Ninth Circuit Rejects The Situs-Of-Injury Test Adopted By The BRB In Addressing Eligibility For Benefits Under OCSLA

In Valladolid v. Pac. Operations Offshore, LLP, 2010 U.S. App. LEXIS 9820, 35-36 (9th Cir. May 13, 2010), the Ninth Circuit considered whether an employee must be on a site within the outer continental shelf in order to collect benefits under the Outer Continental Shelf Lands Act. The court rejected the situs of injury test and found that the claimant must prove a substantial nexus between the injury and extractive operations on the shelf.

In this case, the employee died when he was crushed by a forklift on the grounds of Pacific Operation’s onshore oil-processing facility. The employee’s duties were primarily on an oil rig owned by Pacific that was more than three miles off the California coast. His duties on the rig included picking up litter, emptying trash cans, washing decks, painting, fixing equipment, and helping load and unload the platform crane. At the onshore facility, one of his duties included consolidating scrap metal for third parties to pick up. This consolidation process occurred about once every two years.

The employee’s widow claimed workers’ compensation benefits under the Outer Continental Shelf Lands Act (“OCSLA”) and the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), which were denied by the Administrative Law Judge (ALJ). Under OCSLA, the ALJ denied benefits under the situs of injury test finding that the accident did not occur within the geographic situs of the outer continental shelf. LHWCA benefits were denied as the employee was not engaged in maritime employment and was not injured on a maritime situs. The Benefits Review Board (BRB) upheld both denials.

The Ninth Circuit considered the “But For Test” adopted by the Third Circuit and the Situs of Injury Test adopted by the Fifth Circuit as well as the statutory language of Section 1333(b). Section 1333(b) states:

(b) Longshoremen’s and Harbor Workers’ Compensation Act applicable; definitions. With respect to disability or death of an employee resulting from any injury occurring as the result of operations conducted on the outer Continental Shelf for the purpose of exploring for, developing, removing, or transporting by pipeline the natural resources, or involving rights to the natural resources, of the subsoil and seabed of the Outer Continental Shelf compensation shall be payable under the provisions of the Longshoremen’s and Harbor Workers’ Compensation Act.

The Fifth Circuit held that as the operations must occur on the outer continental shelf, so must the injury in Mills v. Director, Office of Workers’ Compensation Programs, 877 F.2d 356 (5th Cir. 1989) The Ninth Circuit disagreed explaining that the statute did not have an on-site requirement but used the language “as the result of.” The Ninth Circuit noted that an accident off the outer continental shelf may still be covered if the accident happened due to an activity related to operations conducted on the outer continental shelf.

The Ninth Circuit also considered the “But For Test” applied by the Third Circuit. In Curtis v. Schlumberger Offshore Service, Inc., 849 F.2d 805, the employee worked as a well-logging operator off the coast of New Jersey on an oil rig. He had returned to his employer’s headquarters in Rhode Island but was then ordered back to the rig. While driving back to the rig, the company car was struck head on by another vehicle. The ALJ found that the accident was covered under OCSLA. The BRB reversed finding while Curtis was in the scope of his employment, the accident did not occur in the geographic location within the outer continental shelf. The Third Circuit reversed the BRB and noted that Section 1333(b) did “not place any nexus, situs or geographic restrictions on claims for injuries in connection with outer continental shelf operations.” The Third Circuit applied the “But For Test” and found his injuries compensable as but for his traveling back to the rig to conduct operations, his injuries would not have occurred.

The Ninth Circuit did not find that a simple “But For Test” was appropriate but adopted the following test consistent with pre Mills case law:

the claimant must establish a substantial nexus between the injury and extractive operations on the shelf. To meet the standard, the claimant must show that the work performed directly furthers outer continental shelf operations and is in the regular course of such operations. An injury sustained during employment on the outer continental shelf itself would, by definition, meet this standard.

The Ninth Circuit remanded the matter to the BRB for further consideration in light of the above test. The Circuit Court affirmed the dismissal of the LHWCA claim as the onshore facility was not a maritime situs or “adjoining area” within the meaning of § 903(a).

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