In Sira Cruz v. National Steel and Shipbuilding Company; Peterson Industrial Scaffolding, Inc., Civil Action No. 17-55441 (December 19, 2018) (9th Cir.), a case that may only be noteworthy for practitioners in the Ninth Circuit, the Court applied a borrowed employee defense to a longshoreman’s claim against a third party. The defendant, in this personal injury case, was the borrowing employer of the plaintiff who was paid compensation under the LHWCA by her nominal employer. She then turned around to sue the defendant who then raised the borrowed employee defense. In a case of first impression for the Ninth Circuit, the summary judgment granted the defendant in the district court was affirmed specifically stating that the defense was applicable where the employee was covered by the LHWCA, allowing the Ninth Circuit to make the rare statement that “we join the Third, Fourth, Fifth, and Eleventh Circuits …” Id. at p. 3-4.
Doug Matthews has practiced law in New Orleans for 35 years and concentrates on maritime trial practice as defense counsel.
On September 11, 2018, the U.S. Court of Appeals for the Fifth Circuit, in the matter of McGill C. Parfait v. Director, OWCP, Performance Energy Services LLC and Signal Mutual Indemnity Association Ltd., No. 16-60662, granted the respondents’ motion to dismiss Mr. McGill’s Petition for Review based upon the petitioner’s non-compliance with 33 USC § 933(g). In doing so, the Court noted that neither knowledge of a mediation taking place nor publication of a judgment satisfied the requirement to provide notice of a settlement and a judgment against joint tortfeasors that arose out of his work-related injury.
The petitioner, McGill C. Parfait, was an employee of Performance Energy Services LLC (“employer”) who sustained injuries to his chest and back in an accident that occurred on June 30, 2013, while working for his employer on a site covered by the Longshore and Harbor Workers’ Compensation Act, 33 USC § 901 et. seq. (“LHWCA”). After a formal hearing on his claim under the LHWCA, the Administrative Law Judge (“ALJ”) awarded him $1,493.60 in temporary total and temporary partial disability benefits for his chest injury. The ALJ denied his claim for benefits related to his back injury. Mr. Parfait appealed the ALJ’s award to the Benefits Review Board (“BRB”), which affirmed. He then lodged his Petition for Review with the Fifth Circuit challenging the BRB’s ruling denying total permanent disability benefits for his back injury.
Mr. Parfait also filed a third-party action against Apache Corporation (“Apache”) and Wood Group PSN, Inc. (“Wood”) for the injuries for which he had sought compensation benefits under the LHWCA. While Mr. Parfait’s appeal to the BRB was under submission, the employer learned from counsel for Apache that petitioner had settled his claim against them. The employer also learned, after inquiring of Wood’s counsel, that after a jury trial a judgment had been entered in favor of Mr. Parfait against Wood. After the Petition for Review was lodged in the Fifth Circuit, the employer and its carrier moved to dismiss it, alleging that Mr. Parfait failed to obtain their approval of the third-party settlement or to notify them of it and the third-party judgment as required by § 33(g) of the LHWCA. In the absence of this notification all rights to benefits due an employee under the LHWCA are terminated and forever lost.
In an effort to address the motion to dismiss, the Fifth Circuit submitted questions to counsel for both parties. Based upon the response to these questions, the Fifth Circuit learned that:
- Parfait compromised his suit against Apache in the Southern District of Texas with petitioner receiving a net of $325,000.
- Following a jury trial, in April of 2017, Mr. Parfait received a favorable verdict against Wood and a judgment was entered under which Mr. Parfait enjoyed a net recovery of $41,542.17.
- Counsel for employer/carrier was specifically invited to attend a mediation session that was held on March 10, 2016, and was contacted during the mediation session by claimant’s counsel. (The content of that communication, however, was never divulged.)
- Parfait’s counsel asserted that the Judgment in the jury trial against Wood was published by the district court on June 2, 2017, and asserted that the employer/carrier would have been plainly aware of its existence.
