Opinion ID: 505524
Heading Depth: 2
Heading Rank: 2

Heading: Applying Statutory Principles To The Settlement

Text: 31 The case law deals with double recovery by creating a lien against the settlement fund, and articulates a general principle of equality between independent contractor employed, and vessel employed, longshoremen. These two principles stated in Jones & Laughlin and Peters control the result in this case. 32 The settlement between Taylor and the Vessel provides that the Vessel will indemnify Taylor against the employer's lien for benefits paid. Bunge notes that the settlement agreement is virtually identical to the settlement agreement involved in Allen v. Texaco, Inc., 510 F.2d 977 (5th Cir.1975), with one exception: In Allen the employer's worker's compensation policy contained an express waiver of subrogation in favor of the negligent party; the Comp Policy contains no such waiver. We have previously dealt with the problem of double recovery when a settlement of this type is involved. In Peters, we held that absent a waiver of subrogation ... the effect of the settlement terms [used in Allen is] simply to transfer the obligation automatically to reimburse the employer from the worker to the third party. 764 F.2d at 321. The rationale in Peters was that if the case had gone to trial, and judgment had been obtained against the third party, without a lien for worker's compensation benefits paid, the longshoreman would have received a double recovery. 17 33 Today, however, we are faced with a settlement of the type addressed in Peters in the context of a third party action against the vessel, where the vessel is also plaintiff's employer, as permitted by Sec. 5(b). The sole question before us is whether Peters covers such actions. 34 The principle of equality articulated in Jones & Laughlin compels a conclusion that Peters controls. If we disallow the lien in cases such as this one, injured vessel employed longshoremen could easily word settlement agreements to avoid the employer's lien. This would create a number of inequalities between vessel employed longshoremen and longshoremen employed by independent contractors, as well as between vessels which hire their own longshoremen and those which hire independent contractors: (1) vessels which employ longshoremen would face increased worker's compensation premiums; 18 (2) liability insurers of such vessels would receive a windfall; and (3) longshoremen employed by such vessels would be able to extract part of the liability insurer's windfall during settlement negotiations. 19 We therefore conclude that the employer's automatic lien applies in actions under Sec. 5(b) where a vessel-employer has agreed to indemnify the plaintiff for worker's compensation benefits paid.