Hercules Offshore Finished with Chapter 11 Bankruptcy

In September of this year, the U.S. Bankruptcy Court in Delaware approved Hercules Offshore’s restructuring plan, which proposed to give control of the company to its bondholders in exchange for debt forgiveness. Under the plan, the bondholders swap out $1.2 Billion in debt for control of the company. The bondholders pledged a $450 million dollar loan to fund the company’s exit, which would fast-track its exit out of Chapter 11. With a signed deal with the bondholders, along with its 900 million in revenue, and roughly 80 million in cash on hand, Hercules Offshore believed it was in a good position to overcome the industry’s downturn due to record low oil prices. At the time of the approved restructuring plan, the company stated it hoped to be out of bankruptcy by November.

 

True to its word, during the first week of November, the company confirmed it has completed its financial restructuring and has emerged from Chapter 11 bankruptcy.

 

http://www.worldoil.com/news/2015/11/09/hercules-offshore-emerges-from-bankruptcy

 

Day with the DOL in New Orleans

Loyola University hosted its annual “Day with the DOL” seminar on Tuesday, December 8th in New Orleans, Louisiana. The panelists at this year’s seminar included Administrative Law Judge Patrick Rosenow, David Duhon, District Director of the 7th Compensation District, OWCP, Mouledoux, Bland, Legrand, & Brackett’s very own Alan Brackett, and Jeffery Briscoe of the Law Offices of Art Brewster.

 

The panelists talked the attendees through the claims process at the Office of Workers’ Compensation Program level, which includes attending Informal Conferences with claims examiners, and submitting settlement agreements to the District Director for review. Among the many practice points discussed, District Director Duhon emphasized the timeliness requirements for filing standard Department of Labor pleadings throughout the life of a claim. For example, in order to avoid penalties, a Longshore employer must file a Form LS-202, Employer’s First Report of Injury, within 10 days of a work-related injury that leads to lost time. District Director Duhon cautioned that an employer should follow the “better safe than sorry” method when reporting workplace injuries. He also cautioned that, in accordance with Section 14(f) of the Act, the employer/carrier shall pay a claimant an award within 10 days of the service of the District Director’s Order, or else a penalty in the amount of 20% of the award will be assessed against the Employer and Carrier. As a practice point, Mr. Brackett noted that many Carriers first send the award checks to counsel prior to submission of the Settlement Agreement to the District Director for review. District Director Duhon also requested that counsel pay special attention to the requests for documentation made by claims examiners, as required by Section 30(b).

 

The panelists also addressed the often-litigated issues of attorney’s fees. The attendees, which included members of both claimants’ bar and defense bar, discussed the intricacies of proper attorney fee submission. For example, Mr. Brackett suggested that more detailed entries are less vulnerable to objection by defense counsel. Judge Rosenow acknowledged the delays often associated with fee petition adjudication at the Office of Administrative Law Judges and indicated that the claimants’ bar can expect to see a more timely review process implemented.

 

Judge Rosenow also addressed the OALJ’s current caseload, advising the attendees that the Longshore docket might soon be hampered by the influx of Black Lung claims. The attendees acknowledged, as a practice point, that any anticipated delay in setting hearing dates might prompt settlement of more claims prior to formal hearings. The panelists also instructed the attendees on the use of the newly-implemented OALJ online search function, which allows a user to search a claim’s status and the documents previously filed. While the search function is not yet as technologically advanced as the DOL’s SeaPortal site, it is highly efficient.

 

Overall, the panel discussion was quite informative and beneficial to all those in attendance. For any questions related to the discussion, or for practical advice for litigating at the OWCP or OALJ level, please feel free to contact us.

Wreck Removal Leaves Insured in the Sludge

In December of 2008, Tom’s Welding Inc. (“TWI”) commenced wreck removal/salvage operations pursuant to its agreement with BEI, the owner of the Tank Barge DIA–IA (the “Barge”), which became grounded earlier that year. At or around this time, and in close proximity to these operations, an oil sludge and sheen was observed in the Port of Orange, requiring a clean-up operation in the Sabine River and its tributaries.

 

TWI contends that they first became aware of the spill on December 15, 2009, when it received notice from the United States Coast Guard, naming TWI as the responsible party. Shortly thereafter, the USGC filed a declaratory action in the Eastern District of Texas to have TWI (along with other defendants not named herein) declared liable for the removal costs associated with the oil spill under the Oil Pollution Act of 1990 (“OPA 90”), as well as civil penalties under the Clean Water Act (“CWA”).

