This Week’s Question:
What marine insurance policy covers claims by divers who are injured while diving from a vessel on navigable waters? Is it the USL&H or the MEL policy?
Short Answer
The answer to this question is twofold:
(1) If a court deems that the diver was a seaman (E.g., allowing him to bring a Jones Act case), MEL policies will generally cover that type of claim. If the court deems that the diver is not a seaman, then his claims will be covered by the USL&H policy.
(2) The problem is this: courts are very undecided when it comes to determining whether a particular diver qualifies as a seaman. This means that you may need to obtain both USL&H and MEL coverage for the same job to be adequately insured.
Background
A USL&H policy covers claims brought under the LHWCA (Longshoremen Harbor Workers Compensation Act). The LHWCA provides a no-fault remedy to shore-based maritime workers who are injured on the job. The LHWCA is really a federal workers compensation program. To qualify under the LHWCA, the injured worker must satisfy two elements: situs (place of injury) and status (type of work performed). For the sake of time, virtually all commercial divers injured while diving in navigable waters satisfy the situs and status test. On the other hand, an MEL policy generally covers an employer’s liability that flows from Seamen claims (E.g. Jones Act Claims). Unlike the LHWCA, not all divers virtually qualify as seamen. Legally, a seaman is never considered an LHWCA worker, and vice versa, because the two categories are mutually exclusive. So, in order to determine which marine insurance policy applies, you need to know whether the injured diver is legally considered a Seaman. So, your analysis looks like this:
- Seaman = MEL Insurance
- Not a Seaman = USL&H Insurance
When is a Diver a Seaman?
So far, the court system has identified two ways that a diver may be considered a seaman. The first way is a standard test applied to all maritime workers. The second way is an exception to that test, carved out just for divers. Appropriately, lawyers have referred to this as the “divers exception”. However, the divers exception has received a lot of scrutiny, and is by no means a test that lawyers can rely on. Both methods are discussed below.
The Standard Seaman Test
The Supreme Court of the United States developed a two-part test to determine whether a maritime worker is a Seaman.
(1) The employee’s duties must contribute to the function of the vessel (which is a very loose standard), and
(2) The employee must have a substantial employment-related connection to a vessel in navigation. This connection must be substantial in terms of duration and nature. As a benchmark, a maritime worker must spend 30% of his time on a vessel or an identifiable fleet of vessels, owned or operated by his employer, in order to be considered a seaman.
The Supreme Court designed this test to achieve two goals: (1) to make it possible for maritime employers to know who is a seaman, regardless of the activity the employee was performing at the time of the injury, and (2) to carry out the intent of Congress to provide a seaman’s protections to those employees who are actually sea-based workers, as opposed to land-based workers who are incidentally injured at sea. As you might be able to tell, the key theme here is that seaman status is class-based, meaning that a seaman is afforded Jones Act and other seaman protections even if the seaman is injured on land. The Court specifically designed this test to avoid the possibility that a worker would jump in and out of seaman status while performing his work duties. There are some downsides to this test however: the Supreme Court has yet to apply it outside a narrow set of circumstances, which has created some problems. For example, the federal appellate court in New Orleans (called the 5th Circuit) denied seaman status to a compulsory pilot because he did not have a substantial connection to an identifiable fleet of vessels. This outcome is admittedly inconsistent with the Supreme Court’s goals because Pilots spend virtually all of their working time on vessels. However, if you apply the Court’s test, you quickly come to the conclusion that a compulsory pilot does not have a substantial connection to one vessel or an identifiable fleet because pilots allocate their time to a continuous series of unrelated vessels.
How does the test apply to Divers?
Divers qualify for seaman status the same way other maritime workers qualify. That means that a diver will have to have a substantial relationship to a vessel or fleet of vessels owned or operated by his employer. For example, a diver who performs 30% or more of his working time aboard a vessel or fleet of vessels owned or operated by his employer is a seaman. And remember, just like any other seaman, once a diver is classified as a seaman, he is afforded the seaman’s remedies even if he is hurt while diving from the shore.
The Divers Exception
The diver’s exception is most often cited by reference to the Louisiana Supreme Court opinion, Wisner v. Professional Divers of New Orleans. The diver’s exception arguably relieves a diver from satisfying the second prong of the U.S. Supreme Court’s seaman test (the substantial connection requirement). Instead of requiring the diver to prove he spent at least 30% of his time aboard vessels owned or operated by his employer, the diver merely needs to show that he is a maritime employee whose work regularly exposes him to the perils of the sea. Unfortunately, the contours of this exception are rather unclear, and other courts have been hesitant to recognize it as a legitimate maritime rule. It is helpful to understand the basic facts of the Wisner case. In Wisner, the diver did not satisfy the 30% requirement because his employer contracted him out to work on vessels owned and operated by various third parties. However the diver was (1) injured while diving from a vessel, and (2) spent 90% of his time aboard vessels as part of his regular work duties. The Wisner court refused to apply a strict and “wooden” application of the substantial connection test, reasoning that the court’s inquiry should focus on whether the employee’s duties were primarily sea-based activities, regularly exposing him to the perils of the sea. Shortly after the Wisner decision, the Diver’s exception was scrutinized and its application called into doubt in some federal district court cases. Most notably, the federal district court in New Orleans denied a plaintiff/diver’s request to invoke the diver’s exception even though the diver worked from vessels 53% of the time. See Landry v. Specialty Diving of Louisiana, 299 F.Supp. 2d 629 (E.D.La. 2003). In that case, the plaintiff/diver did not satisfy the standard seaman test (because he failed the substantial connection requirement), and the court also refused to permit the use of any diver’s exception to the facts of the case. It is difficult to tell whether the court was just reluctant to recognize the diver’s exception as a legitimate maritime rule, or if the court believed the diver’s exception was much more narrow than the plaintiff believed. The court appeared to justify its decision on three grounds: (1) the diver’s exception (as recited from the Wisner case) was unenforceable to the extent that the Wisner opinion conflicted with the Supreme Court’s seaman test, (2) cases permitting the diver’s exception concerned divers who spent roughly 90% of their working-time at sea, and (3) those other divers were actually injured while diving (the diver in Landry was not injured while actually diving).
Helpful Cases
Supreme Court Case Law
McDermott Intern., Inc. v. Wilander, 498 U.S. 337 (1991).
Chandris, Inc. v. Latsis, 515 U.S. 347 (1995).
Harbor Tug and Barge Co. v. Papai, 520 U.S. 548 (1997).
Fifth Circuit Case (Compulsory Pilots not Jones Act Seaman)
Bach v. Trident Steamship Co., 920 F.2d 322, vacated & remanded, 500 U.S. 949, aff’d., 947 F.2d 1290 (1991), cert. denied, 504 U.S. 931 (1992).
Wisner v. Professional Divers of New Orleans, 98-1775 La. 3/2/99, 731 So.2d 200 (1999).
Landry v. Specialty Diving of Louisiana, Inc., 299 F.Supp.2d 629 (E.D.La. 2003)
Quick Disclaimer:
This article does not constitute legal advice. It is intended for general informational purposes only. Not all types of marine insurance policies are the same. In fact, a seasoned colleague of mine told me “Joe, no two maritime policies are the same”, a phrase which I adamantly live by. So, remember, just because a certain category of marine policy usually covers a particular type of loss, the only way to know if a loss is ever covered is to look directly at the policy. Insurance policies are contracts, and they may add or omit virtually any term. So, please be safe and have a qualified attorney review your marine insurance policy if you have an issue.
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