Fifth Circuit Reverses Benefits Review Board’s Finding that Claimant Successfully Invoked Section 20(a) Presumption

In a newly-published decision, the Fifth Circuit Court of Appeals in BIS Salamis, Inc. v. Director, OWCP and Joseph Meeks, No. 15-60148 reversed the Benefits Review Board’s determination that Claimant had successfully established a prima facie case of compensability under Section 20(a) of the LHWCA as to certain injuries.  In April 2009, Claimant was involved in an incident where he alleged a low back injury, a neck injury, and a missing tooth following an offshore personnel basket transfer.  All parties agreed there was an incident, but the nature and extent of injuries were disputed, as Claimant had significant pre-existing degenerative issues in his neck and lower back.  Claimant underwent low back surgery and received a recommendation for neck surgery. Claimant visited a dentist on one occasion for his missing tooth.


At formal hearing, ALJ Rosenow determined that Claimant lacked credibility for a number of reasons, including Claimant’s filing of falsified tax returns, the existence of surveillance contradicting his sworn testimony, and Claimant’s withholding information to mislead his doctors.  Because Claimant failed to “create any confidence in the accuracy of his testimony or even his motivation to at least attempt to tell the truth,” the ALJ denied benefits.  The Benefits Review Board reversed this decision, holding that the ALJ failed to address whether Claimant had the presumption of compensability under Section 20(a).


On first remand, the ALJ again emphasized that Claimant was so dishonest and unreliable that any medical testimony that relied on Claimant’s subjective history of injury was not credible.  The ALJ concluded that because the weight of Claimant’s medical evidence relied on his subjective history, that his medical evidence was insufficient to establish a prima facie case of harm.  Therefore, the ALJ held that Claimant had not met his burden under Section 20(a).


In its second opinion, the BRB again reversed.  The BRB held that not only had Claimant met the Section 20(a) presumption, but went further in its analysis, holding that the Employer failed to present any evidence to rebut the presumption.  The BRB remanded strictly for the purpose of determining Claimant’s average weekly wage.  In a dissent, Judge Boggs agreed that Claimant had met his burden under Section 20(a), but indicated that the proper procedural action was to remand to the ALJ for determination of whether the employer presented substantial evidence to rebut the Section 20(a) presumption.  On second remand, parties agreed to an AWW, and the BRB affirmed, extending a final and appealable order pursuant to Section 21(c).


The Fifth Circuit reversed the BRB and ordered reinstatement of ALJ Rosenow’s order on first remand.  The Fifth Circuit confirmed that credibility can be taken into account in the first step of the 20(a) presumption analysis.  The ALJ and not the BRB must weigh the evidence,  and ALJ Rosenow had determined that the medical records in Claimant’s favor were based solely on his subjective complaints.  Because Claimant had no credibility, the medical causation opinions also lacked credibility.  Claimant therefore failed to demonstrate that he suffered a harm and could not meet the requirements under Section 20(a) as to his neck and low back.  However, the Fifth Circuit affirmed the BRB’s determination that the ALJ’s denial of Claimant’s missing tooth was irrational and unsupported by substantial evidence.


BIS Salamis, Inc. v. Director, OWCP and Joseph Meeks

5th Circuit Finds Record Insufficient to Confirm OCSLA Situs in Indemnity Dispute

The U.S. Fifth Circuit Court of Appeals recently addressed the situs requirement of a personal injury claim arising under the Outer Continental Shelf Lands Act (OCSLA).  Tetra Technologies was performing a salvage operation on a decommissioned oil production platform in the Gulf of Mexico and retained Vertex Services to assist with the project.  A rigger employed by Vertex was injured when he fell approximately 80 feet into the water.  He sued Tetra for personal injury and Tetra sought indemnity from Vertex pursuant to a Master Service Agreement between the two companies.  The District Court determined Tetra was entitled to indemnity from Vertex and Vertex appealed to the 5th Circuit.


On appeal, Vertex raised several arguments including that under OCSLA, Louisiana law was applicable and the indemnity agreement was voided under the Louisiana Oilfield Indemnity Act (LOIA).  The first question for the Court was whether OCSLA applied to this case such that Louisiana law should be applied as a surrogate to federal law.  The adoption of state law as a surrogate to federal law requires 1) that the controversy arise on a situs covered by OCSLA (such as a fixed platform on the outer continental shelf); 2) that federal maritime law must not apply of its own force; and 3) state law must not be inconsistent with federal law.  For the controversy to arise on a situs covered by OCSLA in a contractual dispute, the majority of the work performed under the contract must occur on a stationary platform or other OCSLA situs.


