7th Circuit Comp Case Ruling: REVISED

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 that employees injured on a non-moving riverboat casino cannot sue their employer under a maritime law that allows huge claim awards unavailable under the workers' compensation system. [@@]

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

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

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

A lower court upheld their action, which has been brought against the casino operators and the contractor. But the appellate court concluded that the boat, which was only moved for yearly Coast Guard engine tests, "was not ?in navigation' for purposes of the Jones Act."

The court said the workers were not Jones Act protected because the riverboat was not involved in transport and its purpose was merely to provide a legal venue for gambling under Illinois law. Jones' purpose is to protect seamen on vessels "regularly" exposed to 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 motion for rehearing" and if necessary the firm would probably petition for a U.S. Supreme Court hearing.

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

The boat, which in 2001 cruised off to Texas to be sold, was always staffed with a captain and crew and could be disconnected from utilities and leave the dock in 20 minutes. But a company executive said there was no intention to cruise it for casino operations, the court noted.

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

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

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

Kim Kearney, a senior partner at Chicago's Clausen Miller law firm, which represented the riverboat before the 7^th Circuit, said that between 1,000 to 2,500 persons can be employed on a riverboat. Before the decision she said she expected whoever lost would seek high court review.

The issue is also alive in other jurisdictions. Currently, she said there are Jones Riverboat casino cases pending before the 5^th U.S. Circuit, the jurisdiction including Louisiana, Mississippi and Texas.

Jerry Grim, executive vice president for marine sales with Arthur J. Gallagher in St. Louis said that "underwriters are terrified of this Jones Act" because of the loss potential. He said that since 2002 when American International Group drastically reduced its presence, the market had been dominated by Zurich North America of Schaumburg, Ill.