Common Law Tort Claims Preempted by the DBA’s and LHWCA’s Exclusivity Provisions

Claimant was injured in a roadside bomb attack.  The employer and carrier paid medical and indemnity benefits pursuant to the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) as extended by the Defense Base Act (“DBA”).  In addition, Claimant filed a federal civil lawsuit against the employer and carrier asserting common law claims for breach of contract, breach of fiduciary duty, fraud, and conspiracy to defraud.  In his complaint:

Nadheer alleged that, before his transfer to Erbil, he had requested transfer to a hospital in Jordan and that his insurance provider had denied this request.  He claimed that this violated a provision in the LHWCA that allows patients to select their own physicians and that he was never informed of this and various other rights of his under the LHWCA.  He further asserted that, as a result of deficient medical treatment he received in Erbil, he had suffered horrific pain and a degree of potentially permanent disability to his right arm.

Claimant’s federal case was dismissed for want of jurisdiction.  The DBA’s and LHWCA’s exclusivity deprived the district court of jurisdiction.  The United States Court of Appeals for the Fifth Circuit agreed.

The intentional misrepresentation claims failed because “state law claims for bad faith withholding or termination of compensation benefits are preempted by the LHWCA.”  The Fifth Circuit found no meaningful difference between withholding benefits and the alleged bad faith mis-administration of benefits.  Therefore, the LHWCA preempted the cause of action and Claimant’s proper recourse would be found in the LHWCA’s criminal penalty statute, 33 U.S.C. 931(c), if the allegations were true.

Claimant’s breach of contract claim was preempted, too.  He argued that the language used in the insurance policy created a contractual obligation separate from the LHWCA’s statutory obligation.  The Fifth Circuit disagreed.  The LHWCA is a comprehensive compensation scheme that provides benefits in lieu of all common law damages, including Claimant’s breach of contract claim.

Finally, the Fifth Circuit determined that Claimant’s action against the insurers must also fail.   Such actions are implicitly preempted by the LHWCA’s exclusivity provision.

Nadheer v. Insurance Co. of Pennsylvania, 2013 WL 69343, slip op. (5th Cir. 2013)