AEU Longshore Blog ISSUE: Questions and Answers

There’s one thing (at least) that you can say about the Longshore and Harbor Workers’ Compensation Act.  It’s never dull.

Questions come up everyday as brokers and underwriters, claims specialists and even attorneys, seek to resolve uncertainties, particularly in the areas of coverage and jurisdiction.

I’ve selected some of the recent inquiries that I’ve seen, and I’ve offered my brief, initial thoughts on these questions.  They have been selected because variations of these questions arise regularly.

Question Number 1

Are foreign workers coming temporarily to the United States to do work that meets status and situs covered under the Longshore Act?

The answer, of course, is yes.  And the fact that the employer is a foreign corporation does not change this.  Any employer, foreign or domestic, can be an “employer” under the Longshore Act.  For purposes of situs and status the nationality of the employer or employee is not relevant, nor is the duration of the work assignment or contract.

Question Number 2

Are river pilots covered under the Longshore Act?

My answer here is an easy one, and it is the same as the answer to many other coverage questions that arise under the Act.  The answer is, “it depends”.  If these pilots can establish seaman status then they would be covered under the Jones Act (tort recovery based on negligence) and the General Maritime Law (warranty of seaworthiness and maintenance and cure, transportation and wages).  The Longshore Act expressly excludes seamen, or members of the crew of any vessel, in Section 902(3)(G).  If the pilots cannot meet seaman status under the Chandris v. Latsis test, because, for example, they do not satisfy the duration requirement (30% rule) in relation to any vessel or fleet of vessels under common control or ownership, then they would most likely be covered by the Longshore Act pursuant to Director, Office of Workers’ Compensation Programs, U.S. Department of Labor v. Perini, 459 U.S. 297 (1983), since they are working over the navigable waters.

Question Number 3

Are construction workers coming onto a waterfront terminal property to repair buildings damaged by a storm covered by the Longshore Act?

Under the principle that it is very difficult to ask any coverage question under the Longshore Act and get an unqualified “yes” or “no” answer, my answer here is a conditional yes.  There are several considerations that apply.  We know that not only are the traditional maritime workers who load and unload cargo, and who build or repair ships, covered by the Act, but workers who build, repair, or maintain the buildings and equipment used in such traditional maritime activities are covered.  Construction worker coverage cases often involve two questions:  does the work being done involve an inherently maritime structure, and at the time of the work is there on going maritime activity taking place?  Two “yes” answers will get you coverage, but one or two “no” answers complicates the issue.

NOTE:  You can tell if you are dealing with a true Longshore Act expert if they are unable to answer even the most seemingly simple question with a straightforward yes or no.

Question Number 4

Are workers such as union representatives visiting and touring a maritime job site covered by the Longshore Act?

The best I can do with this one is, probably not but there’s a catch.  Even though these workers are on a covered situs, they also must meet maritime status under the Act.  In other words, their jobs must be integral or essential to the ongoing maritime activity.  To put it another way, would non-performance of their job interrupt or interfere with the maritime activity?  Under this test, these workers probably do not meet status.  What’s the catch?  Perini again, which holds that if they are over the water on the job they do not have to meet status.  Situs over the water confers status.  So there may be some limited Longshore Act exposure there.

NOTE:  An insurance broker may ask, “Am I covered under the Longshore Act if I meet with my insured at their terminal or shipyard”?  It’s the same answer.  Probably not, but watch out for Perini.

NOTE:  I don’t think that the so-called “vendor” exclusion in Section 902(3)(D) would apply to these workers, since they are not employed by either a vendor, supplier, or transporter.

Question Number 5

Is work on domestic U.S. military bases covered under the Defense Base Act (DBA)?

Finally, an easy one, but again there’s a catch.  The DBA only applies outside the continental United States, which for the DBA includes Alaska and Hawaii.  The Act also applies in all U.S. Territories (or small “t” territories for that matter).  The exception is that the DBA does not apply on Guam under the terms of a U.S. Department of Labor waiver.

