A McCorpen Defense Has Only Three Elements

In an unpublished decision, the Fifth Circuit affirmed a district court’s denial of maintenance and cure benefits, and punitive damages, against a claimant’s former employer.  The facts demonstrated that the claimant underwent a hip replacement surgery prior to his employment, and that he was on prescription pain medicines when he under went a pre-employment physical.  The claimant never disclosed this injury to his employer.

Maintenance and cure requires a vessel owner to provide compensation and medical care to an injured seaman, “even if the seaman’s injury stems from a pre-existing illness or condition, unless, the seaman knowingly concealed this condition from his employer when he was hired.”  If there was concealment, an employer may lodge a McCorpen defense.  McCorpen v. Central Gulf Steamship Corp., 396 F.2d 547, 548 (5th Cir. 1968).  Such a defense applies “when an employer subjects a seaman to a medical examination as part of the hiring process and the vessel owner can prove that the seaman: (1) intentionally misrepresented or concealed pertinent medical facts; (2) the non-disclosed facts were material to the company’s decision to hire the claimant; and (3) there was a causal link between the concealed pre-existing injury and the employment injury.” 

In his appeal, the claimant seized upon Jauch v. Nautical Servs., Inc., 470 F.3d 207 (5th Cir. 2006) to argue that the Fifth Circuit required an additional McCorpen defense element: “[i]f a vessel owner would have employed the seaman even had the requested disclosure been made, concealment will not bar the seaman’s recovery of maintenance and cure.”  The Fifth Circuit denied this argument, stating that the McCorpen defense has only three elements, and that the quoted language from Jauch merely refers to the second prong of the McCorpen defense.  Finally, the court concluded that the employer successfully established a McCorpen defense because the claimant misrepresented or concealed his hip replacement injury, a fact that was material to the employer’s decision whether to hire the claimant, and that the hip replacement was connected to the workplace injury.

Atlantic Sounding Co., Inc., No. 10-30357, slip op. (5th Cir. Nov. 23, 2010).

Work-Over Rig Mechanic Entitled to LHWCA Coverage

On November 17, 2010, the Fifth Circuit issued an unpublished opinion discussing the issue of longshore jurisdiction.  A mechanic who was working on a work-over rig mounted on a barge in Louisiana state waters was injured in the course of his employment.  He filed a claim for benefits under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”).  Following a hearing, the Administrative Law Judge concluded that claimant was not a covered employee under the LHWCA because the barge was a fixed platform and not a vessel, and that claimant was not engaged in traditional maritime activity.  The decision was appealed, and the Benefits Review Board (“BRB”) reversed, finding that claimant was a covered employee because he was injured in the course of his employment on navigable waters.  Following remand, the ALJ awarded temporary total disability benefits, and the BRB affirmed the decision.  Thereafter, the employer and carrier appealed the decision to the Fifth Circuit.

In Director v. Perini North River Associates, 459 U.S. 297 (1983), the Supreme Court held that if an employee is injured over navigable waters in the course of employment on those waters, he satisfies the status requirement and is afforded coverage under the LHWCA.  459 U.S. at 324.  To address whether the claimant was engaged in maritime employment, the Fifth Circuit looked at its decision in Bienvenu v. Texaco, Inc., 164 F.3d 901 (5th Cir. 1999), wherein it held that an employee need not establish that he was engaged in maritime employment if the injury occurred over navigable waters.  Petitioners argued that the Supreme Court’s decision in Herb’s Welding, Inc. v. Gray, 470 U.S. 414 (1985), controlled this case.  In Herb’s Welding, the Supreme Court held that “employees engaged in oilfield work are not engaged in maritime employment.”  However, the Court was addressing the status of workers injured on stationary platforms and not vessels, which rendered Herb’s Welding inapposite.  Further, the Fifth Circuit recognized in Manuel v. P.A.W. Drilling & Well Serv., Inc., 135 F.3d 344 (5th Cir. 1998) that “a barge of the exact configuration of the barge in this case was a vessel.”  The claimant therefore was injured on a vessel over navigable waters and he was entitled to coverage.

Great Southern Oil and Gas Co., et al. v. Director, OWCP, No. 09-60859, slip op. (5th Cir. Nov. 17, 2010).

Ninth Circuit: “Award” Does Not Necessarily Refer to a Compensation Order

In a new published opinion, the Ninth Circuit addressed Section 6(c) of the Longshore and Harbor Workers’ Compensation Act.  Section 6(c) states: “Determinations under subsection (b)(3) [which deal with the determination of the national average weekly wage] with respect to a period shall apply to employees or survivors currently receiving compensation for permanent total disability or death benefits during such period, as well as those newly awarded compensation during such period.”  Although the court focused on the meaning of the words “award” and “awarded,” the holding essentially addressed when those words are synonymous with “entitlement.”

In Roberts, the claimant injured his neck and shoulder when, in 2002, he slipped on a patch of ice.  His employer voluntarily paid compensation, but those payments stopped in May 2005.  Following a hearing before an administrative law judge (“ALJ”), the court awarded claimant temporary total disability (“TTD”) from March 11, 2002 through July 11, 2002; permanent total disability (“PTD”) from July 12, 2005 through October 9, 2005; and permanent partial disability (“PPD”) benefits from October 10, 2005 through the present.  The claimant was a high wage earner, and he was entitled to the maximum compensation rate.  The ALJ applied the maximum compensation rate for 2002, but subsequently used the fiscal year 2006 maximum rate for the short period of time between October 1, 2005 and October 9, 2005.

