A Maritime, Longshore and Defense Base Act Blog

When the attorney for a person allegedly injures in an accident filed his lawsuit, he would almost without exception, include claims for anxiety, stress and depression, i.e., mental pain and suffering.  This was common practice for decades.  In conjunction with bringing these allegations, the attorney would schedule his client to be examined by a psychologist or psychiatrist (mental health professional) (MHP) who would inevitably proceed to see the client once or twice a month until the lawsuit was concluded.  Ninety-nine percent of the time, the MHP would issue report after report opining that his client is so emotionally damaged by his experience that he is unable to work and/or will require continued therapy for years to come.  When confronted with this situation, the attorney for the person or company being sued has no choice but to have the claimant examined by a MHP of his choice to rebut or debunk the opposition’ opinion.  At trial or at mediation it boils down to a swearing match contest between the MHP’s, the winner being the one the judge or jury finds more credible.

In recent years plaintiff’s attorneys have latched onto the diagnosis de jour, post-traumatic stress disorder.  The American Psychiatric Association has since the 1980’s recognized Post Traumatic Stress Disorder (“PTSD”) as a legitimate anxiety disorder.  As stated in the Diagnostic and Statistical Manual of Mental Disorders IV, “the essential feature of PTSD is the development of characteristic symptoms following exposure to an extreme traumatic stressor involving direct personal experience of an event that involves actual or threatened death or serious injury, or other threat to one’s physical integrity; or witnessing an event that involves death, injury or threat to the physical integrity of another person; or learning about unexpected or violent death, serious harm or threat of death or injury experienced by a family member or other close associate.  Symptoms include persistent re-experiencing of the traumatic event (nightmares, dreams), persistent avoidance of stimuli associated with the trauma (fear of being on boats/water) and persistent symptoms of increased arousal (difficulty sleeping ,outbursts of anger, difficulty concentrating, hyper vigilance, and exaggerated startle response).  MHP’s traditionally associated a diagnosis of PTSD with traumatic events such as military combat, violent personal assault (sexual assault, physical attack, robbery, mugging), being kidnapped, terrorist attack, torture, incarceration as prisoner of war or in a concentration camp, natural or manmade disasters (earthquake, flood, volcano eruption) or severe automobile accidents.

However, what we in the legal profession are seeing more frequently are lawsuits for personal injury that do not involve the extreme traumatic events required for the diagnosis which include a claim for total and permanent disability due to PTSD.  Any event that can result in anxiety is now the incubator for a PTSD claim.  In the past, most people outside the medical/legal community had never heard of PTSD.  Since the 1990’s, when our country began its war on terror, many of our combat veterans have returned and have been diagnosed with PTSD as a consequence of their very real experiences.  It is a subject of daily discussion on television and the internet.  Most people have at least a layman’s understanding of what PTSD is and its symptoms.  Plaintiff’s attorneys have co-opted PTSD, and when given the opportunity will make it the centerpiece of their claim.  This is especially true when the client has no obvious sign of injury.

To make a diagnosis of PTSD, the MHP has to rely on the truthfulness of the client.  The MHP will take the subjective statements of the client and apply them to the objective criteria.  If there  is enough to correlate, the diagnosis of PTSD is made.  The problem is that anyone who can click on and search the internet can find article after article which spell out the symptoms.  All that person has to do is tell his psychologist what he needs to hear in order to meet the diagnosis.  There is much to be gained.  It has been described as a “money spinner.”  If you have the prospect of significant monetary reward by continuing to claim to experience anxiety, flashbacks, depression, etc., many people may not find it easy to relinquish those symptoms.

The Minnesota Multiphasic Personality Inventory-2 (MMPI-2) is the test commonly used by MPH’s to assess PTSD.  However, it is not fool proof.  Studies have shown that persons with a layman’s understanding of the symptoms can utilize that knowledge to assist them to develop a test profile that is consistent with PTSD.  If individuals are able to fake PTSD successfully on the MMPI-2, monetary incentives will benefit not only the attorneys and their clients, but also those who develop strategies designed to inform individuals of ways to fake certain disorders.  Studies have shown that persons involved in litigation report they are suffering from PTSD four times more often than those who are not.

How can the faker be revealed?  Thorough investigation of the claimant’s prior medical history and employment history is the first step.  Does he have a history of making claims?  A criminal history?  Family or domestic problems?  History of mental health care?  Surveillance can be a useful tool.  What is the claimant doing with his time?  Are his daily living activities consistent with someone who claims to be so mentally and emotionally challenged?  Retain a MHP (who has no stake in the outcome) with experience in the diagnosis of PTSD to conduct an objective evaluation.  Look for signs of malingering and evidence of secondary gain.

There are legitimate cases of PTSD.  However, the litigation industry has taken this real illness and used it to manufacture claims.  This has resulted in increased costs and, on occasion, unwarranted money judgments.  Perhaps the worst consequence is that now virtually all litigation PTSD claims are treated with cynicism and skepticism, and the person really suffering with PTSD may not be justly compensated.

Following the massive BP oil spill, the State of Louisiana sought to protect a portion of its wetlands by constructing a massive “sand berm” (levee) just offshore from particular coastal areas.  The berm construction and related dredging activity allegedly caused damages to area oyster beds.  

