Multi-Jurisdictional Worker’s Compensation Interrelationships Between USL&H and Admiralty- the Basics

1. Multi-Jurisdictional Worker’s CompensationInterrelationships Between USL&H and Admiralty- the Basics Presented by: Mary Ann Calkins Senior Vice President- Maritime SeaBright Insurance Company

2. Multi-Jurisdictional Workers’ Compensation United States Longshore and Harbor Workers’ Compensation Act Established 1927

3. Southern Pacific v. Jensen • 1908 Federal WC Act covered certain “federal” employees but notmaritime workers • 1914 Jensen died while unloading vessel over Navigable water-he was a longshoremen at time of injury on Navigable waters • On appeal, state WC claim rejected: • States were without power to extend WC remedy to Longshoremen injured on a gangplank between ship & pier. Federal jurisdiction over “maritime matters” • Longshoremen injured on the seaward side of a pier were left without a compensation remedy; Longshore injured on the pier were protected by state compensation Acts. • Congress enacted a federal system in 1927 – The United States Longshore and Harbor Workers Compensation Act- as a “gap filler” to injuries occurring upon the navigable waters of the United States by workers that were not Jones Act Seamen.

4. USL&H – The Act What Does The Act Cover? • Section 903. Coverage • “Compensation shall be payable under this Act ……from injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel)”

5. USL&H – Navigable Waters • All waters of the United States with tidal influence • Waterways engaged in maritime commerce • Adjoining piers, wharf (1972 amendment) Navigable Waters

6. USL&H - Situs • Navigable Waters, or • Adjoining pier • Wharf • Dry Dock • Terminal Building • Marine Railway Situs Test

7. USL&H - Situs • Navigable Waters, or • Adjoining area customarily used by an employer • Loading • Unloading • Repairing • Building a vessel Situs Test (continued)

8. USL&H - Status • Any person engaged in maritime employment including: • longshoring operations • ship repairman • shipbuilder • ship breaker USL&H EMPLOYEE DEFINED:

9. USL&H - Status • Clerical, secretarial, security, data processing ** • Camp, club, restaurant, museum,retail outlet or recreational operation employees • Marina employees not engaged in construction of marina (maintenance excepted) • Suppliers, transporters or vendors temporarily on premises • Aquaculture workers USL&H Employee Does Not Include • **only if employees are subject to state workers’ compensation law.

10. USL&H - Status USL&H Employee Does Not Include: (continued) • building, repairing or dismantling recreational vessel under 65 feet in length** • repairing or dismantling recreational vessel ** • master or member of a • crew of any vessel • person engaged by • master to load or unload • or repair any small • vessel under 18 tons net • **only if employees are subject to state workers’ compensation law.

11. Recreational Vessels and the USL&H Act • 29 footer • 131 footer(excludes repair or dismantling)

12. USL&H - Employer USL&H Employer Defined “The term ‘employer’ means an employer any of whose employees are employed in maritime employment, in whole or in part, upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway or other adjoining area customarily used by an employer in loading, unloading, repairing or building a vessel)” Perini 459 US 297 (1983) Bienvenu 164 F 3rd 901 (5th cir 1999) Morganti 415 F. 3d.407 (2nd Cir 2005)

13. USL&H - Employer • Governments: • officer or employee of United States, or • agency thereof, or • any state or foreign government, or • any subdivision thereof Employers NotCovered

14. USL&H - Subcontractors SUBCONTRACTORS Section 904. Liability for Compensation “In the case of an employer who is a subcontractor, only if subcontractor fails to secure the payment of compensation shall the contractor be liable for and be required to secure the payment of compensation.” Secure means to insure or self insure.

15. USL&H – Legal Entities • Partners and Individuals (not covered) Partnerships, Sole Proprietorships • Executive Officers (covered, no waiver possible) • Employees (covered) Corporations (Subject to Situs and Status) • Members (covered, no waiver possible) • Managers (covered, no waiver possible) • Employees (covered) Limited Liability Corporation (Subject to Situs and Status)

16. USL&H – Special Fund Section 944. Special Fund (8F) Second Injury fund for USL&H benefits • Tax based on % of indemnity payments and use of fund • Federal Tax Multiplier on Retros • Non “F” Multiplier on State Act classes

