5th Circuit affirms full LHWCA lien recovery in 3rd party lawsuit

by Matthew H. Ammerman on October 23rd, 2011

This decision from the U.S. Court of Appeals for the 5th Circuit involves a lawsuit for vessel negligence under Section 905(b) and addresses 3 LHWCA issues:

(1) A 3rd party defendant's violation of a Coast Guard regulation does not preclude a contributory negligence defense against the longshoreman.

(2) An employer or carrier's lien for LHWCA benefits paid is not subject to reduction by the longshoreman's contributory negligence.

(3) And, wages paid in lieu of LHWCA compensation benefits are recoverable by the longshoreman’s employer.

Baham v. Nabors Offshore Corporation, 2011 U.S. App. LEXIS 21172 (5th Cir. October 18, 2011)(unpublished).

Lee Baham was a crane mechanic employed by Seatrax. He was sent to fix a crane on Nabor's offshore drilling rig, Dolphin 109. Nabors' rig supervisor David Prather climbed up a ladder to a platform surrounding the port-side crane, spoke briefly with Baham, and then was called up to the cab. Prather had not closed the cover to the ladder opening he passed through. Baham was walking on the platform looking up to inspect the underside of the cab and did not notice the opening in the platform floor. Baham fell through the opening and 14 feet to the deck below.

Baham argued that he did not have to prove fault because Nabors violated a Coast Guard regulation that requires deck openings to be covered at all times when not in use. U.S. Magistrate Judge Michael Hill found in a bench trial that Nabors was negligent as matter of law due to the regulatory violation that in part caused Baham's injury. But, Judge Hill found Baham's recovery should be reduced by 50% due to his own negligence. On appeal, Baham argued that he should not be charged with contributory negligence because Nabors violated a Coast Guard regulation. The Fifth Circuit quickly dispatched with this argument because Baham was not a seaman. The possible contributory negligence bar – incorporated by the Jones Act from FELA -- did not apply.

Baham's damages totaled $949,993.39, which Judge Hill reduced to an award of $474,996.695 due to his contributory negligence. Seatrax and its LHWCA compensation carrier, SeaBright Insurance Company, recovered $80,399.09 ($ 68,599.89 [medical expenses] and $11,800.00 [indemnity payments]) on its lien for benefits paid to Baham under the LHWCA.

Baham argued on appeal that the employer and carrier's lien should have been reduced by Baham's contributory negligence. Though incorrect, this argument is often asserted by plaintiffs and third-party defendants, presumably because some state workers' compensation acts allow lien reduction. The LHWCA does not. In a Section 905(b) suit against a third-party vessel, the LHWCA employer and carrier are entitled to recover the entire lien from the worker's net third-party recovery -- without reduction for contributory negligence or the employer's negligence. Id. at *6 citing Bloomer v. Liberty Mut. Ins. Co., 445 U.S. 74, 85-87 (1980); Jacques v. Kalmar Indust., AB, 8 F.3d 272, 274 (5th Cir. 1993); Hayden v. Kerr-McGee, 787 F.2d 1000, 1002-04 (5th Cir. 1986).

The court also briefly addressed Baham's argument that Seatrax should not be allowed to recover the wages it paid to Baham in lieu of compensation. Baham was brought back to work post-injury as a clerk but paid his higher, crane mechanic wages. Judge Hill allowed Seatrax to recover $80,107.50 it paid in excess of regular clerk wages based on the evidence that Seatrax paid that excess sum in lieu of LHWCA compensation. The credible intentions of the employer are dispositive of whether post-injury payments to an LHWCA-covered employee constitute wages or advance payments of workers' compensation. Shell Offshore, Inc., v. Dir., Office of Worker's Comp. Programs, 122 F.3d 312, 317-18 (5th Cir. 1997). Here, the court held Seatrax' payment of excess wages counted as LHWCA compensation benefits and were, therefore, recoverable in the same manner as if paid by an insurance carrier.

Therefore, the trial judge's findings and award were affirmed on appeal in all respects.

Baham v. Nabors Offshore Corporation, 2011 U.S. App. LEXIS 21172 (5th Cir. October 18, 2011)(unpublished).

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