 

Six months after the filing of this lawsuit, TWI sent notice of the claim to its insurer, Great American Insurance Company of New York (“Great American”). In turn, Great American filed this declaratory judgement, disputing that it owed coverage and/or a duty to defend TWI for potential liability in the underlying suit.

 

The policy at issue contained a “Marine Commercial Liability Limited Pollution Coverage Endorsement” (the “Limited Pollution Endorsement”), which covered TWI for property damage it became obligated to pay as a result of “the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ “ resulting from its “Maritime Operations” – identified in the policy as “ship repair.”

 

Ultimately finding in favor of Great American, the Court outlined several reasons why TWI is not owed insurance coverage under its policy with Great American. First, lacking any meaningful legal distinction between wreck removal and ship repair at law, the Court applied the general rule of construction; construing that words in the insurance contract “in accordance with their plain and ordinary meaning,” the Court determined that wreck removal and ship repair are two very distinct functions and call for different policies of insurance. Specifically, the court reasoned that the term “wreck removal” contemplates a vessel that is a total loss that must be removed from navigable channels and, as was the case here, dismantled for scrap while remaining in the water. As such, no aspect of removal of wreckage is contemplated in ship repair, which merely involves moving a vessel from the water to a facility for repair. The function, the risks, and the outcomes are distinct. Accordingly, the Court opined that the Limited Pollution Endorsement does not cover liability arising out of TWI’s wreck removal operations.

 

Second, because TWI did not provide Great American with notice of the Coast Guard’s 2009 letter until six months after the Texas Litigation was filed, the explicit exclusion to coverage under the Limited Pollution Endorsement, for failure to notify Great American of “an actual or potential pollution accident or occurrence within 30 days of [its] knowledge of the event,” was enforceable against TWI.

 

Third, because TWI’s potential liability for the cleanup is based on the OPA 90, and for civil penalties under the CWA, and because the Limited Pollution Endorsement expressly excludes coverage for damages arising solely by statute, as well as coverage for “fines, penalties, exemplary or punitive damages,” the court reasoned that Great American had two additional reasons to deny coverage.

 

Finally, and without much hesitation or discussion, the Court shot down TWI’s contention that Great America breached its duty to defend, stating, “[h]aving already determined that the plain meaning of the terms “wreck removal” and “ship repair” bar coverage, this Court likewise holds that Great American had no duty to defend TWI.

 

Great American Insurance Company v. Tom’s Welding

5th Circuit Addresses LHWCA’s Last Maritime Employer Doctrine

The U.S. Fifth Circuit Court of Appeals recently addressed the last maritime employer rule under the Longshore and Harbor Workers’ Compensation Act (LHWCA).  The claimant was employed by Ramsay Scarlett & Co. at the Port of Baton Rouge from 1969 – 1991.  From 1991 – 2013, the claimant worked for a second employer, Westway, also at the Port of Baton Rouge.  In 2011, he was diagnosed with asbestosis, which he alleged was caused by exposure to asbestos brake pads and clutches during his employment with Ramsay Scarlett.  The claimant filed a claim for medical benefits against Ramsay Scarlett under the LWHCA.

 

The Administrative Law Judge determined that the claimant established a prima facie claim, which Ramsay Scarlett failed to rebut and that Ramsay Scarlett was the last maritime employer.  Ramsay Scarlett appealed to the Benefits Review Board, which affirmed the ALJ’s decision.

 

On appeal to the Fifth Circuit, Ramsay Scarlett argued that even if the claimant established a prima facie claim by virtue of his deposition testimony and the report of an industrial hygienist, it was not the last maritime employer.  Ramsay Scarlett argued that the claimant testified he also worked around cranes, trucks, and equipment that could have exposed him to asbestos while employed by Westway.  The Fifth Circuit held that because the claimant did not testify about asbestos exposure at Westway and Ramsay Scarlett failed to provide any contradictory evidence, there was not “substantial evidence” sufficient to rebut the claimant’s claim and establish Westway as the last responsible employer.  The Fifth Circuit affirmed the ALJ’s finding that Ramsay Scarlett was the last maritime employer and was responsible for all medical benefits related to the disease.

 

Ramsay Scarlett & Co. v. Director, OWCP