ISSUE: 2014 Part Two

Jack_crop 300dpiI mentioned last time that calendar year 2014 was relatively quiet for Longshore Act jurisprudence at the federal appellate level.  There were no decisions at the U.S. Supreme Court. There were, however, a few interesting (to me) Longshore and Jones Act cases at the Courts of Appeal.

Steven Lincoln v. Director, Office of Workers’ Compensation Programs, U.S. Department of Labor; Ceres Marine Terminals, Inc., 4th Cir., 3/12/14

This case involved two perennially contentious issues: attorney fees and hearing loss.

The Benefits Review Board (the Board) had found that the employer was not liable for the claimant’s attorney fee, as the requirements for fee shifting under section 28(a) of the Act (33 U.S.C. 928(a)) had not been met.  The Fourth Circuit Court of Appeals denied the claimant’s petition for review of the Board’s Order.

FACTS:  Timing is important under section 28(a).  Based on a 4/11/11 audiogram, the claimant filed a claim for hearing loss on 5/24/11, which the employer controverted on 5/26/11.  The employer received written notice of the claim from the U.S. Department of Labor (DOL) on 6/14/11, and on 7/7/11 the employer voluntarily paid $1,256.84 in compensation, which was the equivalent of one week’s compensation at the maximum weekly rate.

In controverting, the employer acknowledged that there was workplace noise induced hearing loss, but that additional information was needed before it could determine the correct compensation payment.  (The case was eventually settled on 10/4/11 for a 10% binaural hearing loss.)

The claimant’s attorney filed a fee petition on the basis of section 28(a), which, under certain circumstances, shifts the obligation to pay an attorney fee from the successful claimant to the employer.

Section 28(a) states, “If the employer or carrier declines to pay any compensation on or before the thirtieth day after receiving written notice of a claim for compensation having been filed from the deputy commissioner on the ground that there is no liability for compensation within the provisions of this chapter and the person seeking benefits shall thereafter have utilized the services of an attorney at law in the successful prosecution of his claim …” then the employer may be liable for the claimant’s attorney fee.

In this case, the DOL’s District Director had ruled that the employer was not liable for the claimant’s attorney fee.

The claimant appealed the District Director’s denial to the Board, arguing that the payment of only one week of compensation does not satisfy section 28(a)’s requirement for the payment of “any compensation” and further arguing that “any compensation” means all compensation due.

The Board affirmed the denial of an employer paid attorney fee.  It held that the term “any compensation” is unambiguous and plainly encompasses an employer’s partial payment.  The Board noted that the employer’s refusal to pay compensation must be absolute in order for it to face possible fee liability under section 28(a).  In this case, the employer had controverted, but it had admitted liability and paid one week’s compensation.

The Board recognized that the medical evidence often cannot be ascertained with any degree of certainty within 30 days of receipt of the claim.  Thus, fee shifting under section 28(a) may not occur if the employer agrees that some amount is due and tenders “any compensation”.

Note:  The employer in this case did pay some compensation, raising the issue of fee shifting under section 28(b), but this section did not apply in this case.  It only applies when the employer initially pays voluntary compensation and a subsequent dispute arises about the total amount of compensation due, with the further requirement that an informal conference be held, that the employer refuse to accept the written conference recommendation, and that the employee procures the services of an attorney to obtain a greater award than what the employer was willing to pay following the written recommendation.  There was no informal conference in this case.

Two points:

The payment of one week’s compensation, in the opinion of the Fourth Circuit, was directly tied to the alleged injury and was not merely an obvious attempt to avoid fee shifting under section 28(a).

Controversion does not trigger fee shifting under section 28(a).  The only trigger is the refusal to pay “any compensation” within 30 days of receiving the claim from DOL.

The employer in this case found a way to avoid attorney fee liability under section 28(a).

Larry Naquin, Sr. v. Elevating Boats, LLC, 5th Cir., 3/10/14

This case involves another frequently litigated issue, the question of whether an injured worker qualifies for the seamen’s remedies under the Jones Act and General Maritime Law as a member of a crew of a vessel, or whether he is a non-seaman covered by workers’ compensation.