Oyster leaseholders situated in Plaquemines Parish sued the State of Louisiana and various companies that were involved in the design, planning, construction, management and/or conduct of the dredging operations.  The lawsuit was filed in Plaquemines Parish (25^th JDC) – situs of the affected oyster beds.  The State and other defendants filed venue exceptions to transfer the lawsuit to the Parish of East Baton Rouge (19^th JDC) consistent with the terms of the leases and statutory law.

Although the oyster leases contained a mandatory forum selection provision requiring suits be brought in 19^th JDC, the district court denied the venue exception, holding that the forum selection clause was unenforceable based on a Louisiana statute (Code of Civil Procedure Art. 44) that bars waivers of objections to venue in advance of litigation.

The defendants filed an emergency writ application to the Louisiana Fourth Circuit Court of Appeal which reversed the district court and ordered the oyster damage suit transferred to 19^th JDC.  The appellate ruling held in pertinent part:

La. R.S. 13:5104 mandates that a suit alleging damages resulting from the State’s response to a disaster during a declared state of emergency must be filed in the Nineteenth Judicial District, East Baton Rouge Parish. Also the venue provisions of La. R.S. 56:427.1 and 432.1 concerning damages to oyster leases caused by coastal protection activities require venue in the Nineteenth Judicial District.  Furthermore, La. R.S. 49:214.5.6 concerning actions arising under oyster leases also requires venue in the Nineteenth Judicial District.

The ruling was issued on May 4, 2012 and it is not known whether the oyster fishermen will seek a further review by the Louisiana Supreme Court.

The case is Pelican Island Oysters, Inc. et al v. State of Louisiana, etc. et al, C.A. No. 58813, in the 25^th JDC for the Parish of Plaquemines.

The Benefits Review Board (“BRB”) published a new employer-friendly average weekly wage (“AWW”) decision further clarifying the method for calculating a Defense Base Act (“DBA”) claimant’s AWW.

Claimant’s overseas employment was followed, on two occasions, by a return to stateside employment.  At the time of his injury, Claimant was employed as a K-9 handler in Afghanistan pursuant to a six-month contract.  He sustained left lower extremity injuries when an improvised explosive device detonated, and he has not worked since the date of the injury.  The dispute that developed between the parties concerned Claimant’s AWW.  Following a trial, the Administrative Law Judge (“ALJ”) determined that Claimant’s AWW was only $1,029.50, which was “based on a blend of claimant’s stateside earnings and his contract rate of pay with employer in the year prior to his injury.”  The ALJ used Section 10(c) of the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) to determine Claimant’s AWW.  Under Section 10(c), an ALJ must arrive at a sum which reasonably represents an injured worker’s annual earning capacity at the time of his injury.

The seminal case concerning the AWW of DBA employees is K.S. [Simons] v. Service Employees Int’l, Inc., 43 BRBS 18, aff’d on recon. en banc, 43 BRBS 136 (2009).  In that case, the BRB “held that where claimant is injured while working overseas in a dangerous environment in return for higher wages under a long-term contract, his annual earning capacity should be based upon the earnings in that job as they reflect the full amount of the annual earnings lost due to the injury.”  Simons, 43 BRBS at 21.  But, there is an exception: “if the record contained credible evidence that a claimant’s employment overseas was in fact, or was intended to be, short-term, i.e., for less than a one-year contractual term, the result here [exclusive use of overseas earnings] would not necessarily control.”

Here, the exception applied, and the BRB affirmed the ALJ’s use of a blended approach to the determination of Claimant’s AWW.  Because of the short-term nature of the employment contract (six months), and Claimant’s rotation of stateside and overseas employment, an AWW calculation that combined war zone and stateside wages was warranted.  Claimant’s war zone employment was cyclical, and his employment history interspersed domestic employment in Louisiana with overseas employment.  Finally, Claimant did not demonstrate “a long-term commitment to overseas employment.”

BRB Decision: Jasmine v. Can-Am Protection Grp., Inc., BRB No. 11-0610 (04/09/2012) (published).

ALJ Decision: Jasmine v. Can-Am Protection Grp., Inc., 2010-OALJ-430 (06/02/2011).

In March, the Loyola University New Orleans College of Law hosted the 2012 Annual Longshore Conference (“ALC”), which was a rousing success.  The following issues of import were discussed at the conference:

