Fighting an LHWCA Claim Denial: Third-Party Rights & Appeals for Maritime Workers

When an LHWCA Claim Is Denied or Controverted

The Longshore and Harbor Workers' Compensation Act provides federal workers' compensation benefits to covered maritime workers. When an employer or their insurance carrier denies or "controverts" a claim, the worker faces a federal administrative dispute process that is more complex than typical state workers' comp systems and that requires, in most serious cases, legal representation.

This guide explains the LHWCA dispute process, how to appeal a claim denial, and how third-party tort claims work alongside the federal compensation system.

Why LHWCA Claims Are Controverted

An employer or insurer may controvert an LHWCA claim on several grounds:

• **Jurisdictional dispute.** The employer argues that the worker does not meet the status test (not a maritime occupation) or the situs test (injury did not occur in a covered location).
• **Medical causation dispute.** The employer's medical evaluator disagrees with the treating physician about the diagnosis, the relationship between the injury and work activity, or the extent of disability.
• **Wage rate dispute.** The parties disagree about the average weekly wage, which determines the benefit amount.
• **Return-to-work disputes.** The employer argues the worker has wage-earning capacity and disputes the level of disability.

A controversion suspends the employer's obligation to pay benefits until the dispute is resolved. The worker bears the burden of proving entitlement.

The Administrative Dispute Process

Informal Resolution at the District Director Level

The first step is an informal conference conducted by an OWCP district director. The goal is voluntary resolution. The district director may issue a recommendation, but it is not binding.

When informal resolution fails, the case proceeds to formal hearing.

Formal ALJ Hearing

Formal hearings are conducted by Administrative Law Judges at the Office of Administrative Law Judges. These are bench trials before the ALJ, not jury trials. The ALJ reviews:

• Medical evidence from treating physicians and employer-retained independent medical examiners
• Vocational evidence about the worker's wage-earning capacity
• Witness testimony
• Employment records and wage documentation

ALJ decisions include findings of fact and conclusions of law. Attorneys experienced in LHWCA practice are essential at this stage — the procedural and evidentiary rules are different from state workers' comp and from federal district court litigation.

Benefits Review Board Appeal

ALJ decisions can be appealed to the Benefits Review Board (BRB), a federal appellate body within the Department of Labor. The BRB reviews for errors of law and for substantial evidence supporting the ALJ's factual findings. BRB decisions are then appealable to the appropriate federal circuit court of appeals.

This full appellate chain means that LHWCA disputes can take three to seven years to finally resolve through litigation. Injured workers who cannot afford to wait often settle at or before the ALJ hearing stage.

Third-Party Tort Claims: The Most Valuable Avenue for Injured Maritime Workers

The LHWCA explicitly preserves the worker's right to sue third parties — anyone other than the employer — whose negligence caused or contributed to the injury. This is a critical right that many injured maritime workers fail to exercise.

Who Are Third Parties in Maritime Cases?

• **Vessel owners.** The owner of a vessel that was being loaded or repaired when the worker was injured may be liable under federal maritime law if the vessel was unseaworthy or if the vessel owner's negligence created the hazard. The Supreme Court's decision in *Scindia Steam Navigation Co. v. De Los Santos* established the conditions under which vessel owners owe duties to longshore workers.
• **Equipment manufacturers.** A defective crane, forklift, hatch cover, or line-handling equipment that injures a dock worker subjects the manufacturer to strict product liability independent of the workers' comp claim.
• **Stevedore companies.** When a stevedore company (other than the worker's employer) creates a hazardous condition, it may be liable in tort.
• **Cargo owners.** In some cases, hazardous cargo that was inadequately packaged, labeled, or secured gives rise to claims against the shipper or cargo owner.

Why Third-Party Claims Matter

LHWCA benefits, while better than most state workers' comp programs, are still limited: they replace only two-thirds of lost wages and do not compensate for pain and suffering, loss of enjoyment of life, or non-economic damages. A third-party tort claim under federal maritime law or state law allows recovery of:

• **Full lost wages** rather than the two-thirds cap
• **Pain and suffering** — often the largest component in serious injury cases
• **Loss of consortium** for spouses
• **Punitive damages** in appropriate cases (vessel unseaworthiness cases can support punitive damages under *Atlantic Sounding Co. v. Townsend*)

The combination of LHWCA benefits (for immediate income and medical coverage) and a third-party tort case (for full damages) maximizes the injured worker's total recovery.

The Employer's Lien Right

When a worker recovers damages from a third party, the LHWCA employer (or their insurer) has a lien against the recovery for the benefits already paid. Your attorney must negotiate the lien as part of the settlement process. Many sophisticated plaintiffs' attorneys can reduce the lien substantially through negotiation, increasing the net recovery to the worker.

Occupational Disease Claims: Special Rules

For occupational diseases under the LHWCA — particularly asbestosis and mesothelioma in shipyard workers — special rules govern:

• The "last responsible employer" rule allocates liability to the last employer who exposed the worker to the disease-causing agent
• The one-year filing deadline runs from when the worker knew or should have known of the disease and its occupational origin
• Asbestos mesothelioma cases often proceed simultaneously under LHWCA and through asbestos tort litigation against product manufacturers — two separate tracks with different defendants and different damage calculations

Shipyard mesothelioma cases involve some of the largest recoveries in personal injury law, given the latency period of 20 to 50 years and the certainty of the occupational connection. An attorney experienced in both LHWCA and asbestos litigation is essential.