In a new published decision, the Fifth Circuit addressed “whether an insurer who makes voluntary [Longshore and Harbor Workers’ Compensation Act (“LHWCA”)] payments to an injured employee on behalf of a shipowner/employer is entitled to recover these payments from the employee’s settlement of a Jones Act claim against the shipowner/employer based on the same injuries for which the insurer has already compensated him.” Ultimately, the court held that “an insurer acquires a subrogation lien on the employee’s Jones Act recovery for the amount of LHWCA benefits paid.”
The LHWCA system is like other workers’ compensation systems in that it embodies a compromise between employees and employers: in exchange for paying quick and certain compensation regardless of fault, employers are generally absolved from further liability. But the LHWCA does still preserve the availability of remedies against third parties who might have caused the worker’s injury. For example, a LHWCA-covered worker may bring an action against a vessel if his injury was caused by the negligence of the vessel. While it is “possible for an injured worker to obtain a tort recovery from a third party based on injuries for which he has already been compensated by his employer under the LHWCA,” employers still have “a subrogation right to be reimbursed from the worker’s net recovery from a third party for the full amount of compensation benefits paid.”
Injured workers can also sue under the Jones Act, which works in tandem with the LHWCA: “The Jones Act provides tort remedies to sea-based maritime workers, while the LHWCA providers workers’ compensation to land-based maritime employees.” This is true even if the injured worker voluntarily received LHWCA payments without a formal award. Still, the employer is allowed to take “a credit against those items of damages . . . that bear a reasonable relation to the items of loss compensated by workmen’s compensation benefits.” But, the Fifth Circuit asked in its new published decision whether “an insurer who has made voluntary LHWCA payments to an injured employee on behalf of the employer have a right to be reimbursed from the employee’s settlement of a Jones Act claim against the employer based on the same injuries?”
The answer is, “Yes.” The Fifth Circuit concluded that there was “no sound reason” to differentiate a carrier’s right of reimbursement against a Jones Act settlement from a carrier’s right of reimbursement against a LHWCA Section 905(b) claim. Accordingly, the Fifth Circuit held that “an insurer who makes voluntary LHWCA payments to an injured employee on behalf of the employer acquires a subrogation lien on a recovery by the employee in a Jones Act suit against the employer based on the injuries for which the insurer has already compensated him.”
Disclosure: Will Bland and Patrick Costello of Mouledoux, Bland, Legrand & Brackett, represented the owner of the construction barge (the injured worker’s employer).