Riverboat Comp Case Moves To 5th Circuit
The attorney for a permanently moored New Orleans riverboat casino expects a recent ruling by a Chicago judicial panel to help his client's contention that its injured employees are covered by workers' compensation, not maritime law.
Peter Sloss, with Murphy, Rogers and Sloss in New Orleans, who is due to argue the matter this week before the 5th U.S. Circuit Court of Appeals, said that last month's decision by the 7th U.S. Circuit is "very helpful for us" and should "have some persuasive authority."
Mr. Sloss represents the Treasure Chest Casino, which stopped cruising Lake Ponchartrain and became a non-moving operation in March 2001. The riverboat, which is still certified to operate by the Coast Guard, is contesting a claim by casino worker Mary Martin, who was injured when she fell on the dock en route to her job.
Ms. Martin contends her case is covered by the Jones Act, which protects seamen in the course of their employment even when they are not on a vessel. Under the Jones Act, workers whose suits are successful can obtain huge damage awards that are unavailable under the workers' comp system.
Both Mr. Sloss' case and the one decided by the 7th U.S. Circuit Court of Appeals have ramifications for an insurance marketplace that industry professionals say has had availability problems after workers obtained million-dollar-plus negligence suit verdicts under the Jones Act.
The 7th Circuit case which applies to permanently moored casinos in Illinois, Indiana and Wisconsin will be appealed, a lawyer for casino workers involved in that suit reported.
The three-judge 7th Circuit 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 was brought against the casino operators and the contractor. However, 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 protected by the Jones Act 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.
"Were definitely filing a motion for rehearing," said Gail G. Renshaw, with the Lakin Law Firm in Wood River, Ill., who represents the workers. If necessary, she said, 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 added.
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. However, a company executive said there was no intention to cruise the ship 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 insurance. Some Indiana casinos pay $100 million for Jones coverage as part of an umbrella policy, 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 claims can pay much less for injuries than what is provided by a workers' comp death and injury schedule when there is no employer fault found. However, if the employer is found liable, "then there's no limit," and there have been verdicts in the $3-to-$5 million range, Mr. Berry noted.
Kim Kearney, a senior partner at Chicago's Clausen Miller law firm, which represented the riverboat before the 7th Circuit, said that between 1,000 and 2,500 people can be employed on a riverboat casino. Before the decision, she said she expected whoever lost would seek high court review.
The issue is also alive in other jurisdictions, she noted, with Jones riverboat casino cases pending before the 5th 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 has been dominated by Zurich North America of Schaumburg, Ill.
Reproduced from National Underwriter Edition, April 30, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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