Employer Can't Get Reimbursement from Carrier for Benefits Paid on Non-Compensable Claim
Friday, July 28, 2017 | 1270 | 0 | 4 min read
Industrial Helicopters voluntarily paid workers' compensation benefits to its employee Tommie Hebert after he fell from one its helicopters while trying to net deer in Mexico, but it can't get that money back from its workers' compensation carrier.
Even though a jury found that Hebert was acting in the course and scope of employment when he fell, an appellate court ruled that he wasn't. As a result, Industrial Helicopters is on the hook for $2 million in damages, minus a credit for the "workers' compensation benefits" it voluntarily paid.
The Louisiana 3rd Circuit Court of Appeal ruled Wednesday that Industrial Helicopter's workers' comp carrier, LWCC, is not liable for any of the tort damages.
Hebert had been a fuel truck driver for Industrial Helicopters, a company owned by J. Oran Richard that provided aerial herbicide application services. Richard also ran a company called Game Management Inc., which performed wildlife surveys in Mexico.
In March 2007, Richard’s son asked Hebert to come along on a trip to capture deer. Hebert allegedly was reluctant to do because he was marinating rabbits for a cook-off that he participated in every year – but he acquiesced because he didn’t want to lose his job with Industrial.
Industrial provided the helicopter for the deer-netting trip, which had been refitted to remove the rear seats and doors. There was a plywood box installed where the seats had been. Hebert sat on the edge of this box, with his legs and upper body hanging outside the helicopter, while manning the netting gun.
The helicopter banked as Hebert was leaning out to take aim at a deer, and he fell from the craft.
Benefit fight begins
Hebert suffered serious injuries, and Industrial voluntarily began paying his medical bills. Industrial also started providing weekly checks to Hebert as workers’ compensation benefits.
But Industrial’s insurance carrier – the Louisiana Workers’ Compensation Corp. – took the position that Hebert’s accident was not compensable.
After LWCC disclaimed liability for the payment of workers' comp benefits to him, Hebert filed a personal injury action against Industrial and GMI.
The defendants filed a motion seeking dismissal of his lawsuit, asserting they were immune from civil liability as Hebert’s joint employers.
A trial judge granted their motion, but the 3rd Circuit reversed the ruling in 2011. The appellate court said Hebert did not qualify as a “borrowed” employee of GMI since he remained under the control of Industrial.
While the court said Industrial would enjoy civil immunity as Hebert’s employer if Hebert was in the course and scope of his employment with Industrial at the time of his accident, the court noted that Industrial had denied that was the case.
The court remanded the case for further proceedings.
After the case was back in the trial court, Hebert filed a motion for summary judgment as to Industrial’s claim of immunity. He argued that Industrial’s claim that his injuries did not occur in the course and scope of his employment constituted a judicial admission that Industrial could not dispute.
The trial judge denied Hebert’s motion and allowed the case to go to a jury.
The jury found Hebert had suffered $2 million in damages, but that he was 56% at fault for his accident. The jury assigned the remaining 44% of fault to Industrial.
However, the jury also found that Hebert was within the course and scope of his employment at the time of the accident, so judgment was entered in favor of Industrial.
Hebert appealed, and the 3rd Circuit once again reversed.
The court said Industrial had judicially confessed that Hebert was not in the course and scope of his employment at the time of the accident, so it should not have been allowed to present any argument to the contrary.
The court further found “the evidence overwhelmingly establishes that Hebert was not in the course and scope of his employment with Industrial at the time of the accident,” which meant Industrial’s liability was for tort damages – not comp benefits.
What of the 'comp benefits' already paid?
The 3rd Circuit Court remanded the case for the trial judge to determine whether either Industrial or its insurer were entitled to a credit for the workers’ compensation benefits Hebert had received.
Following this second remand to the trial court, District Judge Laurie Hulin found Industrial was entitled to an offset of its civil liability to Hebert in the amount of $503,839.
