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Interest and Defense Base Act benefits (We are talking about your MONEY)

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Defense Base Act Lawyer - Bill Turley

“I give you an insider’s view of Defense Base Act Law, with no sugar coating. No lawyer talk, no double talk. Ever."

Defense Base Act Lawyer Bill Turley - author of the 5 Star book - Win Your Defense Base Act Case

Real information that will help you collect more money in your Defense Base Act case

Not to be putting the cart before the horse, but one of the questions that you may have is whether you're entitled to interest for unpaid Defense Base Act benefits. In this article, I address most of the questions you may have about the DBA and interest. 

As I always do before I write an article, i researched what else was out there on the subject. I Googled "Defense Base Act and Interest" and a couple of articles came up. These other articles sort of talked generically about the DBA and interest, but they really didn't dive very deep. Beyond, "You get interest under the DBA and you should hire me." 

You will see in this article, I give you concrete information and legal citations that will actually help you win your Defense Base Act case and get compound interest awarded and how and why interest is awarded in Defense Base Act cases. 

So, as usual, buckle up and hang on. As always I give it to you straight. I may not tell you what you may want to hear - I tell you what you need to hear. Because with this topic, we're talking about YOUR MONEY!

 

Interest is VERY important - but let's talk carts and horses 

I say you may be putting the cart before the horse because it may be presumptuous that you will prevail in your DBA case and be awarded benefits. Meaning, first you have to win your DBA case. If you don't win and get awarded benefits, then talk about you getting interest simply isn't so important anymore.  

I suggest that you don't approach your DBA case by thinking that you are going to "for sure" win your case. The road to prevailing in your DBA case can be much more rocky than you it may at first appear. 

What you are going to see is that the DBA insurance company is going to lay tricks and traps in order to try and defeat your case. Usually, the DBA insurance company is going to attack your credibility and character. It's not personal - they do this to everyone.  

Fact is, the DBA insurance company will lay tricks and traps for unsuspecting people just like you that have legitimate DBA claims. People have been falling for these tricks and traps for years. This is one of the main areas I cover in my 5 Star reviewed book - Win Your Defense Base Act Case.  My book is all about helping you avoid these case-killing mistakes.

Here is a word of caution. I suggest that you prepare your case very carefully.  You need to pay attention to the details in order for you to prevail in your DBA case. 

 

Am I entitled to interest for my Defense Base Act benefits?

Yes, you are entitled to interest for all unpaid Defense Base Act disability benefits. Let's get into the nuts and bolts of the Defense Base Act and getting awarded interest (meaning more money for you and your family). 


It’s all about making claimants whole for their injuries


The Defense Base Act is an extension of the Longshore and Harbor Workers Compensation Act (LHWCA). Thus, much of the law for DBA claims is actually law developed for the LHWCA. If you're an overseas civilian contractor bringing a Defense Base Act claim, you are called the "claimant." 

Although the LHWCA does not provide for interest to be paid on past due benefits, the courts and the Benefits Review Board have ruled that interest awards are consistent with the Congressional purpose of making claimants whole for their injuries. Newport News Shipbuilding & Dry Dock Co. v. Director, OWCP (Watkins), 594 F.2d 986, 987 (4th Cir. 1979); Strachan Shipping Co. v. Wedemeyer, 452 F.2d 1225 (5th Cir. 1971), cert. denied, 406 U.S. 958 (1972); Grant v. Portland Stevedoring Co., 16 BRBS 267, 269 (1984), on recon., 17 BRBS 20, 23 (1985).

Interest is awarded to ensure that employees receive the full amount of compensation due. Grant, 17 BRBS at 23; Morris v. Washington Metro. Area Transit Auth., 12 BRBS 208, 210 (1979).

 

Interest is fair because the employer (read: DBA insurance company) had use of the money that is owed to you

As one court stated: 

"Interest was properly assessed since Newport News during this period had the use of money owed to the claimant." Newport News Shipbuilding & Dry Dock Co. v. Director, Office of Workers' Compensation Programs, etc., 594 F.2d 986, 987 (4th Cir. 1979).


When does the interest start?

The Fifth Circuit has held that the payment of interest starts 14 days after your injury. Their logic is based on the employer (read: insurance company) has 14 days to respond to a claim. Wilkerson v. Ingalls Shipbuilding, Inc., 125 F.3d 904 (5th Cir. 1997). Thus, you only get interest after the 14 days when you're injured. 


