Sketoe v. Dolphin Titan International
| Decision Date | 15 September 1994 |
| Docket Number | 93-817A,BRB 93-817 |
| Parties | DONALD SKETOE Claimant-Respondent Cross-Petitioner v. DOLPHIN TITAN INTERNATIONAL Employer-Respondent and EXXON COMPANY, U.S.A. Self-Insured Employer-Petitioner Cross-Respondent DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR Respondent |
| Court | Longshore Complaints Court of Appeals |
Appeal of the Decision and Order - Awarding Benefits of A.A Simpson, Jr., Administrative Law Judge, United States Department of Labor.
James L. Bates, Jr., Metarie, Louisiana, and Chris J. Roy Alexandria, Louisiana, for claimant.
Patrick E. O'Keefe (Montgomery, Barnett, Brown, Read Hammond & Mintz), New Orleans, Louisiana, for Exxon Company, U.S.A.
Joshua T. Gillelan II (Thomas S. Williamson, Jr., Solicitor of Labor; Carol DeDeo, Associate Solicitor; Janet Dunlop, Counsel for Longshore), Washington, D.C., for the Director, Office of Workers' Compensation Programs, United States Department of Labor.
Before: SMITH, BROWN, and McGRANERY, Administrative Appeals Judges.
DECISION and ORDER
Exxon Company, U.S.A. (Exxon) appeals, and claimant cross-appeals, the Decision and Order - Awarding Benefits (89-LHC-3195) of Administrative Law Judge A.A. Simpson, Jr., awarding benefits 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., as extended by the Outer Continental Shelf Lands Act, 43 U.S.C. §1331 et seq. (the Act) We must affirm the findings of fact and conclusions of law of the administrative law judge which are rational, supported by substantial evidence, and in accordance with law. O'Keeffe v. Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359 (1965); 33 U.S.C. §921(b)(3). The Board heard oral argument in this case on January 13, 1994, in New Orleans, Louisiana.
To show the relationship of the parties in this case, we start with the fact that Exxon was the holder of a lease that it had obtained from the United States of America giving it the exclusive right and privilege to drill for, mine, extract, remove and dispose of oil and gas deposits in and under a particular described area of the Outer Continental Shelf of the United States seaward of Louisiana. RX-1. Exxon then entered into a contract, dated May 18, 1984, with Dolphin Titan International (Dolphin Titan) whereby Dolphin Titan, as the contractor, would furnish a self-contained platform drilling rig, referred to as the contractor's Drilling Rig Number 125. See RX-2. Dolphin Titan was to drill wells from a specified Exxon platform, with maximum depth set at 16, 000 feet, set casing, take cover, run tests, and furnish under its exclusive responsibility supervising, technical and rig personnel to perform the subject work. Payment was not on a set specified price but was to be made on a per diem basis with rates up to $8, 750 per 24-hour day. It is obvious that this was a multimillion dollar venture entered into by people thoroughly familiar with the business.
The drilling contract for Rig 125 provided that all work shall meet the approval of Exxon, but that the detailed manner and method of doing the work shall be determined by the contractor. It specified that Dolphin Titan was an independent contractor and that Exxon was interested only in the results obtained. Despite this, the administrative law judge stated that an examination of the contract indicated that Exxon had the right to supervise the performance of Dolphin in minute detail, an erroneous assertion our dissenting colleague repeats. See Smith, J., dissent at 16. The administrative law judge referred to Claimant's Exhibit No. 1 at 1-3; this document, however, was an attachment to a brief. See Claimant's brief in opposition to Employer's Motion for Summary Decision. A review of the contract itself, RX-2, fails to reveal any provision giving Exxon the right to supervise the performance of the contract by Dolphin, let alone in minute detail. See Cl. Ex. 19 at 14, 15. The specified and written intention of the parties was just the opposite.
Claimant sustained an injury to his right hand on July 15, 1984, while working as a derrickman for Dolphin Titan.[1] Although Dolphin had obtained workers' compensation coverage from Northumberland Insurance Company, [2] it is uncontested that this company was not a carrier authorized by the district director to provide coverage under the Act. See 33 U.S.C. §932(a); 20 C.F.R. Part 703. Nonetheless, Northumberland paid claimant benefits until it became insolvent, at which time Dolphin Titan assumed the payments. Dolphin Titan continued to pay claimant's temporary total disability benefits from December 16, 1984, until January 2, 1986, when it also became insolvent. Thereafter, claimant filed a claim against Exxon, seeking to hold it liable as a general contractor based on application of Section 4(a) of the Act, 33 U.S.C. §904(a).
