Schaubert v. Omega Services Industries

• Decision Date: 14 October 1998
• Docket Number: BRB 98-153
• Parties: BRENT SCHAUBERT, Claimant v. OMEGA SERVICES INDUSTRIES and INSURANCE COMPANY OF NORTH AMERICA, Employer/Carrier-Respondents ELF AQUITAINE OPERATING INCORPORATED and CIGNA INSURANCE COMPANY, Employer/Carrier-Petitioners
• Court: Longshore Complaints Court of Appeals

BRENT SCHAUBERT, Claimant v. OMEGA SERVICES INDUSTRIES and ELF AQUITAINE OPERATING INCORPORATED and No. BRB 98-153

October 14, 1998

Appeal of the Decision and Order on Remand of Richard K. Malamphy Administrative Law Judge, United States Department of Labor.

Michael A. Varner (Brown, Sims, Wise & White, P.C.) Houston, Texas, for Elf Aquitaine and Cigna Insurance Company.

John A. Keller, Mandeville, Louisiana, for Omega Services Industries and Insurance Company of North America.

Before: SMITH and BROWN, Administrative Appeals Judges, and NELSON, Acting Administrative Appeals Judge.

DECISION AND ORDER

PER CURIAM:

Elf Aquitaine (Elf) appeals the Decision and Order on Remand (95-LHC-1150) of Administrative Law Judge Richard K. Malamphy rendered on a claim filed pursuant to the provisions of the Longshore and Harbor Workers' Compensation Act, as amended, 33 U.S.C. §901 et seq. (the Longshore Act), as extended by the Outer Continental Shelf Lands Act 43 U.S.C. §1331 et seq. (OCSLA). We must affirm the administrative law judge's findings of fact and conclusions of law if they are supported by substantial evidence, are rational, and are in accordance with law. 33 U.S.C. §921(b)(3); O'Keeffe v. Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359 (1965).

In this case, claimant was employed by Omega Services Industries (Omega), a labor supply company. Omega contracted with Elf to supply it workers, and claimant was assigned to work at Elf's offshore platform off the coast of Louisiana. On October 5, 1990, claimant injured, and later lost, his left thumb while working for Elf. Pursuant to the workers' compensation insurance policy between Omega and the Insurance Company of North America (INA), INA paid claimant disability and medical benefits.^[1] Exhs. A, D. INA now seeks reimbursement from Elf, arguing that Elf is claimant's borrowing employer and is responsible for the payment of claimant's benefits.

In 1991, claimant filed a third-party civil suit against several defendants, including Elf, for his injuries. In September 1993, the district court granted Elf's motion for summary judgment, finding it to be claimant's borrowing employer and therefore not subject to civil action. Exh. K. Once the appropriate parties were named as defendants, Exhs. E-J, claimant, in February 1994, settled his third-party case, noting that settlement was made without written approval of Omega or its insurer and that he relinquished his rights under the Act except that he reserved future claims against Elf.^[2] Exh. L. INA attempted to intervene in the case to recover its compensation payments from Elf, but the district court dismissed the intervention as being derivative of claimant's rights which had been settled, and it noted that, in any event, the intervention had been filed after Elf had been dismissed as a party to the case. Exh. M.

Thereafter, INA filed a claim under the Act against Elf, seeking reimbursement of monies it paid to claimant. The administrative law judge granted Elf's motion for summary judgment on the grounds that he did not have jurisdiction to address this insurance contract dispute because claimant no longer had an active claim. INA appealed the decision to the Board. The Board distinguished its decisions in Rodman v. Bethlehem Steel Corp., 16 BRBS 123 (1984), and Busby v. Atlantic Dry Dock Corp., 13 BRBS 222 (1981), from the instant case because it involves a meritorious claim for benefits for which claimant was fully paid, and the Board reversed the administrative law judge's determination that he lacked jurisdiction to address the issue. The Board held that the primary issue in this case is that of the responsible employer and that any issues related to insurance contracts are merely ancillary to this issue. Therefore, the Board concluded that, as claimant once had a meritorious claim for benefits, the administrative law judge has the authority to address the issue of the responsible employer under the borrowed employee doctrine and that his authority included addressing the ancillary contract issues. Schaubert v. Omega Services Industries, Inc., 31 BRBS 24 (1997).

