Multiple cases for an injury under Longshore & Habor Workers Act?

The Parties

Mr. Pittman worked as a sandblaster and painter for New Century.

New Century Fabricators was a sandblasting company in Iberia, Louisiana. The company filed for bankruptcy in 2014.

The Facts

Mr. Pittman was injured in a June 20, 2013 work-related accident, when he fell to the deck of a supply vessel during a personnel basket transfer going from a jack-up vessel to the supply vessel.  And then on July 18, 2013, Mr. Pittman filed a claim for benefits under the Longshore and Harbor Workers’ Compensation Act.

Employment Conditions

The injuries

Mr. Pittman sustained neck and back injuries.

The employer’s actions

New Century Fabricators controverted (disputed) Mr. Pittman’s claim, and has paid no compensation or medical benefits to him.   On July 17, 2013, the day before the claim was filed, Mr. Pittman filed a third-party tort suit in federal court against the owner of the jack-up vessel, Hercules Offshore, Incorporated.  On April 10, 2015, Mr. Pittman and Hercules settled the third-party suit for the gross amount of $650,000.  Mr. Pittman’s net recovery was $375,000, and the remaining $275,000 went to his attorney’s fees and expenses.  New Century Fabricators was aware of the third-party lawsuit and settlement negotiations. However, they did not give written approval of the settlement.

Results of the Initial Hearing

After the case was transferred to the Office of Administrative Law Judges (OALJ), New Century Fabricators filed a motion for dismissal of the claim for benefits under the Longshore and Harbor Workers’ Compensation Act. New Century asserted that if the amount of the third-party settlement is less than the amount of their liability for compensation under the Act, then the claim is barred by Section 33(g), 33 U.S.C. §933(g). Alternatively, New Century Fabricators alleged that if the third-party settlement amount is more than their liability under the Act, New Century Fabricators’ entitlement to a Section 33(f), 33 U.S.C. §933(f), credit would extinguish its liability under the Act.  New Century Fabricators argued that, in either event, they have no liability for benefits under the Act and the claim should be dismissed. Mr. Pittman responded that genuine issues of material fact exist regarding the applicability of Section 33(g). These factual issues were with respect to whether the gross third-party settlement amount exceeds New Century Fabricators’ liability for Mr. Pittman’s lifetime compensation and as to the amount of the Section 33(f) credit, which is based on Mr. Pittman’s net third-party recovery.  Mr. Pittman asserted that as New Century Fabricators had provided no evidence regarding the amount of his total lifetime entitlement to compensation under the Act, which presented a factual issue to be decided following a formal hearing. Further, in response to the administrative law judge’s request that Mr. Pittman submit a proposed valuation of his lifetime compensation entitlement, Mr. Pittman asserted that he is entitled to a total of $524,960.38 in lifetime compensation under the Act. In response, New Century Fabricators disagreed with Mr. Pittman’s valuation of his compensation entitlement. In addition, New Century took the position that, even using Mr. Pittman’s valuation, his claim is barred by Section 33(g). The administrative law judge granted New Century Fabricators’ motion for summary decision and dismissed the claim.  Specifically, the administrative law judge compared Mr. Pittman’s proposed valuation of his lifetime compensation entitlement, $524,960.38, to Mr. Pittman’s net recovery from the third-party settlement, $375,000.  As a result, the administrative law judge concluded that because Mr. Pittman’s net recovery is less than the amount of his claimed compensation entitlement, and he failed to obtain written approval of the third-party settlement from New Century Fabricators and carrier, his claim is barred by Section 33(g).

The Appeal

On appeal, Mr. Pittman assigned error to the administrative law judge’s comparison of the net, rather than the gross, amount of the third-party settlement with the amount of his lifetime compensation entitlement.  Mr. Pittman contended that because the gross amount of the settlement exceeded his compensation entitlement, Section 33(g) did not bar his claim, and he therefore urged the Board to reverse the administrative law judge’s decision and remand (return to the administrative law judge for reconsideration) the case for further proceedings. The Director responded, agreeing with Mr. Pittman that because the administrative law judge erroneously used the net, rather than the gross, settlement amount in finding the claim barred under Section 33(g), the decision had to be vacated and the case remanded for the administrative law judge to correctly determine the amount of Mr. Pittman’s lifetime compensation entitlement and to make the appropriate comparison.  New Century Fabricators also responded to Mr. Pittman’s appeal, urging affirmation of the administrative law judge’s dismissal of the claim.  Specifically, New Century Fabricators argued that the administrative law judge’s use of the net amount of the third-party settlement in making the Section 33(g) comparison with Mr. Pittman’s own valuation of his compensation entitlement was consistent with the Supreme Court’s decision in Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 26 BRBS 49(CRT) (1992).  New Century Fabricators argued, in the alternative, that even if the claim was not barred by Section 33(g), New Century Fabricators’ liability for benefits was extinguished by its entitlement to a Section 33(f) credit.

The Ruling on Appeal

The administrative appeal judges vacated the administrative law judge’s determination to grant summary decision.  They noted that summary decision is proper only when there are no genuine issues of material fact and there is no controversy concerning inferences drawn from the facts, such that the moving party is entitled to judgment as a matter of law.  They also remanded the case back to the administrative law judge in order to determine whether Section 33(g) would bar the claim by making a comparison between the gross amount of the third-party settlement and Mr. Pittman’s lifetime compensation entitlement.

The Takeaway

While, as Mr. Pittman found, it is possible to bring a tort case in addition to a claim under the Longshore and Harbor Workers’ Compensation Act, claimants must check their figures carefully and make sure they are not losing out on any benefits when any verdict or settlement is compared to their lifetime entitlements.

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