Interest and temporary disability

Where temporary disability benefits have not been paid interest on unpaid benefits is usually awarded from the date of injury. Lonergan v. Ira S. Bushey & Sons, Inc., 11 BRBS 345, 348 (1979) (scheduled injury).


Interest and permanent disability

Where permanent disability benefits have not been paid, interest becomes assessable as of the date maximum medical improvement is reached for the purposes of rating the extent of the permanent disability. Schreck v. Newport News Shipbuilding & Dry Dock Co., 10 BRBS 611, 613-14 (1978); see also Lonergan, 11 BRBS at 348; Whyte v. General Dynamics Corp., 8 BRBS 706, 708 (1978).


Interest for medical benefits

Interest should be awarded on all past due medical benefits, whether costs were initially borne by the claimant or medical providers. Ion v. Duluth, Missabe & Iron Range Railway Co., 31 BRBS 76 (1997); Hunt v. Director, OWCP, 999 F.2d 419 (9th Cir. 1993), 27 BRBS 84(CRT) (1993).


How is interest computed?

Interest is computed from the date each compensation payment becomes overdue. Since compensation is due a claimant from the date of disability, interest on payments which are not timely made accrues from the date of disability as well. Canamore v. Todd Shipyards Corp., 13 BRBS 911, 916 (1981).

Compound interest vs. simple interest

Compound interest means "interest paid on both the principal and the previously accumulated interest." Black's Law Dictionary 887 (9th ed. 2009). In contrast, simple interest is "interest paid on the principal only and not on accumulated interest."
Price v. Stevedoring Servs. of Am., 697 F.3d 820, 825 (9th Cir. 2012).

There can be a big difference in the amount of interest payable on a loan if interest is calculated on a compound rather than simple basis.

 

The BRB has previously held that interest is not compounded

The interest is not compounded. Santos v. General Dynamics Corp., 22 BRBS 226, 228 (1989). But, not so fast....

 

The Ninth Circuit has held that interest is to be compounded:  Compound interest compensates a claimant, who has been rendered an "involuntary creditor,"  by the employer's delay

Compound interest compensates a claimant, who has been rendered an "involuntary creditor,"  by the employer's delay. As we have indicated, courts have increasingly recognized that "[c]ompound interest generally more fully compensates a plaintiff," Am. Nat. Fire Ins. Co., 325 F.3d at 938,  especially when the interest rate is low, as it is under § 1961; there is no element of penalty or punishment in the justification for compound interest.
Price v. Stevedoring Servs. of Am., 697 F.3d 820, 843 (9th Cir. 2012).

The 9th Circuit explains why compounding interest is fair

"Consistent with these observations, the movement in the case law away from the 'American rule' against compounding pre-judgment interest reflects a growing consensus that the attitudes underlying the common law presumption are being displaced by the modern recognition that compound interest fosters fairness and efficiency. Price v. Stevedoring Servs. of Am., 697 F.3d 820, 842 (9th 2012). 
 
 
"Waiting for money is costly to the injured worker"
 
The Ninth Circuit held that it is error to award simple interest. The Ninth Circuit held that “the proper award of interest at a rate no lower than the compound § 1961 rate:”

This essentially punitive standard for awarding compound interest is inconsistent with the general justification for compounding pre-judgment interest in the first place. As discussed, interest is awarded on past due payments to ensure that claimants receive the compensation to which they are entitled; waiting for money is costly to the injured worker. In other words, "prejudgment interest is not awarded as a penalty; it is merely an element of just compensation." City of Milwaukee v. Cement Div., Nat'l Gypsum Co., 515 U.S. 189, 197, 115 S. Ct. 2091, 132 L. Ed. 2d 148 (1995); accord In re Oil Spill, 954 F.2d 1279, 1331-32 (7th Cir. 1992). Such interest compensates a claimant, who has been rendered an "involuntary creditor," id. at 1331, by the employer's delay. As we have indicated, courts have increasingly recognized that "[c]ompound interest generally more fully compensates a plaintiff," Am. Nat. Fire Ins. Co., 325 F.3d at 938,  especially when the interest rate is low, as it is under § 1961; there is no element of penalty or punishment in the justification for compound interest. We are thus unconvinced by the Board's explanation that simple interest should be awarded absent exceptional circumstances.
 
For similar reasons, we are also unpersuaded by the Director's argument that "full compensation is ensured by simple interest and the additional compensation available under section 14." Section 914 provides for a "delinquency penalty," Roberts, 132 S. Ct. at 1359 n.6; 33 U.S.C. § 914, and thus advances a punitive goal separate from the purpose of ensuring full compensation. Moreover, § 914 applies only where employers have not controverted liability. See 33 U.S.C. § 914(e).
 