1. A presentation given regarding significant judicial decisions.  Of particular interest was the BRB decision Obadiaru v. ITT Corp, 45 BRBS 17 (2011) concluding that a subsequent DBA carrier, when found liable for an aggravation, is liable for the entirety of Claimant’s attorneys fees under Section 28(a) when the subsequent carrier did not pay benefits within thirty (30) days of the Claimant’s filing a claim for compensation against the subsequent carrier.
2. There was a presentation by an orthopedic physician who explained his methodology for performing examination of claimants. The doctor used the acronym SOAP for subjective, objective, assessment, and plan.  (S) Subjective: patients described the reason for their visits and any past history of similar problems to the doctor.  (O) During the objective portion, the doctor provides physical exam, may require laboratory testing, imaging, etc.  (A) Assessment: the doctor provides his diagnosis and then a (P) plan of treatment.  The medical provider determines if additional tests or disability ratings are needed.
3. There was a panel presentation regarding the proposed amendments to the Act via Senate Bill 699.  The consensus of the panel was that Senate Bill 669 should fall short in attempting to amend the Act.  Serious consideration must be given to the Longshore Act’s extension and how any proposed changes in the longshore arena would affect claimants in the U.S. and abroad.
4. There was a presentation regarding Section 8(f) requirements.  One issue discussed was the Special Fund’s statutory lien against the proceeds of third-party settlements for the amount of payments made by the Special Fund. (Section 33(g)(3)).  The Benefits Review Board found in Lindsay v. Bethlehem Steel Corporation, 22 BRBS 206 (1989), that the employer has first lien rights and the Special Fund has secondary lien rights against the net proceeds of the third-party settlement.
5. Regarding Section 9 of the Act: one practice point to remember was that the statutory minimum for compensation does not apply to aliens and non-nationals of the United States or Canada pursuant to Section 9(g).  However, whatever the compensation rate may be for aliens and non-nationals it should still be adjusted yearly in accordance with Section 10(f).
6. A presentation regarding psychological claims arising out of the Act discussed an overview of the history of PTSD issued by the National Center for PTSD, a division of the U.S. Department of Veterans Affairs.  The overview evaluates the criteria for PTSD, diagnosis of the same, and how PTSD is assessed and treated.
7. During a presentation regarding the handling OCONUS claims an audience discussion ensued.  One claims handling lesson of particular import was the fact that District Directors are requesting employers and carriers to illustrate that at least three attempts were made to find/identify an overseas injured worker who is otherwise no longer working with the employer or is missing for purposes of obtaining an OWCP Bulletin No. 05-01 informal conference.

For more information regarding the 2012 ALC, please contact us at Mouledoux, Bland, Legrand & Brackett, LLC.

The Louisiana Fifth Circuit Court of Appeal recently considered the validity a Jones Act settlement in the context of an exception of res judicata.  The plaintiff, Randy James Rudolph, was injured in a vessel collision while working as a deckhand.  Rudolph sued his employer, D.R.D. Towing (“employer”), and others in Louisiana state court alleging that he was a Jones Act seaman and was entitled to maintenance and cure.

Employer denied Rudolph’s allegations and also filed an exception of res judicata.  Employer claimed that Rudolph executed a receipt and release shortly after the accident in settlement of all claims.  In opposition, Rudolph submitted an affidavit accounting the purported settlement.  The trial court ultimately granted the employer’s exception and Rudolph appealed.

On appeal, the Louisiana Fifth Circuit discussed the “substantial federal jurisprudence recognizing the special status of seamen and defining the role of state courts in the application of the law with regard to seamen.”  Importantly, the burden is on the one who sets up a seaman’s release, here the employer, to show it was executed freely, without deception or coercion, and was made by the seaman with a full understanding of his rights.

The court highlighted the four factors that guide an analysis of the validity of a seaman’s release:

(1) The adequacy of the consideration—did the seaman receive fair compensation in light of the extent of injuries and the risk of trying his case?

(2) The available medical advice—did the seaman know the full extent of his injuries and the need for future medical care?

(3) The legal advice available and given—did the seaman have full knowledge of his legal rights?

(4) The nature of the negotiation—did the party seeking to secure the release overreach?

Applying these factors, the court found that Rudolph’s release was invalid.  The release, which was executed three days after the accident in employer’s offices, was overseen by a non-lawyer consultant hired by the employer.  The consultant knew at the time of the release that Rudolph was experiencing health issues and had a medical appointment later that day.  The consultant also failed to explain Rudolph’s right to maintenance and cure and indemnity and medical benefits.  Further, the consultant knew Rudolph was not represented by counsel and never advised him of his right to obtain counsel.  The court found that a transcript of the interaction supported Rudolph’s contention that he believed he was only settling his claims for the possessions he lost when the boat sank.  In addition, the $3,000 settlement amount was not adequate to cover Rudolph’s property losses and medical expenses.  In sum, the court found that Rudolph had not “signed the release with full understanding and knowledge of his rights and a full appreciation of the consequences of the release.”

Finding that the release was invalid, the court set it aside and reversed the trial court’s grant of the employer’s exception of res judicata and remanded the case for further proceedings.

Rudolph v. D.R.D. Towing Co., LLC, et al., 11-1074 (La. App. 5 Cir. 4/24/12); 2012 WL 1415135.

Claimant appealed, and the BRB affirmed, the Decision and Order of ALJ C. Richard Avery, wherein Claimant was denied benefits under the Act.  The ALJ addressed only the issue of status under Section 2(3) of the Act, 33 U.S.C. § 902(3).

Generally, a claimant satisfies the “status” requirement if he is an employee engaged in work that is integral to the loading, unloading, constructing, or repairing of vessels.  See 33 U.S.C. §902(3); Chesapeake & Ohio Ry. Co. v. Schwalb, 493 U.S. 40, 23 BRBS 96 (1989).  To satisfy this requirement, he need only “spend at least some of [his] time in indisputably longshoring operations.”  Northeast Marine Terminal Co. v. Caputo, 432 U.S. 249, 273 (1977).  Although an employee is covered if some portion of his activities constitute covered employment, those activities must be more than episodic, momentary, or incidental to non-maritime work.  Boudloche v. Howard Trucking Co., 632 F.2d 1346, 12 BRBS 732 (5th Cir. 1980), cert. denied, 452 U.S. 915 (1981).

