Article Summary

• The President issued an executive order requiring the use of electronic disbursements wherever possible to save government resources and combat fraud.
• LHWCA Section 8(f) Special Fund claimants will need to accept direct deposits for seeking reimbursement once this new presidential mandate takes effect.
• The deadline for government agencies to utilize electronic funds transfers is September 30, 2025, with the Department of Labor ordered to make this transition “as soon as practicable.”

Special Fund Payments Will Require Electronic Funds Transfer (“EFT”) for All Future Payments

The Special Fund was established in Section 8(f) of the Longshore and Harbor Workers’ Compensation Act (LHWCA). Section 8(f) shifts part of the liability for permanent partial and permanent total disability, and death benefits, from the employer to the Special Fund, when the disability or death is not solely due to the injury which is the subject of the claim. Where an employer hires a worker who has a pre-existing permanent partial disability and due to an injury becomes further disabled, the employer is liable for the first 104 weeks of indemnity benefits, following which the Special Fund takes over liability for future disability benefits.

On March 25, 2025, President Trump issued an executive order titled “Modernizing Payments To and From America’s Bank Account.” Under this order, the federal government will phase out the use of paper-based payments, including checks and money orders flowing into and out of the United States General Fund in order to promote operational efficiency. According to the order, maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American taxpayer over $657 million in fiscal Year 2024. The order also seeks to defend against fraud and improper payments, noting that Department of the Treasury checks are sixteen times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic transfer of funds.

The Executive Order mandates a transition to electronic payments for all federal disbursements and receipts where possible under applicable law. Effective September 30, 2025, the Secretary of the Treasury shall cease issuing paper checks. Administrative Agencies such as the Department of Labor have been ordered to transition “as soon as practicable.” This will necessarily include payments by the Special Fund.

Claimants seeking benefits from the Special Fund will be required to accept direct deposit to receive these funds. As a practical matter, once an application for relief from the Special Fund has been provisionally accepted pending stipulations, the claimant’s banking information should be submitted with the joint stipulations so there is no delay on the part of the OWCP in issuing a compensation order.

Read the full executive order >