13.4 Other States, USL&H, and Federal Acts

Coverage Beyond the Home State

Part One only covers states listed in Item 3.A of the Information Page. Employers who send workers across state lines, or who fall under federal jurisdiction, need additional coverage. Three mechanisms are tested: Part Three - Other States Insurance, the USL&H Act, and other federal compensation acts.

Part Three - Other States Insurance

Part Three extends coverage to states listed in Item 3.C of the Information Page that were not part of the original 3.A states. It is a safety net for incidental or future operations.

• A state already in 3.A is fully covered by Part One.
• A state in 3.C triggers Part Three if the employer begins work there.
• A monopolistic state fund state can never be listed in 3.C.

Exam trap: if a state is not listed in either 3.A or 3.C and the employer works there, there is a coverage gap - benefits may not be paid.

Monopolistic Fund States

A few states require employers to buy WC only from a state-operated monopolistic fund; private insurers cannot write Part One there. The commonly tested monopolistic states are North Dakota, Ohio, Washington, and Wyoming. Employers in those states obtain statutory WC from the state fund and buy Stop Gap (Employers Liability) coverage separately - often endorsed onto a CGL or BOP - because the state fund provides no Part Two protection.

USL&H Act

The United States Longshore and Harbor Workers' Compensation Act (USL&H) is a federal law covering maritime workers injured on the navigable waters of the U.S. or adjoining areas (piers, docks, terminals, shipyards) - workers who are not seamen. USL&H benefits are generally higher than state WC. Coverage is added to the standard policy by the Longshore and Harbor Workers' Compensation Act Coverage Endorsement (WC 00 01 06).

The Jones Act and Other Federal Acts

• Jones Act (Merchant Marine Act) - covers seamen (crew of a vessel), who are excluded from USL&H. It is not no-fault; the seaman sues the employer for negligence, similar to FELA.
• FELA - Federal Employers Liability Act - covers interstate railroad workers; also fault-based.
• Defense Base Act - extends USL&H to workers on overseas military bases.
• Federal Black Lung / Coal Mine - covers coal miners' pneumoconiosis.

All States vs. Listed States Endorsement

Item 3.C can be written two ways. The employer may list specific states it expects to enter, or it may use language such as "all states except those listed in 3.A and the monopolistic fund states." The all-states approach is broader and prevents accidental gaps when crews travel unexpectedly. Crucially, Part Three does not apply if the employer had operations in that state on the policy effective date but failed to list it in 3.A - Part Three is meant for new or incidental operations, not for known exposures the insured deliberately left off. Examiners test this limitation.

Stop Gap Coverage in Monopolistic States

Monopolistic state funds pay statutory benefits (the Part One equivalent) but provide no employers liability protection. That leaves the employer exposed to the same third-party-over and consortium suits Part Two would normally handle. Stop Gap coverage restores that employers-liability protection and is usually added by endorsement to the Commercial General Liability policy or a Businessowners Policy (BOP). An exam favorite: in a monopolistic state, statutory benefits come from the state fund, but employers liability must be arranged separately through Stop Gap.

Comparing the Federal Acts

The key distinction among federal acts is no-fault vs. fault. USL&H and the Defense Base Act are no-fault like state WC. The Jones Act and FELA are fault-based negligence remedies - the worker must prove employer negligence, but can recover full tort-style damages including pain and suffering, which no-fault systems exclude.

• No-fault: state WC, USL&H, Defense Base Act, Black Lung.
• Fault-based: Jones Act (seamen), FELA (railroads).

Exam trap: longshoremen and harbor workers are covered by USL&H, not the Jones Act, because they are not crew members of a vessel in navigation.

Defense Base Act, Black Lung, and FECA

Several narrower federal acts round out the picture. The Defense Base Act (DBA) extends USL&H benefits to civilian employees working on U.S. military bases overseas or under public-works contracts abroad. The Federal Black Lung Benefits Act compensates coal miners disabled by pneumoconiosis and their survivors. The Federal Employees' Compensation Act (FECA) covers civilian employees of the U.S. government itself - postal workers, federal agency staff - administered by the Department of Labor, not by a private WC policy.

None of these are written on the standard NCCI policy; USL&H is the only one added by endorsement to it (WC 00 01 06).

Concurrent Jurisdiction and Election

A single injury can fall under more than one system. A shipyard worker injured on a pier might be eligible under both state WC and USL&H - this is concurrent jurisdiction, and the worker may pursue benefits under either, though USL&H usually pays more. Because the maps overlap, prudent employers with any maritime exposure add the USL&H endorsement rather than gamble on whether a court will classify a worker as land-based or maritime.

Exam trap: USL&H benefits are generally higher than state benefits, so the choice of system materially affects the payout, and an uncovered USL&H exposure leaves the employer paying out of pocket.