The trap for the unwary traps another

by Matthew H. Ammerman on September 14th, 2018

     The Supreme Court calls it a “trap for the unwary.”[1] Section 33(g) provides that an injured LHWCA worker must get written approval from his employer and its insurance carrier prior to a third-party settlement that is less than his LHWCA entitlement or his LHWCA benefits will be forfeited.[2] That written approval must be filed with the U.S. Department of Labor within 30 days of the date the settlement.[3] Also, the worker must notify his employer of any settlement with or judgment rendered against a third person before LHWCA benefits are awarded by an administrative law judge.[4] Section 33(g) is interpreted by its plain terms.[5]
     The Fifth Circuit in Parfait v. Director, OWCP, focuses on the notice requirement of Section 33(g)(2) in holding LHWCA benefits were forfeited.[6] The ALJ’s formal award of LHWCA benefits to Parfait of only $1,493.60 was not final because it was on appeal. Therefore, a Section 33(g)(1) comparison of Parfait’s LHWCA entitlement to the amount of his third-party settlement was not ripe.[7] But Parfait did not provide actual notice to his employer of a $325,000 settlement with third-party Apache or a $41,542.17 civil judgment against another third party, Wood Group, prior to the ALJ’s award.
     Parfait argued that his employer at the time of injury, Performance Energy Services, LLC, was on notice of the settlement with Apache because Performance’s counsel was invited to participate in mediation of the third-party lawsuit. The Fifth Circuit rejected that argument because, at best, Parfait only notified the employer of the possibility of settlement.[8] As to the judgment against Wood Group, Parfait argued the LHWCA employer was on constructive notice because the U.S. District Court for the Southern District of Texas, Galveston Division, published the verdict on the PACER system on June 2, 2017. The Fifth Circuit held that was inadequate to satisfy Section 33(g)(2). The worker has an “affirmative duty to notify [the employer of a settlement or judgment].”[9] Constructive notice of the judgment in a public record was insufficient.
     The court says that there is a dearth of federal circuit opinions on the type of notice required to be provided to the employer to satisfy Section 33(g)(2).[10] The takeaway from Parfait is that constructive notice of a judgment and a phone call advising of mediation is not enough.


[1] Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 483, 112 S. Ct. 2589, 2598 (1992).
[2] 33 U.S.C. § 933(g)(1).
[3] Id.
[4] Bethlehem Steel Corp. v. Mobley, 920 F.2d 558, 561 (9th Cir. 1990); Fisher v. Todd Shipyards Corp., 21 BRBS 323 (1988).
[5] Nicklos Drilling Co. v. Cowart, 927 F.2d 828, 832 (5th Cir. 1991)(en banc), aff’d, Estate of Cowart, 505 U.S. 469, 484, 112 S. Ct. 2589, 2598 (1992).
[6] 2018 U.S. App. LEXIS 25736 (5th Cir. September 11, 2018).
[7] Id. at *12.
[8] Id. at *15.
[9] Id., citing Fisher, 21 BRBS 323 (2015); see also Edwards v. Marine Repair Services, Inc., 49 BRBS 71 (2015).
[10] Id. at *13-14.

Posted in not categorized    Tagged with Section 33(g), LHWCA, Cowart



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