In his Decision and Order, the administrative law judge found that Exxon was a general contractor and thus liable for the payment of compensation under Section 4(a) of the Act, inasmuch as the subcontractor, Dolphin Titan, failed to properly maintain compensation coverage. The administrative law judge also found that as claimant was not totally disabled by his right hand injury, he was limited to scheduled benefits for a 60 percent permanent physical impairment pursuant to Section 8(c)(3), 33 U.S.C. §908(c)(3). Thus, the administrative law judge held Exxon liable for temporary total disability benefits from the date of injury through June 4, 1991, permanent partial disability benefits under Section 8(c)(3) commencing June 5, 1991, interest and medical benefits, subject to a credit for any amounts paid by Dolphin Titan or its insurer.
On appeal, Exxon contends that it is not a general contractor within the meaning of Section 4(a) but rather is the "principal" or "owner" of oil lease rights obtained from the United States Government and that it hired Dolphin Titan for drilling services on its own property. Exxon argues that as it was not contractually obligated to any third party to perform the duties which claimant was executing at the time of his injury, the work cannot be considered a subcontracted fraction of a larger obligation. Moreover, Exxon contends that as it does not own offshore drilling rigs and does not employ drilling crews of its own, the work which Dolphin Titan was performing was not work normally performed by Exxon's own employees. Thus, Exxon contends that it is not a general contractor under the test set forth in Director, OWCP v. National Van Lines, Inc., 613 F.2d 972, 11 BRBS 298 (D.C. Cir. 1979). Claimant responds, urging affirmance, contending it does not matter whether Exxon's and Dolphin Titan's relationship was that of contractor and subcontractor or principal and independent contractor. In claimant's view, in either event, Exxon is liable. The Director, Office of Workers' Compensation Programs (the Director), also responds, urging that the administrative law judge's finding that Exxon is liable as a general contractor be affirmed. Claimant cross-appeals the administrative law judge's findings that he has reached maximum medical improvement and that he does not continue to be at least temporarily totally disabled. Exxon responds, urging affirmance of the administrative law judge's findings regarding the nature and extent of claimant's disability. The Director responds, urging that the case be remanded for further findings on the issue of suitable alternate employment.
The issue presented by Exxon's appeal is whether the administrative law judge erred in holding Exxon secondarily liable for paying claimant's benefits pursuant to Section 4(a) of the Act. Section 4(a), as amended in 1984, provides:
Every employer shall be liable for and shall secure the payment to his employees of the compensation payable under sections 907, 908, and 909 of this title. In the case of an employer who is a subcontractor, only if such subcontractor fails to secure the payment of compensation shall the contractor be liable for and be required to secure the payment of such compensation. A subcontractor shall not be deemed to have failed to secure the payment of compensation if the contractor has provided insurance for such compensation for the benefit of the subcontractor.
33 U.S.C. §904(a)(1988). The prior version of Section 4(a), as amended in 1972, provided:
Every employer shall be liable for and shall secure the payment to his employees of the compensation payable under sections 907, 908 and 909 of this title. In the case of an employer who is a subcontractor, the contractor shall be liable for and shall secure the payment of such compensation to the employees of the subcontractor unless the subcontractor has secured such payment.
33 U.S.C. §904(a)(1982)(amended 1984).[3] In this case, both Dolphin Titan and its insurer are insolvent. Thus, the issue is whether Exxon is a "contractor" liable for benefits under Section 4(a).
Although the United States Court of Appeals for the Fifth Circuit has not addressed the issue of contractor liability under Section 4(a), the United States Court of Appeals for the District of Columbia Circuit reviewed a case in which the claimant was injured while working for a company, Eureka, which had been delegated some of National Van Lines' pre-existing contractual obligations to transport goods. National Van Lines, 613 F.2d at 972, 11 BRBS at 298 ().[4] Like Dolphin Titan in the instant case Eureka was not properly insured and was bankrupt. The United States Court of Appeals for the District of Columbia Circuit, noting that the issue of whether National Van Lines could be deemed a "contr...
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