On remand, the administrative law judge determined that Elf, as the borrowing employer, is the responsible employer under the Act. Decision and Order at 4. He also addressed each of Elf's defenses against reimbursing INA; he held that INA did not waive its right to indemnification against Elf, that as a result, he need not address the applicability of the Louisiana Oilfield Indemnity Act, La. Rev. Stat. Ann. §9:2780, that Section 33(g), 33 U.S.C. §933(g), does not preclude INA's entitlement to reimbursement for payments it made to claimant prior to his third-party settlement, and that reimbursement between employers is permitted under the Act. Decision and Order at 4-9. Therefore, he ordered Elf to repay INA for all disability and medical expenses it paid to claimant. Decision and Order at 9. Elf appeals this decision, and INA responds, urging affirmance.

JURISDICTION

Elf first contends that the Department of Labor does not have jurisdiction over this case because it is strictly a contract case between an employer and an insurer, and claimant is not an interested party. Without addressing all of Elf's specific arguments, we reject this assertion, as it was fully addressed in the Board's previous decision, Schaubert, 31 BRBS at 24. Therefore, the issue has been decided, and it is the law of the case. See Doe v. Jarka Corp. of New England, 21 BRBS 142 (1988).

REIMBURSEMENT

Elf next contends that the Act does not permit the reimbursement INA seeks.^[3]Moreover, it contends the administrative law judge erred in relying on Total Marine Services, Inc v. Director, OWCP, 87 F.3d 774, 30 BRBS 62 (CRT), reh'g en banc denied, 99 F.3d 1137 (5th Cir. 1996), aff'g Arabie v. CPS Staff Leasing, 28 BRBS 66 (1994). INA argues that reimbursement between a borrowing employer and a lending employer has been upheld by the Board and the United States Court of Appeals for the Fifth Circuit, in whose jurisdiction this case arises.

In Total Marine, the Fifth Circuit upheld the Board's decision that a borrowing employer is liable for a claimant's disability and medical benefits. Total Marine, 87 F.3d at 779, 30 BRBS at 66 (CRT). The court then concluded, without discussion:

in the absence of a valid and enforceable indemnification agreement, the borrowing employer is required to reimburse an injured worker's formal employer for any compensation benefits it has paid to the injured worker.

Id. (emphasis added). In Vodanovich v. Fishing Vessel Owners Marine Ways, Inc., 27 BRBS 286 (1994), the Board affirmed an administrative law judge's determination that the borrowing employer is solely liable for the claimant's benefits; therefore, it was proper for the administrative law judge to join that employer to the claim and order it to reimburse the claimant's lending employer. Thus, as between borrowing and lending employers, reimbursement of funds paid is permissible in cases arising under the Act. Consequently, we reject Elf's argument to the contrary.

SECTION 33(g)

Elf next contends the administrative law judge erred in concluding that Section 33(g) does not apply to bar INA's right to recover benefits it paid to claimant for his work injury. Elf argues that claimant's failure to obtain pre-settlement approval from Omega, Elf or INA invokes the Section 33(g) bar and prevents Elf from being held liable in this case for benefits already paid by INA. INA argues that Section 33(g) does not bar its right to indemnity from Elf, as its right preceded the date of the settlement, its right was not derivative of claimant's rights, and it does not seek reimbursement for future benefits but only for those it paid before the settlement was reached. The administrative law judge found that although Section 33(g) may preclude INA's claim of reimbursement for amounts paid to claimant after he entered into his third-party settlement, it does not bar INA's claim for reimbursement of those benefits it paid prior to the execution of claimant's third-party settlement. Decision and Order at 7-8.

Although the administrative law judge did not determine whether Section 33(g) applies to this case, any error is harmless as Section 33(g) applies in determining whether a claimant's right to benefits is barred by his entry into an unapproved third-party settlement.^[4] Section 33(g) is not a basis for denying reimbursement between the potentially liable employers or carriers in this case. See generally I.T.O. Corp. of Baltimore v. Sellman, 954 F.2d 239, 25 BRBS 101 (CRT) (4th Cir.), modified in part on reh'g, 967 F.2d 971, 26 BRBS 1 (CRT) (1992), cert. denied, 507 U.S. 984 (1993). Thus, Section 33(g) is inapposite to the issue of INA's request for reimbursement.

Since a third-party recovery is at issue, however, the pertinent question is whether INA has a lien right under Section 33(f), 33 U.S.C. §933(f), against claimant's settlement recovery. Section 33(f) states:

If the person entitled to compensation institutes proceedings within the period prescribed in subsection (b) of this section the employer shall be required to pay as compensation under this chapter a sum equal to the excess of the amount which the Secretary determines is payable on account of such injury or death over the net amount recovered against such third person. Such net amount shall be equal to the actual amount recovered less the expenses reasonably incurred by such person in respect to such proceedings (including reasonable attorneys' fees).

33 U.S.C. §933(f). This section has been interpreted as granting an employer both a lien against the settlement recovery for payments previously made, as well as a credit or offset...