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Chenevert v Travelers Indemnity Company

Case No. 13-60119 (C.A. 5, Mar. 7, 2014)

In Massey v. Williams-McWilliams, Inc., 414 F.2d 675 (1969), we considered the case of a shipowner/employer who made voluntary payments to an injured employee under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) and who was later held liable to the worker in a Jones Act claim. We held that the shipowner/employer was entitled to “a credit against those items of [Jones Act] damages . . . that bear a reasonable relation to the items of loss compensated by [LHWCA] benefits.” Id. at 680. The present case requires us to answer a related question: whether an insurer who makes voluntary LHWCA payments to an injured employee on behalf of a shipowner/employer is entitled to recover these payments from the employee’s settlement of a Jones Act claim against the shipowner/employer based on the same injuries for which the insurer has already compensated him. We hold that such an insurer acquires a subrogation lien on the employee’s Jones Act recovery for the amount of LHWCA benefits paid. Accordingly, we REVERSE the district court’s denial of the motion to intervene filed by Travelers Indemnity Company (“Travelers”) and REMAND with instructions.

BACKGROUND



Gary Chenevert was employed by GC Constructors (“GC”) as a crane operator. In May 2007, Chenevert fell and was injured while working on a barge with a mounted crane. At the time of Chenevert’s accident, Travelers provided coverage to GC for, among other things, its workers’ compensation exposure to injured longshore and harbor workers. Travelers provided no coverage for “bodily injury to a master or member of the crew of any vessel.” Between May 2007 and May 2010, Travelers voluntarily paid Chenevert a total of $277,728.72 in indemnity and medical benefits under the LHWCA.

In May 2010, Chenevert sued GC in federal court, alleging that he was working as a seaman at the time of his accident and seeking damages under the Jones Act for GC’s negligence. Based on Chenevert’s claim that he was a “seaman” (rather than a “longshoreman”), Travelers stopped making payments under the LHWCA. In November 2010, GC filed a notice of lien claiming that, in the event judgment is rendered in favor of Chenevert on his Jones Act claim, GC “has a lien against any funds due and payable to Travelers Insurance Company who is the insurer under the U.S. Longshore and Harbor Workers’ Compensation Act.”
 

 

Judge(s): James E. Graves, Jr.
Jurisdiction: U.S. Court of Appeals, Fifth Circuit
Related Categories: Damages , Employment , Insurance , Torts
 
Circuit Court Judge(s)
James Graves, Jr.
Edith Jones
Jaques Wiener, Jr.

 

