     Case: 16-60662    Document: 00514636532     Page: 1   Date Filed: 09/11/2018




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT


                                  No. 16-60662                  United States Court of Appeals
                                                                         Fifth Circuit

                                                                       FILED
MCGILL C. PARFAIT,                                             September 11, 2018
                                                                  Lyle W. Cayce
             Petitioner                                                Clerk

v.

DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS,
UNITED STATES DEPARTMENT OF LABOR; PERFORMANCE ENERGY
SERVICES, L.L.C.; SIGNAL MUTUAL INDEMNITY ASSOCIATION,
LIMITED,

             Respondents




                      Petition for Review of an Order of the
                              Benefits Review Board


Before DAVIS, OWEN, and ENGELHARDT, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
      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,
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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

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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.


1Response of Petitioner to Question 1 (State the net amount the Claimant
received in the two settlements that he made with third parties):

      On or about April 25, 2016, Claimant McGill Parfait entered into a release and
      indemnity agreement with Apache Corporation in order to settle the suit
      initiated by McGill Parfait against Apache Corp., et. al. in the U.S. District
      Court for the Southern District of Texas – Galveston Division, C.A. No. 3:14-
      cv-00213. The net amount of this settlement was $325,000.00 (three-hundred
      twenty-five thousand dollars) to McGill Parfait. Expressly excepted from this
      settlement was Wood Group PSN, Inc., its parents, subsidiaries, affiliates and
      interrelated companies, against all of whom Claimant McGill Parfait expressly
      reserved his rights, actions and causes of action.
      Following a jury trial in April 2017, on or about July 2017, McGill Parfait
      entered into a release and indemnity agreement with John Wood Group PLC
      (“Wood Group”) in order to settle the suit initiated by McGill Parfait against
      Wood Group, et al., in the U.S. District Court for the Southern District of
      Texas–Galveston Division, C.A. No. 3:14-cv-00213. This ‘settlement’ did not
      represent a compromise of Parfait’s claim, and followed a jury trial that was
      held in April 2017, which resulted in a favorable verdict for Parfait which was
      published as public record by the District Court on June 2, 2017, as Doc. No.
      204 in that cause. The net amount of this post-verdict settlement was
      $41,542.17 (forty-one thousand, five-hundred forty-two dollars and 17 cents) to
      McGill Parfait.



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      (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.
      Response:
      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

      2   33 U.S.C. § 933, Compensation for injuries where third persons are liable, provides:

      (a) Election of remedies


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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 on account of a disability or death for which compensation is payable under this
chapter the person entitled to such compensation determines that some person other than
the employer or a person or persons in his employ is liable in damages, he need not elect
whether to receive such compensation or to recover damages against such third person.
      ....

       (f) Institution of proceedings by person entitled to compensation

       If the person entitled to compensation institutes proceedings within the period
prescribed in subsection (b) the employer shall be required to pay as compensation under this
chapter a sum equal to the excess of the amount which the Secretary determines is payable
on account of such injury or death over the net amount recovered against such third person.
Such net amount shall be equal to the actual amount recovered less the expenses reasonably
incurred by such person in respect to such proceedings (including reasonable attorneys' fees).

       (g) Compromise obtained by person entitled to compensation

        (1) 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.

       (2) 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 employer's
insurer has made payments or acknowledged entitlement to benefits under this chapter.

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      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 employer’s insurer has made
      payments or acknowledged entitlement to benefits under this
      chapter.
      Section 33(g), quoted above, which requires the employee to obtain
written approval of certain third-party settlements and to give notice of all
third-party settlements and judgments, is designed to ensure that the
employer’s rights are protected in the settlement and to prevent the claimant
from unilaterally bargaining away funds to which the employer or its carrier
might be entitled under 33 U.S.C. § 933(b)-(f).      In particular, the notice
requirement enables an employer to protect its right to set off the settlement
amount against its future obligations and its right to reimbursement of its
previous payments from the settlement proceeds. Further, it ensures against
fraudulent double recovery by the employee.
      Parfait has conceded in the filings with the Court that he did not give
notice to the Employer or Insurer of his settlement with Apache or the