The 3rd Circuit upheld this decision last November.
Meanwhile, LWCC commenced an action before the Office of Workers’ Compensation seeking a declaratory judgment as to its coverage obligations for Hebert’s accident. Industrial filed a counterclaim seeking coverage.
LWCC moved for summary judgment on both claims, arguing that the 3rd Circuit’s prior decisions should bar Industrial from relitigating whether Hebert had been injured in the course and scope of his employment.
Industrial countered that the doctrine of res judicata was not applicable to the OWC action since it did not involve the same parties who participated in the litigation before the 3rd Circuit. It also filed its own motion for partial summary judgment, seeking an order that coverage would be afforded under LWCC’s policy if Hebert was in the course and scope of his employment with Industrial and/or GMI.
The OWC granted summary judgment in favor of LWCC on the res judicata issue, but the OWC said “if it is determined that Industrial was a general employer and Game Management Inc. was a special employer of Tommie Hebert at the time of his accident, then coverage for workers’ compensation benefits will be payable under the policy LWCC issued to Industrial.”
Both Industrial and LWCC appealed from the OWC decision.
The 3rd Circuit on Thursday said its prior rulings have established that Hebert was outside the course and scope of his employment with Industrial at the time of his injury. Since Industrial was not Hebert’s “employer” for workers’ compensation purposes, the court said Industrial could not “lend” him to GMI and thereby make GMI his “special employer.”
The court also said Industrial could not recover the “comp benefits” it paid to Hebert after the accident from LWCC since it owed him civil damages, and it had already received a credit for the amount it had paid to Hebert as benefits against its civil liability.
“The reasons which preclude an employee from receiving workers’ compensation benefits plus tort damages in an intentional tort setting, should extend as well, in the inverse, to the insured’s attempt to collect reimbursement from its workers’ compensation insurer for payments this court granted a credit for against its negligence-based tort liability after conclusively finding the payments were not required under the WCA,” the court said.
As “this court has already determined the benefits Industrial seeks reimbursement for are not compensation benefits,” the court said Industrial cannot “attempt a second bite at the apple by seeking to recover the tort damages it owed to Hebert under LWCC’s workers’ compensation policy.”
Attorneys sound off
Jeff Napolitano, a defense attorney with Juge, Napolitano, Guilbeau, Ruli & Frieman, said Thursday he saw the court’s ruling as a statement that “we’re going to be consistent” about preventing double-recoveries for injured workers and employers alike.
From his review of the decision, Napolitano said, the court is making it clear that an employer that makes payments to a worker who doesn’t have a valid workers’ compensation claim can’t recover the amounts of those payments from its comp carrier.
Napolitano said he thought “the moral of the story” is that employers should turn claims over to their comp carriers, and let the carriers decide whether to begin making payments, because “you can’t obligate your carrier to pay” if a claim is found to be non-compensable.
Fellow defense attorney Roger Javier of the Javier Law Firm commented that this was an extremely unusual case, with not only a unique injury, but also uncommon facts.
The general takeaway is that an employer “cannot double-dip” and get a credit against its tort liability for payments made to a worker and recover the amount of those payments from a comp carrier, he said.
Javier further noted that the decision did not say whether LWCC had made any payments to Hebert, and whether the carrier might be able to recoup that money from Industrial. If the carrier had made payments, he said he imagined the carrier would want to be repaid.
Hebert’s accident has spawned nearly a decade of litigation so far, Javier said, and there may still be more to come.
Kenneth H. Laborde, Brendan P. Doherty and Bradley J. Schwab of Gieger, Laborde & Laperouse represented Industrial before the 3rd Circuit. Gregory E. Bodin and Christopher M. Vitenas of Baker, Donelson, Bearman, Caldwell & Berkowitz represented LWCC.
LWCC on Thursday issued a statement via Bodin, saying it does not comment on matters in litigation.
To read the court’s decision, click here.