Where an employee has sued third-party tortfeasors as a result of his employment-bred injury, he is required under § 33(g), at the risk of losing his benefits for failing to do so, to obtain the written approval of his employer for any settlement he enters into if it is in an amount less than what would be the total liability of the employer under the LHWCA. Additionally, where the employee either settles his case for any amount or obtains a judgment, the employee must provide notice to the employer of this fact. The seminal case applying § 933(g) of the LHWCA is Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992) in which the Supreme Court applied a strict interpretation of the language contained in § 933(g). The court stated,
An employee is required to provide notification to his employer, but is not required to obtain written approval, in two instances: 1) where the employee obtains a judgment, rather than a settlement, against a third-party; and 2) where the employee settles for an amount greater than or equal to the employer’s total liability. Under our construction, the written approval requirement of 33(g)(1) is inapplicable in those instances, but the notification requirement of 33(g)(2) remains in force. Id. at 475
In the instant case, the Fifth Circuit noted that whether the net result of the settlement with Apache satisfied the employer’s total liability or not, Mr. Parfait was still required to provide 933(g)(2) notice, which he did not give. Furthermore, Mr. Parfair failed to give his employer notice of the actual judgment against Wood. The fact that the employer/carrier were on notice of the mediation, were invited to attend it and that some alleged unknown discussion occurred between claimant’s counsel and employer’s counsel at the time of the mediation, was of no moment, as the actual results of the settlement were not made known by the claimant to his employer. The Fifth Circuit cited a number of unpublished decisions of the BRB, which had held to a strict interpretation to § 933(g)(2) describing the affirmative duty of the employee to notify the employer. The employer’s mere knowledge of settlements or the absence of prejudice to the employer was found not to suffice to prevent the absolute bar to compensation from being invoked in these instances.
On January 3, 2018, the United States Court of Appeals for the Fourth Circuit in Russell Moody v. Huntington Ingalls Incorporated, No. 16-1773 (4th Cir., 01/03/2018), reversed a ruling of the Benefit Review Board that had earlier overturned the finding of an Administrative Law Judge that granted benefits to a retired employee. Russell Moody, a shipyard employee, suffered a workplace injury, but did not undergo surgery until after he retired. He sought disability benefits for a two month, post-surgery recuperation during which he was not medically cleared for work.
Mr. Moody had worked for Huntington for 45 years when due to a change in his assignment to a different shift, he decided to retire. On August 1, 2011, he gave his requisite 90-notice of retirement to be effective October 31, 2011. On September 19, 2011, Mr. Moody injured his right shoulder while working in the shipyard. Even though the injury was going to require surgery, Mr. Moody continued to work for Huntington. It was not until after he retired, as scheduled, that he underwent shoulder surgery. According to his physician, he needed to remain “out of work” until February 16, 2012, and then had limitations effective through March 28, 2012, after which he would have no restrictions.
Huntington paid the cost of surgery but refused to pay Mr. Moody temporary total benefits asserting that because Mr. Moody had retired, the temporary recovery from the surgery had not caused him to lose any wages. The Administrative Law Judge nevertheless ruled in Mr. Moody’s favor and awarded temporary benefits. The judge concluded that Mr. Moody was totally incapacitated during the recovery period, noting that had Mr. Moody undergone surgery immediately after the accident, Huntington would have had to pay disability benefits to him.
The Benefits Review Board disagreed and concluded that Mr. Moody was not entitled to any disability benefits because he voluntarily retired before the onset of his workplace injury’s debilitating effects. The Board reasoned that the voluntary retirement resulted in a total loss of ability to earn wages, such that no injury would cause any further loss of economic capacity.
The Fourth Circuit reversed the Benefits Review Board’s decision indicating that while Mr. Moody’s injury did not cause him to lose any income during his recuperation, it did deprive him of the ability to work during that period. The fact that Mr. Moody had retired did not undermine the fact that but for the recuperation from surgery, he would have been capable of performing active employment, if he had chosen to do so. The Fourth Circuit stated, “to decide otherwise would not only deprive Moody of his rightful benefits, but would also confer a windfall on Huntington: it is undisputed that Moody would have received disability benefits had he undergone surgery immediately, rather than discharging his duties in good faith, and Huntington would have had to pay for another drive.” (p. 7.) The Court distinguished whether there was an actual economic loss from there being an incapacity to earn wages. In so doing, it stated, “because the LHWCA compensates workers for their inability to earn wages due to injury, workers are entitled to disability benefits when an injury is sufficient to preclude the possibility of working.” It felt that the LHWCA compensates the deprivation of economic choice when it is caused by workplace injury. As such, voluntary retirement is not a form of total incapacity.