17. USL&H – Related Acts L&H benefits to employees of contractors performing public works construction outside the US, US Territories, possessions and at military bases outside US Defense Base Act provides L&H benefits to all workers whose duties are performed while out on the Outer Continental Shelf exploring/extracting natural resources, who are not seaman Outer Continental Shelf Lands Act provides Non appropriated Funds Instrumentalities Act provides L&H benefits for civilian employees working on US military bases throughout the world who are not paid with funds appropriated by Congress

18. Continental Shelf (source: Office of Naval Research)

19. Regional Planning Areas on the Outer Continental Shelf

20. Multi-Jurisdictional Workers’ Compensation SIMPLE SUMMARY How To Determine The Exposures If employee works • Around docks, piers, vessels, cargo, but are not assigned to specific vessels, you have an USL&H Act exposure • Around specific vessel, or designated fleet, whether permanently assigned or not, you have an Admiralty exposure

21. USL&H – Dual Capacity • Section 905(b) Exclusiveness of Liability • Breach the duty to be seaworthy causes injury to Longshoreman. • Employee may bring action (in rem) against vessel as third party • Injury caused by negligence of employer in it’s capacity as vessel owner Dual Capacity: Vessel Owner is Employer

22. Multi-Jurisdictional Workers’ Compensation Admiralty Law & Merchant Marine Act (The Jones Act)

23. Admiralty Law What Is It? • Federal Law Governing Navigation and Shipping • Judiciary Act of 1789 Gives Federal Courts Jurisdiction • Developed From British Admiralty Courts in American Colonies • Primarily Local Matter, State Court Jurisdiction • Law of Ships Flag Determines Source of Law

24. Admiralty Law Obligation to Injured/Sick “No Fault” Obligation of Employer to Employee • Transportation • Wages • Maintenance • Cure • 1903 The Osceola, 189 U.S. 158

25. Merchant Marine Act (The Jones Act) 46 U.S.C. sec 688: Recovery for injury to or death of seaman 1920 Any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right of trial by jury, and in such action all statutes of the United States modifying or extending the common-law right or remedy in cases of personal injury to railway employees shall apply; and in case of the death of any seaman as a result of any such personal injury the personal representative of such seaman may maintain an action for damages at law with the right of trial by jury, and in such action all statutes of the United States conferring or regulating the right of action for death in the case of railway employees shall be applicable. Jurisdiction in such actions shall be under the court of the district in which the defendant employer resides or in which his principal office is located.

26. Maritime Employers Responsibilities • To pay transportation, wages, maintenance and cure • Vessel must be “reasonably fit for her intended purpose” • Vessel owner has duty to provide a seaworthy vessel • Breach of this duty with resulting injury leads to claim for “unseaworthiness” • in rem claim against the vessel - Federal Jurisdiction • Unseaworthiness can be instantaneous

27. Admiralty Extension Act • Extended admiralty jurisdiction to shoreside if injury or illness caused by a vessel through its maritime operations. • “The admiralty and maritime jurisdiction of the United States shall extend to and include all cases of damage or injury, to person or property, caused by a vessel on navigable waters, not withstanding what such damage or injury be done or consummated on land.” 1948 Title 46 USC sec 740

28. Other Admiralty Extensions • Death On the High Seas Act

29. The Seamen • Answer: Seamen Who Has Maritime Remedies Available to Them? • Person is: • Permanently assigned to or performs a substantial part of his work upon • A vessel in navigation (or to an identifiable group of such vessels) and • Contributes to the function or mission of the vessel How does employee gain seamen status

30. Seamen Status Two Prong Test to satisfy the criteria of: “employment related connection to a vessel in navigation” • First: “Employees duties must contribute to the function of the vessel or to the accomplishment of its mission.” • Second: “Seamen must have a connection to a vessel in navigation (or to an identifiable group of such vessels) that is substantial in terms of both its duration and its nature.” “A worker who spends less than about 30% of his time in the service of a vessel in navigation should not qualify as a seaman under the Jones Act.” US Supreme Court: Chandris, Inc. et al. V. AntoniosLatsis, 513 US 945,115 S.Ct. 2172 (1995)

31. U.S Two U.S. Supreme cases specific to “in navigation” Vessel was in drydock, still in navigation even though it is not accomplishing a “transportational” function. Contribution to vessel’s function or accomplishment of its mission must be substancial in duration and nature-created the 30% test. Chandris v. Latsis, U.S. (1995) Vessel need not be in motion to qualify as a vessel. It is relevant whether vessel is used or “capable” of being used in maritime transportation either in theory or practical means Stewart v. Dutra, 125 S.Ct. 1118 (2005) “A vessel is a ‘being”. It is born (built), it has a life and it dies. It is in navigation until it is taken out of navigation to such an extent that the original entity no longer exists; it is dead.” - author unknown

