Prosecuting Misrepresentation and Fraud Under the Longshore Act

Section 31 of the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) contains statutory penalties for misrepresentations made by a LHWCA litigant.  If a claimant or a representative of a claimant knowingly and willfully makes a false statement for the purpose of obtaining a benefit or payment, then that person is guilty of a felony.  Upon conviction, the guilty person could be punished by a $10,000 fine and imprisonment for five years.

Misrepresentation penalties are not solely directed at claimants.  An employer or carrier, or the agents of employers and carriers, also face penalties if they knowingly and willfully make a false statement for the purpose of reducing, denying or terminating benefits to an injured worker.  The potential penalties include a $10,000 fine and imprisonment for five years.

But what is the process for reporting a misrepresentation?  The Division of Longshore and Harbor Workers’ Compensation’s (“DLHWC”) Procedure Manual contains step-by-step instructions.  Chapter 3-700 addresses “Fraud or Abuse,” and for the most part it addresses fraud by a LHWCA claimant.  If fraud is suspected, an employer or carrier can report the suspected instance of fraud to the Office of Workers’ Compensation Programs’ assigned district director.  The report may be made verbally or by letter, and the report should include supporting information or documentations that led to the suspicion of fraud.  If the suspicion arises when the claim is at the Office of Administrative Law Judges then the ALJ may “in the Decision and Order, refer the matter to the OWCP for appropriate action on the information.”

Once the district director receives the complaint, the evidence of fraud will be reviewed.  The complaint will be forwarded to the regional director.  A summary of the complaint and other relevant evidence will be transmitted along with the district director’s recommendation regarding prosecution and additional investigation.  The regional director then refers the case to the regional solicitor who will determine if the case is ripe for referral to the Offices of the United States Attorneys or if additional investigation is needed.  Examples of additional investigation could include surveillance by the Federal Bureau of Investigation.

The types of evidence that may be used in a successful fraud prosecution include a misleading Form LS-200, payroll records from employment while compensation benefits were paid, written statements, interrogatories, depositions, income tax returns, reports from private investigators, surveillance films, reports from credit reporting agencies, transcripts from administrative hearings, documents submitted at administrative hearings, state workers’ compensation files, insurance case files, and medical records.  A district director can obtain this information (even by issuing subpoenas according to the Procedure Manual) or the evidence of fraud could be obtained by Wage and Hour Division investigators or FBI agents.  If prosecution is necessary, the matter is referred to a United States attorney.

The DLHWC’s policy is that “[t]he detection and prevention of fraud or abuse in the Longshore Program is of the highest priority.”  Fraud is serious.  Misrepresentations won’t be tolerated.

Note: Each week the LexisNexis Workers’ Compensation Law Community publishes reports of fraud and abuse in state and federal workers’ compensation systems.  Click this hyperlink to see the most recent post.