AEU Longshore Blog ISSUE: Questions- Extensions

This is the last (for now) of a group of posts dealing with recurring questions regarding the Longshore Act.  Following is a discussion of three issues, one for each of the Act’s three extensions.

Defense Base Act (42 U.S.C. 1651 et seq.)

I most recently discussed the Defense Base Act (DBA) on July 14, 2015.  You are encouraged to refer back to that entry, especially since it includes a discussion of the U.S. Department of Labor’s DBA waiver process.

The question that comes up with regularity is whether or not the DBA only covers U.S. citizens.   THE DBA DOES NOT ONLY COVER U.S. CITIZENS.  The DBA covers all employees, including third country nationals and host country nationals, who meet the statutory coverage requirements.

The DBA provides:

“Section 1(a) Places of employment.

Except as herein modified, the provisions of the Longshore and Harbor Workers’ Compensation Act, as amended, shall apply in respect to the injury or death of any employee engaged in any employment –

  • At any military, air, or naval base acquired after January 1, 1940, by the United States from any foreign government; or
  • Upon any lands occupied or used by the United States for military or naval purposes in any Territory or possession outside the continental United States (including the United States Naval Operating Base, Guantanamo Bay, Cuba; and the Canal Zone; or
  • Upon any public work in any Territory or possession outside the continental United States … if such employee is engaged in employment at such place under the contract of a contractor (or any subcontractor or subordinate subcontractor with respect to the contract of such contractor) with the United States; …
  • Under a contract entered into with the United States or any executive department, independent establishment, or agency thereof (including any corporate instrumentality of the United States), or any subcontract, or subordinate contract with respect to such contract, where such contract is to be performed outside the continental United States and at places not within the areas described in subparagraphs (1), (2), and (3) of this subdivision, for the purpose of engaging in public work, and every such contract shall contain provisions requiring that the contractor (and subcontractor or subordinate contractor with respect to such contract) (1) shall, before commencing performance of such contract, provide for securing to or on behalf of employees engaged in such public work under such contract the payment of compensation and other benefits under the provisions of this Act, and (2) shall maintain in full force and effect during the term of such contract, subcontract, or subordinate contract, or while employees are engaged in work performed thereunder, the said security for the payment of such compensation and benefits …;
  • Under a contract approved and financed by the United States or any executive department … where such contract is to be performed outside the continental United States, under the Mutual Security Act of 1954 …;
  • Outside the continental United States by an American employer providing welfare or similar services for the benefit of the Armed Forces pursuant to appropriate authorization by the Secretary of Defense;”

That is the entire coverage provision.  You will notice that “employees” are covered, without reference to citizenship, nationality, or resident status.

NOTE:  Under paragraph (4), the provision “for the purpose of engaging in public work” is broadly interpreted.  If you have any employees traveling outside the continental U.S. (the “continental U.S.”  includes Alaska and Hawaii for the DBA) under a U.S. government contract you should be thinking DBA.

NOTE:  DBA coverage is separate from USL&H coverage, requiring a separate endorsement.

So, this has been a long way of saying that the DBA does not only cover U.S. citizens.

Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.)

I most recently discussed the Outer Continental Shelf Lands Act (OCSLA) on February 29, 2016.  The occasion was a BRB decision interpreting the Supreme Court’s OCSLA coverage test from the case of Pacific Operators Offshore, LLP v. Valladolid, 132 S.Ct. 680 (2012).

NOTE:  In Valladolid the Supreme Court resolved a conflict among three federal Circuit Courts of Appeals and held that to be covered by OCSLA the injury does not have to occur on the outer continental shelf (OCS) of the U.S.  The Court adopted a test that requires a substantial nexus, or significant causal link between the injury and the employer’s on OCS oil and gas operations.  The Court recognized that this test is fact specific to each case.

We’ve only had a few cases so far applying this test, and we’ve just had another one, as the BRB is sorting out somewhat inconsistent results from the administrative law judges (ALJ).

In Boudreaux v. Owensby & Kritikos, Inc., 49 BRBS 83 (2015), the BRB affirmed the ALJs finding of OCSLA coverage for an employee injured in a car accident while on his way to a pick up point from which he would be transported to OCS platforms.  His job was to perform ultrasonic testing on the platforms.  The ALJ, as affirmed by the BRB, found that this employee satisfied the substantial nexus test.

