7th Circuit Comp Case Ruling: REVISED

By Daniel Hays

NU Online News Service, April 14, 9:07 a.m.EST?A federal appeals court in Chicago has ruled thatemployees injured on a non-moving riverboat casino cannot sue theiremployer under a maritime law that allows huge claim awardsunavailable under the workers' compensation system. [@@]

The case will be appealed, a lawyer for the workers saidtoday.

Friday's 7^th U.S. Circuit Court of Appeals decision,which covers permanently moored casinos in Illinois, Indiana andWisconsin, has ramifications for an insurance marketplace thatindustry professionals said had availability problems after workersobtained million-dollar-plus verdicts under the federal Jones Actwhich permits negligence suits by seamen.

The three judge panel's decision came in a case brought by 46employees of the Players II Riverboat moored on the Ohio River nearMetropolis, Ill. The plaintiffs claimed that in July 2000, when acontractor did work on the vessel, they were injured by exposure totoxic chemicals.

A lower court upheld their action, which has been broughtagainst the casino operators and the contractor. But the appellatecourt concluded that the boat, which was only moved for yearlyCoast Guard engine tests, "was not ?in navigation' for purposes ofthe Jones Act."

The court said the workers were not Jones Act protected becausethe riverboat was not involved in transport and its purpose wasmerely to provide a legal venue for gambling under Illinois law.Jones' purpose is to protect seamen on vessels "regularly" exposedto sea perils, the court found.

Gail G. Renshaw, with the Lakin Law Firm in Wood River, Ill.,representing the workers said, "We're definitely filing a motionfor rehearing" and if necessary the firm would probably petitionfor a U.S. Supreme Court hearing.

A vessel "in navigation doesn't mean movement. We will not stophere" with this decision, she promised. In her brief, she arguedthat the Players II floated on a navigable river and was "subjectto the perils associated with river traffic."

The boat, which in 2001 cruised off to Texas to be sold, wasalways staffed with a captain and crew and could be disconnectedfrom utilities and leave the dock in 20 minutes. But a companyexecutive said there was no intention to cruise it for casinooperations, the court noted.

Dana Berry, Aon director of gaming services in the brokeragefirm's Chicago office, said the effects of the decision "could behuge" from his clients' perspective. Buying Jones Act coverage, henoted can be more than double the cost of workers' comp coverage.Some Indiana riverboat casinos pay in excess of $1 million forprimary Jones Act coverage, he related.

Mr. Berry said states increasingly have "gone dockside" and,like Illinois in 1999, removed requirements that boats conductgambling cruise activity.

Jones Act can pay much less for injuries than what is providedby a comp death and injury schedule when there is no employer faultfound. But if the employer is found liable, "then there's nolimit." There have been verdicts in the $3 million to $5 millionrange, Mr. Berry said.

Kim Kearney, a senior partner at Chicago's Clausen Miller lawfirm, which represented the riverboat before the 7^thCircuit, said that between 1,000 to 2,500 persons can be employedon a riverboat. Before the decision she said she expected whoeverlost would seek high court review.

The issue is also alive in other jurisdictions. Currently, shesaid there are Jones Riverboat casino cases pending before the5^th U.S. Circuit, the jurisdiction including Louisiana,Mississippi and Texas.

Jerry Grim, executive vice president for marine sales withArthur J. Gallagher in St. Louis said that "underwriters areterrified of this Jones Act" because of the loss potential. He saidthat since 2002 when American International Group drasticallyreduced its presence, the market had been dominated by Zurich NorthAmerica of Schaumburg, Ill.