32. “In Navigation” Examples

33. “Mission of the Vessel” • McDermott International, Inc. v. Wilander, 498 U.S. 337 (1991) • “…we believe that the requirement that an employee’s duties must ‘contribute to the function of the vessel or of the accomplishment of its mission’ captures well an important requirement of seaman status. It is not necessary that a seaman aid in navigation or contribute to the transportation of the vessel, but a seaman must be doing the ship’s work” US Supreme Court -

34. “Mission of the Vessel” Examples

35. Overlaps-Dual Jurisdiction • Papai v. Harbor Tug 9th Cir. (1997) Jones Act & USL&H Act are mutually exclusive • Southwest Marine, Inc. v. Gizoni, 502 U.S 81 (1991) Worker entitled to pursue both remedies simultaneously Dual Jurisdiction examples- • Divers • Pile drivers-marine construction • Seafood processors on vessels • Oil spill responders • Entertainment vessels • Biological observers

36. Admiralty Law and the Jones Act SUMMARY Regardless of fault, employer has duty to provide…. • Transportation • Wages • Maintenance • Cure Employee can claim against the vessel for unseaworthiness Allows employee suits against employer for negligence.

37. Merchant Marine Act (The Jones Act) Jones Act simplified • Allows employee (crew member) suits against employer • Allows for trial by jury and remedy for wrongful death • in personamclaim against employer/vessel owner - Local Jurisdiction

38. Insurance Solutions USL&H Endorsement Maritime Employers Liability Endorsement Voluntary Compensation Maritime Endorsement Protection and Indemnity Policy Standard Workers Compensation Policy

39. Standard Workers’ Compensation Policy Item 3A: Statutory State Act Coverage Item 3B: Employer Liability Limits (905b) Item 3C: Other States Coverage Standard NCCI policy excludes • USL&H and all amendatory acts thereto • FELA: Federal Employers Liability Act • Injury to master or member of the crew of any vessel

40. USL&H Coverage Endorsement Amends USL&H exclusion in standard policy Statutory USL&H benefits in schedule of states listed Premium increase for non “F” class multipliers Section 905(b); dual capacity addressed under part two - employers liability No coverage for Defense Base Act, etc….

41. Maritime Employers Liability Coverage Endorsement Territorial limitation: (paragraph A.3. and A.6.) Covers Master or Member of Crew (removes exclusion 10) Excludes coverage under Protection & Indemnity policy (added exclusion 13) Transportation, Wages, Maintenance and Cure - Excluded (unless a premium charge is shown in schedule. Paragraph 14) Provides “in rem” coverage (paragraph D.) Bodily injury by disease includes illness Defense in addition to limits, unless amended

42. Maritime Employers Liability Coverage Endorsement Page 2 of Endorsement: Critical • Scheduled description of operations • Transportation, wages, maintenance and cure • Per accident limit • Per disease aggregate limit

43. Voluntary Compensation – Maritime Endorsement Insurance company volunteers to pay scheduled benefits Bodily injury to master or member of crew Work subject to endorsement is scheduled Schedule of benefits listed (State Act or USL&H Act) Conditions of payment (paragraph D): • Release insured and carrier of all responsibility for injury • Transfer rights of recovery to carrier • cooperate with carrier in enforcing rights of recovery

44. Protection and Indemnity Policy Covers liability of….. • Employer • Owner and or operator of vessel Covers loss of life or injury, or illness of any person, including crew (line 14, 15 & 16) Covers removal of wreck (line 19) Excludes compensation acts (line 44 & 45)

45. Insurance Solutions Penalties for Failure to Insure

46. Penalties - USL&H Act USL&H: • Employer subject to one year in jail • Employer can be fined up to $10,000 • President, secretary and treasurer severally personally liable for compensation to injured. • Benefits payable to injured worker, out of pocket • Loss of exclusive remedy (employee suit allowed) • Broker error and omission claim

47. Penalties - Maritime Admiralty (Maritime): • Transportation, wages, maintenance and cure paid out of pocket • Defense of negligence and or unseaworthiness claims out of pocket • Payment of judgement out of pocket • Broker error and omission

48. Putting it all Together