Here, Claimant was a yard foreman; his regular duties consisted of loading trucks, building pipe racks, and cleaning the yard.  On some occasions, he did barge work when the barge crew was short-handed.  Claimant’s yard supervisor indicated that Claimant was sometimes put on the day’s schedule to help the barge crew, and at other times, he would simply be called over to help.  Initially, Claimant’s yard supervisor testified that Claimant spent 50% of his time loading trucks, 5% cleaning the yard, 15% building pipe racks, and 30% working the barges.  Yet, he later testified that he saw Claimant working the barges approximately only ten times over the course of three years.  Claimant was unable to estimate how many times he worked on the barges over the course of his employment; his best guess was 20% of the time.  Claimant reported that he did not work on a barge every week, but sometimes he aided in moving barges around.  Claimant’s co-worker stated that Claimant was part of the truck crew, which was separate from the barge crew, and that he could have loaded barges if he were filling in for someone, but that such a job was infrequent.  No reports or work logs existed in the record.

Claimant contended that because he was sometimes put on the “schedule,” his work loading and unloading barges was not “brief and fortuitous,” as the ALJ found.  The ALJ found that Claimant’s work on the barges was not a part of his regular duties.  Though the ALJ considered the testimony of Claimant’s yard supervisor to be contradictory, he credited the supervisor’s  later statements that Claimant worked on the barges approximately ten times over a three-year period, as this coincided with Claimant’s co-worker’s statements.  All witnesses agreed that Claimant’s work on the barges was not part of his regular duties and was something that was done only when the barge crew was short-handed.  Consequently, the BRB concluded that the ALJ rationally found that Claimant’s activities on the barges were “sporadic” and “were too brief and fortuitous to confer longshore jurisdiction.”  See Kilburn v. Colonial Sugars, 32 BRBS 3 (1998).  As such, the BRB affirmed the finding that Claimant failed to establish that he spent at least “some” time in covered work.  Id.; see generally Caputo, 432 U.S. at 273.  The BRB, therefore, affirmed the ALJ’s denial of benefits under the Act.

Gray v. The Bayou Companies, L.L.C., BRB No. 11-0600 (03/05/2012) (unpublished).

After the claimant suffered an ankle injury on October 7, 2004, the employer began paying temporary total disability (“TTD”) benefits immediately, until June 13, 2005.  Thereafter, when the claimant filed an additional claim for benefits, the employer controverted the claim but nonetheless paid additional TTD benefits within 30 days.  While the claimant was receiving these additional TTD benefits, he filed a “second claim,” stating that he also injured his back in the 2004 incident.  The employer controverted this new back claim, but it continued paying TTD benefits.

Two years after TTD benefits ended, the district director held an informal conference.  The only recommendations made were that (1) the claimant was not authorized to switch to another physician, and (2) that claimant should submit medical reports to his employer about the back condition.  Instead of submitting the medical reports, the claimant chose to refer the claim for a formal hearing.  Ultimately, the Administrative Law Judge (“ALJ”) determined that the claimant was entitled to TTD benefits, medical benefits for his back condition, and a new back physician.

The question presented to the Benefits Review Board (“BRB”) was whether the claimant was entitled to shift fees pursuant to Sections 28(a) or 28(b) of the Longshore and Harbor Workers’ Compensation Act.  The BRB denied fees.

Generally, Section 28(a) applies when an employer declines to pay any benefits within 30 days of receiving notice of the claim and the claimant successfully prosecutes his claim.  Here, the claimant received benefits within 30 days of the initial injury.  Further, the employer reinstated benefits within 30 days of its receipt of claimant’s claim for additional benefits.  It did not matter “[t]hat claimant subsequently sought additional benefits for a back injury arising out of the same work incident” because the employer paid benefits within 30 days of its receipt of a claim.   Payment of fees within the first 30 days, regardless of the “second claim” was determinative and rendered Section 28(a) inapplicable.

Section 28(b) was also inapplicable.  Pursuant to the Fifth Circuit, “the following are prerequisites to an employer’s liability under Section 28(b): (1) an informal conference; (2) a written recommendation from the district director; (3) the employer’s refusal to accept the written recommendation; and (4) the employee’s procuring of the services of an attorney to achieve a greater award than what the employer was willing to pay after the written recommendation.”  Here, the employer did not reject the district director’s recommendations; and instead of securing the back-related medical records–which is what the district director recommended–the claimant referred the claim for formal hearing.  Even though the claimant achieved success before the ALJ, that did not matter because the employer never rejected the director’s recommendation.  Without a rejection, Section 28(b) was inapplicable.

Simmons v. Northrup Grumman Ship Systems, Inc., BRB Nos. 11-0424, 11-0536 (BRB 03/09/2012) (unpublished).

Opinion: This would be a good case for the BRB to publish, particularly beccause of the BRB’s discussion of Section 28(a) and the “second claim.”

A recent Court of Appeals filing from the Director of the Office of Workers’ Compensation Programs raises questions about whether the Director has a new interpretation of Section 28(b) of the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) or whether the Director has taken inconsistent litigation positions.  You be the judge.

