Historically, the Benefits Coordination and Recovery Center (“BCRC”) arm of the Centers for Medicare & Medicaid Services (“CMS”) collected Medicare’s conditional payments.  While the BCRC continues to address Medicare’s reimbursement rights with Medicare beneficiaries, in late 2015 the CMS’s Commercial Repayment Center (“CRC”) took over responsibility for seeking reimbursement directly from Applicable Plans.  Applicable Plans include liability insurers, self-insured entities, no-fault insurers, and workers’ compensation entities.  If you receive correspondence from the CRC, you must act quickly.

The CRC issues three types of correspondence:

  1. Conditional Payment Letter (“CPL”)
    • A CPL is issued if a beneficiary reports a pending case where an Applicable Plan may have primary payment responsibility, before the Applicable Plan submits a Section 111 report.  There is no time frame for a response, but the Applicable Plan is encouraged to respond expeditiously in certain situations.
  2. Conditional Payment Notice (“CPN”)
    • A CPN is issued when the Applicable Plan notifies CMS that it has primary payment responsibility (or submits a Section 111 report) and Medicare has made conditional payments.  An Applicable Plan has 30 days from the date on the CPN to challenge the claims in the CPN.  If not disputed within 30 days, a demand letter will be issued requiring payment, and interest will be assessed.
  3. Demand Letter
    • Demand letters seek payment within 60 days.  Applicable Plans have 120 days from receipt of a demand to file an appeal.  Receipt is presumed to be five (5) calendar days from the date of the demand letter absent evidence to the contrary.

To date, the CRC has focused the majority of its collection efforts on Group Health Plans.  However, CMS’s annual year-end fiscal report indicates that in 2016, the CRC workload will expand to include the recovery of certain Non-Group Health Plan conditional payments where an Applicable Plan had or has primary payment responsibility.

Additional information on the CRC and the recovery and appeals process is provided on the CMS website:

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The information posted to this blog article is provided for informational purposes only.

Information contained herein is not intended as nor does it constitute legal or professional advice, nor is it an endorsement of any source cited or information provided. Information is subject to change. The applicability of information may vary with case facts and legal updates. Further, the information in this blog is only a summary of many of the relevant provisions of the MSP, Section 111 and related case law. This blog article does not encompass every aspect of these provisions and should not be your only reference for determining Medicare compliance. By way of example only, the CMS issues routine Alerts and updates to its User Guide. Kean Miller will not update this blog article every time there is a new User Guide, Alert and/or a new or revised regulation.

The analysis, conclusions and/or opinions expressed in this article are exclusively those of the author and do not represent the opinions or position of any Kean Miller client.

Multimillion dollar offshore drilling rigs and subsea drilling equipment can be rendered worthless if their most basic components, the nuts and bolts that hold them together, fail. Since 2013, investigators with the Bureau of Safety and Environmental Enforcement (“BSEE”) have been investigating why bolts used in subsea oil equipment have suddenly, and without warning, failed. These bolt failures have caused shut-downs and increased safety concerns for possible catastrophic well events. At least one subsea equipment provider has issued a global recall for faulty bolts on its blowout preventers (“BOP”). Flaws have also been found in BOP’s manufactured by other companies.

These bolts failure are now on BSEE’s radar. Indeed, BSEE has issued Safety Alert 318 warning of “the recurring problem of connector and bolt failures in various components used in risers and subsea BOP’s used in offshore operations.” BSEE’s regulators are currently working with drilling companies, manufacturers, and the American Petroleum Institute (“API”) to create new standards for minimum hardness and coating of subsea equipment bolts, as well as guidelines for assembly and installation of the bolts. The API has proposed replacing “critical bolts” that do not meet the proposed hardness standard by 2017. It is estimated that this issue could affect more than 2,400 platforms and oil rigs in the Gulf of Mexico.

The reason for the bolt failures has yet to be determined. It is likely that the alloys used in heavy steel bolts are not hard enough to survive in the waters of the Gulf of Mexico. Alternatively, excessive tightening or “over-torqueing” could be causing the failures.

New BSEE regulations require greater reporting of breakdowns and failures, including bolt failures. Thus, offshore drillers and support companies would be wise to heed BSEE’s Safety Alert and inspect the bolts in their equipment for failures. Preventative maintenance and replacement of bolts that are not up to specifications can prevent catastrophic and costly failures in the future as well as significant regulatory penalties.

For information concerning BSEE’s Safety Alert No. 318, please see www.BSEE.gov/bolts.