On September 27, 2017, the Fifth Circuit in U.S.A. v. Don Moss, Curtis Dantin, Grand Isle Shipyard, Incorporated, and Christopher Srubar, No. 16-30516 (5th Cir. September 27, 2017), issued a decision affirming the District Court’s dismissal of criminal charges against a number of oil field contractors resulting from a welding accident that occurred on an offshore oil platform located on the Outer Continental Shelf on November 16, 2012. The platform owner and leaseholder, Black Elk Energy Offshore Operations, LLC, in September of 2012, interrupted its oil and gas production on West Delta 32 to begin construction projects on its three-platform production facility. In pursuing these construction projects, it contracted with a number of different companies to provide workers connected with the project. On November 16, 2012, during welding operations, a fatal explosion occurred killing three men and injuring others.
Criminal indictments were issued three years later pursuant to Outer Continental Shelf Lands Act 43 USC §§ 1331, et. seq. (OCSLA) with the government contending that contractors were criminally liable because they failed to obtain proper authorization to weld, failed to conduct appropriate pre-work inspections and failed to ensure the construction area was safe for hot work as required by OCSLA safety regulations. The contractors moved for dismissal of the charges against them. The District Court Judge issued an Order dismissing the charges against the contractors based upon his analysis of each of the regulatory provisions cited in the indictments. He concluded that none of the OCSLA regulations applied to oilfield contractors. Central to this analysis, the Court pointed out that each of the three specific provisions of the OCSLA regulations underlying the charged criminal violations imposed regulations addressed to “You.” Under OCSLA regulations, “You” is a defined term:
You means a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), a pipeline right-of-way holder, or a State lessee granted a right-of-use and easement. 30 CFR § 250.105.
The District Court held this definition did not include contractors, subcontractors or service providers. The government timely appealed.
On appeal, the government relied on four main arguments. First, the government contended that a plain reading of OCSLA subjects any person, including contractors and their employees to criminal penalties for violating the regulations promulgated under the statute. 43 U.S.C. § 1350(c). Second, OCSLA regulations governed the appellees’ conduct because they were the “person[s] actually performing the activit[ies],” and are thus “jointly and severally responsible” under the 30 CFR § 250.146(e). Third, the Courts had upheld both civil and criminal penalties imposed under similar statutory and regulatory schemes. Fourth, OCSLA regulations supported civil and criminal penalties for any person “responsible for a violation” of the regulations. 30 CFR § 250.1402.
Under 43 U.S.C. § 1350(c), the government argued that the contractors were criminally liable as that provision stated that any person who knowingly or willfully violated a regulation that was designed to protect health, safety or the environment may be subject to criminal penalties under OCSLA. The government argued that under OCSLA’s definition of a “person” the contractors clearly fell within its ambit. In response, the contractors asserted that OCSLA precluded the government from criminally prosecuting them as they were not holders of OCSLA leases or permits. In citing 43 USC § 1348(b), the contractors argued that OCSLA identified those people who were required to comply with OCSLA regulations by stating “it shall be the duty of any holder of a lease or permit under this subchapter” to comply with regulations governing workplace safety and health for their own employees and those of any “contractor or subcontractor.” They argued that because Section 1348(b) specifically imposed the duty on lessees and permittees, and equally specifically referenced, but did not impose its regulatory duties on contractors and subcontractors, they were textually excluded from those duties. Ergo, if they were not parties given a duty to comply, criminal penalties should not be imposed.
The panel of the Fifth Circuit thought that the contractors’ arguments were well-stated, even more so given the government’s failure ever before to seek criminal penalties against a contractor in the 60 plus year history of the OCSLA. It was noted that the government’s past inactions spoke volumes about the scope of its regulatory authority. The court, however, stated that to resolve the appeal it did not need to decide whether OCSLA and its criminal liability provision could extend to contractors. Assuming arguendo that the provisions of OCSLA could apply to these contractors, it proceeded to determine whether the specific regulations would support the criminal indictments.
In addressing the specific regulations alleged to have been violated by the contractors, the Court indicated that the government ran up against the regulatory definition of “You.” It found that all of the welding regulations that formed the basis of the criminal indictment only referenced “You.” The government sought to circumvent the plain language of the definition of “You” by citing language in 30 CFR § 250.146(e) pertaining to joint and several responsibility for compliance with OCSLA regulations. The Fifth Circuit, however, indicated that “joint and several responsibility” was a term of art reserved for civil, rather than criminal liability, and noted that the government failed to cite any cases that demonstrated support for joint and several criminal liability.
