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Workers comp coverage for mid-market marine firms complicated by multiple laws

Two federal laws, plus state laws, often prompt multiple worker claims

Workers comp coverage for mid-market marine firms complicated by multiple laws

Because two different federal statutes provide remedies for marine worker injury claims, middle-market employers with maritime operations often are confused about what types of insurance coverage to purchase.

Longshoremen and other types of shore workers are covered by the U.S. Longshore and Harbor Workers' Compensation Act, a federal workers compensation program that serves as the exclusive remedy for injured marine workers.

But seamen and other crew members are covered by the Merchant Marine Act of 1920, known as the Jones Act, which provides a personal-injury negligence remedy within the tort system.

Although these two statutes define which types of workers fall under each law, there are some “gray areas,” marine liability experts say, which often lead injured marine workers to file claims under both laws, setting up the need for marine employers to have work comp coverage under the Longshore Act and maritime employer liability coverage for Jones Act claims. And in some states, such as California, it also may be necessary to buy statutory workers compensation coverage, experts said.

Because of the nature of their work, “marine workers are constantly walking in and out of coverage during the course of the workday,” said Jack Martone, senior vice president at Washington-based American Equity Underwriters Inc., which administers a self-insured group workers comp program for maritime employers.

For example, most U.S. courts have considered workers who spend 30% or more of their workday on a vessel, such as fishermen, to be Jones Act employees, while those who spend the majority of their time on shore, such as stevedores, to be covered by the Longshore Act, Mr. Martone said.


But because a Jones Act recovery can be significantly greater than one under the Longshore Act, injured workers often file claims under both, Mr. Martone said. As such, “an employer has to have coverage for the right remedy or suffer the consequences,” he said.

“We've got several cases right now where dock builders are claiming to be seamen,” said Tom Langan, corporate risk manager at Weeks Marine Inc., a Cranford, N.J.-based dredging, marine construction and stevedoring firm. The employees sued arguing they are covered by the Jones Act, relying in part on the U.S. Supreme Court's 2005 decision in Willard Stewart v. Dutra Construction Co. “that basically found anything that floats is a vessel,” he said.

“The Supreme Court has wrestled with the dividing line between longshoremen and seamen for a long time,” said Jim McMullen, a partner at Gordon & Rees L.L.P. in San Diego, who was involved in the 1991 precedent-setting Southwest Marine Inc. v. Byron Gizoni.

In that case, Southwest Marine, a San Diego-based ship repair operator, was sued by Mr. Gizoni, a rigging foreman who broke his foot when it went through a wooden sheet covering a hole in a platform being used to transport a rudder from the shipyard to a floating dry dock. He applied for, and received, medical and compensation benefits under the Longshore Act and later filed suit under the Jones Act, alleging that he was a seaman injured as a result of his employer's negligence. While the district court dismissed his claim, finding that Mr. Gizoni was not a seaman as defined by the Jones Act, the appellate court reversed, and the U.S. Supreme Court upheld, finding that “a maritime worker whose occupation is one of those enumerated in the USL&H may be a seaman within the meaning of the Jones Act.”

“If you have exposures on the waterfront, you've got to entertain the possibility that you will need USL&H and/or maritime employers liability coverage, or both,” said Jeffrey Gieseler, Metairie, La.-based area vice president at Gallagher Marine, a unit of Arthur J. Gallagher Risk Management Services Inc.


He said there are three ways for marine employers to obtain coverage: “You can buy a U.S. Longshore Act policy,” which is akin to statutory workers compensation except that it crosses state lines, covering workers as they traverse all U.S. jurisdictions; “you can be self-insured, but you have to satisfy the financial responsibility requirements set by the Department of Labor; or you can belong to a group self-insurance fund.”

Some employers buy maritime employer liability cover from protection and indemnity clubs, said Nadine Stillifant, senior vice president in the marine group at Marsh Inc. in Seattle.

“When you're looking for a P&I placement, you need to make certain it includes crew. In part of the country, it's customary to provide bodily injury and property damage under the P&I coverage and have separate MEL cover. There are certain underwriters that will provide all three coverages, but it depends on how their reinsurance coverage is structured,” she said.

In some states, maritime employers also may require statutory workers compensation cover, said Mr. McMullen, citing CNA Insurance Co. v. Workers Compensation Appeals Board, Navigators Insurance Co., et al., a 1997 case involving a bartender on a Catalina ferry who was injured while running down the gangway after disembarking.

Even though Cella Baker spent more than 80% of her workday aboard the vessels to which she was assigned, the California appellate court ruled that because “she tripped on the bottom of the gangway and fell onto her knee onto the floating finger pier” belonging to the city of Avalon, Calif., she “was entitled to state workers comp benefits,” Mr. McMullen said.

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