Liberty Mutual not entitled to comp premiums for seamen


Liberty Mutual Insurance Co. cannot claim premium for marine workers not covered by state workers compensation laws, a circuit court held in a decision published Monday.

In Liberty Mutual Insurance Corp. v. Dubuque Barge & Fleeting Service Co., the 8th U.S. Circuit Court of Appeals in St. Louis unanimously affirmed a district court’s decision that the insurer wrongfully charged premium for a marine construction company’s workers classified as “seamen” in its workers compensation premium calculations.

Dubuque Barge & Fleeting Service Co., doing business as Dubuque, Iowa-based Newt Marine Service, is a construction company that conducts most of its work on a floating dredge barge on the Mississippi River.

The company held three one-year workers comp policies issued by Liberty Mutual through Iowa’s assigned risk plan, beginning in May 2013. All three policies included the same premium terms, and Newt Marine paid an up-front, estimated premium. After an audit, Liberty Mutual calculated the final premium, with Newt Marine paying the difference if the final result exceeded the initial estimate.

Each policy excluded coverage for bodily injuries to the crew of any vessel under the Jones Act, thereby giving “seamen” a private right of action against the company for personal injuries suffered in the course and scope of their job. Newt maintained a separate protection and indemnity policy from American International Group Inc. to cover bodily injuries of its employees classified as seamen. 

However, Liberty Mutual charged Newt Marine a premium for the coverage of seamen employees in its final calculations on the basis that Newt could alter an employee’s work from that of a seaman to that of an employee covered by the policy.

Newt refused to pay the additional premiums, and Liberty Mutual sued the company for breach of contract, seeking more than $1 million in premiums. 

A district court held that the premiums sought by Liberty Mutual were not merited under the terms of the policy, and the insurer appealed.

The appellate court affirmed the district court’s decision, holding that remuneration for the seamen workers was not covered by the language of the policy because those employees “do not engage in covered work.”

The court held that in the event a worker was reclassified, the insurer would be entitled to remuneration for that worker, but that the possibility of reclassification does not allow Liberty “to include remuneration for all of Newt Marine’s seamen employees in the final premium calculation.”

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