What’s the catch?  There have been instances (well, at least one that I know of), where the U.S. Government contract, to be performed outside the continental U.S.,  involved the reporting and brief training of employees stateside before they left to go overseas.  It seems that the DBA may apply in this narrow instance.  So, there goes our unqualified answer.

So that’s the first five.  I’ve got a lot more examples of recurring questions, and I’ll list more in the future.

 

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John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers’ Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.

AEU Longshore Blog ISSUE: Landmark Cases Number 11- Gizoni

Case number eleven on my list of landmark U.S. Supreme Court Longshore cases is a Jones Act case, but with significant consequences for the adjudication of claims under the Longshore Act.

The employer in the case of Southwest Marine, Inc. v. Byron Gizoni, 502 U.S. 81 (1991), operated a ship repair facility.  It owned several floating platforms and barges which it moved around by tugboats.  The tugs positioned the platforms alongside vessels under repair.  The platforms were used to move equipment, materials, supplies, and vessel components around the shipyard.  Once in place, the platforms supported the ship repair personnel.

The plaintiff in this case was a rigging foreman who worked on and rode the floating platforms as they were towed into place.  He occasionally served as lookout and gave maneuvering signals to the tugboat operators and secured lines from the platforms to the vessels under repair.

The plaintiff received voluntary payment of workers’ compensation benefits under the Longshore Act from the employer’s workers’ compensation insurance carrier, but he filed a seaman’s lawsuit against his employer seeking tort damages under the Jones Act.

Many questions were raised in this case, and its pivotal holdings have complicated the overlapping coverage and jurisdictional issues between the (mutually exclusive) Longshore and Harbor Workers’ Compensation Act and the Jones Act.

Among the key questions:

  1. May a maritime worker whose occupation is one of those enumerated in the Longshore Act (ship repair) nonetheless be a seaman under the Jones Act?
  2. Does the exclusivity provision of section 905(a) of the Longshore Act apply to a “ship repairman” who may also be a Jones Act seaman?
  3. Does the voluntary payment and receipt of Longshore Act benefits preclude a subsequent Jones Act lawsuit?
  4. Is it essential to the administration of the Longshore Act by the U.S. Department of Labor that its resolution of the issue of coverage should preempt a Jones Act lawsuit??
  5. Does the doctrine of equitable estoppel apply to the situation whereby a worker must elect his remedy between the Longshore Act and the Jones Act?
  6. Must a maritime worker aid in the navigation of a vessel in order to qualify as a seaman?
  7. Were the floating repair platforms in this case “vessels” for purposes of the Jones Act?

In the Jones Act lawsuit, the federal district court granted summary judgment to the employer based on the facts that the floating platforms were not vessels and that the claimant was a ship repairman, not a seaman, and was precluded from suing his employer by the exclusivity provision in section 5(a) of the Longshore Act (33 U.S.C. 905(a)).

The federal Ninth Circuit Court of Appeals reversed the district court’s grant of summary judgment on the issue of seaman status, finding that questions of fact existed as to seaman status and whether the platforms were vessels.  The Ninth Circuit also reversed the district court’s ruling that the claimant was precluded from bringing suit by the Longshore Act’s exclusivity provision.

The U.S. Supreme Court granted review.  The federal Fifth Circuit had held to the contrary on several of these issues in Pizzitolo v. Electro-Coal Transfer Corp., 812 F.2d 977 (1987) so a circuit conflict existed.  The Supreme Court affirmed the Ninth Circuit’s rulings, and in the process established several important principles.

  1. Does exclusivity protect the employer from suit?

Section 5(a) states,

“Exclusiveness of liability

The liability of an employer … shall be exclusive and in place of all other liability of such employer to the employee … and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death ….”

Of course, section 5(a) provides the employer with immunity from lawsuits by employees covered by the Longshore Act.  But if the “employee” could arguably be a Jones Act seaman, excluded from Longshore Act coverage by section 2(3)(G), then the exclusivity provision would not apply to bar his seaman’s suit.

