In a recent ruling from the United States District Court for the Eastern District of Louisiana in In re Aries Marine Corp.,[1] Judge Lance Africk found that a waiver of subrogation by a Longshore and Harbor Workers’ Compensation Act (LHWCA) carrier did not waive the carrier’s right to an offset against future LHWCA liability. The court found that the carrier can claim an offset of compensation payments on a tort recovery made by a plaintiff.
In re Aries Marine Corp. – Background
This matter arose out of an accident with a lift boat, which was sent to house workers who on a platform in the Gulf of Mexico off the coast of Louisiana. The vessel jacked up, and a construction crew worked until the next day, when the vessel began to list and then sank. The workers, who were injured when the lift boat capsized in the Gulf of Mexico, received benefits under the LHWCA for their injuries from their employers and the LHWCA carriers.
Carriers Bring Subrogation Claims
The carriers then brought subrogation claims to recover the benefits paid from the defendants. The defendants and the plaintiffs moved for summary judgment, arguing that the carriers had agreed to waive their rights of subrogation pursuant to the terms of the contract between the employers and the owner of the rig. The policies provided for waiver of subrogation when required by written contract, so Judge Africk considered the requirements of the underlying contracts.
The waiver in the contract extended to the owner of the rig and its “invitees.” The Court addressed whether the owner of the lift boat and the claimants were, in fact, invitees, citing Louisiana law that defines an invitee as a person who goes onto premises with the expressed or implied invitation of the occupant on business of the occupant or for their mutual advantage. Judge Africk agreed with the owner of the rig that the employees were invitees of the owner of the rig and that the carriers were required to waive subrogation in favor of the claimants.
Having concluded that owner of the lift boat and the workers were invitees, and therefore subrogation was waived, Judge Africk considered the validity of the waiver under Louisiana state law. He had previously held a waiver was applicable to the contracts, invalidating indemnity provisions.[2] As there was unenforceable indemnity in this case, Judge Africk held that the statute did not void the waiver of subrogation, and the subrogation claims of the carriers were dismissed.
Carriers File Motion for Reconsideration
The carriers filed motions for reconsideration of the granting of the rig owner’s motion for summary judgment on their subrogation claims as LHWCA carriers. One carrier argued that, notwithstanding the waiver of subrogation, it had a claim for an offset, pursuant to Section 33(f), for the net tort recovery of plaintiff. Judge Africk acknowledged that dismissal of the claim for an offset would be “legal error.” Therefore, he amended the granting of summary judgment to reflect that the order did not affect the carrier’s claim for an offset pursuant to Section 33(f). Like the first carrier, the second carrier argued that it retained a right to claim an offset pursuant to Section 33(f). The Court granted the same relief to the second carrier, that it retained the right to assert an offset against the LHWCA claim pursuant to section 33(f).
Therefore, the carriers were allowed to claim the offset against future LHWCA liability despite the waiver of subrogation.
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[1] In re Aries Marine Corp., Nos. 19-10850, 19-13138, 2023 U.S. Dist. LEXIS 132835 (E.D. La. Aug. 1, 2023) (Africk).
[2] Citing the Fontenot v. Chevron U.S.A. Inc., 676 So.2d 557 (La. 1996), decision from the Louisiana Supreme Court, Judge Africk noted that a waiver of subrogation provision does not violate the Louisiana Oilfield Indemnity Act if the contract does not also require indemnity.