James Brown, an employee of Production Operators, Inc. (POI), was injured on an offshore platform and subsequently sued multiple defendants, including Forest Oil Corp., for damages. POI intervened to recover benefits it paid on Brown's behalf after discovering it failed to secure compensation under the Longshoreman and Harbor Workers' Compensation Act (LHWCA). The Browns then sued POI under 33 U.S.C. § 905(a) for damages. POI counterclaimed based on an Insurance Waiver Agreement signed by Brown, which stipulated that POI would provide full salary and medical benefits in exchange for Brown waiving claims against POI for injuries.
Before trial, the Browns settled with all defendants except POI for $600,000. A jury subsequently found both POI and Forest Oil liable for the Browns' injuries. The district court deducted the settlement amount and prior benefits from the jury's total damages of $666,367.04, leading to a judgment against the Browns for $54,272.96 owed to POI.
Separately, James Brown filed a breach of contract suit against POI in Texas state court, alleging wrongful termination of benefits after initiating the LHWCA action. This case was removed to federal court, where POI's counterclaim was consolidated. The district court granted POI's motion for summary judgment, dismissing Brown's claims with prejudice. The Browns appealed aspects of both the LHWCA case and the breach of contract case, which were consolidated for review. The Court vacated and remanded in part while affirming other portions of the lower court's decisions.
A summary judgment is reviewed de novo, where it can be granted if no genuine material fact issue exists and the moving party is entitled to judgment as a matter of law. Under the Insurance Waiver Agreement, Brown waived his right to compensation under the Longshore and Harbor Workers' Compensation Act (LHWCA) in exchange for contract benefits. However, Section 915(b) of the LHWCA nullifies any employee waiver of compensation rights, rendering Brown's breach of contract claim legally invalid, supported by precedent. The validity of the contract is distinct from any failure by POI to secure compensation, which is addressed separately under the LHWCA.
In his claims of fraud and misrepresentation, Brown must prove POI's intent to deceive and resulting damages. For negligent misrepresentation, he must establish POI's duty to provide accurate information, a breach of that duty, and damages from reliance on the misrepresentation. The undisputed facts indicate POI was unaware of Brown's federal jurisdiction status when the agreement was signed, undermining any claim of intent to defraud. Although Brown suggests POI misrepresented its self-insurer status, such a misrepresentation does not affect the contract's validity, and he has not demonstrated how this caused him damages. Consequently, Brown has not established a genuine issue of material fact regarding his fraud and misrepresentation claims, negating the need to consider POI's prescription argument.
The Browns contest the district court's decision to offset their $600,000 settlement against the damages awarded at trial, arguing that Louisiana law, applicable under the Outer Continental Shelf Lands Act (OCSLA), should dictate the offsetting method. They assert that Louisiana's proportionate fault approach mandates that a nonsettling tortfeasor is liable only for their share of fault, citing Diggs v. Hood. POI counters that the OCSLA allows Louisiana law only if no inconsistent federal law exists, and because the Longshore and Harbor Workers' Compensation Act (LHWCA) enforces a one recovery policy, a dollar-for-dollar credit is warranted. POI also challenges the Browns' standing to raise this claim and argues that the issue is moot since the contribution between POI and Forest Oil is resolved. The legal context reveals that Brown's injury occurred on a platform subject to the OCSLA, making the LHWCA the applicable compensation scheme. Typically, under the LHWCA, employees cannot sue their employers unless the employer fails to secure compensation, which allows the Browns to pursue a civil action. The case hinges on whether the LHWCA mandates a pro tanto offset rule for such civil actions, a matter requiring statutory interpretation. POI cites Hernandez v. M/V Rajaan and Edmonds v. Compagnie Generale Transatlantique to support its view that the LHWCA modifies state law regarding nonsettling defendants' liability.
The vessel brought in several third-party defendants, with the plaintiff settling with them prior to trial. In assessing the liability of the nonsettling defendant, the maritime pro tanto approach was adopted, stipulating that the plaintiff is entitled to a single recovery for his injuries, which must be offset by the settlement amount received from the third-party defendants. The document expresses skepticism about the ongoing relevance of the Hernandez decision based on the Supreme Court's ruling in McDermott, Inc. v. AmClyde, which favored the proportionate share method over a dollar-for-dollar credit in maritime cases. It highlights that the Longshore and Harbor Workers' Compensation Act (LHWCA) does not explicitly endorse the pro tanto rule, and the court declines to follow Hernandez's reasoning. The panel also dismisses reliance on Edmonds, clarifying that it did not address the liability of nonsettling defendants but reaffirmed joint and several liabilities. The panel notes that in Edmonds, the Supreme Court ruled that a vessel should be liable for the full damages owed to a longshoreman, emphasizing that any adjustment should not disadvantage the injured employee. However, the current situation differs, as the Browns voluntarily accepted the risks associated with their settlement. The document further explains that Section 905(a) of the LHWCA aims to encourage employer participation in the compensation scheme by abolishing non-participating employers' immunity from tort claims, restoring employees' rights against non-participating employers. It indicates that while the statute lacks detailed legislative history, its wording shows Congress’s ability to modify standard state law principles when intended.
Section 905(a) prohibits employers from using contributory negligence, fellow servant negligence, or assumption of risk as defenses, which are typically available in state tort actions. The court acknowledges that the Browns might receive an unintended benefit but refrains from altering the cause of action provided by Congress without explicit direction. The judgment requiring a $600,000 settlement deduction from the Browns' total damages is vacated, and the case is remanded for determining the share of the jury award attributable to POI.
Prior to the Browns' civil action, POI paid $120,640 to James Brown for compensation and medical benefits. The district court ruled that POI could recover this amount from the settlement with third-party defendants; however, the Browns contend that these payments were made under an Insurance Waiver Agreement and not under the Longshore and Harbor Workers' Compensation Act (LHWCA), which lacks provisions for employer liens. The court reviews this summary judgment de novo and concludes that POI's payments should be legally regarded as compliant with the LHWCA, despite being made under the invalid Agreement. The Department of Labor recognized these payments as compliant, and courts uphold the employer's subrogation right to reimbursement from a worker's third-party recovery. Hence, POI is entitled to an employer's lien.
Regarding the application of the lien to Jann Brown's damages, the Browns argue against applying it to her recovery. The court agrees, stating that an employer's offset is limited to the damages intended for the employee. On remand, the district court must restrict the lien application to the damages received by James Brown. The judgment is partly vacated and remanded for appropriate adjustments to the damage award, while the grant of summary judgment is affirmed.
