Ditmore v. Fairfield Industries, Inc.

• Decision Date: 04 May 1994
• Docket Number: Civ. A. No. G-93-178.
• Citation: 855 F. Supp. 187
• Parties: Gerald G. DITMORE, Plaintiff, v. FAIRFIELD INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

855 F. Supp. 187

Gerald G. DITMORE, Plaintiff, v.FAIRFIELD INDUSTRIES, INC., Defendant.

Civ. A. No. G-93-178.

United States District Court, S.D. Texas, Galveston Division.

May 4, 1994.

Robert A. Chaffin, Houston, TX, Kurt Siess, Sugarland, TX, for plaintiff.

Dan Becker, Thomas Fitzhugh, III, Houston, TX, for intervenor-plaintiff.

Willie Ben Daw, III, W.T. Womble, King Waters, Houston, TX, for defendant.

ORDER

HUGH GIBSON, District Judge.

Before the Court is Intervenor's Motion for Summary Judgment.Plaintiff and Intervenor have submitted briefs, documentary evidence and a list of stipulated facts for the Court's consideration.

Background

PlaintiffGerald G. Ditmore, a Texas resident, was hired by DefendantFairfield Industries, Inc. in Texas and sent to Louisiana on a short-term assignment.On December 3, 1991, Ditmore suffered injuries while working aboard the Quarterboat Fairfield, a work platform operated by Fairfield on a navigable waterway.

Although the accident occurred in Louisiana, Ditmore was eligible and applied for Texas workers' compensation benefits under the extra-territorial provisions of the Texas Workers' Compensation Act.SeeTex.Lab. Code § 406.071.The "Employer's First Report of Injury or Illness," a standardized report form completed following the incident, indicates Ditmore hurt his lower back when he slipped after stepping down into a boat.Copies of the report were forwarded by Fairfield to the Texas Workers' Compensation Commission and to IntervenorLiberty Mutual Fire Insurance Company, Fairfield's workers' compensation underwriter.

Liberty Mutual never contested the workers' compensation claim and paid a total of $42,819.32 ($26,280.00 in temporary income benefits and $16,539.38 for medical expenses) to or on behalf of Ditmore.All of these benefits were paid pursuant to the Texas Workers' Compensation Act.

Ditmore filed a Jones Act complaint on April 5, 1993.Prior to reaching trial, Ditmore and Fairfield tendered to the Court an "Agreed, Final, Take Nothing Judgment" which was entered on January 24, 1994.In this document Ditmore acknowledges that the Quarterboat Fairfield is not a vessel.Plaintiff and Defendant agree, however, that Ditmore was a seaman by virtue of being attached to a "fleet of vessels."Ditmore and Fairfield further stipulate:

This settlement contemplates and incorporates the full amount of compensation benefits paid by Liberty Mutual Fire Insurance Co.("Intervenor"), Intervenor to the previous action.Plaintiff and Defendant agree that all such payments made by Intervenor on behalf of Defendant, including the $42,819.32 alleged in Intervenor's Petition in Intervention, were made as Maintenance and Cure for seaman's benefits under the Jones Act.

The insurance contract between Fairfield and Liberty Mutual provided for workers' compensation coverage and expressly excluded Jones Act coverage.Because Ditmore has proclaimed his seaman status and settled his maritime claim against Fairfield, Liberty Mutual asserts that equitable principles, in addition to the sparse case law on the issue, support Liberty Mutual's right to reimbursement of the $42,819.32 paid as workers' compensation benefits.

Ditmore contends Liberty Mutual cannot recover on the basis of either subrogation — because Liberty Mutual has no statutory subrogation right — or restitution — because neither he nor Fairfield engaged in any wrongful conduct.Ditmore also argues that Liberty Mutual cannot now assert mistake as to compensability because Liberty Mutual did not contest compensability of the injury within sixty days after receiving notice of the injury as required under the Texas Workers' Compensation Act.Tex.Lab.Code § 409.021(c).

Ditmore steadfastly insists that no double recovery will result if he receives the disputed amount, and thus equity does not compel a finding in favor of Liberty Mutual.As an alternative to ruling in Liberty Mutual's favor, Ditmore asks the Court to decline jurisdiction under the authority of 28 U.S.C.A. § 1367(c)(2), and allow the matter now before the Court to be decided "in the appropriate Texas forum."

The contested $42,819.32 has been placed in escrow pending the Court's ruling.Ditmore and Liberty Mutual agree there exists no genuine, material factual dispute and that the issue presently before the Court can be decided as a matter of law.No on-point, controlling Supreme Court or Fifth Circuit authority is available to provide unequivocal guidance for resolving the issue presented.

Analysis

The Texas Workers' Compensation Act exempts employers from common-law liability based on negligence or gross negligence.Castleberry v. Goolsby Bldg. Corp.,617 S.W.2d 665, 666(Tex.1981)."For covered employees, the Texas workers' compensation statute provides the exclusive remedy for injuries sustained in the course of their employment."Rodriguez v. Naylor Indus., Inc.,763 S.W.2d 411, 412(Tex.1989).