The test was not whether at the time of injury the claimant was engaged in activity that met the substantial nexus test.  In this case he was not.  It was a car accident.  The test is whether his job duties significantly contribute to his employer’s on OCS operations and whether the accident occurs in the course and scope of his employment.

Baker v. Gulf Island Marine Fabricators, LLC, 49 BRBS 45 (2015), involved an injured worker who spent 100% of his time working on land building modular living quarters, some of which would eventually be installed on an offshore tension leg (oil) platform.  In this case, the BRB affirmed a coverage denial by the ALJ both under the Longshore Act (the tension leg platform was not a vessel and thus this was not shipbuilding) and under OCSLA.

The substantial nexus test was not satisfied.  The living quarters worked on by the claimant might be installed on the OCS years later, and they would be installed by other entities, not his employer.  His employer had no on OCS operations.    There was an insufficient causal connection between his duties and his employer’s on OCS operations (in this case, none).  The denial of coverage in Baker has been affirmed on appeal at the Fifth Circuit.

The latest case is Anthony Grabert v. Besco Tubular and American Interstate Insurance Company and Director, Office of Workers’ Compensation Programs, U.S. Department of Labor, BRB No. 16-0140, September 22, 2016.  In this case, an ALJ denied OCSLA coverage where the circumstances were very similar to those in Boudreaux.  The claimant was injured in a car accident on his way to a crew boat that would transport him to his job on an offshore platform, where he worked as a “tong operator”, performing casing and tubing tasks.

The ALJ in the Grabert case had issued his denial prior to the BRB’s decision awarding OCSLA benefits in the Boudreaux case.  Rather than remand the case for reconsideration in light of Boudreaux, the BRB simply reversed the denial and remanded the case to the ALJ for an award of benefits.

So although the Valladolid substantial nexus test for OCSLA coverage is getting off to a somewhat inconsistent start at the ALJ level, it appears that there will be a sufficient number of cases in short order to establish a coherent pattern of interpretation.

Nonappropriated Fund Instrumentalities Act, (5 U.S.C. 8171 et seq.)

I last discussed the Nonappropriated Fund Instrumentalities Act (NAFIA) on March 13, 2014.  There’s one provision in the NAFIA that I thought I would highlight, just to cover all three extensions of the Longshore Act.

Remember how the Defense Base Act applies to all employees, whether U.S. citizens or not?  The NAFIA is a little different.

Coverage includes,

  1. “those employees of such nonappropriated fund instrumentalities as are employed within the continental United States” (including Alaska and Hawaii)
  2. “those United States citizens or permanent residents of the United States or a Territory who are employees of such nonappropriated fund instrumentalities outside the continental limits of the United States.”

For employees working outside of the continental United States who are neither citizens nor permanent resident of the United States or a Territory, “compensation shall be provided in accordance with regulations prescribed by the Secretary of the military department concerned and approved by the Secretary of Defense or regulations prescribed by the Secretary of the Treasury ….”

NOTE:  This sets up an apparent conflict with the Defense Base Act, which covers all employment on U.S. military bases outside of the continental U.S.  There is no conflict, however, since as to those non-U.S. citizens employed by NAFI’s overseas the NAFIA preempts the DBA and applies as the NAFI employees’ exclusive remedy for workplace injuries.

 

 

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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: Random Notes

Number 1. Joint and Several Liability

I occasionally see references to the nature of ALMA member’s liability as “Joint and Several”. This is a serious misstatement.

In fact, ALMA members are NOT, and never have been, subject to joint and several liability.

As provided in ALMA’s bye-laws, members’ liability is “several and not joint”.

There’s a big difference.

Joint and several liability exists, for example, in federal maritime tort law when a plaintiff sues and wins a judgment against multiple tortfeasors. The plaintiff may collect the full value of the judgment from any single one of the defendants, even a defendant only 1% responsible for the plaintiff’s damages.  That defendant must then seek contribution from the co-defendants through third party legal action.  This is clearly inequitable in many instances.

“Joint and several” liability can leave one party “holding the bag”.

This most definitely is NOT the nature of the liability of ALMA members. The ALMA Bye-Laws provide, in Article V, Section 5.1:

“The Members accepted for and provided with insurance coverage by the Association shall severally and not jointly, but each in its own name only, mutually insure each other in accordance with the provisions in the Member’s Coverage Agreement and the provisions of these Bye-Laws ….”