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judgment obtained from Wood Group. Specifically, with respect to the Apache
settlement, Parfait argues that inviting counsel for the Employer/Insurer to a
mediation session where settlement was being discussed with Apache put the
Employer/Insurer on notice that a settlement might be made in the future.
With respect to the judgment Petitioner obtained against Wood Group, Parfait
contends that publication of the judgment on the verdict filed in the public
records following the trial was sufficient to put the Employer/Insurer on notice
of that judgment. We are unpersuaded that Parfait gave adequate notice as
required under § 33(g)(2) with respect to either the settlement or judgment.
      Estate of Cowart v. Nicklos Drilling Co. is the most relevant Supreme
Court authority on the questions presented to us. 3 In that case, Cowart hurt
his hand while working for Nicklos Drilling Company (“Nicklos”) on Transco
Exploration Company’s (“Transco”) offshore drilling rig. 4 Although Cowart
had received no formal award and was not receiving compensation, the
Department of Labor notified Nicklos’s carrier that it owed Cowart $35,592.77
for permanent partial disability. 5 Cowart made a third-party settlement with
Transco in his tort action against the platform owner from which he received
a net amount of $29,350.60. 6 The settlement was funded by Nicklos under an
indemnity agreement with Transco. 7 Although Nicklos had notice of the
settlement, Cowart did not obtain written approval from Nicklos to make this
settlement. 8
      Because Subsection (g)(1) begins “[i]f the person entitled to compensation
. . . enters into a settlement with a third person,” the ALJ found that because


      3 505 U.S. 469 (1992).
      4 Id. at 471.
      5 Id. at 471, 473-74.
      6 Id. at 471.
      7 Id. at 471-72.
      8 Id.



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Cowart was not receiving compensation, the written approval requirement did
not apply to him. 9 This Court reversed, holding that the approval requirement
applied regardless of the fact that the employee was not receiving
compensation and no award had been made in his favor. 10 The Supreme Court
agreed and, in affirming this en banc Court’s judgment, found that while
§ 33(g)(1) requires the employer’s written approval of settlements for amounts
less than the employee’s compensation entitlement, only notice to the employer
is required for other settlement amounts and for any judgment obtained
against a third party. Specifically, the Court stated:
      An employee is required to provide notification to his employer,
      but is not required to obtain written approval, in two instances: (1)
      Where the employee obtains a judgment, rather than a settlement,
      against a third party; and (2) Where the employee settles for an
      amount greater than or equal to the employer’s total liability.
      Under our construction the written-approval requirement of
      § 33(g)(1) is inapplicable in those instances, but the notification
      requirement of § 33(g)(2) remains in force. That is why subsection
      (g)(2) mandates that an employer be notified of ‘any settlement.’ 11
      The Court also explained the reasons that notice is sufficient in those
instances:
      In cases where a judgment is entered . . . the employee does not
      determine the amount of his recovery, and employer approval,
      even if somehow feasible, would serve no purpose. And in cases
      where the employee settles for greater than the employer’s
      liability, the employer is protected regardless of the precise
      amount of the settlement because his liability for compensation is
      wiped out. Notification provides full protection to the employer in
      these situations because it ensures against fraudulent double
      recovery by the employee. 12


      9 Id. at 473-74.
      10 See id. at 471, 473-75. We affirmed this decision in an en banc opinion. Id. at 474.
      11 Id. at 475, 482 (emphasis added).
      12 Id. at 482-83.



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      Under the above language from the Supreme Court in Cowart, Parfait’s
rights to compensation and medical benefits under the LHWCA must be
terminated. The Employee (Parfait) received $325,000 in the settlement of his
claim against Apache. He has appealed the ALJ’s award of $1,493.60 and
challenges the BRB’s denial of benefits for his back injury. If the settlement
amount is less than the compensation to which the Employee would ultimately
be entitled, § 33(g)(1) required him to obtain his Employer’s written approval
(which he undisputedly did not obtain). And if the settlement amount is
greater than the compensation to which he would ultimately be entitled,
§ 33(g)(2) required him to give his Employer notice of the settlement (which he
did not give).
      In addition, the Employee received sums in the amount of $41,542.17 by
way of a judgment against another third party, Wood Group. Subsection
33(g)(2) required the Employee to give his Employer notice of this judgment
(which he did not give).
      Under the statutory scheme, if an employee makes a settlement with or
obtains a judgment against a third party, at a bare minimum, the employee
must give notice of the settlement or judgment to his employer. Here, the
ultimate benefits to which the Employee is entitled have never been finally
determined. That determination is not necessary here because whatever the
outcome of this appeal, his failure to give notice of the settlement and judgment
would terminate his right to compensation.
      The Supreme Court’s reasons outlining the consequences of Cowart’s
failure to obtain written approval from the employer of a settlement apply
equally to the failure of Parfait to give notice of the sums he received in
settlement and judgment from third parties.




