Expansiveness of Situs Under Longshore and Harbor Workers’ Compensation Act

Expansiveness of Situs Under Longshore and Harbor Workers’ Compensation Act

By: Forrest Guedry

Edited by: Molly MacKenzie

Global Management Enterprises, LLC v. Commerce & Industry Insurance Company, 2014 WL 2810005 (5th Cir. 2014)Many Circuit Courts have differing opinions when interpreting the situs requirement of the Longshore and Harbor Workers’ Compensation Act (hereinafter “LHWCA”). This was the sole issue before the United States Court of Appeals for the Fifth Circuit in Global Management Enterprises, LLC v. Commerce & Industry Insurance Company. The LHWCA provides workers’ compensation to certain maritime workers when they are injured on the job. To receive LHWCA benefits, workers must satisfy the status requirement, which refers to the nature of the work being performed, and the situs requirement, which refers to the place where the work is being performed.In this case, Global Management Enterprises, LLC (hereinafter “Global”) hired temporary workers in 2010 to help clean up areas around the Gulf of Mexico after the Deepwater Horizon oil spill. At that time Global had an insurance policy with Commerce and Industry Insurance (hereinafter “Chartis”), in which Chartis was to provide workers’ compensation insurance. Within the insurance agreement, a clause excluded injuries to any persons engaged in work activities covered by the LHWCA. The incident at issue occurred on a remote island known as G1, where workers were bagging oil-soaked sand to be loaded onto a truck, which would bring the bags to a vessel waiting at a pier for removal. One of Global’s temporary employees, Librado De La Cruz, was injured while lifting a bag of oil-soaked sand that was later to be removed from the island. When De La Cruz was injured, he was working on one of the island’s beaches only a few feet from the edge of the water, but approximately half a mile from the pier where the vessel would be loaded.After De La Cruz’s injury, Chartis began to pay him worker compensation benefits under the Louisiana workers’ compensation Act. De La Cruz also applied for benefits under the LHWCA. Although De La Cruz withdrew his LHWCA claim before the question of his coverage was ever determined, Chartis stopped payment of the worker compensation benefits due to the insurance policy’s exclusionary clause. In return, Global filed a lawsuit alleging breach of contract, negligence, and bad faith. Chartis responded to the lawsuit by filing a motion for summary judgment on all claims, stating that the injury fell within the insurance policy’s exception. The District Court granted Chartis’ summary judgment motion on all claims. Global appealed the decision to the Fifth Circuit, which vacated the judgment and remanded the case to the District Court with instructions to reconsider their decision in light of new precedent, Depot Services v. Workers’ Compensation Program, 714 F.3d 384 (5th Cir. 2013). After review, however, the District Court again granted summary judgment in favor of Chartis, and Global appealed once more.Benefits under the LHWCA are only available to cover injuries that occur upon 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. Further, for a worksite to be covered by LHWCA, it must both (1) adjoin navigable waters and (2) customarily be used by an employer to enable maritime activities. The parties agree that De La Cruz’s injury occurred at a worksite adjoining navigable waters, as it was mere feet away from the water of the Gulf of Mexico. Rather, the dispute arises in determining whether such a beach is a location customarily used by an employer for enabling a maritime activity.While Chartis argued that the beach and pier combined to serve as a single area customarily used for maritime activities and cited case law, the Fifth Circuit disagreed with their viewpoint. The Fifth Circuit explained that the dock and the pier were not interconnected parts as compared to larger facilities used in maritime activities, like those in the cases cited by Chartis. In contrast, the beach where De La Cruz was injured and the pier where the vessel was loaded were nearly half a mile apart. Thus, the interconnectedness referred to in the cases cited by Chartis was lacking in the instant case. Furthermore, the Fifth Circuit explained that the area where De La Cruz was injured was not dedicated to longshore work. Rather, De La Cruz and his co-workers were engaged in the task of cleaning the island’s beaches.

De La Cruz’s injury was therefore not sustained at a worksite customarily used for loading, unloading, repairing, dismantling, or building a vessel as required by the language of the applicable LHWCA statute. Consequently, as the injury was not subject to the exclusionary clause of the insurance policy, the Fifth Circuit thus reversed the District Court’s grant of Chartis’ summary judgment motion and remanded the case back to the District Court for further proceedings.