Should a Supplementary Contribution (or Call) ever be necessary then each member’s liability will be based on that Member’s Contribution for that Underwriting Period in relation to the total of all Contributions for that period.

Each ALMA member will only be responsible for its fair share.

NOTE: ALMA has never had the need for a Supplementary Contribution or Call.  ALMA’s Underwriting and Reserving are designed so that the necessity of a Supplementary Contribution or Call at any time is extremely unlikely.

Note Number 2. Hearing Loss Claims

Recently I complained about the lack of equity for maritime employers in the adjudication of hearing loss claims under the Longshore Act.

I thought that I’d give the U.S. Department of Labor’s Benefits Review Board (BRB) the last word on this issue, since it is the adjudicator. Here’s an excerpt from a recent Board hearing loss decision (in a case in which the entire hearing loss award went against the employer that had employed the worker for one shift, his last day of work):

“It is outside the Board’s scope of review to change the last employer rule or to apply a rule that provides a more equitable approach to compensation. The last employer rule came about as an administratively feasible option for allocating liability in occupational disease cases, while effectuating the beneficent purpose of the Act.  In the original responsible employer hearing loss case (Travelers Insurance Company v. Cardillo, 225 F.2nd 137 (2nd Cir.) cert. denied, 350 U.S. 913 (1955)) the U.S. Court of Appeals for the Second Circuit observed that prior to the passage of the Act, an employer representative suggested that the Act should contain a provision limiting the proportion of the total award for which an employer could be liable, to the same ratio as the extent of the damage done during the period worked for that employer.  However, Congress declined to amend the Act, with the understanding that, absent such a provision, a ‘last employer’ would be liable for the full amount recoverable, even if, medically, the injury would in all probability, not be fully attributable to that last employment.  Therefore, as the last employer rule apportions liability in a fundamentally equitable manner, in that all employers will be the last employer a proportionate share of the time we reject employer’s assertion that it is against public policy to hold it liable for the claimant’s hearing loss ….”

Aside from proving that the Board uses too many commas, this is a very clear statement that the last employer rule as established in 1955 is here to stay as far as hearing loss under the Longshore Act is concerned. The Cardillo court made it perfectly plain; liability in full is assigned to the last employer that exposed the worker to the condition that led to the disease prior to the time the disability resulting from the disease became manifest, even though the disease in the particular worker’s case, “may not have been attributable at all to employment by the last employer”.

Note Number 3. Landmark Cases

Here is the list of landmark Longshore Act Supreme Court decisions that I’ve discussed in previous weeks (you can look them up):

  1. Northeast Marine Terminal Co., Inc. v. Caputo, 432 U.S. 249 (1977)
  2. Director, OWCP v. Greenwich Collieries, 512 U.S. 267 (1994)
  3. Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992)
  4. Sun Ship, Inc. v. Commonwealth of Pennsylvania, et al., 447 U.S. 715 (1980)
  5. Potomac Electric Power Co. v. Director, OWCP, 449 U.S. 268 (1980)
  6. Director, OWCP v. Perini North River Associates (Churchill), 459 U.S. 297 (1983)
  7. O’Leary v. Brown-Pacific-Maxon, Inc., 340 U.S. 504 (1951)

Here are the (landmark in my opinion) cases coming up for discussion in the near future:

  1. Herb’s Welding, Inc. v. Gray, 470 U.S. 414 (1985)
  2. Chesapeake & Ohio Ry. Co. v. Schwalb, 493 U.S. 40 (1989)
  3. P.C. Pfeiffer Co. v. Ford, 444 U.S. 69 (1979)
  4. Pacific Operators Offshore, LLP v. Valladolid, 132 S.Ct. 680 (2012)
  5. Southwest Marine, Inc. v. Byron Gizoni, 502 U.S. 81 (1991)

And that should do it for what I consider to be the most important Longshore Act Supreme Court cases. If I’ve overlooked any please let me know.

 

 

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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 Cases- Number Seven- Zone of Special Danger

I’m adding to my list of landmark Longshore Act Supreme Court decisions with a case that arose under the Defense Base Act (42 U.S.C. 1651, et seq.) (DBA). The case is O’Leary v. Brown-Pacific-Maxon, Inc., 340 U.S. 504 (1951).  It established the doctrine of the Zone of Special Danger in DBA cases (this is without a doubt one of the most misleading names ever applied to a judicial doctrine, but more on this later).

