Baldwin Haspel Burke & Mayer LLC

Maritime Update: “Borrowed Employee” Entitled Only to LHWCA Compensation, No Tort Suit

Bill Schwartz -  Posted on by Baldwin, Haspel, Burke & Mayer

Waukesha Pearce Industries, Inc. employed Milorad Raicevic as an offshore platform mechanic beginning in 2008. While still employed by Waukesha Pearce, Raicevic worked on an offshore platform owned by Fieldwood Energy located on the outer continental shelf in the Gulf of Mexico. Almost a year into working (and sleeping) on Fieldwood’s platform, Raicevic awoke after midnight to an alarm blaring in the mechanic’s room. Raicevic slipped and fell twice, due to oil that had leaked on the floor, while trying to address the mechanical issue that triggered the alarm.

Raicevic suffered back injuries that necessitated various treatments, including surgery, physical therapy, and steroid injections. Raicevic received payment for those treatments through Waukesha Pearce’s workers’ compensation benefits. Additionally, Raicevic sued Fieldwood and the platform operators for negligence. Fieldwood defended by asserting that Raicevic was its “borrowed employee,” so workers’ compensation, including the Longshore and Harbor Workers Compensation Act (LHWCA), precluded Raicevic’s tort claim against them. Despite this defense, the case went to trial before a jury.

At trial, the jury found that both Fieldwood and Raicevic were each 50% responsible for the injuries. The jury also made special findings about the factors that a court weighs to decide “borrowed employee status.” The trial court considered the jury’s findings and concluded that the necessary conditions for immunity from tort suit were met. As a result, judgment was entered that the LHWCA gave Fieldwood tort immunity and dismissed the suit against them. The Plaintiff appealed.

On appeal, the Fifth Circuit Court first turned to the question of Raicevic’s employer. They correctly held Fieldwood was required to show Raicevic was its “borrowed employee” in order to have tort immunity under the LHWCA. In order to  determine  whether  an  employee is  a  “borrowed employee,”  the court had to apply a nine factor test articulated  in the prior decision of Ruiz  v.  Shell  Oil  Company. These nine factual inquiries underlie “borrowed employee status,” but the ultimate determination of whether an employee is a borrowed employee is a question of law for the court to decide.

The nine factors were:

1. Who  had  control  over  the  employee  and  the  work  he  was  performing,  beyond mere suggestion of details or cooperation?

2. Whose work was being performed?

3. Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?

4. Did the employee acquiesce in the new work situation?

5. Did  the  original  employer  terminate  his  relationship  with  the employee?

6. Who furnished tools and place for performance?

7. Was  the  new  employment  over  a  considerable  length  of  time?

8. Who had the right to discharge the employee?

9. Who had the obligation to pay the employee?

After review of the findings and the nine factors made by the jury, the  district  court  determined that Raicevic was Fieldwood’s borrowed employee.

Also as part of its determination, the Court focused on the implied consent for his work situation attributed to Raicevic. When an employee begins work for an employer under the coverage of the LHWCA, he is presumed to have consented to the Act’s trade-off between potential large common law damages for smaller, but certain, LHWCA benefits. In other words, when one is entitled to workers compensation benefits, the certainty of getting benefits arising out of any injury related to his employment is traded for the ability to file a tort action to recover possibly greater damages at trial. The Fifth Circuit noted that by the very act of continuing employment, the employee may be assumed to agree that the benefits offered by the LHWCA in the event of injury are acceptable. They then focused on whether the employee here (Raicevic) had consented (implicitly or explicitly) to this statutory trade-off. They found he did.

While the benefits paid to Raicevic were made by his actual employer, Waukesha Pearce, the lower district court had also found Fieldwood had LHWCA workers’ compensation insurance at the time of Raicevic’s injury. While Fieldwood had not actually paid the LHWCA benefits, the court found Fieldwood could invoke the LHWCA as a bar to Raicevic’s tort claim. Here, the evidence showed both Fieldwood and Waukesha Pearce had LHWCA insurance at the time of Raicevic’s injury.

In making this finding, the Fifth Circuit held it is enough for Fieldwood to invoke the LHWCA’s exclusive-recovery provision if it had such insurance. The Court specifically noted that “the LHWCA does not place any additional burden on the employer to immediately and actually make compensation payments to individual injured employees.” In other words, the payment of premiums to have such coverage to pay when and if benefits were due or owing was enough to provide Fieldwood with the immunity from tort suit.

The Fifth Circuit therefore found the lower court was correct to enter judgment for the defendant. Click here for a copy of the entire decision.


If you have any questions regarding this maritime matter, please contact Bill Schwartz at (504) 569-2900 or wschwartz@bhbmlaw.com.


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