The court further noted that the drafting history of the definition of “You” and the prior public statements of the regulating agencies responsible for OCSLA confirmed that the specific regulations did not apply to contractors. In addressing whether the regulations that were specifically directed at lessees could also extend penalties to contractors, the Court noted that the virtual non-existing past enforcement of OCSLA regulations against contractors confirmed that the regulations were never intended to apply to them, noting also that the government had not issued civil indictments for non-compliance against contractors prior to 2011.
In addressing the government’s more generalized argument that regulations may result in criminal liability for anyone who fails to comply with them, the Court indicated that the argument ignored the rule that a general provision of a comprehensive regulatory scheme must yield to more specific, conflicting provisions. It stated that “the appellees were indicted under three provisions of 30 CRF § 250.113, all of which are directed at “You,” not at just any person, and Section 250.146(c), which was previously addressed, does not impose criminal liability beyond the definition of “You.” It stated that because the applicable regulatory definitions unambiguously excluded contractors, more general liability provisions did not control.
Finally, the Court addressed the government’s position with regard to its prior non-enforcement of regulations against contractors where the government indicated that subcontractors always had fair notice of their potential exposure to civil penalties and criminal liability as an interpretation of its regulatory directives. The Court chose not to apply the Auer v. Robins deference standard as it appeared that the government’s interpretation conflicted with its earlier and consistently held view. It felt that there had not been fair notice to contractors of this potential liability and because this involved a criminal liability, as opposed to civil exposure, the enforcement of the governmental agency’s interpretation of its regulations in this instance, would be a violation of the contractors’ due process rights.
Whether this last part of the Fifth Circuit’s decision leaves open the possibility of subsequent acceptance of the governmental agencies’ interpretation of these existing regulations as applying to contractors, in light of its previous statements, appears to be speculative.
On May 17, 2017, the United States Court of Appeals for the Fifth Circuit rendered a decision affirming an Administrative Law Judge’s decision in Bollinger Shipyards, Inc., et al. v. Director, OWCP, et al., No. 16-60370. This matter arose as a claim filed under the Longshore and Harbor Workers’ Compensation Act, 33 USC § 901 et. seq. The plaintiff, Kenneth Worthy, filed a claim against his past employer, Bollinger Shipyards, Inc., for an occupational illness as a result of exposures to hazardous substances, including welding fumes, sandblasting dust, industrial cleaning solvents and other fumes and chemicals resulting in a diagnosis of chronic, obstructive pulmonary disease (COPD).
After a number of years working as a welding supervisor occasioning his exposure to the above-noted fumes, Mr. Worthy was examined by a physician in 2008, who indicated that he could no longer wear a respirator, as required by his job, due to airway obstruction. Mr. Worthy had been out of work due to other injuries at that time, and upon his attempt to return to work after recovering from these injuries, Bollinger required him to be again examined with regard to his pulmonary condition. On March 22, 2010, the company physician, Dr. Bourgeois, diagnosed Mr. Worthy with COPD based upon the results of a pulmonary function test. At that time, Mr. Worthy was told by the physician that he could not return to work and was advised to see a pulmonologist. It was also recommended that he apply for Social Security Disability. Instead of doing this, Mr. Worthy applied for work with a separate employer and worked as a welding supervisor from March 29 – May 18, 2010, when he was fired for sleeping on the job.
After Mr. Worthy filed his claims against Bollinger for his respiratory condition, he was seen by yet another physician that performed a further pulmonary function test which gave similar results as were obtained in March 2010. This doctor also indicated to Mr. Worthy that he could not return to any job that exposed him to fumes or dust.
At the trial of the matter before an Administrative Law Judge, Bollinger asserted that it was not liable for Mr. Worthy’s occupational disease due to the fact that Mr. Worthy was exposed to further lung irritants while in the employ, however short-lived, of a later maritime employer. The issue presented addressed the application of the “last employer rule” as defined by the Second Circuit’s widely-adopted rule in Travelers Insurance v. Cardillo, 225 F.2d 137 (2nd Cir. 1955). Under this rule, the responsible employer in occupational disease cases is the last employer during whose employment the claimant was exposed to injurious stimuli, prior to becoming aware that he was suffering from an occupational disease.