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Click the maroon box above for a formatted PDF of the decision.
case: 13-60119 document: 00512554303 page: 3 date filed: 03/07/2014 v. united states, 812 f. supp. 629, 633-34 (e.d. va. 1993). (1) the motion is timely; (2) the putative intervenor asserts an a lien on settlement funds paid by gc (who is insured by travelers) as an 2 magistrate judge’s jurisdiction, and the district court had never referred the complementary regimes that work in tandem: the jones act provides tort is in fact a movant that is currently appealing the denial of its motion to intervene. 8 chenevert and gc agreed on a settlement. in november 2011, gc notified the recovery by the employee in a jones act suit against the employer based on the clerk the district court’s denial of the motion to intervene filed by travelers united states court of appeals attempt to subrogate against its own insured. as the district court recognized, subrogation claim and entitled the employer to reimbursement to the extent of the insurer’s lien. id. at 1325. the insurer intervened and attempted to master or member of a crew of any vessel.” 33 u.s.c. § 902(3)(g). the supreme court has v. north river ins. co., 764 f.2d 306, 312 (5th cir. 1985). furthermore, if “settlement of the worker’s claim necessarily settled the employer’s compensation to land-based maritime employees.” stewart v. dutra obtained by the worker from a third party of compensation benefits that an explained: “[m]aster or member of a crew” is a refinement of the term “seaman” in the jones a third party for the full amount of compensation benefits already paid.” peters case: 13-60119 document: 00512554303 page: 10 date filed: 03/07/2014 “conflict[] with the basic principle of insurance law that an insurer may not subrogate against basis of the controversy in the action into which he seeks to earlier order and submitted a somewhat expanded analysis as a report and insured.”). (insurer’s intervention to protect its subrogation interest in a plaintiff’s in massey v. williams-mcwilliams, inc., 414 f.2d 675 (1969), we gc “has a lien against any funds due and payable to travelers insurance to the substance of the magistrate judge’s order. motion to the magistrate judge for a proposed ruling. travelers also objected longshoreman and a third party defendant cannot settle around the employer’s recommendation in a memorandum opinion, denying travelers’s motion to considered a case in which a longshoreman was injured by a vessel owned by recommendation to the district court. travelers filed objections to this report intended to oppose any effort by travelers to recover from his pending the lhwca, like other workers’ compensation schemes, embodies a appeal from the united states district court discussion 4 the employer argued that allowing an insurer to exercise the employer’s lien would gc. if this were not so, an employer and employee could easily settle around the jones act for gc’s negligence. based on chenevert’s claim that he was a joint motion for dismissal of chenevert’s claims against gc, with the case under federal rule of civil procedure 24(a)(2), a party is entitled to been adequately represented by gc. travelers now appeals. receive quick, certain compensation from their employers regardless of fault, those items of [jones act] damages . . . that bear a reasonable relation to the whether the principles of peters and taylor are applicable in the context of a intervene in chenevert’s suit for the purpose of asserting its subrogation rights james e. graves, jr., circuit judge: case: 13-60119 document: 00512554303 page: 1 date filed: 03/07/2014 remaining open to allow resolution of travelers’s pending motion to intervene. acquired a repayment lien that is independent of, and cannot be nullified by, barge with a mounted crane. at the time of chenevert’s accident, travelers compensated by his employer under the lhwca. although the lhwca “does chenevert’s jones act settlement fund may be construed in some way as ceres gulf v. cooper, 957 f.2d 1199, 1202 (5th cir. 1992). we discuss below but employers are generally absolved from any further liability in relation to defendant – appellant pursuant to the jones act shall be credited against any liability imposed by settlement of a jones act claim against the shipowner/employer based on the against any money recovered by chenevert. no. 13-60119 settlement with gc. in october 2011, travelers was granted permission to file chenevert argues that “travelers would have no greater right to recover money from gary chenevert than gc constructors itself would possess,” but lien.” id. at 1324 (citing peters); see peters, 764 f.2d at 308 (holding that claim. we held that the shipowner/employer was entitled to “a credit against conclusion as the supreme court noted in gizoni, the lhwca “specifically provides reimbursement. see peters, 764 f.2d at 308 n.1. the magistrate judge, in his recovery for the amount of lhwca benefits paid. accordingly, we reverse 7 employer and as vessel.” id. at 1324-25. we concluded that the same principle nevertheless be a “seaman” excluded from lhwca coverage and entitled to intervene if: stronger equitable claim to repayment from a jones act recovery. a worker a worker covered by the lhwca whose injury is “caused by the negligence of shipowner/employer is entitled to recover these payments from the employee’s may 16, 2011. although chenevert, through counsel, initially represented to travelers claims arising from the very risk for which the insured was covered by that gary chenevert was employed by gc constructors (“gc”) as a crane travelers’s attempt to enforce the lien. the insurer’s lien and prevent any possibility of recovery by the insurer. case: 13-60119 document: 00512554303 page: 5 date filed: 03/07/2014 settlement, it is the insurer, not the employer, who has the lien. the insurer, his employer. the worker received lhwca benefits from his employer’s no. 13-60119 company who is the insurer under the u.s. longshore and harbor workers’ no. 13-60119 “depend[s] on the nature of the vessel, and the employee’s precise relation to injured employee on behalf of the employer acquires a subrogation lien on any settlement fund, [the insurer] is not trying to avoid the risk against which it considered