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      First, the Court stated that with respect to § 33(g)(1) (requiring the
employee to obtain written approval for certain settlements), “Congress has
spoken with great clarity to the precise question raised by this case. It is the
duty of the courts to enforce the judgment by the Legislature.” 13 The same can
be said for the clarity of § 33(g)(2) to the question presented in this case relative
to the requirement of the employee to give notice of judgment and settlement.
      The Court also observed that accepting Cowart’s interpretation would
conflict with the goals of § 33(f). “It mandates that an employer’s liability be
reduced by the net amount a person entitled to compensation recovers from a
third party.”   14   The same difficulty would be presented by accepting
Petitioner’s argument in this case.
      There is a dearth of federal circuit court opinions on the type of notice
that must be given in order to satisfy § 33(g)(2). The BRB, however, has given
a strict interpretation to that section. In Fisher v. Todd Shipyards Corp., the
employer challenged an ALJ’s determination that compensation was not
barred by § 33(g)(2) since the employer had denied liability for compensation
and was not prejudiced by the settlement. 15 The BRB disagreed with the ALJ,
stating:
      [T]he plain language of Section 33(g)(2) places on claimant an
      affirmative duty to notify employer, before the entry of an award
      of benefits, of any third-party settlement or judgment obtained by
      claimant. Employer’s mere knowledge of settlements or the
      absence of prejudice to employer will not suffice to prevent the
      absolute bar to compensation from being invoked. To hold
      otherwise would virtually read Section 33(g)(2) out of the statute. 16




      13 Id. at 483-84.
      14 Id. at 479.
      15 21 BRBS 323 (1988).
      16 Id.



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       Since Cowart, the BRB has consistently employed this strict
interpretation, holding that if the employee settles for an amount greater than
the total liability of the employer and fails to give notice of that settlement, the
employee suffers the termination of his benefits. 17 This is required to protect
the employer’s right to offset third-party recovery against its liability for
compensation and also to prevent a fraudulent double recovery.
       It is clear to us that Petitioner’s counsel’s telephonic notice on March 10,
2016 to Respondents’ counsel that a mediation was being held to attempt to
compromise the Petitioner’s claim against Apache was just that -- notice that
Parfait was trying to settle that case. That is clearly inadequate notice of the
settlement that was ultimately made on April 25, 2016. Similarly, we reject
the argument that the court’s filing of the judgment obtained against Wood
Group in the public record amounted to the required notice to the Employer.
A finding that this constituted the requisite notice would, in the language of
the Supreme Court in Cowart, be contrary to “the clear meaning” 18 of § 33(g)(2)
as written, 19 and the “affirmative duty to notify.”


       17  Edwards v. Marine Repair Servs., Inc., 49 BRBS 71 (2015) (“The Board has held
that the plain language of subsection (g)(2) places on the claimant an affirmative duty to
notify his employer of the third-party settlement, and the employer’s mere knowledge of the
settlement or the absence of prejudice to the employer will not suffice to prevent the bar to
compensation from being invoked.”); Cooley v. Huntington Ingalls, Inc., 49 BRBS 45 (UBD)
(2014) (“Although employer gained knowledge of agreements through the discovery process,
the administrative law judge must address whether claimant satisfied his affirmative duty
to notify employer . . . of any third-party judgment he obtained.”); H.S. v. Pacorini USA, Inc.,
No. 07-0991 (BRB June 30, 2008) (UBD) (“Pursuant to the Supreme Court’s decision in
Cowart, 505 U.S. 469, 26 BRBS 49 (CRT), if claimant either fails to comply with the written
approval requirement of Section 33(g)(1) or fails to give notice to employer in the instances
where written approval is not required, i.e., a settlement exceeding compensation entitlement
or a judgment, the forfeiture provision applies.”); Dilts v. Todd Shipyard Corp., No. 02-0434
(BRB Mar. 12, 2003) (UBD) (“There is no requirement under Section 33(g) that employer
establish prejudice in order for Section 33(g) to bar a claim for compensation.”).
        18 Cowart, 505 U.S. at 476.
        19 33 U.S.C. § 933(g)(2) (requiring “the employee . . . to notify the employer of any

settlement obtained from or judgment rendered against a third person”).

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C.     CONCLUSION
       We find no reason to remand this case to the BRB for fact-finding. The
Employee in this case did not comply with the approval and notice
requirements of § 33(g) (1) and (2) with respect to his third-party settlement
with Apache or his judgment against Wood Group. This failure requires
termination of any right to compensation or medical benefits Petitioner might
otherwise have under the LHWCA. We therefore grant Respondents’ motion
and dismiss this appeal.




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