The application of this rule usually arises in the situation where the individual has terminated his employment as a result of a diagnosis identifying a disability and limitations precluding the claimant’s continued work. In the instant, however, after Mr. Worthy was diagnosed with COPD, he sought and obtained further employment for several months performing similar duties as he had for Bollinger. Under these facts, Bollinger argued that the ALJ should have focused solely on the date of disability (last date of employment) to determine the last responsible employer, citing Liberty Mutual Insurance v. Commercial Union Insurance, 978 F.2d 750, 756 (1st Cir. 1992). The Fifth Circuit determined that it did not need to address the situation when diagnosis and disability dates were different because the Administrative Law Judge found that both of these events occurred on March 22, 2010, and this issue was not truly raised by Bollinger before the Benefits Review Board, and was therefore forfeited.
Bollinger also attempted to avoid liability by asserting that Mr. Worthy’s pulmonary condition was made worse after his brief stint of work with the subsequent employer based upon a post-employment pulmonary function test indicating a decline in pulmonary functioning. The Fifth Circuit, noting the standard discretion applied to fact finding of an ALJ, refused to accept this prong of Bollinger’s appeal and indicated that the ALJ was not convinced by the evidence submitted by Bollinger supporting this conclusion.
On January 27, 2017, the Fourth Circuit Court of Appeals in Ceres Marine Terminals, Inc. v. Director, OWCP, (Samuel Jackson), No. 15-1041, affirmed the decisions of an Administrative Law Judge and the Benefits Review Board holding that a defense founded upon the precept of “zone of danger” was not applicable under the LHWCA. It further agreed with the courts below that the opinion of an independent medical examiner appointed by the District Director’s Office carries no greater weight than do other medical opinions.
This case arises out of a tragic work-related accident where Samuel Jackson, a longshoreman, was operating a fork lift when it accidentally struck and killed a co-worker. The accident was very gruesome in nature. Subsequently Mr. Jackson sought psychological care and was diagnosed with post-traumatic stress disorder (PTSD). After seeing several medical care providers for his psychological condition, the employer requested that the claimant be examined by a medical care provider of its own choosing. That provider, a psychiatrist, also diagnosed the claimant with PTSD and felt that he was being under medicated. As a result of this opinion with regard to the appropriate level of medication, the District Director’s Office appointed an independent medical examiner who, after reviewing the claimant’s injuries, felt that since the claimant did not experience a threat to himself and was never in danger of injury that PTSD was an inappropriate diagnosis. He further felt that the claimant showed significant evidence of malingering. Based upon this opinion, the employer terminated compensation, after which Mr. Jackson filed a claim under the LHWCA.
At the trial of the case, the employer asserted that the claimant could not recover for psychological injury unless he sustained a physical injury or was placed in immediate risk of harm. In so many words, the claimant did not meet the “zone of danger” test for compensability that was first enunciated in Consolidated Rail Corporation v. Gottshall, 114 S.Ct. 2396 (1994). After trial, the Administrative Law Judge rejected this test indicating that Longshore Act case law had established that a claimant can obtain benefits for a work-related psychological injury, and to carve out a negligence law-based exception would be inappropriate. The judge also rejected the employer’s assertion that the Department of Labor-appointed IME psychiatrist opinion should carry more weight than the opinions of medical care providers holding contrary opinions.
The employer appealed to the Benefit Review Board which affirmed the two findings of the Administrative Law Judge and a petition was filed with the Fourth Circuit seeking review. The Fourth Circuit affirmed the two courts below on both issues. The Court rejected the employer’s assertion that Mr. Jackson could not, under the LHWCA, recover for psychological injury unless he sustained a physical injury or was placed in immediate risk of physical harm. It considered that the employer was misapplying the holding of the Consolidated Rail case, which involved a claim that arose under the Federal Employer’s Liability Act (FELA) and addressed principles of negligence. It further explained that the LHWCA did not distinguish between psychological and physical injuries, and simply used the word injury when addressing compensability. The Court found that nowhere in the statute was there a requirement, as suggested by the employer, that psychological injuries be accompanied by actual or threatened physical harm. It felt that Congress could have easily written the statute to contain such a requirement, but did not. On review of other case law, the Court also found that actual or threatened physical harm had never been mandated as a prerequisite for coverage of a psychological injury.
In affirming that decisions of the Administrative Law Judge and BRB insofar as the weighing of an independent medical examiner’s opinion, the Court stated that the specific portion of the LHWCA, 907(e), did not address the weight to be applied to the opinion of an independent medical examiner appointed by the Department of Labor, and therefore, determined that the independent medical examiner’s opinion must be weighed along with the other medical opinions of record without added weight.