On August 10, 2016, the Eastern District of Louisiana reaffirmed that a maritime lien may attach to a vessel at the moment the necessaries are provided, but that the lien may not yet be enforceable until payment is due (i.e., the debt had matured). Thus, in the typical case, the amount of security necessary to release an arrested vessel is calculated only using the value of the matured maritime lien. However, in Odyssea Marine, Inc. v. Siem Spearfish M/V, the court held that given the specific circumstances of the case the security to be posted by the vessel owner to release the arrested vessel may encompass all maritime liens asserted by plaintiff Delta Subsea, LLC (“Delta”) including those that were not enforceable. 2016 WL 4259083 (Aug. 10, 2016) (J., Barbier).

As previously discussed in earlier blog articles, maritime liens arise as a matter of law for those who provide “necessaries” to a vessel such as: repairs; supplies; towage; and the use of a dry dock or marine railway. 46 U.S.C. § 31301(4). The Fifth Circuit has held “that a maritime lien for vessel repairs attached [to the vessel] the moment the vessel left the repair yard with the bill unpaid….” See Pan American Bank of Miami v. Oil Screw Denise, 613 F. 2d 599, 602 (5th Cir. 1980). The Fifth Circuit subsequently refined its previous holding by stating that “the point at which a maritime lien attaches and the point at which it becomes enforceable are not necessarily the same.” See Bank One, Louisiana v. MR. DEAN, 293 F. 3d 830, 834 (5th Cir. 2002). Typically, in order for the lien to be enforceable, the debt must mature per the terms of the agreement between the shipowner and the shipyard. This general rationale is central to the purpose of necessary liens such that they are designed to create security for a claim while still permitting a vessel to continue on her way to earn freight or hire to cover the unpaid debts not presently due.

In Odyssea, Delta arrested the SPEARFISH on account of five allegedly unpaid invoices for ROV support services. Siem, the owner of the SIEM SPEARFISH (“SPEARFISH”), petitioned the court to set an appropriate amount of security so that the SPEARFISH could be released from the U.S. Marshal’s custody. Delta sought to require Siem to post security in the total amount of all outstanding invoices. Siem argued that at the time of arrest, only one invoice was due; therefore the amount of security should be set at the matured debt value, only. Though a maritime lien is not typically enforceable until the debt has matured, the court acknowledged that certain exceptions exist. The Odyssea court held that the owner of the vessel must post security for the aggregate value of all outstanding invoices even though not all presently due.

The court’s reasoning was based on a variety of factors. Most importantly, the court determined that at least one invoice was due at the time of arrest, thus the arrest was proper. Further, in the past four months, the SPEARFISH had been arrested by five different plaintiffs, and Delta was expressly told by Siem that it intended to move the vessel out of the district to prevent Delta from arresting the SPEARFISH. Lastly, the remaining invoices were due within weeks of the date of arrest.

In dicta, the court went one step further by stating that because“arrest is the first step to judicial sale of the vessel, which would wash the vessel [clean] of all maritime liens, it appears sensible to permit a lien holder to enforce a lien that has attached but not fully ripened once other parties have placed the vessel under arrest.” The court went on to justify its ruling by declaring that no Fifth Circuit case governed the present suit, therefore the court determined that this ruling was in line with the Eleventh Circuit’s similar holding in Dresdner Bank Ag v. M/V OLYMPIA VOYAGE, 465 F.3d 1267 (11th Cir. 2006).

From Odyssea, providers of necessaries should take note that they may seek security for all of their maritime liens not yet ripened, but one of the liens must be enforceable at the moment of arrest. Further, vessel owners should take note that terms of credit allow a vessel to proceed on her way to earn freight or hire in order to satisfy any attached liens not presently due. Thus, vessel owners should negotiate reasonable and attainable terms of credit to insure the vessel can continue to generate revenue even with encumbrances attached.

In the recent case of In re Marquette Transp., No. 13-5114, 2016 WL 1695109 (E.D. La. 4/26/16), Judge Sarah Vance offered the latest comment on how a “seafarer” is defined by the landmark U.S. Supreme Court case of Yamaha Motor Corp. U.S.A. v. Calhoun, 516 U.S. 199 (1996).

In re Marquette arose out of a 2013 vessel collision in the territorial waters of Texas between a towing vessel owned and operated by Marquette and a vessel owned by John Tran, a self-employed commercial fisherman. As a result of the collision, Tran was killed; his fishing vessel was destroyed. Litigation began when Marquette filed a Limitation action under 46 U.S.C § 30501, et seq. Thereafter, the family of John Tran filed a claim against Marquette under the General Maritime Law and the survival and wrongful death laws of Texas.

