Those unfamiliar with the Longshore and Harbor Workers’ Compensation Act (LHWCA) may be surprised to learn that the doctrine of apportionment is unavailable in the longshore forum.  Unlike the state workers’ compensation system wherein an employer/carrier may rely upon apportionment to divide permanent disability between the industrial injury and the pre‑existing disability, a similar fate does not await employers/carriers in the longshore arena.  Rather, Congress has established the “Special Fund” designed to limit an employer/carrier’s liability for permanent disability resulting from a combination of a pre‑existing disability and subsequent work injury, pursuant to guidelines codified in Section 908(f) of the LHWCA.

Special Fund Relief

Also known as the “Subsequent Injuries Fund,” the Special Fund has originally intended to encourage employers to hire disabled workers.  The incentive provided by the Special Fund was that of reduced employer/carrier (hereinafter “respondent”) liability wherein an already disabled worker sustained further disability in the course of employment.  (With the enactment of the Americans with Disabilities Act, which itself prohibits discrimination based on disability, the underlying purpose of the Special Fund would appear outdated.)  Nonetheless, the Special Fund remains as the only recourse when faced with an injured worker with pre‑existing disability.

Even when Special Fund relief is granted, the ultimate source of the funding rests with employers and carriers.  There are three primary sources for Special Fund monies:  (1) death benefit payments; (2) assessments against employers and carriers; and (3) fines and penalties.

For example, when a worker dies without survivors, $5,000.00 is payable by the respondent to the Special Fund.  Additionally, respondents contribute to the Special Fund by way of an annual assessment.  The amount of the assessment varies and is determined on a percentage basis by comparing the individual respondent’s workers’ compensation payments during the preceding year to the total of all such payments made by all respondents during the same time frame.  The Special Fund may also receive fines and penalties to support its funding.

In general, the Special Fund limits the respondent’s liability to the first 104 weeks.  After 104 weeks, the Special Fund continues payments of permanent disability to the injured worker or dependents.  Similar to the state workers’ compensation system, however, other expenditures, including temporary disability, medical benefits, penalties, interest and attorneys’ fees are not “apportionable” to the Special Fund and thus must be paid directly the respondent.  See generally, Sizemore v. Coseal and Co. (1989) 23 BRBS 101.

In order to qualify for Special Fund relief, the respondent must establish the following three criteria:   (1) the existence of pre‑existing permanent partial disability; (2) the manifestation of the pre‑existing disability to the employer; and (3) the combined effect of the pre‑existing disability and present disability.

In order to assist the employers, adjusters and counsel in navigating the somewhat muddied waters of Special Fund relief, each of these problems will be addressed in detail below.