Keeping in mind "the humanitarian purposes of the LHWCA" and "our mandate to construe broadly its provisions so as to favor claimants in the resolution of benefits cases," Matulic, 154 F.3d at 1057, we hold that the Board erred in awarding Price simple interest on his past due payments at the § 1961 rate.
 
We affirm the Board's order as to Price's maximum compensation rate, reverse as to the interest rate on his past due payments, and remand  for the agency to calculate the proper award of interest at a rate no lower than the compound § 1961 rate.
Price v. Stevedoring Servs. of Am., 697 F.3d 820, 843 (9th. Cir.).

 

What is the interest rate?

Interest  is assessed on unpaid compensation based on the 52-week U.S. Treasury Bill yield immediately prior to the date of judgment. Littrell v. Oregon Shipbuilding Co., 17 BRBS 84 (1985); Holliman, 20 BRBS at 118; Perry v. Carolina Shipping Co., 20 BRBS 90, 93 (1987); Stone v. Newport News Shipbuilding & Dry Dock Co., 20 BRBS 1, 7 (1987); Bingham v. General Dynamics Corp., 20 BRBS 198, 205 (1988); 

Thus, interest is assessed based upon the filing of the Judges filing of the Decision and Order in the deputy commissioner's office.  The interest rate used is the 52-week U.S. Treasury Bill yield as of this date. Here is the current 52-week U.S. Treasury Bill yield.

For example, US 52 Week Bill Bond Yield was 1.95 percent on July 15, 2019 according to over-the-counter interbank yield quotes for this government bond maturity.

The 52 Week Bill Yield in the United States averaged 5.12 percent from 1962 until 2019, reaching an all time high of 17.31 percent in September of 1981 and a record low of 0.07 percent in October of 2014.

Under what circumstances will I be awarded interest?

If you take your Defense Base Act case to trial, and you have a Decision and Order Awarding benefits, then you will be entitled to interest for all unpaid benefits awarded to you.


If I settle my Defense Base Act claim will I be paid interest?

While it is theoretically possible to get interest if you settle your claim, generally if you settle your claim with an 8(i) settlement, then you aren’t going to get money for interest. That is part of the settling giving a little and getting a little by both parties.


And generally if you settle you case via stipulation, you generally aren’t going to be given interest. That is part of what is motivating the DBA insurance company to settle with you.  Otherwise, they may be inclined to take your case to trial.

 

You have to win your DBA case with the truth

The most important takeaway that I can give you is that you always have to tell the truth with your DBA case. The DBA insurance company is going to hope you fall for one of their tricks or traps. They are hoping that you will lie.  Or, at least, not be 100% candid about something. 

 

Why you shouldn’t do anything until you read my book - Win Your Defense Base Act Case


I strongly suggest that you don’t do anything regarding your DBA case until you read my book. In fact, many of the reviews on amazon.com will tell you the same thing. There is a reason for that. It’s because you need to know about the ways the DBA insurance company is going to try and trick your and trap you before you make one of these case ending mistakes.


Don’t talk to the adjuster, sign any forms (never sign any releases), give a recorded statement, go to your next medical appointment, go the defense medical examination (also called an IME), attend an informal conference, go to a Labor Market Survey appointment, give a deposition, hire the wrong Defense Base Act attorney,  or do anything else related to your Defense Base Act Case until you read my book - Win Your Defense Base Act Case.

Win Your DBA Case

You can check out the 5 Star reviews on amazon.com. 

I suggest that you also check out these articles

Top Ten Defense Base Act questions

DBA Case Studies

PTSD and the Defense Base Act 

 

 


Need help right now?

 
Call us at 619-304-1000  - If you call after regular business hours, when you leave a message, be sure to repeat your name and telephone number twice, so we get it correctly. And be sure to indicate whether it's okay if we respond by text.
 
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This article isn't legal advice
 
These discussions and/or examples are not legal advice. All legal situations are different. These testimonials, endorsements, photos and/or discussions do not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter, or your particular case/ situation. Every case is different. There are any number of reasons why DBA cases are not won and/or are not as successful as folks might have hoped for.
 
Just because we have gotten great results in so many other Defense Base Act cases, doesn't guarantee in particular result in other cases. Including, your DBA case. Every case is different.
William Turley
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“When I seek out professional advice, I don’t want B.S., I want it straight up. I figure you do also.”
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