Summary: The Special Fund established by Longshore and Harbor Workers' Compensation encourages employers to hire disabled maritime workers by limiting an employer's liability should a disabled worker sustain a second injury. The Fund, which is financed primarily by annual assessments levied by the Labor Department on self-insured employers and insurance carriers, is audited annually. However, the audited annual financial statements do not address the potential unfunded liability faced by this program, which has been estimated to be as high as $2.5 billion. This report addresses (1) the feasibility of actuarially calculating the unfunded liability of the Special Fund, (2) whether controls exist to prevent inappropriate claims from being referred to the Special Fund, (3) whether recipient data are matched against other agencies' databases to reduce the risk of payments being made to ineligible recipients, (4) whether there are equitable distributions of assessments among the insurance carriers/self-insured employers as compared to their claim levels, and (5) the status of changes to the Longshore computer systems.
