Interesting Longshore Cases from 2018 – Part One

Calendar year 2018 was a relatively uneventful year for jurisprudence under the Longshore and Harbor Workers’ Compensation Act (LHWCA).

Although there are several important issues that still need clarification and conflicts that require resolving, all things considered, a quiet year is probably a good thing. There were no 180-degree reversals on coverage issues, and no surprises in the key areas of the aggravation rule and last responsible employer rule, although there was one peculiar hearing loss case.

Here are brief summaries of some interesting issues that came up during 2018.

Russell L. Moody v. Huntington Ingalls, Inc.; Director, Office of Workers’ Compensation Programs, U.S. Department of Labor, 4^th Cir., No. 16-1773, January 3, 2018
The issue in Moody was whether voluntary retirement before the onset of a workplace injury’s debilitating effects precludes the existence of a “disability”. The LHWCA (33 U.S.C. section 902(10)) defines disability as “incapacity because of injury to earn … wages”. Mr. Moody required surgery after retirement for a pre-retirement shoulder injury. Was he entitled to total disability benefits for the period of the surgery and recuperation?

The U.S. Department of Labor’s Benefits Review Board (BRB) denied benefits, holding that voluntary retirement means a total loss of the ability to earn wages. Following retirement there is no wage-earning capacity to lose, thus no “disability”.

The federal 4^th Circuit Court of Appeals reversed. The Court noted that according to its “real world” meaning, retirement is not inherently disabling. The claimant could have worked after retirement if he had chosen to do so. The shoulder injury and resulting surgery took that choice away (it was irrelevant that the claimant had no intention of looking for a job after retirement).

In the Court’s opinion, the BRB had misconstrued the meaning of “incapacity”, confusing “unwilling” with “unable”. The case is covered in more detail in this blog post.

Note: The reasoning in this case is in accord with the holding in a 9^th Circuit case, Christie v. Georgia Pacific Co. (9^th Cir., 8/2/18, No. 17-70853).

McGill C. Parfait v. Director, Office of Workers’ Compensation Programs, U.S. Department of Labor; Performance Energy Services, LLC; Signal Mutual Indemnity Association, Ltd., 5^th Cir., No. 16-60662, September 11, 2018
The holding in this case affirms a strict interpretation by the BRB of the notice requirement of section 33(g)(2), dealing with the injured worker’s obligation to notify the employer/carrier in the event of settlement or judgment in a third party case.

Section 33(g)(2) states, “If no written approval of the (third party) settlement is obtained and filed as required by paragraph (1), or if the employee fails to notify the employer of any settlement obtained from or judgment rendered against a third person all rights to compensation and medical benefits under this chapter shall be terminated …”

Inviting the counsel for the employer/carrier to a meeting where settlement was discussed or publishing a judgment in the public record do not meet the claimant’s affirmative duty obligations under section 33(g)(2).

The Court does not prescribe exactly what form the “notice” must take, but presumably it entails a written notice from the claimant to the employer/carrier containing the specifics of any settlement or judgment.

Note: The employer does not have to demonstrate prejudice for the application of the notice requirement.

Eagle Marine Services v. Richard McNish; SSA Marine Terminals, LLC; Homeport Insurance Co.; Director, Office of Workers’ Compensation Programs, U.S. Department of Labor, 9^th Cir., 3/16/18, No. 16-71165, (Unpublished)
The issue in this hearing loss case was last responsible employer.

There was an audiogram on October 9, 2013, while Eagle Marine was the employer, showing bilateral hearing loss of 15.9%.

Then there was an audiogram on December 19, 2013, while SSA was the employer, showing bilateral hearing loss of 9.06%.

The DOL’s Administrative Law Judge (ALJ) had found that both audiograms qualified as “presumptive” evidence of hearing loss under the regulatory criteria of 20 C.F.R. 702.441 (b)(1)-(3).

Who is the last employer, responsible for the claimant’s hearing loss? Who was the last employer to expose the claimant to injurious noise prior to the onset of disability as demonstrated by a determinative audiogram?

The 9^th Circuit affirmed a literal interpretation of the last employer rule.

The October 2013 audiogram, second to last, while Eagle Marine was the (second to last) employer, marked the onset of hearing loss disability. Eagle Marine was the “last” employer to expose the claimant to noise prior to the determinative audiogram.

It would have been a more interesting case if the December 2013 audiogram had shown a higher degree of hearing loss.

Jimmy Neafus v. Artisan Industrial Metals; Jeffboat, LLC; Director, Office of Workers’ Compensation Programs, U.S. Department of Labor, BRB No. 17-0653, August 31, 2018
This hearing loss case involved several interesting issues, including last responsible employer, situs and status, and an uninsured, defunct employer. Also, there was the issue of the contractor/subcontractor relationship and the application of the statutory employer provision of section 4(a).

Jeffboat employed the claimant from 1972 to 1985 and again in 1993. Artisan employed the claimant from 1993 to 2010, during which time he was assigned to work at Jeffboat’s property, where he was exposed to injurious noise.

Artisan, a defunct company, did not have LHWCA insurance coverage, so late in the case the statutory employer provision of section 4(a) was implicated.

If Jeffboat and Artisan had been in a contractor/subcontractor relationship, then Jeffboat would have been the section 4(a) statutory employer, regardless of which was found to be the last employer, since if Artisan were last it had failed to secure its LHWCA obligations. If fact, this was the basis of the ALJ’s decision finding Jeffboat liable.

The BRB reversed the ALJ’s finding that Jeffboat was liable as statutory employer/contractor.

The BRB cited National Van Lines and Sketoe for the general proposition that an employer is a “contractor” under section 4(a) where “the injured employee was engaged in work either that is a subcontracted fraction of a larger project or that is normally conducted by the general employer’s own employees rather than by independent contractors”.

In Sketoe the 5^th Circuit used the phrase “a double set of contract obligations”; that is, the principal must be under some contractual obligation, which it in turn passes in whole or in part to the subcontractor.

In the BRB’s opinion, this was not a “two contract case”. Essentially, the BRB found that the claimant’s work for Artisan at Jeffboat in renovating the shipyard property was required by Jeffboat for its own purposes to support its contracts to build vessels. Jeffboat was an owner renovating and repairing its own property rather than passing on part of contract obligations it had to another party.

Note: Since section 4(a) did not apply and Artisan was found liable as the last employer, and since it was defunct and uninsured, it would then be up to the claimant to seek payment from the Special Fund under section 18(b).