Opinion ID: 518390
Heading Depth: 2
Heading Rank: 1

Heading: Employers' Liability under the Act

Text: 12 In spite of having insured against its employees' compensation claims as the LHWCA requires, Costello now finds itself faced with paying those claims from its own pockets because of its insurers' insolvency. We do not minimize Costello's predicament, especially in light of its small size and limited resources. The seeming injustice has inspired Costello to urge upon us a non-literal interpretation of the LHWCA's provisions, 4 namely, that an employer fully discharges its statutory liability once it has secured insurance. Costello asks us to view the statute as meaning to provide for employees by distributing the risk of injuries across the land-based maritime industry, not by bankrupting individual employers. Costello urges that a comprehensive insurance scheme is the best method for spreading costs over the industry, because employers can predict insurance costs and recoup them from customers. Insurance companies, not employers, have the resources to anticipate the actual costs of injuries, and can adjust their rates accordingly. The LHWCA, Costello argues, contemplates a network of insurance companies liable for injuries. In Costello's vision for the LHWCA, employers who choose to take advantage of the network would be liable only for providing insurance. 13 Costello finds support for its position in the LHWCA provisions which refer, often indirectly, to insurance. Section 904, for example, requires employers to secure insurance. Section 905 limits employer liability only for those employers who satisfy this obligation to secure insurance. Section 935 substitutes insurance companies for employers where an insurance policy covers an employee's claim. 14 Whatever may be the strength of Costello's position as a policy matter, we must conclude that it is not supported in the legislation that Congress has enacted. Rather than prescribing a scheme solely of insurer liability, the statute plainly continues to hold employers responsible for all payments due employees. Section 904 contains a dual mandate--an employer shall be liable for and shall secure the payment to his employees.... 33 U.S.C. Sec. 904(a) (emphasis supplied). A congressional committee report on recent amendments to the Act expressly states that the requirement to secure insurance does not reduce employers' obligations under the Act. See H.R.Rep. No. 570, 98th Cong., 2d Sess. 19, reprinted in 1984 U.S.Code Cong. & Admin.News 2734, 2752. Section 905 simply substitutes the statutory liability imposed by section 904 for any existing common law liability. See 33 U.S.C. Sec. 905. Nothing in section 935 indicates that substitution of an insurance carrier for administrative purposes absolves the employer's liability. To the contrary, the section provides that administrative actions shall be binding upon the carrier in the same manner and to the same extent as upon the employer, indicating that carrier liability is imposed in addition to, not in place of, employer liability. See 33 U.S.C. Sec. 935. 15 Neither is the statute's plain language inconsistent with Congress's asserted legislative purpose. The Act confers a significant benefit upon employers in that they are relieved of the less predictable and perhaps greater expense of conventional tort claims, for which an employer, just as here, would be financially responsible in the event his insurance carrier collapsed. To absolve Costello would leave Keough and Meagher without recourse for the money owed them. As between injured employees and their employer, it is reasonable to believe that Congress would have wanted the employees to prevail. That, in any case, is what the plain terms of the LHWCA provide for. Accordingly, we hold that where, as here, an employer's insurance carrier becomes insolvent, the employer remains liable to employees for the compensation due under the LHWCA.