Attorneys fees can shift from a claimant to an employer or carrier pursuant to Section 28 of the LHWCA.  For purposes of this post, only Section 28(b) is relevant.  That statute states in pertinent part:

If the employer or carrier pays or tenders payment of compensation without an award pursuant to section 14(a) and (b) of this Act, and thereafter a controversy develops over the amount of additional compensation, if any, to which the employee may be entitled, the deputy commissioner or Board shall set the matter for an informal conference and following such conference the deputy commissioner or Board shall recommend in writing a disposition of the controversy.  If the employer or carrier refuse to accept such written recommendation, within fourteen days after its receipt by them, they shall pay or tender to the employee in writing the additional compensation, if any, to which they believe the employee is entitled.  If the employee refuses to accept such payment of tender of compensation, and thereafter utilizes the services of an attorney at law, and if the compensation thereafter awarded is greater than the amount paid or tendered by the employer or carrier, a reasonable attorney’s fees based solely on the difference between the amount awarded and the amount tendered or paid shall be awarded in addition to the amount of compensation. . . . In all other cases any claim for legal services shall not be assessed against the employer or carrier.

Agency deference is an important litigation concern.  Generally, when Congress has “explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation;” and “[s]uch legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.”  Chevron, U.S.A., Inc. v. National Resources Defense Council, Inc., 467 U.S. 837, 843-44 (1984), quoted in Tualatin Valley Builders Supply, Inc. v. U.S., 522 F.3d 937, 941 (9th Cir. 2008).  Yet, Chevron deference is not always owed.  Pursuant to Skidmore v. Swift & Co., 323 U.S. 134, 139-140 (1944), the weight given to an agency’s interpretation of a statute depends on “the degree of the agency’s care, its consistency, formality, and relative expertness, and to the persuasiveness of the agency’s position.”  The weight applied to an agency interpretation can range from great respect to near indifference.  U.S. v. Mead Corp., 533 U.S. 218, 228 (2001).

While an agency is allowed to change its mind, “the consistency of an agency’s position is a factor in assessing the weight that position is due.”  Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 417 (1993).  The weight assigned to an agency’s interpretation depends on the facts of the case.  Id.  An agency’s conflicting interpretations are entitled to considerably less deference.  Id.  Deference to an “agency’s convenient litigation position would be entirely inappropriate.”  Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 213 (1988) (noting that Secretary’s litigation position was “[f]ar from being a reasoned and consistent view”).

To be sure, Section 28(b) has been the focus of much debate over the last decade because of a series of decisions out of the Fourth, Fifth and Sixth Circuits.  A circuit split developed with the Fourth, Fifth and Sixth Circuits on one side and the Ninth Circuit on the other.  To shift attorney’s fees under Section 928(b) in the so-called “strict” circuits, there must be (1) an informal conference; (2) a dispositive written recommendation from the deputy or Board; (3) the employer’s refusal to adopt the written recommendation; and, (4) claimant’s securing a lawyer to achieve a greater amount of compensation than what the employer was willing to pay after the recommendation.   Andrepont v. Murphy Exploration & Prod. Co., 566 F.3d 415, 418, 421 (5th Cir. 2009); Pittsburgh & Conneaut Dock Co. v. Dir., OWCP, 473 F.3d 253, 264-67 (6th Cir. 2007); Va. Int’l Terminals, Inc. v.  Edwards, 398 F.3d 313, 318 (4th Cir. 2005), cert. denied, 546 U.S. 960 (2005); Davis v. Eller & Co., 41 Ben. Rev. Bd. Serv. (MB) 58 (2007).

On the other side of the spectrum is the Ninth Circuit.  Proponents for a “looser” application of Section 28(b) want to apply the Ninth Circuit’s general rule—dating from 1979—that fees may be shifted whenever the extent of liability is controverted and the claimant successfully obtains increased compensation.  Nat’l Steel & Shipbuilding Co. v. U.S. Dept. of Labor, OWCP, 606 F.2d 875, 882 (9th Cir. 1979).  The Benefits Review Board is stuck in the middle.  In applies the “strict” approach unless Ninth Circuit law applies.  Davis v. Eller & Co., 41 Ben. Rev. Bd. Serv. (MB) 58 (2007).

But where does the Director stand?  Prior to the most recent filing, it appeared clear that the Director aligned himself with Fourth, Fifth and Sixth Circuit’s approach.  Consider the following paragraphs, which was taken from an Opposition the Director filed with the Supreme Court of the United States in Virginia International Terminals:

Contrary to petitioner’s principal contention (Pet. 10-15), the decision below does not clearly conflict with the decisions of the Ninth Circuit with respect to the question whether an informal conference and written recommendations are mandatory prerequisites to the award of attorney’s fees under Section 28(b).  In National Steel & Shipbuilding Co. v. United States Dep’t of Labor, 606 F.2d 875 (9th Cir. 1979), which is the primary basis for the claimed circuit conflict, the court affirmed an attorney’s fee award when the district director held an informal conference but did not issue a written recommendation following the conference.  Noting the congressional intent to limit attorney’s fee awards to cases in which parties dispute the existence or extent of liability, the court stated, “[w]e do not believe that the statute contemplates the making of a written recommendation by the deputy commissioner as a precondition to the imposition of liability for attorney’s fees.”  Id. at 882 (discussing H.R. Rep. No. 1441, 92d Cong., 2d Sess. 3 (1972)).  Further, the court reasoned that even if the “written recommendation” prerequisite was necessary, it was met, in that it was “evident” that the parties would have rejected any explicit recommendation because they had failed to reach an agreement at the informal conference, so that instead “[t]he recommendation following the informal conference * * * was for the matter to ‘be referred’” for a formal ALJ hearing “‘at the request of both parties.’”  Ibid. (citation omitted).  Under those circumstances, the court concluded that Section 28(b) provided the basis for an attorney’s fee award.

