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Parfait v. Director

United States Court of Appeals, Fifth Circuit

September 11, 2018


          Petition for Review of an Order of the Benefits Review Board

          Before DAVIS, OWEN, and ENGELHARDT, Circuit Judges.


         McGill C. Parfait filed this Petition for Review to challenge a ruling by the Benefits Review Board ("BRB") in a proceeding in which Parfait sought benefits under the Longshore and Harbor Workers' Compensation Act ("LHWCA"). Parfait's employer, Performance Energy Services, L.L.C. ("Performance" or "Employer"), and its insurer, Signal Mutual Indemnity Association, Ltd. ("Signal" or "Insurer"), moved to dismiss the Petition for Review based on 33 U.S.C. § 933(f) and (g) of the LHWCA. The motion charged that Parfait had received funds in settlement of a tort action with a third party, Apache Corporation ("Apache"), and a judgment against another third party, Wood Group PSN, Inc. ("Wood Group"), for the injuries for which he sought compensation benefits. The Employer and Insurer argued that Parfait failed to obtain approval or provide notice of the settlement and judgment as required by the above sections of the LHWCA.

         Based on written responses by Counsel for Parfait to questions posed by this Court, it is clear that Parfait received substantial sums from a settlement with and judgment against third parties and that the required notice was not given. Based on the plain language of the statute, we must dismiss this Petition for Review.

         A. BACKGROUND

         In December 2013, Petitioner filed a claim with the Office of Workers' Compensation Programs for total/permanent disability benefits under the LHWCA for back and chest injuries he sustained in an accident on June 30, 2013, while working for Performance. Following a formal hearing, the administrative law judge ("ALJ") awarded Petitioner $1, 493.60 in temporary total and temporary partial disability benefits for his chest injury. The ALJ denied his claim for benefits for his back injury. The Petitioner then appealed the ALJ's award to the BRB, which affirmed. The Petitioner then lodged this Petition for Review challenging the BRB's ruling denying total/permanent disability benefits for his back injury.

         Petitioner also filed a third-party tort action against Apache and Wood Group in the Southern District of Texas arising out of his June 30, 2013 accident. While Petitioner's appeal to the BRB was under submission, the Employer learned from counsel for Apache that Petitioner had settled a portion of the third-party tort action. The Employer also learned, after inquiring of Wood Group's counsel, that a judgment had been entered in favor of Petitioner against Wood Group. After the appeal was lodged in this Court, the Employer and Insurer moved to dismiss the appeal alleging that Petitioner failed to obtain their approval of the third-party settlement, or to notify them of the third-party judgment, as required by § 33(g) of the LHWCA. In an effort to determine whether any factual issues were presented that required remand of this case to the BRB, we submitted questions to counsel for Petitioner and Respondents. On August 13, 2018, Counsel for Parfait, in response to questions from the Court, divulged that[1]:

(1) On or about April 25, 2016, Petitioner compromised a suit he had pending against Apache in the Southern District of Texas, with Petitioner receiving $325, 000. Petitioner reserved his right in his release with Apache to proceed against Wood Group.
(2) Following a jury trial in April 2017, Petitioner received a favorable verdict against Wood Group, and a judgment was entered on that verdict from which Petitioner enjoyed a net recovery of $41, 542.17.

         With respect to notice of this settlement and judgment to the Employer/Insurer, Petitioner's counsel responded to the Court's question as follows:

Question: Describe or furnish a copy of any notification Claimant or counsel gave to the employer or insurer of Claimant's intent to settle with either of the third parties with whom settlement was made.
Counsel for Employer/Carrier were specifically invited to attend a mediation session that was held March 10, 2016, and was contacted during the mediation session by Claimant's counsel. This session was specifically called in order to resolve compensation issues and third-party claims. In addition, Parfait's claims against Wood Group were tried to a jury over five days in April of 2017, which resulted in a favorable verdict to Claimant, and which judgment was published by the District Court on June 2, 2017, and of which Respondents plainly were aware. Parfait's claims against Wood Group claims were not compromised by settlement.
Claimant contends that counsel for Employer/Carrier received adequate notice of any settlement(s) for which any prior notice was legally required.

         B. ANALYSIS

         Section 33 of the LHWCA guarantees prompt payment of compensation to an employee injured through the negligence of a third party. Under this scheme, [2] the employee may receive longshore benefits and still maintain a civil action against a negligent third party. To ensure that the employee does not receive a double recovery, the employer is granted rights to full reimbursement of all benefits paid, including compensation and medical benefits, from net third-party recoveries. If such recoveries exceed benefits already paid, the employer is allowed to credit any remainder against its future liability under the LHWCA.

         The Employer relies on § 33(g) of the LHWCA. Section 33(g)(1) provides:

If the person entitled to compensation (or the person's representative) enters into a settlement with a third person referred to in subsection (a) for an amount less than the compensation to which the person (or the person's representative) would be entitled under this chapter, the employer shall be liable for compensation as determined under subsection (f) only if written approval of the settlement is obtained from the employer and the employer's carrier, before the settlement is executed, and by the person entitled to compensation (or the person's representative). The approval shall be made on a form provided by the Secretary and shall be filed in the office of the deputy commissioner within thirty days after the settlement is entered into.

         Subsection 33(g)(2) provides further:

If no written approval of the settlement is obtained and filed as required by paragraph (1), or if the employee fails to notify the employer of any settlement obtained from or judgment rendered against a third person, all rights to compensation and medical benefits under this chapter shall be terminated, regardless of whether the employer or the ...

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