In Seaboard Spirit LTD, et al. v. Antwon Hyman, et al., No. 15-12953, an unpublished opinion issued by the Eleventh Circuit on December 5, 2016, the Court of Appeals reversed a District Court’s opinion that had expanded a vessel owner’s liability to a longshoreman that has traditionally existed under 33 USC § 905(b) to also include a separate cause of action under 33 U.S.C. § 933. This decision fosters the precept that when a vessel is involved with an injury with one covered by the Longshore and Harbor Workers’ Compensation Act, 33 USC § 901 et seq. (LHWCA) the injured plaintiff’s cause of action is solely governed by 33 USC § 905(b).
When injured in the course and scope of his employment a longshoreman is provided compensation benefits pursuant to the LHCWA from his employer. The liability of the employer is one that is set by statute without a determination of fault. Where the longshoreman’s injury is brought about due to the negligence related to the operation of a vessel, he can additionally sue the owner of the vessel pursuant to 33 USC § 905(b), whether the vessel is owned by his employer or another party. Furthermore, if a non-vessel owner/third party’s negligence has caused his injury, the longshoreman is provided a right to sue for damages under 33 U.S.C. § 933.
In the instant case, the longshoreman in question, Mr. Hyman, was killed while involved in unloading operations aboard the M/V SEABOARD SPIRIT in the Port of Miami on May 4, 2011. The M/V SEABOARD SPIRIT was a RO/RO vessel that allowed for containers on chassis to be rolled on and off the vessel in the loading operations. The M/V SEABOARD SPIRIT had been loaded with cargo containers on chassis in the Bahamas on May 3, 2011. Once the containers were aboard the vessel, the vessel crew proceeded to attach lashing chains to secure the cargo for its sea voyage. The securing of containers was a job that would normally be performed by stevedores/longshoremen.
During the unloading operation of the M/V SEABOARD SPIRIT in the Port of Miami, Mr. Hyman was killed while working for the unloading stevedore when a chassis shifted during unloading and caught Mr. Hyman in a pinch point between the container and the side of the vessel.
The owners of the M/V SEABOARD SPIRIT filed a petition under the Limitation of Liability Act in which the heirs of Mr. Hyman made a claim under § 905(b) in addition to asserting a claim under § 933. In the latter assertion it was alleged that because the M/V SEABOARD SPIRIT’s crew secured cargo in the Bahamas, the owner of the M/V SEABOARD SPIRIT, in addition to being an owner, also acted as and assumed the duties of an on-loading stevedore. In this setting, the District Court ultimately determined that the heirs of Mr. Hyman had stated a claim against the vessel owners separate and apart from their status as owners of a vessel and one that could be recognized outside of the limitation proceeding and under § 933 due to their status as a loading stevedore.
The § 905(b) action was tried in the limitation proceeding after which the District Court ruled in favor of the ship owner, but it additionally found that the plaintiffs could proceed in a separate action against the vessel owner as on-loading stevedore under § 933.
This was appealed to the Eleventh Circuit. In review of prior precedent, the Eleventh Circuit found no case law that would allow a vessel owner to be sued separately in a different negligence action other than that provided for in 33 U.S.C. § 905(b) for any fault it may have had as an on-loading stevedore. It did note that a number of cases have found that the ship owner who participated in stevedoring operations would be held to a higher standard of negligence than that provided under the Supreme Court case of Scindia Steam Navigation Co. v. De Los Santos, 451 U.S. 156 (1981). It observed that the plaintiffs did not argue that the District Court should be reversed for not applying the higher standard of care to their § 905(b) claims as it applied to the ships stevedoring operations, and therefore, they had abandoned that argument.
The Fifth Circuit issued an opinion on November 17, 2016, in Robert Deperrodil v. Bozovic Marine, Inc., (No. 16-30009). In a case involving the injury to a passenger aboard a crew boat in high seas, the District Court was called upon to determine whether under the collateral-source rule the plaintiff could recover $186,080.30, which was the amount billed for his medical care, rather than the amount that the insurer was eventually required to pay, $57,385.50, the balance having been written off. Generally the collateral-source rule bars a tortfeasor from reducing his liability by the amount the plaintiff recovers from independent sources. It is a substantive rule of law, as well as an evidentiary rule that disallows evidence of insurance or other collateral payments that may influence the fact finder.