  1. What about the voluntary payment of benefits under the Longshore Act? That was an easy one.  The Supreme Court stated, “It is universally accepted that an employee who receives voluntary payments under the Longshore Act without a formal award is not barred from subsequently seeking relief under the Jones Act.
  2. Is it essential to the administration of the Longshore Act that its resolution of the issue of coverage should preempt a Jones Act lawsuit? No.  Resolution of the question of coverage is not left in the first instance to the U.S. Department of Labor in its administration of the Longshore Act.  The injured worker decides which remedy to pursue (and he may pursue both simultaneously).
  3. Does the doctrine of equitable estoppel apply to the situation whereby a worker must elect his remedy between the Jones Act and the Longshore Act? No.  The doctrine of equitable estoppel does not apply to prevent an injured worker from taking inconsistent positions in his pursuit of mutually exclusive remedies.  Because of the credit to the employer provided in section 3(e) of the Longshore Act, the critical element of detrimental reliance is not present. Congress did not intend to require an election of remedies in the first instance.
  4. Must a maritime worker aid in the navigation of a vessel in order to qualify as a seaman? No.  This was no longer part of the test for seaman status at the time the Gizoni case reached the Supreme Court.  The Court states, “Our decision in Wilander (McDermott v. Wilander, 498 U.S. 337 (1991)), jettisoned any lingering notion that a maritime worker need aid in the navigation of a vessel in order to qualify as a seaman under the Jones Act.  A maritime worker need only be doing a ship’s work, not aid in its navigation, to qualify as a seaman.”
  5. Were the floating repair platforms in this case “vessels” for purposes of the Jones Act? Questions of fact existed on this issue so that summary judgment was not appropriate (remember that the federal district court had granted summary judgment to the employer).
  6. So we are left with the primary, basic question. May a maritime worker whose occupation is one of those enumerated in the Longshore Act nonetheless be a seaman under the Jones Act?  There’s obviously been a lot of water under the bridge on this issue since the Gizoni decision in 1991, and the answer is obviously “yes”.  The Ninth Circuit had held that a “ship repairman” can still be a “seaman”, and the Supreme Court affirmed.

The Gizoni decision in a nutshell:  Even though a worker’s occupation is enumerated in the Longshore Act the worker can not be precluded from entitlement to Jones Act benefits if he can successfully pass the test for seaman status.  The injured worker does not have to choose between two mutually exclusive remedies.  He is not precluded by the doctrines of judicial estoppel or collateral estoppel from pursuing both remedies simultaneously.

NOTE:  In Gizoni the issue of coverage had never been litigated to a conclusion with regard to the Longshore claim.  There have been cases where an adjudication of status under the Longshore Act has precluded a subsequent Jones Act claim.  We may not have seen the last word on the possible application of estoppel doctrines in this context.

NOTE:  While the worker may pursue both remedies, in the final analysis when the smoke clears (or if you prefer, at the end of the day) he will receive only one award, either under the Longshore Act or the Jones Act.  If it’s under the Jones Act as a seaman then the Longshore employer will receive the section 3(e) credit.

 

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John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers’ Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.

ISSUE: Section 33

Section 33(a) (33 U.S.C. 933(a)) of the Longshore Act provides that an injured worker may proceed in tort against a third party (not his employer) if he believes that the third party may be liable to him for damages for negligently causing his work related injury.

Section 33(f) gives the employer the right to offset the net recovery by the employee in the third party lawsuit against the employer’s compensation liability.

Section 33(g) protects the employer’s offset interests. The injured worker must either, (1) obtain the prior written approval of a settlement from both the employer and the insurance carrier if the settlement is for an amount less than the employer’s compensation liability, or (2) give written notice to the employer of any settlement or judgment in the third party lawsuit in the injured workers’ favor regardless of the amount of the recovery.

