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.

 

 

jack_crop-72dpi

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: Outer Continental Shelf Lands Act

Jack_crop 72dpiOn January 11, 2012, the U.S. Supreme Court issued its decision in the case of Pacific Operators Offshore LLP v. Valladolid, which I discussed here on January 19, 2012.

In Valladolid the issue was whether Section 1333(b) of the Outer Continental Shelf Lands Act (OCSLA) (43 U.S.C. 1333(b)) contains a situs of injury provision. In other words, must an injury occur on the outer continental shelf of the U.S. (OCS) to be covered by OCSLA?

Section 1333(b) states:

“With respect to disability or death of an employee resulting from any injury occurring as the result of operations conducted on the outer Continental Shelf for the purpose of exploring for, developing, removing, or transporting by pipeline the natural resources, or involving rights to the natural resources, of the subsoil and seabed of the outer Continental Self, compensation shall be payable under the provisions of the (Longshore Act).”

In affirming the decision of the federal court of appeals for the Ninth Circuit in Valladolid the Supreme Court rejected the Fifth Circuit’s situs of injury requirement and ruled out the Third Circuit’s “but for” causation test for OCSLA coverage.  The Supreme Court announced a new “substantial nexus” test, which requires that there must be a “significant causal link” between the claimant’s injury and his employer’s on-OCS extractive operations.  The Court acknowledged that its new test “may not be the easiest to administer”, but that “… we are confident that the Administrative Law Judges (ALJs) and courts will be able to determine whether an injured employee has established the necessary significant causal link …” for OCSLA coverage.

So we have a new “significant nexus” test for OCSLA coverage.  While presumably it is not difficult to determine coverage for workers actually injured on the OCS, what about workers injured on land?  How would the new test be applied?

Now we have a case applying the “substantial nexus” test.

The case of James Scotty Boudreaux v. Ownsby & Kritikos, Inc. and Louisiana Workers’ Compensation Corporation and Director, Office of Workers’ Compensation Programs, U.S. Department of Labor (BRB No. 15-0117, 12/21/15) involves an injury sustained in a car accident.  The injury occurred while the claimant was traveling from his home in his personal vehicle to a pick up area for transport to his job site on a fixed platform on the OCS. The employee’s job title was “advanced/automated ultrasonic testing field supervisor”. His safety related job was to test tanks on offshore oil platforms.

Note:  In the 52 weeks prior to his accident the claimant spent 89.2 percent of his work time working offshore, but it’s not clear how significant this measure is to the application of the substantial nexus test.

The ALJ found that the injury was covered by the OCSLA under the Supreme Court’s substantial nexus test, and the Benefits Review Board (BRB) affirmed.

Does “substantial nexus” mean a form of employment connection between the worker’s duties at the moment of injury and the employer’s operations on the OCS, or does it mean that the injury must be caused by those operations? Or is this a distinction without a difference?

Does the test for OCSLA coverage involve a “proximate cause” analysis? This question arises because the Supreme Court in announcing its substantial nexus test indicated that the “as a result of operations” language in the statute requires a “significant causal link”. Although it is extremely presumptuous of me, this perhaps was not the best way to put it.

Note:  The “proximate cause” test, used in negligence cases in tort to determine the cause of an injury, is not a good fit in workers’ compensation cases. As it is typically defined, “proximate cause” is “… the primary cause of an injury. It is not necessarily the closest cause in time or space nor the first event that sets in motion a sequence of events leading to an injury. Proximate cause produces particular, foreseeable consequences without the intervention of any independent or unforeseeable cause”. In workers’ compensation cases, on the other hand, if an injury arises out of and in the course of employment, then proximate cause is not the test necessary for coverage.

The question is whether an injury sustained by an employee in a car accident in Louisiana is sufficiently related to the employer’s operations conducted on the OCS to be covered under OCSLA.

The first step is to determine whether or not the injury arose out of and in the course of employment. In the Boudreaux case the claimant was driving his own car on the way to a pick up point. Ordinarily, commuting time to and from work is not considered to be in the course of employment since the employee is on his own time. There are exceptions. The exceptions involve circumstances where, 1) the employer pays the employee’s travel expenses, or 2) furnishes the transportation, or 3) the employer controls the travel, or 4) the employee is on a special errand for the employer.

In our case, the claimant was paid for the trip in the form of mileage reimbursement, so the injury did arise in the course and scope of his employment.

Now how do we apply the substantial nexus test to determine if his injury is covered under OCSLA?

Proximate cause is not the test, nor is its alternate, somewhat broader “but for” formulation used by the Third Circuit in a case that also involved a car accident. And the test is not status based. The fact that Boudreaux spent almost 90% of his time working on the OCS did not end the coverage inquiry. So exactly how do we determine coverage?

In acknowledging that the Ninth Circuit’s take on substantial nexus would not be easy to administer, the Supreme Court did approve the formulation of, “… the claimant must show that the work performed directly furthers OCS operations and is in the regular course of such operations.”

So the substantial nexus test is a “directly furthers” test.  That helps, and it seems like a very broad approach. And the Court made the comment that land based office employees would not meet the test. So that also helps.

An essential component of Boudreaux’s job was to make sure that the offshore rigs were operationally safe. In the mind of the ALJ this met the substantial nexus test by directly furthering the employer’s on-OCS extractive operations.

The BRB indicated that the ALJs have considerable discretion in applying the test for OCSLA coverage. It is my expectation that the test will be liberally applied to the land side injuries of employees whose employers are involved in on-OCS operations. I think that underwriters should be alert for this sometimes hidden OCSLA exposure.

Note:  A USL&H endorsement added to a standard state act workers’ compensation insurance policy does not provide OCSLA coverage. OCSLA coverage requires a separate OCSLA endorsement.

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.