The Fifth Circuit determined that there was no direct authority in the maritime tort context regarding the treatment of written off medical expenses for which liability existed under the Longshore and Harbor Workers’ Compensation Act (LHWCA) 33 USC 901 et. seq. It evaluated the law in its circuit and determined that Mississippi, Louisiana and Texas all had different approaches. The court then reviewed the Fifth Circuit decision in Manderson v. Chet Morrison Contractors, Inc., 666 F.3d 373, 381 (5th Cir. 2012), in which the question was whether the collateral-source rule allowed recovery of written off medical expenses when an employer paid the expenses as part of its maritime cure obligation. In that case, about which Offshore Winds reported at the time, the Court held that it was error to award the amount charged rather than the amount that was paid.
The Court, in the instant case, while feeling that Manderson was not binding as it involved maritime cure and not a maritime tort or LHWCA insurance, the court considered that this was the most applicable of the various approaches to write-offs. It also felt that the rationale in Manderson was very persuasive because maritime cure and LHWCA insurance create similar obligations for employers. In so doing, it determined that LHWCA medical-expense payments are collateral to a third-party tortfeasor only to the extent paid; in other words, under those circumstances, the plaintiff may not recover for expenses billed, but not paid.
The Office of Workers’ Compensation Programs, Department of Labor, posted proposed rules affecting section 906 of the Longshore and Harbor Workers’ Compensation Act 33 U.S.C. § 901 et seq., Federal Register, Volume 81, No. 166, August 26, 2016. The Department invited written comments on the proposed regulations from interested parties by October 25, 2016. The proposed change is designed to address how the provision in Section 906 related to “maximum” compensation is to be applied. These changes focus upon the interpretation of 906(c). For the purpose of this discussion, it should be understood that compensation benefits are capped at 200% of the national average weekly wage (906(b)(1)). Additionally, the national average weekly wage is recalculated every year pursuant to 906(b)(3). Historically an increase in this figure has always occurred. Section 906(c) provides that: determinations made of the national average weekly wage with respect to a period “shall apply to employees or survivors currently receiving compensation for permanent total benefits or death benefits during such period, as well as those newly-awarded compensation during such period.”
As noted in the proposed regulations, the terms “currently receiving compensation” and “newly-awarded compensation” have been the subject of certain litigation over the years. It appears that what the proposed regulations do is to place into a regulation a Benefit Review Board (BRB) ruling that has never been tested in the U.S. Circuit Courts of Appeals. The BRB ruling in Marko v. Morris Boney Company, 23 BRBS 353 (1990), held that 33 U.S.C. § 906(c) required that a claimant who is totally and permanently disabled is to be provided an increase in the maximum allowable benefit annually rather than being held to a fixed maximum that would be established by the date of his disability. So, if an employee’s initial benefit, due to his high average weekly wage (AWW), is limited by the cap of the maximum benefit provided in 906(b)(1), he will not receive a full two-thirds of his AWW as a weekly benefit. If later annual increases in the maximum allowable benefit reach a point where they exceed two-thirds of the claimant’s AWW, he will not then be so limited and will receive his full benefits. If the maximum were fixed, as a number of employers have asserted, this would not occur.
Should an employer be concerned about this reformulated regulation, depends upon whether its employees fall into a category where their compensation rate would be limited by the maximum allowed under Section 906(b)(1). For present purposes, the maximum rate that will come into effect on October 1st, 2016, is $1,436.48. To max out at this rate, an individual would need to have an AWW of $2,154.72 or an annual income of $112,045.44. If employees receive wages in or around this level, then the potential effect of the application of this regulation may be of concern to employers.
The proposed regulations also establish a standard based upon the Ninth Circuit’s decision in Roberts v. Director, OWCP, 625 F.3d 1204, 1208-09 (9th Cir. 2010), aff’d sub nom Roberts v. Sea-Land Services, Inc., 132 S.Ct. 1350 (2012), and the Eleventh Circuit decision in Boroski v. Dyncorp. Int’l, 662 F.3d 1197 (11th Cir. 2011). Both of these courts interpreted Section 906(c)’s “currently receiving compensation” language for permanent and total disability or death benefits, and they have allowed a step-up in the maximum where the claimant’s disability category changed from temporary total disability (TTD) to permanent total disability (PTD). Rather than limit the employee to the maximum at the time of injury, the employee’s rate was subject to the maximum as of the date that his disability was classed as permanent and total. In one of these cases, the claimant, originally injured in 2012, went from TTD to PTD in 2005, and at that time his rate was found to be controlled by the maximum in the 2005 fiscal year. Later, when a wage-earning capacity was established, thereby changing the rate to one of permanent partial disability, the 2002 maximum rate for the date of injury was found to be applicable.