NOTE: The section 33(g)(2) notice requirement is an affirmative duty that the claimant must satisfy.  The section 33(g)(2) requirement is not met if the employer learns about the settlement or judgment some other way.

NOTE: It may appear to someone taking a close look at section 33(g)(2) and the U.S. Department of Labor’s implementing regulations at 20 C.F.R. 702.281 that the regulations require more from the claimant than does the statute.  For example, the regulations attach a notice obligation on the part of the claimant not only in the event of a settlement or judgment, but also upon initiation or dismissal of third party proceedings.  If this confuses you then you are responding appropriately.  The good news is that since the regulations provide no penalty for the claimant’s failure to give notice of initiation or dismissal of third party proceedings we really only have to be concerned with the notice requirement as set out in the statute in section 33(g)(2).

If the injured worker fails to meet the requirements of section 33(g)(1) or 33(g)(2) then his entitlement to indemnity and medical benefits under the Longshore Act is terminated.

There is an important question that the language of the statute does not answer.

Do you use the gross amount of a third party settlement or the net amount to determine if the injured worker has met his prior written approval obligation under section 33(g)(1)? There can be a big difference in the amounts when you consider the amounts of attorney’s fees and expenses that combine with the “net” amount to become the “gross” amount..

Section 33(g) does not specify “net” or “gross”.

Note: the offset provision in section 33(f) does specify that the “net” amount of the third party settlement is used to determine the amount of the employer’s credit or lien. But what about section 33(g)(1)?

NOTE: medical benefits are not included in the comparison between the amount of compensation entitlement and the amount of the 3d party settlement or judgment.

A recent case from the U.S. Department of Labor’s Benefits Review Board explains the current interpretation of section 33(g)(1).

In this case the injured worker settled a third party lawsuit for the gross amount of $650,000 without his employer/carrier’s written authorization. The net amount of the settlement to the injured worker was $375,000.  The proposed valuation of the injured worker’s lifetime compensation entitlement was estimated at $524,960, less than the gross amount of the settlement but more than the net amount.  The employer/carrier had been aware of the lawsuit and the negotiations but did not give written approval of the settlement as required.

So if you use the gross amount of the settlement ($650,000) then the injured worker did not need his employer/carrier’s written approval since the gross amount was for more than the worker’s estimated compensation entitlement ($524,960). But if you use the net amount of the settlement ($375,000) then the worker’s Longshore claim would be barred under section 33(g)(1) in the absence of written approval.

The Department of Labor’s Administrative Law Judge (ALJ) used the net figure and barred the injured worker’s Longshore Act claim under section 33(g)(1).

The Benefits Review Board (BRB) reversed the ALJ on this issue. The BRB held that the gross amount of the third party settlement is the relevant figure for purposes of the section 33(g)(1) comparison.   Since the gross amount of the settlement ($650,000) was for more than the worker’s compensation entitlement ($524,960), his claim was not barred by section 33(g)(1).

It is understandable that the employer in this case thought that it had a good argument for using the net amount of the settlement. In the landmark case of Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992) the U.S. Supreme Court, in the process of deciding the proper interpretation of the phrase “person entitled to compensation” in section 33(g)(1) seemed to assume that the “net” figure was the relevant number in determining whether the employee settled for an amount less than his compensation entitlement.

While the Supreme Court assumed that the net amount of the third party settlement was the relevant figure, this was not an issue in the case and thus no precedent was created.

NOTE: The sole issue before the Supreme Court in Cowart was whether the section 33(g)(1) forfeiture provision applies when the employer is neither paying compensation or subject to an Order to pay.  The Court found that an employee becomes a “person entitled to compensation” and thus subject to the section 33(g) requirements at the moment his right to recovery vests, not when, or if, the employer admits liability.   Refer to the AEU’s blog entry dated 10/29/2015 for a discussion of the Cowart decision.

So it’s a straightforward interpretation of an important provision that can cost an injured worker his compensation entitlement. Use the net amount of the third party settlement to compare to the worker’s compensation entitlement under section 33(g)(1) to determine whether the employer’s and carrier’s prior written approval is required.