The injured worker in this case had the job title of vessel repair supervisor.  Although we know that job titles do not resolve a coverage issue, in this case the title accurately reflected the duties.  The worker supervised the maintenance and repair of employer’s mostly docked and moored fleet of lift boats.  He spent about 70% of his work time on board the vessels, although as mentioned, the vessels were almost always docked or moored in a shipyard canal.

His duties consisted of inspecting, cleaning, painting, replacing defective or damaged parts, performing engine repairs, going on test runs, and operating the vessels’ marine cranes and jack up legs.  The remaining 30% of his work time was spent in the shipyard’s fabrication shop or operating its land based crane.  He was injured while operating the land based crane.

The jury at trial in federal district court found that the worker met seaman status, and this finding was affirmed by the Fifth Circuit Court of Appeals.

NOTE:  The appellate court pointed out that the standard of review for a jury’s factual findings is whether there is a reasonable evidentiary basis for the verdict, reviewing the evidence in the light most favorable to the verdict, reversing “only when there is a complete absence of probative facts to support the conclusion reached ….”

This decision undeniably represents a broad interpretation of the phrase, “master or member of a crew of any vessel”.   Although the original intent of the General Maritime Law and even the Jones Act in 1920 was to protect seagoing sailors from the dangers inherent in their exposure to the perils of the sea and the consequences of being stranded sick or injured in foreign ports, I think that we can now conclude that exposure to “perils of the sea” in the conventional sense is no longer a material consideration if Naquin becomes the law.

According to the Supreme Court’s two part test for seaman status (Chandris v. Latsis, 1995) a seaman must:

  1. Contribute to the function of the vessel or to the accomplishment of its mission, and
  2. Have an employment connection to a vessel in navigation (or to an identifiable group of such vessels) that is substantial in terms of both duration and nature.

For the “duration” part of the second prong of the test, we have the 30% rule.  The “substantial nature” part of the employment connection is a problem.  It is self-evidently difficult to quantify.

So we have a ship repair and maintenance employee of a shipyard who is a “Jones Act” seaman.

Perils of the Sea?  What “perils”?  The Naquin court, perhaps somewhat impatiently, points out, “Courts have consistently rejected the categorical assertion that workers who spend their time aboard vessels near shore do not face maritime perils.”  Apparently this applies also to moored vessels in canals.

“Ship repair” is an enumerated occupation in the Longshore Act as an example of a land based maritime employee?  No help.  Even an employee in one of the Longshore Act’s enumerated occupations can qualify as a Jones Act seaman (Southwest Marine, Inc. v. Gizoni).

Injured on land, operating a land based crane?  Activity at the moment of injury is irrelevant.  The Jones Act seaman test is status based, and it does not focus on the employee’s activity at the time of the injury.

Under the Chandris substantial nature test, ship repair is doing the ship’s work, supplying the necessary employment connection and conferring seaman status.

It remains to be seen whether this decision will have persuasive authority going forward, even in the Fifth Circuit, or whether it will simply stand as an “outlier” as the courts navigate around in the “uncertainty zone” between the Longshore Act and the Jones Act.

It is worth noting that there was a dissent in this case on the issue of seaman status.  In the view of the dissenting judge, Mr. Naquin did not satisfy either the duration or nature components of the second prong of the Chandris test.  Simply put, “… land-based employees like Naquin are not seamen.”

NOTE:  Although the status issue was affirmed, this case was remanded because it was not clear to the appellate court to what extent the lower court’s damage award was “tainted” by “non-compensable considerations”.  Emotional damages resulting purely from another person’s injury and not a fear of injury to one’s self are not compensable under the Jones Act.  In this case, the incident that resulted in the claimant’s injury also resulted in the death of the claimant’s cousin’s husband.  Damages to the claimant as a result of this aspect of the event are not compensable.

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 and Financial Management, and the 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.

 

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