James Baker, Jr. v. Director, OWCP; Gulf Island Marine Fabricators, LLC, U.S. Fifth Circuit No. 15-60634 (August 19, 2016). In this case the Court of Appeals affirmed the Administrative Law Judge’s (ALJ) determination that Mr. Baker, an employee of Gulf Island Marine Fabricators, LLC (Gulf Island) did not qualify for benefits under the Longshore & Harbor Workers Compensation Act (LHWCA), 33 U.S.C. § 901 et seq., either directly or by application of the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. § 1331 et seq.
Mr. Baker filed a claim with the U.S. Department of Labor alleging an injury in the course and scope of his employment with Gulf Island for which he sought benefits under the LHWCA. Gulf Island was in the business of constructing and repairing vessels, and specialized in maritime oil and gas structures. One of Gulf Island’s projects was to fabricate the topside living quarters for the tension-legged platform, Big Foot. Mr. Baker had been hired by Gulf Island to work as a carpenter in the fabrication of the living quarters. His entire employment was spent on this project. His work was within 100 yards of the Houma Navigation Canal to which the employer’s property abutted, but he always worked on dry land. Mr. Baker never went offshore to participate in work duties on the Outer Continental Shelf. The parties had stipulated that the “situs” prong of the jurisdictional test under the LHWCA was met as Mr. Baker performed his duties in an area adjacent to navigable water, but the employer disputed whether under the “status” prong of the jurisdictional test Mr. Baker was involved in maritime employment.
In applying the recent decisions of the U.S. Supreme Court in Stewart v. Dutra Construction Company, 543 U.S. 481 (2005) and Lozman v. City of Riviera Beach, Fla., 133 S.Ct. 735 (2013), the ALJ determined that the tension-legged platform, Big Foot, was not a “vessel” in the context of the LHWCA as that term has been defined by decisional law, and Mr. Baker was therefore not involved in maritime employment.
Mr. Baker also sought coverage under the Act by application of the OCSLA, asserting that the Supreme Court’s decision in Pacific Operators Offshore, LLP v. Valladolid, 132 S.Ct. 680 (2012), extended OCSLA coverage to one who was injured on land. As noted by the ALJ, the Supreme Court decision applying OCSLA extra-territorially required the injured employee to establish a significant causal link between the injury that he suffered and his employer’s onsite OCS operations conducted for the purpose of extracting natural resources from the OCS. In this instance, the ALJ found that Mr. Baker never set foot on the OCS and his employer had no role in transporting the Big Foot to the OCS, installing it there or operating it, ergo OCSLA did not provide him with an avenue to LHWCA coverage.
The ALJ’s decision was affirmed by the Benefit Review Board and Mr. Baker appealed to the U.S. Fifth Circuit Court of Appeals. The Fifth Circuit’s decision likewise analyzed the Dutra and Lozman decisions of the Supreme Court and concluded that the Big Foot was not a “vessel” under the LHWCA. It felt that this comported with its cited precedent denying vessel status to structures that were not designed or engaged in maritime transportation noting that mere flotation on water does not constitute a structure a vessel.
The Fifth Circuit also addressed the Pacific Operators holding indicating that Mr. Baker’s injury occurred on dry land while he was building the living and dining quarters for the Big Foot, and therefore, he did not satisfy the fact-specific test enunciated by the Supreme Court. The Court reasoned that Mr. Baker’s job of constructing living and dining quarters was too attenuated from Big Foot’s future purpose of extracting natural resources from the OCS for the OCSLA to cover his injury. Mr. Baker’s employment was located solely on land, whereas the employee in Valladolid spent 98% of his time on an offshore drilling platform. Furthermore, Mr. Baker’s particular job did not require him to travel to the OCS at all, making his work geographically distant from the OCS. Likewise, his employer had no role in moving the Big Foot to and installing it on the OCS. Based upon these specific facts of Mr. Baker’s employment, the Fifth Circuit concluded that the ALJ appropriately denied Mr. Baker’s claim.