the case of a shipowner/employer who made voluntary payments to b. the lhwca and jones act suits interest was adequately represented; the remaining elements are not disputed. for the fifth circuit coverage [under the lhwca] has never actually been litigated.” id. at 91. taylor, 845 f.2d at 1329-30 (“[b]y enforcing the employer’s lien against the interest related to the property or transaction that forms the represented by the existing parties. a. the lhwca and third-party vessel suits voluntary payments under the lhwca without a formal award is not barred 5 we hold that an insurer who makes voluntary lhwca payments to an 10 an untimely motion to intervene.2 on october 27, 2011, travelers moved to that he did not contest travelers’s lien, he explained in august 2011 that he not expressly provide for reimbursement from a judgment or settlement it.” id. at 88 (quotations omitted). furthermore, “an employee who receives lhwca payments to an injured employee on behalf of the employer have a intervene; (3) the disposition of the action may impair or impede in taylor v. bunge corp., 845 f.2d 1323, 1324 (5th cir. 1988), this court lyle w. cayce voluntary lhwca payments to an injured employee on behalf of a no. 13-60119 jones act. the jones act provides that “[a] seaman injured in the course of operator. in may 2007, chenevert fell and was injured while working on a a lien on a portion of the funds the employer itself agreed to pay in settlement travelers indemnity company, under the lhwca. in november 2010, gc filed a notice of lien claiming that, indemnity company (“travelers”) and remand with instructions.1 distributing the disputed funds in the district court’s registry to travelers. of travelers’s motion to intervene and remand the case for the purpose of who recovers against a third party under § 905(b) is necessarily covered by the case: 13-60119 document: 00512554303 page: 7 date filed: 03/07/2014 subrogated to all of the employer’s repayment rights. against the employer based on the same injuries? working as a seaman at the time of his accident and seeking damages under held that the reverse is also true; i.e., that a shipowner-employer who effjohn int’l cruise holdings, inc. v. a&l sales, inc., 346 f.3d 552, 560 (5th occupations of the lhwca (such as a longshoreman or a ship repairman) may mcdermott int’l, inc. v. wilander, 498 u.s. 337, 347 (1991). compensation act.” judge. however, for reasons that are not clear, a magistrate judge entered an no. 13-60119 any provision for repayment of the lien) would in some sense abrogate the case: 13-60119 document: 00512554303 page: 6 date filed: 03/07/2014 no. 13-60119 district court that it had reached a settlement with chenevert and requested exposure to injured longshore and harbor workers. travelers provided no “whether this principle survives when [the] employer wears two hats as as explained above, an insurer’s right of reimbursement from an and recommendation. the district court adopted the magistrate judge’s case. the district court also held that travelers’s interests in the litigation had a vessel” may bring an action against the vessel. 33 u.s.c. § 905(b). fifth circuit after the death of u.s. district judge w. allen pepper, jr., who had been id. at 308 n.1 (citing 33 u.s.c. § 933(h)). for the northern district of mississippi worker must still use the proceeds of the recovery to repay the employer or his ability to protect that interest; and (4) it is not adequately filed 9 before jones, wiener, and graves, circuit judges. his employer to preserve the insurer’s subrogation rights in the event the worker obtains a the funds that the third party has agreed to pay in settlement”). we considered act (“lhwca”) and who was later held liable to the worker in a jones act case: 13-60119 document: 00512554303 page: 9 date filed: 03/07/2014 1 travelers was incorrectly characterized as a defendant in the district court, and is act; it excludes from lhwca coverage those properly covered under the jones act.” recognized, a worker whose job title fits within one of the enumerated inc. v. gizoni, 502 u.s. 81 (1991). this is a “fact-specific” question that at some time between october 18, 2011, and october 27, 2011, compensation benefits are paid by an employer’s insurer, that insurer is because travelers did not insure gc against jones act liability. see also presiding over the case, the case was randomly reassigned to a different district this broad statement “leave[s] out a crucial boundary of the rule: the benefits. it would be particularly unfair to deny the insurer the right to recover that any amounts paid to an employee for the same injury, disability, or death case: 13-60119 document: 00512554303 page: 8 date filed: 03/07/2014 lhwca and therefore entitled to compensation benefits; nevertheless, the conclude that travelers is entitled to the disputed funds in the district court’s is fully applicable and held that “the worker’s compensation carrier’s ability to reimbursement; that is, by paying lhwca benefits to the injured employee on insurer for the benefits. on the other hand, a worker who succeeds in a jones jones act settlement. in other words, does an insurer who has made voluntary items of loss compensated by [lhwca] benefits.” id. at 680. the present case behalf of the employer, the insurer is subrogated to the employer’s right of provided coverage to gc for, among other things, its workers’ compensation recovery for the same injury by suing his employer for negligence under the in the united states court of appeals liable under the jones act is entitled to “a credit against those items of a worker who has received lhwca benefits may also obtain a double district court granted this motion.3 chenevert and gc ultimately settled for construction co., 543 u.s. 481, 488 (2005).5 as the supreme court has 6 two district courts have considered the issue and held that an insurer who has paid case: 13-60119 document: 00512554303 page: 4 date filed: 03/07/2014 i. double recoveries involving the lhwca whether travelers has an interest in the settlement fund and whether its 1325 n.6. the panel rejected this argument for two reasons. id. at 1329-30. this issue does requires us to answer a related question: whether an insurer who makes injuries for which the insurer has already compensated him. we therefore the lhwca.” 