I’ll discuss whether this claimant had a problem with the section 33(g)(2) requirement of notice to the employer of any judgment or settlement in a third party action regardless of amount in a follow up discussion.

 

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John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog

 

ISSUE: Landmark Case Number 10

The case of P.C. Pfeiffer Co. v. Ford, 444 U.S. 69 (1979), is another early “status” case.  It is “early” (dates of injury April 12, 1973 and May 2, 1973) in the sense that at that time the courts were struggling to interpret the brand new “status” coverage provisions that had been created in the 1972 Amendments to the Longshore Act.  Remember that prior to the 1972 Amendments the test for coverage was based only on the location of the injury.  Anyone injured in the course of employment over the navigable waters of the United States or on a dry dock was covered.  The Amendments added coverage in specified landside areas for employees engaged in “maritime employment”.

The key issue in these early cases was the interpretation of what constituted maritime employment.

Ford is a “status” case involving two workers who were injured while performing their duties landward of the “point of rest” alongside the vessel on the dock. The U.S. Department of Labor’s (DOL) Administrative Law Judges (ALJ) had originally denied the workers’ claims by application of the “point of rest” doctrine.

NOTE: The now discredited so-called “point of rest” doctrine argued that maritime employment includes only the portion of the unloading process that takes place before the longshoremen place cargo from the vessel onto the dock and the portion of the loading process that takes place to the seaside of the last point of rest on the dock.  In other words, loading and unloading only occurs between the vessel and the dock.

The DOL’s Benefits Review Board reversed the ALJ’s denials and found that the workers were covered by the Longshore Act. The federal Court of Appeals for the Second Circuit affirmed.  Then on remand from the Supreme Court for reconsideration in light of its intervening Caputo decision the Court of Appeals reaffirmed its earlier opinion awarding benefits.  So what were these workers doing that complicated the coverage question?

Mr. Ford, a warehouseman, was injured while fastening military vehicles on to railroad flat cars. The vehicles had been delivered to port by ship, put in storage, and then placed on the rail cars by longshoremen on the day prior to the injury.

The consolidated case involved Mr. Bryant, who was injured while unloading a bale of cotton from a dray wagon into a pier warehouse. Cotton arriving at the port from inland shippers entered cotton compress warehouses, then went by dray wagon to pier storage warehouses, and subsequently was moved by longshoremen from the warehouse onto vessels for shipping.

Mr. Ford had been working out of the Warehousemen’s local union on the day of the accident. Union rules limited the types of jobs that warehousemen could perform.  They could not move cargo directly from a vessel either to a point of rest on the dock or, in this case, on to a railcar.  These movements were performed only by longshoremen.

Neither claimant was directly involved in handling cargo between the dock and the vessel. Did their duties constitute “maritime employment”?

NOTE: Remember, these were early cases.  Today these activities would be considered clear instances of maritime employment.  The issue was not clear back when these cases were being adjudicated.

Held: Ford and Bryant were engaged in maritime employment at the time of their injuries because they were engaged in intermediate steps of moving cargo between ship and land transportation.

The principle is that persons moving cargo directly from ship to land transportation are engaged in maritime employment, and a worker responsible for some portion of that activity is as much an integral part of the process of loading or unloading a ship as a person who participates in the entire process.

NOTE: The truck driver carrying the cotton away from or to the terminal and the locomotive engineer transporting the military vehicles away from the terminal are not engaged in maritime employment even though they were present on a covered situs.  They are engaged in land transportation.  Ford’s job of fastening the vehicles to the railroad flatcars was the last step in transferring the cargo from sea to land transportation.

The Longshore Act is going to follow cargo handling from the vessel to the warehouse, from warehouse to warehouse, from terminal to terminal, until it is placed on to land transportation. In the other direction, the Longshore Act will follow cargo from where it is removed from land transportation until it ends up on a vessel.  All intermediate steps are covered.

 

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John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.