After reviewing the plaintiff’s deposition testimony, the MSA, and the Salvage Plan, the Court was unable to conclude whether the majority of Vertex’s work was to be performed on an OCSLA situs.  The Court determined the record was inadequate and the case was remanded to the District Court for further evaluation of this dispositive question.


Tetra Technologies v. Continental Insurance Co.

U.S. 9th Circuit Sides with Claimant’s Counsel in Attorney Fee Dispute

Recently, in the case of Shirrod v. Director, OWCP et al., a Claimant’s attorney appealed the decision of the ALJ, which was affirmed by the BRB, to reduce his applicable hourly rate for attorney’s fees. Initially, Claimant sought attorney’s fees at the ALJ level. The fees requested were a result of a $400.00 per hour billing rate by Claimant’s counsel. In support of his claim for attorney’s fees, Claimant submitted an Oregon State Bar 2007 Economic Survey which provided billing rates for legal services in Oregon.

The ALJ awarded attorney’s fees based on a reduction of Claimant’s counsel billing rate to $340.00 per hour. As a basis for this decision, the ALJ rejected the economic survey as not probative. Rather, the ALJ developed a proxy market rate. After the BRB affirmed the ALJ’s award of attorney’s fees, Claimant sought an appeal on the contention that the proxy market rate formula was flawed.

In its review, the 9th Circuit noted that fees in Longshore Act cases should be commensurate with those of other types of cases. In these cases, the deciding authority should determine the “relevant community” and the prevailing market rates in that community. The 9th Circuit determined that despite the presence of readily available rate information, the ALJ had not relied on data tailored to the relevant community, which in this case was Portland, Oregon. Ultimately, the 9th Circuit held that the BRB erred in affirming an attorney’s-fee award based on a proxy market rate not tailored to the relevant community. Claimant’s petition for review was granted, the BRB’s decision was vacated, and the case was remanded for further proceedings.

Bankruptcy on the Horizon: Offshore Supply Companies Prepare

Companies engaged in supplying offshore services, an essential corner of the oil sector here in Louisiana, should be preparing for the potential increase in bankruptcies as the worst crude market downturn in decades spreads. More than half of the public companies in the offshore supply-vessel industry face a high probability of restructuring or bankruptcy, according to research conducted by the consulting firm AlixPartners.


Supply vessels are a lifeline to the rigs, hauling everything from people to pipes to food. Moreover, they’re custom-made for the oil industry and depend on the rigs for work; when the rigs slow down, so too does this custom-made supply chain.


There are now more than five supply vessels for each offshore drilling rig, up from roughly three vessels per rig in 2008. With the falling demand, companies have been forced to make hard changes


Close to home, one of Louisiana’s largest offshore supply companies is set to have more than 30 OSVs fleet stacked by year-end as the slump in oil prices continues to wreak havoc on the offshore market. The 30 stacked vessels will represent about half of the company’s OSVs. It’s fleet currently consists of 59 OSVs, but that is expected to increase to 61 vessels if scheduled deliveries in Q4 go according to plan.


Back in April, the company reported 18 new generation OSVs stacked in its Q1 results. At the time, the company said the lay-ups were part of aggressive cost cutting measures undertaken in response to soft market conditions. Other measures included company-wide headcount reductions and across-the-board pay-cuts for shore-side personnel. The company reported that for the third quarter of 2015, revenues were $116.3 million, a decrease of $50.6 million, or 30.3%, from the same period last year.


Following an early December 2015 statement from the Organization of Petroleum Exporting Countries, that it was essentially lifting its production target for crude, we should prepare for oil prices to remain lower for longer than previously expected. According to Transocean Ltd., the world’s largest supplier of offshore drilling rigs, the challenging offshore market is expected to last into 2017.


AlixPartners looked at 33 publicly traded companies as part of their study, and found that the amount of debt those companies carry compared with earnings before interest, taxes, depreciation and amortization, which is known as leverage, climbed over the year end in June – often a precursor to restructuring or bankruptcy.