District Court Lacked Federal Question Jurisdiction on 33(g) Issue

Plaintiff sustained an injury that brought him under the purview of the Longshore and Harbor Workers’ Compensation Act (LHWCA).  He received benefits from the insurance carrier, LWCC, for LHWCA benefits.  Plaintiff also sued a third party for negligence in federal district court.

According to Section 933(g) of the LHWCA, a party forfeits any future benefits under the LHWCA if he or she settles with a third party without receiving written approval of the settlement from the LHWCA insurance carrier.  In the instant matter, Plaintiff and the third party reached an agreement at a settlement conference to settle the claim for a proposed amount.  An LWCC representative was present at the settlement conference, and expressed that LWCC would consent to the proposed settlement amount.  The federal district court therefore conditionally dismissed the claim based on the understanding that it had been settled.

Following the settlement conference, LWCC learned that it would likely be left liable for significant future exposure and therefore refused to executed the Form LS-33, which is the written approval for settlement required by Section 933(g) of the LHWCA.  The district court therefore vacated the conditional dismissal, and Plaintiff joined LWCC as a party to its third party claim for negligence.

Plaintiff requested that the federal district court order LWCC to execute the Form LS-33 or find that LWCC waived Section 933(g)’s written approval requirement.  LWCC moved to dismiss for lack of subject-matter jurisdiction.  The federal district court denied LWCC’s motion to dismiss because it found that the waivability of the Section 933(g) written approval requirement created federal-question jurisdiction.

Plaintiff moved for summary judgment and LWCC filed a cross-motion for summary judgment contending that the written approval requirement of Section 933(g) was not waivable.  The federal district court granted summary judgment in favor of LWCC and dismissed the complaint with prejudice, holding that LWCC’s decision to withhold consent on the settlement was a proper exercise of its power under the LHWCA.  Plaintiff appealed this ruling, and LWCC appealed the denial of its motion to dismiss for lack of subject matter jurisdiction.

The Fifth Circuit held that the district court incorrectly found that it had federal-question jurisdiction.  Federal-question jurisdiction exists if the party has asserted a federal cause of action or the party has asserted a state cause of action that necessarily raises a stated federal issue.  Here, Plaintiff did not assert any federal cause of action against LWCC, as Section 933(g) of the LHWCA does not create a private cause of action.  None of Plaintiff’s claims required proving a federal issue as an element of the claim, and Plaintiff failed to show that the state-law claims required proving a substantial federal issue.  The Fifth Circuit therefore reversed the summary judgment and rendered a judgment of dismissal.

Venable v. Louisiana Workers’ Compensation Corp., — F.3d —- (5th Cir. 2013).