Unlike the parties in National Steel, petitioner and respondents did not participate in an informal conference, and thus the two cases do not squarely conflict.  There is no way to predict how the Ninth Circuit would have decided National Steel had there not been an informal conference.  If anything, the fact that the court relied on the conduct of the parties at the conference as evidence that a written recommendation would have been rejected suggests that the informal conference was critical to the disposition of that case.

Moreover, in Todd Shipyards Corp. v. Director, OWCP, 950 F.2d 607 (1991), a case expressly relied upon by the court of appeals below (Pet. App. 14), the Ninth Circuit subsequently distinguished National Steel and clarified the congressional intent behind Section 28 in a manner consistent with the Fourth Circuit’s decision here.  In that case, the only disputed issue following the informal conference was the claimant’s entitlement to an attorney’s fee for services rendered before the conference ended; the parties had reached an agreement at the informal conference on claimant’s entitlement to disability benefits.  950 F.2d at 608.  The court held that a fee award was not authorized in those circumstances, because Section 28(b) authorizes an attorney’s fee only when the record shows that, following an informal conference, the employer refused to accept the written recommendation of the claims examiner.  Id. at 610.  The court distinguished the case from National Steel, in which the parties continued to dispute “liability on the amount of compensation to be paid after the informal conference.” Id. at 611 (emphasis added).  The court explained:

While we believe that the intent of Congress is clear from a plain reading of the words used in [Section 28(b)], the legislative history explains unequivocally the very limited scope of attorneys’ fees awards under the statute.

“A new provision is added dealing with cases where payment of compensation is tendered and an unresolved controversy develops about the amount of additional compensation, despite the written recommendation of the deputy commissioner. The provision directs an award of a reasonable attorney’s fee . . . where the employer or carrier has refused to accept the recommendation. . . .”  In all cases other than those specified above, attorneys’ fees may not be assessed against the employer.

Id. at 610 (quoting H.R. Rep. No. 1441, supra, at 3).  Not only does this explanation call into question the continued viability of National Steel‘s holding regarding the dispensability of the written-recommendation requirement, but the Ninth Circuit’s analysis is completely consistent with the reasoning of the Fourth Circuit below.

As can be seen, the Director questioned the continued viability of National Steel when addressing Section 28(b) to the Supreme Court.  It appears that the Director supports the use of the four prerequisites recognized by the Fourth, Fifth and Sixth Circuits.  In fact, in a subsequent Brief to the United States Fifth Circuit Court of Appeals, which was submitted in Carey v. Ormet Primary Aluminum Corp., 627 F.3d 979 (5th Cir. 2010), the Director championed the use of the four prerequisites:

To shift attorney fee liability to an employer under section 28(b), a claimant must satisfy the following requirements: a) the district director must hold an informal conference; b) the district director must issue a written recommendation resolving the controversy; c) the employer must refuse to accept the recommendation; and d) the claimant must utilize the services of an attorney to obtain a greater award than that which the employer was willing to pay after the written recommendation.

Despite these statements to the Supreme Court (in 2004) and the Fifth Circuit (in 2010), the Director recently took a different tact with the United States Ninth Circuit Court of Appeals (in 2012):

It is firmly established in this Circuit that fee-shifting under Section 28(b) is not limited to situations where the employer rejects a district director’s written recommendation after an informal conference.  Indeed, fee-shifting does not depend on the existence of a written recommendation.  As the “seminal Ninth Circuit decision regarding Section [28(b)] held:

“We do not believe that the statute contemplates the making of a written recommendation by the [district director] as a precondition to the imposition of liability for attorney’s fees.  The congressional intent was to limit liability to cases in which the parties disputed the existence or extent of liability, whether or not the employer had actually rejected an administrative recommendation.”

. . .

Contrary to [Employer's] suggestion, this Court’s later decisions have not retreated from [National Steel's] clear holding.  In Todd Shipyards…a panel held that a claimant was not entitled to attorney’s fees under Section 928(b).  But it did so not because of a lack of a recommendation from the district director, but because the only issue that remained in the case after the informal conference was entitlement to attorney’s fees for work performed prior to formal litigation.  The [Todd Shipyards] panel plainly reiterated the holding of [National Steel] that the purpose of Setion 28(b) is to authorize assessment of legal fees where liability is contested and an attorney secures higher compensation in formal proceedings.  950 F.2d at 610.  And it distinguished [National Steel] only because:

“In this matter, there was no controversy concerning liability on the amount of compensation to be paid after the informal conference.  These issues were resolved by Todd’s concession and the parties’ stipulation.  Section 928(b) does not authorize the payment of attorneys’ fees if the only unresolved issue is whether attorneys’ fees awarded should be for services performed prior to the successful termination of the informal conference.  That is the only issue that was unresolved after the informal conference in this matter.”

. . .