502 u.s. at 91 (citing 33 u.s.c. § 903(e)). we have previously bring a claim against his employer under the jones act. see southwest marine, report and recommendation, reasoned that “[t]o suggest that an employer has compromise between workers and employers: workers injured on the job settlement. but again, it is travelers that is asserting the lien, not gc. $1,725,000, with $277.728.72 of this amount deposited into the district court’s between may 2007 and may 2010, travelers voluntarily paid chenevert a total insurer and later sued the vessel for negligence pursuant to 33 u.s.c. § 905(b). employer.” 46 u.s.c. § 30104. “[t]he jones act and the lhwca are recovery. kahue v. pacific envtl. corp., 834 f. supp. 2d 1039, 1060-61 (d. haw. 2011); lewis “seaman” (rather than a “longshoreman”), travelers stopped making payments damages . . . that bear a reasonable relation to the items of loss compensated no authority to enter the order because the parties had not consented to the the moment it settled the case is nonsense.” however, at the time of no. 13-60119 coverage for “bodily injury to a master or member of the crew of any vessel.” no. 13-60119 against its own insured.” 16 couch on insurance 3d § 224:1 (2013). however, gary chenevert, employer has already paid,” courts “have uniformly held . . . that an employer id. the worker and the vessel settled for $700,000 “over and above the the district court appears to have viewed travelers’s attempt to assert vessel.” id. at 1330. travelers filed a motion to reconsider, arguing that the magistrate judge had as a general rule “no right of subrogation can arise in favor of an insurer recover under the employer’s lien against the settlement fund is not affected . prohibition of insurers’ subrogation against their own insureds applies to against a jones act recovery should be different from its right of employee’s tort recovery is derived from the employer’s right of background voluntarily pays lhwca benefits to an injured employee and is later found in response to travelers’s motion, the magistrate judge withdrew his has a subrogation right to be reimbursed from the worker’s net recovery from 3 gc’s motion stated an incorrect amount to be deposited; the amount was later this is incorrect. by paying lhwca benefits on behalf of gc, travelers funds. see mcdonald v. e.j. lavino co., 430 f.2d 1065, 1071 (5th cir. 1970) 2012). however, the lhwca generally preserves an injured worker’s an injured employee under the longshore and harbor workers’ compensation cir. 2003). a district court’s ruling under rule 24(a)(2) is reviewed de novo. by workmen’s compensation benefits.” massey v. williams-mcwilliams, inc., repayment lien against a portion of a settlement that it agreed to pay (without in the event judgment is rendered in favor of chenevert on his jones act claim, case: 13-60119 document: 00512554303 page: 2 date filed: 03/07/2014 in may 2010, chenevert sued gc in federal court, alleging that he was no. 13-60119 same injuries for which the insurer has already compensated him. we hold along the same lines, chenevert argues that allowing gc to assert a remedies against third parties who may have caused the injury. for example, act claim is necessarily a seaman, and therefore not entitled to lhwca intervene. the district court held that travelers has no right of subrogation ii. travelers’s subrogation right registry. in december 2011, the district court granted chenevert and gc’s insurer.” id. assuming travelers’s assertion of its repayment lien against plaintiff – appellee by satisfying the employer’s payment obligations under the lhwca, becomes its own insured,” because the employer had agreed to indemnify the worker for any attempt 5 the lhwca provides that an “employee” covered by the act does not include “a recovery is cognizable as intervention of right under rule 24(a)). march 7, 2014 from a third party based on injuries for which he has already been worker’s compensation benefits already paid,” in effect trying to settle around it is therefore possible for an injured worker to obtain a tort recovery v. asserting a right of subrogation against gc, this would be unproblematic we perceive no sound reason why an insurer’s right of reimbursement 2 under the scheduling order in place, motions were required to be filed no later than of $277,728.72 in indemnity and medical benefits under the lhwca. 6 order approximately two months later denying travelers’s motion to intervene. that $277,782.22 of the settlement funds be deposited into the court’s registry . . by the fact that [the insured employer] was both employer and owner of the it had paid. 4 id. we recognized circuit precedent holding that “an injured 3 that such an insurer acquires a subrogation lien on the employee’s jones act no. 13-60119 as to the settlement proceeds, and therefore no interest in the property in the registry, and that travelers may intervene for the purpose of collecting these right to be reimbursed from the employee’s settlement of a jones act claim by the insurer to exercise the lien against the settlement fund. taylor, 845 f.2d at 1329, for the reasons explained above, we reverse the district court’s denial such injuries. see, e.g., 1 the law of maritime personal injuries § 2:1 (5th ed. lhwca benefits to an injured worker may intervene in the worker’s jones act suit against 4 pending the outcome of the dispute between chenevert and travelers. the therefore incorrectly characterized as a defendant in the caption for this opinion. travelers enforce the employer’s lien against the settlement fund to recover the benefits employment . . . may elect to bring a civil action at law . . . against the corrected to $277,728.72. reimbursement against a § 905(b) recovery. arguably, the insurer has an even remedies to sea-based maritime workers, while the lhwca provides workers’ subrogated to the employer’s reimbursement rights under the lhwca. see not arise in the present case because gc did not agree to indemnify chenevert against from subsequently seeking relief under the jones act” because “the question of 414 f.2d 675, 679-80 (5th cir. 1969). the question presented by this case is the benefits it has paid in such a situation.6


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