After extensive litigation, in April 2016, the Tran claimants filed a Memorandum of Law addressing the issue of whether they could supplement remedies available under the General Maritime Law with State Law remedies provided by Texas’s wrongful death and survival statutes. They argued that because the decedent was neither a Jones Act seaman nor a maritime employee covered by the Longshore and Harbor Workers Compensation Act (“LHWCA”), Tran was a “nonseafarer,” such that his survivors could pursue state law remedies as allowed by Yamaha. Marquette opposed contending that because Tran earned his living as a fisherman, he was a “person engaged in maritime trade.” According to Marquette, Tran was a “seafarer” as defined by Yamaha; thus, his survivors were precluded from recovering non-pecuniary damages under Texas law.

Note that it was undisputed that Tran was neither a Jones Act seaman nor an employee covered by the LHWCA. At issue was whether the Tran claimants could supplement remedies available under General Maritime Law with state law remedies, including the remedies provided by Texas’s Wrongful Death and Survival Statute.

Whether non-pecuniary damages are available in cases involving non-seamen killed or injured in state territorial waters was famously taken up by the U. S. Supreme Court in the aforementioned case of Yamaha. In that case, the parents of a child killed in a jet ski accident in state territorial waters asserted state law remedies. Drawing a distinction between “seafarers” and “nonseafarers,” the U.S. Supreme Court held that the General Maritime Wrongful Death Action does not preempt state remedies in cases involving the death of a non-seafarer in state territorial waters. Holding that Congress had not prescribed remedies for the wrongful deaths of nonseafarers in territorial waters, the Yamaha Court found no basis for displacing state remedies in cases of this nature.

Since Yamaha, courts have divided on the meaning of the critical term “non-seafarer.” The division between the two leading interpretations of “nonseafarer” is based on language found in the Yamaha opinion. In a footnote, the Yamaha Court explained that “by non-seafarers, we mean persons who are neither seaman covered by the Jones Act…nor longshore workers covered by the Longshore and Harbor Workers Compensation Act.” However, also in the Yamaha opinion, the Court described the scope of its holding noting that state remedies are not displaced in cases where the claimant “was not a seaman, longshore worker, or person otherwise engaged in maritime trade.” Seizing upon the “person otherwise engaged in maritime trade” language, several courts have concluded that a “person otherwise engaged in maritime trade” is a “seafarer” precluded from pursuing non-pecuniary damages under state law even though that person is neither a Jones Act seaman nor longshoreman covered by the LHWCA.

Marquette argued that Tran, a self-employed commercial fisherman, was “otherwise engaged in maritime trade at the time of the collision.” Based on this interpretation, Tran would be deemed a “seafarer” under Yamaha and the Tran claimants would be barred from supplementing their federal maritime law remedies with non-pecuniary damages provided by Texas law. Other Courts have explicitly rejected Marquette’s approach and simply defined a nonseafarer as one who is neither a seaman nor covered by the LHWCA.

In a well-reasoned opinion, Judge Vance found the Tran claimants’ arguments more persuasive and more consistent with Yamaha as a whole. She reasoned that it was clear that Jones Act seamen and Longshore workers covered by the LHWCA are “seafarers,” while individuals who are not covered by these maritime statutes are “nonseafarers.” In reaching the result, Judge Vance found that in defining the term “nonseafarer” in the aforementioned footnote, the Supreme Court expressly tied “seafarer” status to coverage under federal maritime statutes, such as the Jones Act and the LHWCA. Judge Vance further advised that it was reasonable to conclude that Yamaha’s reference to “persons engaged in maritime trade”, mainly refers to those maritime employees who are not longshore workers, but are, nonetheless, covered by the LHWCA. Section 902(3) of the LHWCA defines “employee” as “any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor worker including a ship repairman, ship builder, and ship breaker…” 33 U.S.C. § 902(3).

Based on this reasoning, Judge Vance joined those courts that have held, for purposes of Yamaha, a nonseafarer is someone who is neither a seaman covered by the Jones Act nor a longshore or harbor worker covered by the LHWCA. Accordingly, the decedent Tran was a nonseafarer and Yamaha did not preclude application of Texas statutes preventing recovery of non-pecuniary damages. While this case involved Texas law, Judge Vance’s ruling should not be narrowly read to apply only to Texas-based incidents as her ruling would be the same in Louisiana as well.

For several businesses in the Baton Rouge area, one of the many implications of the recent flooding is the loss of business records that are subject to retention requirements under various state and federal laws. In light of the destruction of many such records in the flood, a question arises as to the applicability of these retention requirements and the steps a business should take to maintain compliance with the law.