The Jones Act provides that "any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law against his employer."46 U.S.C.App. § 688.The Supreme Court has ruled that this language provides a seaman's exclusive remedy.North Coal & Dock Co. v. Strand,278 U.S. 142, 147, 49 S.Ct. 88, 89, 73 L.Ed. 232(1928).The Texas Workers' Compensation Act and the Jones Act, consequently, provide mutually exclusive remedies for an injured worker.

The Supreme Court has held, when an employer is the permanent or pro hac vice owner of the vessel to which the employee is assigned, the employee may sue his employer under general maritime law notwithstanding that previously the employee has received compensation.Reed v. S.S. Yaka,373 U.S. 410, 83 S.Ct. 1349, 10 L.Ed.2d 448(1963).Accordingly, an amphibious worker such as Ditmore may file for and receive workers' compensation benefits before the issue of seaman status is resolved.Sharp v. Johnson Bros. Corp.,973 F.2d 423, 427(5th Cir.1992).

Credit and Reimbursement

Both federal and state courts have concluded that an injured maritime worker is not allowed to recover twice for the same maritime injury — once under federal maritime law and again under the state workers' compensation plan.SeeSun Ship, Inc. v. Pennsylvania,447 U.S. 715, 725, 100 S.Ct. 2432, 2439, 65 L.Ed.2d 458, 466(1980);Miron v. All Alaskan Seafoods, Inc.,705 F.Supp. 518, 519(W.D.Wash.1988);State Dept. of Public Safety v. Brown,794 P.2d 108, 110(Alaska1990);McFarland v. Justiss Oil Co.,526 So.2d 1206, 1214(La.App.1988);Benders v. Board of Governors,636 A.2d 1313, 1314-15(R.I.1994);Indiana & Michigan Elec. Co. v. Workers' Compensation Commissioner,184 W.Va. 673, 403 S.E.2d 416, 420(1991).Similarly, the Texas Workers' Compensation Act provides that an injured worker who elects to pursue the employee's remedy under the workers' compensation laws of another jurisdiction and who recovers benefits under those laws may not recover under the Texas act.Tex.Lab.Code § 406.075.

If an employer provides workers' compensation benefits to an injured employee and the injured worker is ultimately determined to be a seaman, the employer can receive a credit for these payments against the Jones Act settlement or judgment.See, e.g., Massey v. Williams-McWilliams, Inc.,414 F.2d 675, 679(5th Cir.1969), cert. denied,396 U.S. 1037, 90 S.Ct. 682, 24 L.Ed.2d 681(1970);Jacques v. Kalmar Industries, AB,8 F.3d 272, 273(5th Cir.1993).In some situations, however, the nature of the insurance coverage may preclude a set-off or credit.See, e.g., Gauthier v. Crosby Marine Service, Inc.,752 F.2d 1085, 1090(5th Cir.1985)(no set-off allowed where seaman alone purchased the insurance);Owens v. Conticarriers & Terminals, Inc.,591 F.Supp. 777, 792-93(W.D.Tenn.1984)(no set-off where medical insurance was provided as a "fringe benefit").None of these relatively uncommon insurance-coverage circumstances are a concern in the instant case.

Although conceding that, under both maritime law and the Texas Workers' Compensation Act, a credit is allowed when workers' compensation benefits are paid to a seaman, Ditmore asserts that the rule is not applicable to his situation.Ditmore characterizes Liberty Mutual's claim as one of subrogation, or in the alternative, as restitution.He claims the Texas workers' compensation scheme precludes Liberty Mutual's recoupment under either theory.

In Texas, a worker's compensation carrier's right of subrogation is provided by statute.Gautreaux v. Port Arthur,406 S.W.2d 531, 534(Tex.Civ.App. — Beaumont1966, writ ref'd n.r.e.).The Texas Workers Compensation Act expressly subrogates the carrier only to a worker's claims against third parties.Tex.Lab.Code § 417.001-.002.Ditmore concludes, therefore, that Liberty Mutual must take nothing on its claims since there exists no statutory right of subrogation to Ditmore's claims against his employer.

In the alternative, Ditmore portrays Liberty Mutual's reimbursement request as a claim for restitution pursuant to the Texas Workers' Compensation Act.The act declares that an employee who has obtained excess workers' compensation payments through fraud, misrepresentation, or fabrication, alteration, concealment or destruction of documents, is liable for full repayment of the funds plus interest.Tex.Lab.Code § 415.008(a) and (c).According to Ditmore, he has not acted wrongfully, and restitution should not be required absent employee wrongdoing as delineated in the workers' compensation statute.

Both of Ditmore's arguments fail because Liberty Mutual is neither claiming subrogation rights nor directly seeking restitution from Ditmore pursuant to the Texas Workers' Compensation Act.Instead, Liberty Mutual wants credit and reimbursement for workers' compensation benefits paid to a worker who was not entitled to receive them.SeeCommercial Union Ins. Co. v. McKinnon,10 F.3d 1352(8th Cir.1993)....