607 F.2d 1101 (5th Cir. 1979), 77-1577, Highlands Ins. Co. v. American Marine Corp.

Docket Nº:77-1577.
Citation:607 F.2d 1101
Party Name:HIGHLANDS INSURANCE COMPANY, Plaintiff-Appellee, v. AMERICAN MARINE CORPORATION, Louisiana Materials Co., Inc., and Sea Drilling Corporation, Defendants-Appellants.
Case Date:December 05, 1979
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 1101

607 F.2d 1101 (5th Cir. 1979)

HIGHLANDS INSURANCE COMPANY, Plaintiff-Appellee,

v.

AMERICAN MARINE CORPORATION, Louisiana Materials Co., Inc.,

and Sea Drilling Corporation, Defendants-Appellants.

No. 77-1577.

United States Court of Appeals, Fifth Circuit

December 5, 1979

Neal D. Hobson, Joseph W. Looney, New Orleans, La., for defendants-appellants.

A. R. Christovich, Sr., A. R. Christovich, Jr., New Orleans, La., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before TUTTLE, GOLDBERG and RANDALL, Circuit Judges.

TUTTLE, Circuit Judge:

This is an appeal by American Marine Corporation and its two wholly-owned subsidiaries, Louisiana Materials Company, Inc. and Sea Drilling Corporation, from a judgment against them in favor of the original plaintiff, Highlands Insurance Company. The judgment was based upon final audits by the insurer of the payrolls of the insured company's Workman's Compensation policies using a premium basis of $100 per week for 52 weeks of employment for each of the employees. The defendants contended that the audit was wrong in several respects: (1) That a 26 week basis should have been used because the offshore employees were employed

Page 1102

to work "seven on seven off;" (2) That certain listed employees were executives and not properly included in the schedule for offshore workers; (3) As to those workers who were scheduled as "onshore" workers, the policies were invalid as to them because the retrospective rating plan in effect as to the offshore policies, which purported to apply also to the onshore policies, were invalid because the plan was not filed with the Louisiana Insurance Commission.

The record discloses that some time prior to the issuance of this policy, offshore workers had worked 10 days on and five days off. At that time, it was the custom in the industry for insurance premiums to be calculated on the basis of every week during which an employee performed any services. This would, of course, cover every week of total employment, because the ten day period would extend into parts of two weeks. Sea Drilling Corporation had initially insured with Highlands beginning in 1966. It entered into a three year program beginning in 1969, while American Marine and Louisiana Materials were insured through other companies until January and February of 1971. The policies issued to American Marine and Louisiana Materials included an endorsement which adopted by reference the retrospective rating program attached to the Sea Drilling policy.

When Highlands discovered that Sea Drilling had been reporting its seven on seven off employees on a 26 week basis for 1969, it demanded a change from Sea Drilling, and as a result a meeting was had in May of 1970. Highlands contends that this meeting resolved the issue between the parties by an agreement by Sea Drilling that the basis for premium computation would be 52...

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