The Effect of Section 905(b) on the Parties’ Agreement to Indemnify

U.S. United Ocean Services, LLC (“United”) entered into a General Services Agreement (“the Agreement”) with Buck Kreihs Company, Inc. (“BK”) whereby BK would perform ship-repair work for United.  BK agreed to indemnity United for all liabilities arising out of or related to any way to the work or services performed by BK or to BK’s presence on United’s property, even if the liability at issue was partially caused by United’s fault or negligence.  The Agreement did not apply to liability caused solely by United’s fault or negligence.  The Agreement also required BK to procure a general liability policy and to name United as an additional insured under that policy.  Pursuant to the same, St. Paul issued a general marine liability policy in which BK was the Named Insured and United was an additional insured under the policy.

One of BK’s employees was injured removing a gangway that led from BK’s dock to a barge owned and operated by United.  The injured employee sued United, who made a demand against St. Paul as an additional insured.  United and the injured employee settled.  St. Paul denied coverage to United on the ground that the policy’s Watercraft Exclusion excluded coverage. The District Court granted summary judgment to St. Paul and United appealed.

On appeal, the Fifth Circuit noted Section 905(b) of the Longshore and Harbor Workers’ Compensation Act voids BK’s agreement to indemnify United under the Agreement.  Section 905(b) states, in pertinent part, in the event of injury to a person covered by the Longshore and Harbor Workers Compensation Act caused by the negligence of a vessel, then such person, or anyone otherwise entitled to recover damages by reason thereof, may bring an action against such vessel as a third party, and the employer shall not be liable to the vessel for such damages directly or indirectly and any agreements or warranties to the contrary shall be void. 33 U.S.C. §905(b).

The general insuring clause of the policy extended coverage only to those obligations that the insured was “legally obligated to pay.”  Since BK could not, as a matter of law under Section 905(b), be “legally obligated to pay” injured employee’s claim against United, the policy’s coverage provision did not encompass BK’s attempted assumption of liability as to the claim.  The Fifth Circuit, therefore, affirmed the District Court’s grant of summary judgment in favor of St. Paul and against United, holding there was no coverage pursuant to the Agreement between BK and United and as a matter of law.

Paul Holden, et al. v. U.S. United Ocean Services, LLC, et al., 2:09-CV-3670 (5th Cir. 08/19/2014)

Consolidation of Baltimore Longshore District Office Into the Norfolk Longshore District Office

From the Department of Labor’s e-mail service:

The Baltimore Longshore District Office will physically close on September 30, 2014.  It will be consolidated into the Norfolk District Office.  Prior to the physical closure of the Baltimore District Office, the case work will transition to the Norfolk District Office for maximum efficiency.

Therefore, effective September 1, 2014, the Norfolk District Office has jurisdiction over past and future cases under the LHWCA, and its extensions, arising in the states of Delaware, Maryland, Pennsylvania, Virginia, West Virginia and the District of Columbia.

All forms submitted for the creation of a new case should still be submitted to the Longshore Central Case Create site in New York City.  After a case has been created, all case-specific mail should still be sent to the Longshore Central Mail Receipt site in Jacksonville, FL.

For more specifics about this consolidation, including the consolidation’s affect on the DOL’s scanning facilities, review Industry Notice 146.

Defense Base Act Claimant’s Temporary Job Was Not Suitable Alternative Employment

When an injured Longshore or Defense Base Act claimant cannot return to their usual work, an employer must demonstrate the availability of suitable alternative employment (“SAE”).  In many cases, the employer must establish that there are realistically available jobs within the geographic area where claimant resides, which the claimant is capable of performing, considering their age, education, work experience, and physical restrictions.  If the employer successfully demonstrates SAE, then the claimant must demonstrate that they diligently tried to secure employment.

A potential problem can arise when the claimant actually has obtained work following their injury, but the employment is temporary in nature.  That is what happened in McMiller v. Serv. Employees Int’l, a recent unpublished decision from the Benefits Review Board.  There, the Board noted that:

[W]here an injured employee obtains various temporary jobs following her injury, such fact does not necessarily defeat a claim for total disability. Carter, 14 BRBS at 97; see also Edwards v. Director, OWCP, 999 F.2d 1374, 27  BRBS 81 (CRT) (9th Cir. 1993), cert. denied, 511 U.S. 1031 (1994) (court held that short-lived employment did not establish that suitable alternative employment was realistically and regularly available on the open market)Mendez v. National Steel and Shipbuilding Co., 21 BRBS 22 (1988).

In McMiller, the claimant held a “short-lived position with Rose International” but that was insufficient employment to establish SAE.  And the employer failed to submit  any additional evidence concerning the availability of SAE, thus failing to satisfy its burden.  Accordingly, the claimant remained totally disabled.

What’s the takeaway?  Employers and carriers should always commission a labor market survey; and claimants should always continue their diligent search for work.

McMiller v. Serv. Employees Int’l, Inc., BRB No. 13-0579 (Jul. 29, 2014)

Second Circuit Upholds Denial of Defense Base Act Benefits Based on the ALJ’s Medical Credibility Findings

In a very brief unpublished opinion, the Second Circuit upheld a denial of Defense Base Act benefits.  The court summarized the dispute and outcome as follows:

Khan argues the ALJ failed to apply the presumption of 33 U.S.C. § 920(a) to his disability claim.  The ALJ correctly applied the presumption in determining whether Khan suffered from a work-related injury.  However, the § 920(a) presumption does not apply in determining whether any disability was caused or aggravated by a particular work-related injury.  A separate burden-shifting scheme governs that inquiry.  See Pietrunti v. Dir., Office of Workers’ Comp. Programs, 119 F.3d 1035, 1038 (2d Cir. 1997); Palombo v. Dir., Office of Workers’ Compensation Programs, 937 F.2d 70, 73 (2d Cir. 1991).  Under that scheme, the employee must first establish that the disability was caused by a work-related injury.  See Palombo, 937 F.2d at 73.  Here, the ALJ reviewed the entirety of the record and found the report by Doctor Brief to be more credible than the one provided by Doctor Singh as to causation.  Therefore, the BRB committed no error of law and the ALJ’s findings were supported by substantial evidence.  See Pietrunti, 119 F.2d at 1042 (“Credibility findings of an ALJ are entitled to great deference and therefore can be reversed only if they are patently unreasonable.” (quotation marks omitted)).

Khan v. Torres Aes, — Fed. Appx. —-, No. 13-3628 (2d Cir. Aug. 20, 2014).

For those interested in reviewing the Benefits Review Board’s opinion, click this link.