A new decision from the Benefits Review Board should make a lot of foreign national military contractors happy. Essentially, the Board green-lit double recovery for Defense Base Act injuries…in certain situations and for certain types of contractors. The decision is Newton-Sealey v. Armorgroup Services (Jersey) Limited.
This case is a big deal because of the Defense Base Act’s exclusivity provision. The DBA states that the liability of an employer is “exclusive and in place of all other liability” for injuries that fall within the purview of the DBA. See 42 U.S.C. § 1651(c).
But that may not always be the case.
In Newton-Sealey, the Board was confronted with a peculiar set of facts. A British citizen pursued both a Defense Base Act claim in U.S. courts and a negligence/breach of contract claim in U.K. courts. The injured worker settled the U.K. claim but continued pursuing the DBA claim. Among other things, the Employer and Carrier argued that the injured worker should not be able to recover twice for the same injury.
Here is what the Board said:
However, the facts here are distinguishable…on two very critical points: claimant is not an American citizen, and he is not seeking enforcement of a foreign law in a U.S. court. Rather, claimant, a British citizen, has certain rights granted by his home country, and the question is whether, having availed himself of those rights, he is not precluded from seeking his rights under the American law which covered his employment. We think not.
Under the laws of the UK, claimant has a right to pursue both a local workers’ compensation claim and a tort remedy against his employer. Pursuit of one does not exclude the other, and there is no employer tort immunity. It is questionable whether the UK court was required to enforce the DBA’s exclusivity provision. In any event it is the responsibility of those in the DBA scheme to ascertain its applicability, and it is in the other forum where the exclusivity of the DBA remedy is to be raised. That is, in knowing that the Act is to be an employer’s exclusive source of liability for injuries befalling its workers, it is the employer who must raise and plead this defense before the courts in the foreign claims. A foreign court’s decision cannot negate a claimant’s right to compensation under the DBA. Therefore, we hold that claimant’s pursuit of his rights under the UK injured-worker laws in his home country, and his resultant tort settlement, cannot preclude him from pursuing his claim under the [Defense Base] Act and obtaining benefits if the claim is otherwise compensable.
There’s more. When addressing whether the employer should get a credit for the amount paid in the U.K. settlement, the Board said:
Claimant’s double recovery here is not “absurd” in light of the fact that he has two remedies available to him. One remedy is based on his right as a British citizen to sue his employer in tort, and one remedy is based on his status as an employee subject to the DBA. There is no statutory provision in the [Longshore] Act or the DBA preventing claimant from both recoveries. Because double recovery is not such an absurd result that we should look beyond the statute, we decline to create another extra-statutory credit provision.
So, what does all of this mean? For starters, any foreign national employed by a Defense Base Act contractor should check their home country laws to determine whether they can maintain a separate but entirely permissible second lawsuit for the same injury covered by the DBA. Foreign nationals may be able to recover benefits and damages twice. Although Newton-Sealey dealt only with a U.K. case, chances are high that a similar outcome could be reached in other countries.
U.S. citizens are not so lucky. By virtue of their status as an American citizen, injured workers from the U.S. are prohibited from double recovery. In Newton-Sealey, the employer and carrier argued that it was unfair to let U.K. citizens recover twice but prohibit U.S. citizens from doing the exact same thing. The Board was not convinced, stating: “We reject [Employer’s] argument that we should prevent the double recovery in this case because it would give, unjustly a UK worker greater rights than an American worker. The rights of foreign nationals under the Act are not always the same as those of American citizens and residents.”
I can’t decide if employers or DBA carriers should be more concerned about Newton-Sealey. Employers have the prospect of double recovery. Plus, employers have to pay for DBA insurance and also defend a lawsuit in the worker’s home country. If the employer wants to avail itself of the DBA’s exclusivity provision in this type of case, it must do so in a U.K. court, not a U.S. court. The employer will not get help from the DBA carrier in the non-DBA lawsuit because the DBA carrier will not be a party to the foreign suit. Moreover, Newton-Sealey reads like the DBA carrier will not get to raise an exclusivity defense against a foreign law in a U.S. court because the proper venue for the exclusivity defense is in the foreign court, where the carrier is not a party.
Finally, Newton-Sealey addressed a few other issues (Section 33(g) defenses and the credit doctrine) which makes the case important beyond the exclusivity provision. Nonetheless, the Board’s treatment of the exclusivity provision vis-a-vis U.K. citizens is what makes Newton-Sealey a must-read case. I imagine that this will be appealed to a U.S. federal appellate court.
Photo courtesy of flickr user wisegie.