Fifth Circuit Court of Appeals Affirms Denial of Claimant’s Right to Future LHWCA Benefits

A recent case decided by the Fifth Circuit Court of Appeals, Parfait v. Director, OWCP and Performance Energy Services, has affirmed the denial of Claimant’s right to future benefits under the Longshore & Harbor Workers’ Compensation Act (LHWCA).

Background – Claimant Filed a Claim for Total Disability Benefits under LHWCA

Claimant filed a claim for benefits under the Longshore & Harbor Workers’ Compensation Act for permanent and total disability benefits for back and chest injuries that he sustained while working for his Longshore employer. Following a formal hearing, the Administrative Law Judge (ALJ) awarded Claimant a closed period of Temporary Total Disability (TTD) benefits for the chest injury but denied benefits for an alleged lower back injury. Claimant appealed the ALJ’s award, which the Benefits Review Board (BRB) affirmed. Claimant then filed its Petition for Review with the Fifth Circuit Court of Appeals.

Concurrently, Claimant had filed a third-party tort action against various third-party defendants. While the Claimant’s BRB appeal was pending, Employer learned that Claimant had settled a portion of the third-party tort action as to one of the third-party defendants. The amount of settlement greatly exceeded the award of the ALJ. Although Claimant notified counsel for Employer that a mediation was being conducted to attempt settlement in the third-party claim, Claimant neither provided notice of the settlement to the Employer, nor obtained express written consent of the settlement to the Employer. Employer then moved to have the Fifth Circuit appeal dismissed pursuant to Section 33 of the LHWCA.

Fifth Circuit – Notice Requirement in Section 33 Ensures Employer’s Rights are Protected

In analyzing Section 33 of the LHWCA, the Fifth Circuit emphasized that Section 33(g) required that an employee obtain written approval of certain third-party settlements and to provide notice of all third-party settlements and judgments. The purpose of Section 33 was designed to ensure that the employer’s rights are protected and to prevent a claimant from unilaterally bargaining its way to funds to which an employer may be entitled. Per the Fifth Circuit, the notice requirement enables employers to protects its right of set-off against its future obligations and prevents double recovery on the part of the claimant.

Fifth Circuit Ruling

The Fifth Circuit held that Claimant’s right to compensation and benefits should be terminated under the plain language of the statute and under the U.S. Supreme Court precedent. See Estate of Cowart v. Nicklos Drilling, 505 U.S. 469 (1992). Further, the Fifth Circuit cited to a dearth of BRB precedent holding that if an employee settled for an amount greater than the total liability of the employer and fails to give notice, then the employee suffers termination of benefits. In this case, Claimant’s telephonic notice of mediation was “clearly inadequate” notice of an actual settlement. The Fifth Circuit dismissed Claimant’s Petition for Review.

Parfait v. Director, OWCP and Performance Energy Services

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