Any doubt about [National Steel's] continuing viability is eliminated by Matulic v. Director, OWCP, 154 F.3d 1052, 1061 (9th Cir. 1998)…

So what do you think?  Has the Director’s position changed?  The continued viability of National Steel was questionable in 2004; yet in 2012 the Director has no doubt about the continuing viability of National Steel because of the Matulic decision.  Yet, Matulic was issued in 1998, six years before the Director questioned the viability of National Steel in a brief to the Supreme Court.  Or maybe the Director’s position has not changed, and he was just analyzing Ninth Circuit law.  Perhaps that is why he used the phrase “in this Circuit.”  If that is the case, however, the Director is not entitled to deference because he is not interpreting a statute or regulation, he is instead interpreting case law.

As mentioned earlier, agency deference is a powerful tool.  But, courts will not defer to a “convenient litigating position,” especially one that lacks consistency with an agency’s prior position.   It will be interesting to see how much deference is offered to the Director’s interpretation of Section 28(b) going forward.

In recent months the cruise industry has been in the headlines.  Not so much due to the lifestyle of fun, luxury and glamour which is the trademark of the brand, but due to casualties that have resulted in loss of life and injury.

Forty-five years ago, in 1967, the United States Congress passed legislation to protect the interests of those persons sailing on commercial vessels used in the passenger trade.  The initial House Bill was introduced in 1965 with the intent to provide passengers a means of recovery in the event that their cruise was cancelled or otherwise interrupted due to financial insolvency of the cruise ship owner.  Then in late 1965 and early 1966 two foreign flagged cruise ships with U.S. citizens onboard caught fire in the Caribbean.  One fire resulted in the death of ninety passengers, causing Congress to become increasingly concerned for the safety of the American traveling public and lack of industry safety concerns.  Then President Johnson ordered several executive agencies, including the Department of Commerce, Maritime Administration, State Department, Treasury Department, U.S. Coast Guard and the Federal Maritime Commission to collaborate in creation of legislation to not only protect the financial interests of passengers who have lost the cost of their tickets in the event of the vessel owner’s insolvency, but to also protect the financial interests of passengers who are killed or injured.  After lengthy debate, the Act, known as the Passenger Vessel Financial Responsibility Act, became law.  46 C.F.R. 540.

The modern cruise industry bears little resemblance to that which existed in 1967.  Since the 1970’s the cruise industry has experienced an increasing popularization, becoming a major part of the tourism sector, and reaching a level of enormous significance world wide as an economic factor.  It has matured and is one of the most outstanding examples of globalization, with an increasing number of ports of call and new destinations around the globe, multinational clientele, and new vessels whose size and passenger capacity was not imaginable twenty years ago.  The industry has made the cruise the vacation of choice for those who would not have considered it in past decades.  As a consequence, the Act is more relevant than ever.

The Act consists of two parts.   Subpart A provides the passenger with financial security in the event that the vessel owner ceases operations due to insolvency or otherwise and the passenger’s cruise (for which he has already paid) is cancelled or interrupted.  Subpart B provides the passenger with similar financial security should he be injured or killed while on the voyage and the vessel owner claim financial hardship.

To provide this security, the Act requires persons in the United States who arrange, offer, advertise, or provide passage on a vessel having berth or stateroom accommodations for fifty or more passengers and embarking passengers at U.S. ports to provide proof of financial responsibility that is filed with the Federal Maritime Commission.  Such a passenger vessel may not call on U.S. ports unless it has filed an application with the Federal Maritime Commission which demonstrates it has the financial ability to respond to passenger’s claims.  By its application, the vessel owner is guaranteeing that it has the financial wherewithal to respond to its passenger’s claims.  The guaranty is backed by proof of either insurance, a surety bond, self- insurance or an escrow account.  The amount of the guaranty depends on the number of passenger accommodations aboard the vessel and evidence of the owner’s passenger revenue collected in the two prior fiscal years.  After its analysis of the application, if the FMC finds that the cruise line’s proof of financial solvency is backed by the appropriate security, it will issue Certificates of Performance and Casualty to the owner.  Only then will the cruise line be allowed to call on U.S. parts and take on passengers.  Should a passenger have grounds to make a claim against the cruise and the cruise line is out of business or otherwise unable to or refuses to respond, the passenger can contact the FMC to procure the information necessary to make his claim against the guaranty or security posted by the owner.

The Act makes no distinction as to the citizenship of the passenger or the flag of the ship.  Any person who embarks on a voyage from a U.S. port aboard a ship of any nation is protected.  The security or guaranty to reimburse the passenger for non-performance or indemnification due to injury or death remains outside the reach of the bankruptcy courts.  In other words, insolvency of the cruise line does not constitute a defense to the insurer that has provided the guaranty and the insurer agrees to pay any unsatisfied final judgments obtained on such claims.

Subpart B is more expansive in the class of individuals who may be covered by the guaranty.  It provides that the security posted must be sufficient to meet any liability which may be incurred for death of injury to passengers and “other persons” on voyages to or from U.S. ports.  Unfortunately, the Act does not define “other persons with any degree of certainty.  This raises the question of whether crew (the traditional Jones Act seaman) is covered.  Passengers, however, are defined as “any persons not necessary to the business, operation or navigation of the vessel.”  No courts have been asked to determine who “other persons” are.  The FMC, on its website, states that “other persons” “include, but are not limited to visitors, crew and temporary workers aboard ship.”  However, this statement does not carry the weight of law and who exactly is an “other person” has yet to be tested in a court of law.