Basically, the Supreme Court in O’Leary took an existing theory of causation in the workers’ compensation context and tacked this on to the DBA, where it became known as the Zone of Special Danger doctrine (in capital letters), and the rest is history.

NOTE: The fatal accident in this case occurred during performance of a construction project in Guam when the employee attempted to rescue two swimmers by diving into a dangerous channel where swimming was expressly forbidden.

The formulation from O’Leary as it is usually cited is as follows:

“The test of recovery is not a causal relation between the nature of employment of the injured person and the accident. Nor is it necessary that the employee be engaged at the time of the injury in activity of benefit to his employer.  All that is required is that the ‘obligations or conditions’ of employment create the ‘zone of special danger’ out of which the injury arose.”

Recovery would be available for an injury arising out of “… one of the risks of the employment, an incident of the service, foreseeable, if not foreseen, and so covered by the statute.”

Note: The “statute” referred to in the above quote was not the DBA, but O’Leary was a DBA case, capital letters were applied to the doctrine and we had the DBA’s Zone of Special Danger.

For background, I’ve summarized and discussed the Defense Base Act here on several occasions.

Basically the DBA covers all employees working overseas for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside of the continental U.S. in any Territory or possession, as well as all employees working on public works contracts with any U.S. Government agency outside of the U.S.

A recent case from the U.S. Department of Labor’s Benefits Review Board (BRB) illustrates how broadly the doctrine of the Zone of Special Danger has come to be applied (and I think that this case would have come as a big surprise to the O’Leary court).

The case is Steven Ritzheimer v. Triple Canopy, Inc., and Allied World National Assurance Co., and Director, Office of Workers’ Compensation Programs, U.S. Department of Labor, BRB No. 15-0233, 2/23/2016.

The BRB granted oral argument and issued an en banc decision in this case of a claimant who was employed in Israel as a “force protection officer” pursuant to his employer’s contract with the U.S. Department of Defense.

The injury occurred when the claimant slipped getting out of the shower in his apartment. Here’s how the BRB described it:  “While showering in his apartment, the shower curtain came out of the bathtub, and the bathroom floor became wet.  When the claimant stepped out of the tub, he slipped on the floor ….” The BRB affirmed an Administrative Law Judge’s (ALJ) decision that this accident was covered under the DBA by application of the Zone of Special Danger.

The BRB listed the ALJ’s significant findings of “relevant” fact:

  • The bathroom in the claimant’s apartment was comparable to bathrooms in the U.S.,
  • The apartment’s furnishings did not include a bathmat,
  • The apartment was paid for by the employer,
  • The claimant’s job required a professional appearance, including good personal hygiene,
  • Weather conditions and the weight of his gear left the claimant sweaty and dusty after work,
  • The claimant also showered on his days off,
  • The claimant was “on call” 24 hours per day, 7 days per week, although he never worked 7 days per week or 24 hours per day.

Citing back to O’Leary, the ALJ found that the employer’s requirement that employees maintain good hygiene was a “condition and obligation” of the employment.  In the ALJ’s words, “The obligations and conditions of claimant’s employment made it necessary for him to engage in the showering activity that resulted in his injuries.”

NOTE: Surprisingly (maybe not), this is not the first DBA case resulting from an injury in a shower, but it is the first one occurring in the claimant’s off duty hours in his private apartment seemingly completely unrelated to work.

The ALJ and BRB rejected the employer’s argument that the act of showering in his private apartment on his own time was a personal activity completely disconnected from his employment.

So this is where we are with the Zone of Special Danger. I used to say that to describe DBA coverage as 24 hour, all activity coverage was not completely accurate.  I think that I may have to revise my opinion.  Admittedly, there are behaviors that would not be covered by the DBA, but based on this case and the existing case law they would have to be pretty far out there, most likely involving criminal activity or the indulging of truly unique personal idiosyncrasies.

So we have a “Zone” that covers DBA cases everywhere. It is a Zone of “Special Danger”.  But as the federal First Circuit Court of Appeals describes it, “Although the requisite ‘special danger’ covers risks peculiar to the foreign location or risks of greater magnitude than those encountered domestically, the zone also includes risks that might occur anywhere but in fact occur where the employee is injured.  ‘Special’ is best understood as ‘particular’ but not necessarily ‘enhanced’ (Battelle Memorial Institute v. DiCecca, 792 F.3rd 214 (1st Cir. 2015)). Yes, this is what we used to call doubletalk.