The Ninth Circuit opened its analysis with an English lesson.  It contended that “[t]he Act does not expressly define the terms ‘award’ or ‘awarded.’”  Although the Supreme Court has used the transitive verb “award” to mean “to give or assign by sentence or judicial determination,” here the Ninth Circuit focused on use of “award” as a noun.  By doing so, it reasoned that the terms “award” and “awarded” are used differently throughout the Act.  Sometimes an “award” means a formal compensation order—see, e.g., 33 U.S.C. §§ 913(a), 914(a) and 928 (a)—but other times, the term “award” means “entitlement,” without reference to a formal order.  For instance, the court reasoned that Section 8 “uses the terms ‘award’ and ‘awarded’ to refer to an employee’s entitlement to compensation under the Act generally, separate and apart from any formal order of compensation.”  Additionally, the Ninth Circuit noted that Sections 4, 10(h)(1), 14(a), and 33(b) supported its “entitlement” contentions.

Turning, then, to Section 6(c), the court deciphered the meaning of “newly awarded compensation.”  The Ninth Circuit now holds that “an employee is ‘newly awarded compensation’ within the meaning of Section 6(c) when he first becomes entitled to compensation.”  Applied to the facts of this case, the claimant became entitled to compensation when he was injured in 2002, and the ALJ correctly used the 2002 maximum compensation rate for those periods of time.

From there, the court addressed another portion of Section 6(c): “currently receiving compensation for permanent total disability.”  It determined that a claimant is “currently receiving” PTD benefits when he is first entitled to receive such benefits, whether he is being paid or not.  Here, the ALJ erred by failing to use the maximum compensation rate for 2005 for the period of time that Claimant was entitled to PTD benefits.  Viewing Roberts in its entirety reveals that the maximum compensation rate for 2005 applies only to Claimant’s PTD benefits, and that the maximum compensation rate for 2002 applies to the TTD period before it and the PPD  period after it.  In other words, the 2005 rate is sandwiched by the 2002 rate.

There are surprising omissions in the Ninth Circuit’s decision.  For instance, there was no discussion about Section 19, which deals with the procedure of Longshore claims.  Section 19(e) states, “[t]he order rejecting the claim or making the award (referred to in this Act as a compensation order) shall be filed in the office of the deputy commissioner…”  See 33 U.S.C. § 919(e).  It would seem that Congress provided a parenthetical definition that the court should have addressed. 

Additionally, the court’s reference to Section 14(a) to support its theory that “award” is sometimes synonymous with “entitled” appears incorrect.  Section 14(a) states, “[c]ompensation under this Act shall be paid periodically, promptly, and directly to the person entitled thereto, without an award, except where liability to pay compensation is controverted by the employer.”  If the Ninth Circuit’s reasoning is used, Section 14(a) would require periodic and prompt payment to non-controverted claims, where the claimant is “without entitlement.”  Obviously, this is incorrect and Congress most likely intended “award” in Section 14(a) to mean “compensation order.”  Implementing regulations suggest that the Department of Labor would agree.  See 20 C.F.R. § 702.231.

Roberts v. Director, OWCP, — F.3d —-, 2010 WL 4483972 (9th Cir. 2010).

Compound Interest Owed in Limitation Proceeding

The United States Eighth Circuit Court of Appeals recently issued a ruling on the proper interpretation of the “per annum” interest provision found in Supplemental Rule for Admiralty or Maritime Claims F(1).  The case arose out of a 1998 allision on the Mississippi River near St. Louis.  A towboat and its tug allided with a bridge, breaking up the tow and causing the loose barges to strike and damage The Admiral, a casino entertainment ship moored nearby. 

Rule F(1), which governs the posting of security when establishing a limitation fund under the Limitation of Shipowner’s Liability Act, 46 U.S.C. § 30505, became an issue for the parties in 2005.  The plaintiff in limitation, American Milling, initially elected to post a surety bond for $2.2 million in 2001.

In 2005, after the Eighth Circuit affirmed the trial court’s ruling on apportionment of fault and American Milling’s entitlement to limit its liability, American Milling sought to deposit $2.2 million cash into the registry of the court, along with simple interest from the date it posted the surety bond in 2001.  The claimant in the limitation action opposed this, arguing that interest on the fund should be compounded annually.

The Eighth Circuit ultimately agreed with the claimant and affirmed the ruling below, holding that courts sitting in admiralty have considerable discretion in fashioning equitable remedies and that compounding interest annually serves to compensate claimants for the lost use of their funds and resources during the pendency of the limitation action.  The court also held that although it would have been acceptable to deposit cash in the court’s registry at the outset, American Milling could not now change its type of security for its own economic advantage to the detriment of the claimants.

American Mill Co. v. Brennan Marine, Inc., — F.3d —-, 2010 WL 4137559 (8th Cir. 2010).

Note: This entry was prepared by Trevor Cutaiar, an associate at Mouledoux, Bland, Legrand & Brackett.