The public should be aware of the act and the remedies it provides.  I would venture to say that the majority of the public is not.  The FMC provides significant information on its website. www.fmc.gov/ .

Considering a vacation cruise?  Take a few minutes, visit the website, and become informed.

Bon Voyage!!

The Defense Base Act (“DBA”) is a system of federal workers’ compensation applied to United States contractors working abroad on U.S. bases or pursuant to a U.S. contract.  When these contractors sustain a work-related injury, they are entitled to benefits.  In some instances, the event that caused the contractor’s injury qualifies as a “war-risk hazard.”  See 42 U.S.C. 1711 and 20 C.F.R. 61.4.  Generally, “war-risk hazards” include the discharge of weapons; any action by a hostile force or person, including insurrection or rebellion; the discharge of munitions intended for use in war; the collision of vessels and aircraft operating without customary navigation aids; and the operation of a vessel or aircraft in a zone of hostility or engaged in war activities.  The benefits paid to a DBA claimant because of injuries caused by a ”war-risk hazard” qualifies the employer, insurance carrier, or compensation fund that paid benefits to reimbursement under the War Hazards Compensation Act (“WHCA”).

Although there are other instances when the WHCA applies the focus of this post is reimbursement.  The pertinent provision for reimbursement is 42 U.S.C. 1704, which states in pertinent part:

(a) Where any employer or his insurance carrier or compensation fund pays or is required to pay benefits–

(1) to any person or fund on account of injury or death of any person coming within the purview of this Act or sections 1-4 of the Defense Base Act if such injury or death arose from a war-risk hazard, which are payable under any workmen’s compensation law of the United States or of any State, Territory, or possession of the United States or other jurisdiction; or

. . .

(3) . . . such employer, carrier, or fund shall be entitled to be reimbursed for all benefits so paid or payable, including funeral and burial expenses, medical, hospital, or other similar costs for treatment and care; and reasonable and necessary claims expense in connection therewith.

The WHCA sets forth the precise category of items that are reimbursable.  A employer, carrier, or compensation fund can seek a dollar-for-dollar reimbursement of all medical benefits, indemnity benefits, and funeral benefits it was required to pay to a DBA claimant.  See 33 U.S.C. 907, 908, 909.  Further, the employer, carrier, or compensation fund is entitled to reimbursement of reasonable and necessary claims expense.  Pursuant to the Code of Federal Regulations, claims expenses can be allocated or unallocated.  See 20 C.F.R. 61.104.  Allocated claims expenses include “reasonable attorneys’ fees, court and litigation costs, expenses of witnesses and expert testimony, examinations, autopsies and other items of that were reasonably incurred in determining liability under the Defense Base Act . . . .”  Id.  Unallocated expenses are expenses that cannot be specifically itemized or documented.  To account for reimbursement, 15% of the sum of the reimbursable payments is added to the reimbursement amount.  Id.  In practice, the Division of Federal Employees Compensation, which is the agency charged with administering the WHCA, applies the unallocated expense provision only to medical, indemnity, and funeral benefits–but not to future indemnity benefits incurred as a result of a commutation request.  See FECA Bulletin No. 12-01.

To be sure, anything that is paid pursuant to the DBA is reimbursable.  Not only are the claimant’s benefits reimbursable, but so are the litigation costs associated with the claimant’s DBA case.  Although there is debate in the Longshore community about the necessary scope of litigation for DBA injuries caused by a “war-risk hazard,” the WHCA makes it clear that a carrier must litigate each claim just as it would if the WHCA did not apply.  An employer and insurance carrier must “take reasonable measures to contest, reduce, or terminate its liability by appropriate available procedure under workers’ compensation law or otherwise . . . .”  See 20 C.F.R. 61.102.

The moment when an employer becomes entitled to reimbursement has also been debated in the Longshore community.  The answer to that debate is contained in the the reimbursement statute.  It says that an employer, carrier, or compensation fund shall be entitled to reimbursement when it is required to pay DBA benefits.  See 42 U.S.C. 1704.  In other words, when a DBA claimant’s entitlement to DBA benefits accrues, the employer, carrier, or compensation funds right to WHCA reimbursement accrues too.  There is no provision in the WHCA that tolls the entitlement to reimbursement to some later point in time, like the date when the claimant reaches maximum medical improvement or is released to return to work.  When a DBA claimant is entitled to receive his first dollar in benefits, the WHCA allows reimbursement of that dollar.  Compare 33 U.S.C. 914 and 42 U.S.C. 1704; cf. Roberts v. Sea-Land Services, — S. Ct. —-, 2012 WL 912953 (2012).  And while the practice is to secure a DBA compensation order prior to requesting reimbursement, there is no statutory or regulatory requirement for an employer and carrier to secure an order prior to requesting reimbursement, which the Office of Workers’ Compensation Program recognized in OWCP Bulletin No. 05-01.

In closing, the WHCA reimburses an employer, carrier, or compensation fund–presumably the Special Fund established by the Longshore Act, see 33 U.S.C. 944 and 33 U.S.C. 908(f)–for the medical, indemnity and funeral expenses paid to a DBA claimant injured by a “war-risk hazard.”  Further, the DBA reimburses litigation costs and other claims expenses incurred in determining DBA liability.  The entitlement to reimbursement accrues at the moment the employer, carrier, or insurance fund is required to pay benefits–which is the date the claimant becomes entitled to benefits.