The doctrine is not limited to recreational or social activities in isolated areas nor is it limited to any element of special dangers of the employment in a particular locale increasing the risk of injury.

It is not necessary to establish proof of a heightened danger in order to invoke coverage under the doctrine. It apparently includes purely personal, off duty activities.

In fact, the Zone of Special Danger for DBA coverage has been applied to injuries suffered by non-U.S. citizens working in their home countries. You can’t get any less special than that.

So the Zone of Special Danger is not limited to any particular zone, there’s nothing special about the nature of the circumstances in which it applies, and there is no element of danger involved or required.

It’s not “Holy”, it’s not “Roman”, and it’s not an “Empire” for you history buffs (thank you Voltaire).

I’m calling O’Leary a “landmark” Longshore Act case, although it’s really not a “landmark” in that the zone of special danger phrase (small letters) already existed, and it’s not a Longshore Act case (it’s DBA).  But I think it’s appropriate since the case involves a Zone of Special Danger doctrine that applies everywhere, does not require “special” circumstances, and does not require any element of “danger”.

 

 

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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: Defense Base Waivers

Jack_crop 72dpiI’ve discussed the Defense Base Act (DBA) (42 U.S.C. 1651) on several previous occasions so I’ll just briefly review it here and then discuss one particular aspect.

The DBA is a workers’ compensation law that extends the benefits of the Longshore Act to employees outside of the continental U.S. under certain circumstances.  It was enacted in 1941, supplemented in 1942 by the War Hazards Compensation Act (WHCA) (42 U.S.C. 1701), and amended in 1953 and 1958 to broaden coverage.

The DBA covers the following employment activities:

  1. All employees working overseas for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside the continental U.S. in any Territory or possession,
  2. All employees working on public works contracts with any U.S. Government agency outside the continental U.S.,
  3. All employees working on contracts approved or funded by the U.S. under the Foreign Assistance Act, generally providing for cash sale of military equipment, materials, or services to allies if the contract is performed outside the continental U.S.,
  4. All employees working for American employers providing welfare or similar services outside the U.S. for the benefit of the armed forces (such as the USO).

The DBA applies to all employees, not just to U.S. citizens, and to all employers, foreign or domestic.

The DBA applies to all contracts regardless of length, whether just a few days, a year, or longer.

There does not have to be a causal relationship between the employment of the injured worker and the injury in the conventional sense.  All that is required is that the “obligations and conditions” of employment create the “Zone of Special Danger” out of which the injury arose.  This is sometimes inaccurately referred to as “24 hour coverage”.

Defense Base Act Waivers

Section 1(e) of  the Defense Base Act states, “Upon the recommendation of the head of any department or other agency of the United States, the Secretary of Labor, in the exercise of his discretion, may waive the application of this section with respect to any contract, subcontract, or subordinate contract, work location under such contracts, or classification of employees.”

Waiver requests are routinely granted when submitted by the proper person in the proper form, but there are limits and conditions.

Waivers do not apply to any employee who is a U.S. citizen, or is hired in the U.S., or who is a bona fide resident of the U.S. regardless of nationality.  The one exception to this policy is the case of Guam, where the DBA has been waived in its entirety even though the residents are U.S. citizens.

There is a further, very important, consideration.  There is a condition attached to every waiver.  The condition is that employees covered by the waiver must receive workers’ compensation benefits pursuant to the provisions of the local laws.  If this condition is not met then the waiver is null and void and the DBA applies to all employees.

Federal agencies should insert in every contract the requirement that each contractor, before commencing performance under the contract, must provide and maintain for all waived employees such workers’ compensation insurance or injury and death benefit protection required by local law.  It is important that this protection not exclude war hazards, since a waiver under the DBA also waives coverage under the WHCA for direct claims by injured employees.

A problem arises when there is no effective local workers’ compensation law.  Where that is the case, you either apply the provisions of the DBA, or if you obtain a waiver of the DBA as to host country and third country nationals you make sure that the conditions for application of the waiver are satisfied.  For third country nationals, for example, you can provide home country or country of hire coverage.  For host country nationals, if there is no existing law, you have a problem.  What did the local law provide when and if it was in effect?  What kind of existing health and disability coverage is available which approximates workers’ compensation protection?  Does it include war risk protection?  You must come up with something close to local coverage or else you must provide DBA benefits.

The burden is on the contractor to make sure that his waiver meets all conditions.

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.