Under federal laws, businesses generally remain subject to their record-keeping obligations, but the IRS and the Department of Labor have provided some guidance in the past on how businesses who have lost records in a natural disaster can comply with the law.

With respect to records required to substantiate business losses and other tax deductions, the Internal Revenue Code addresses the loss of records due to circumstances beyond the taxpayer’s control. Specifically, Treasury Regulation § 1.274-5T provides that “[w]here the taxpayer establishes that the failure to produce adequate records is due to the loss of such records through circumstances beyond the taxpayer’s control, such as destruction by fire, flood, earthquake, or other casualty, the taxpayer shall have a right to substantiate a deduction by reasonable reconstruction of his expenditures or use.”

When claiming this exception, the taxpayer must be diligent about the reconstruction of records. Corroborating records or testimony regarding the specific expenses incurred is required, and a deduction will be denied if a business makes no attempt to recreate its destroyed records. Similarly, if the reconstruction is uncorroborated or perceived as unreliable, the deduction can be denied for lack of substantiation.

According to the Disaster Resource Guide published by the IRS, a business seeking to create a “reasonable reconstruction” of its lost business records should obtain copies of invoices from its suppliers, copies of bank statements, and copies of the last year’s federal, state and local tax returns, including payroll tax returns and business licenses, as these will reflect gross sales for a given time period.

In addition to reconstructing destroyed records, the Tax Court has indicated that it is necessary to document the extent of the destruction at the facility where the records were stored and the extent of the records that were lost. For instance, where the taxpayer did not provide evidence as to flood water damage at his record-keeping facility, the Tax Court denied the deduction, observing that it was not obligated to accept a taxpayer’s “unverified and self-serving testimony.” Darling v. C.I.R., 89 T.C.M. (CCH) 1334 (Tax 2005).

There is somewhat less guidance with respect to a business’s obligations to maintain records related to employees and employee benefit plans under applicable federal laws such as ERISA or COBRA. Generally speaking, these laws do not anticipate how to apply the record-keeping rules when a natural disaster occurs and records and businesses are destroyed.

Although there is no statutory guidance on the record-keeping requirements under these laws after a natural disaster, the Department of Labor has previously considered this issue in advisory opinions and in rules published in the Code of Federal Regulations. According to the DOL, the loss or destruction of records required to be maintained under ERISA does not discharge the business from its statutory duty to retain such records. 29 CFR Part 2520.

The DOL has also indicated that there is a general duty to reconstruct the records required to be retained under ERISA. That said, whether lost or destroyed records can, or should be, reconstructed and whether the persons responsible for the retention of records are, or should be, personally liable for the cost incurred in connection with the reconstruction of records is “necessarily dependent on the facts and circumstances of each case.” DOL Advisory Opinion 84-19A (April 26, 1984).

For instance, if reconstruction cannot be accomplished without excessive or unreasonable cost, a company would not be under a duty to reconstruct or attempt to reconstruct the lost or destroyed records. Further, if a company has access to other documents from which the lost or destroyed records could reconstructed and such other documents would be available to the company for the remainder of the requisite retention period, reconstruction of the destroyed records would not be required, provided that the company “make such agreements and arrangements necessary” to ensure that such other documents would remain available. DOL Advisory Opinion 84-19A (April 26, 1984).

In sum, if you or your business lost records in the flood which were subject to retention requirements, the best course of action is to undertake reasonable efforts that demonstrate good faith compliance with the law. Such steps include documenting the destruction done to the building in which your records were stored, the types of records that were kept prior to the flood, and the measures taken to remediate the problem. To the extent reasonable, make a good faith effort to reconstruct the lost records. Ultimately, if a business can show that it took the most reasonable and appropriate steps to comply with its record-keeping requirements, it may be able to persuade the IRS or other governmental authority to waive applicable sanctions.

For more helpful information on record reconstruction, the Disaster Resource Guide published by the IRS contains specific steps that individuals and businesses can take to reconstruct their records.

Given the significantly better benefits available to an injured worker who qualifies under the Longshoreman and Harbor Workers’ Compensation Act (“LHWCA”) compared to a state workers’ compensation scheme, attorneys for injured workers are constantly trying to fit their client into the LHWCA to maximize their potential recovery. As a result, there is a steady availability of legal opinions emerging from both administrative agencies as well as the judiciary. In nearly every case, the result hinges upon some sort of classification, such as: classifying the employee (maritime worker or not), classifying the employment (maritime work or not), or classifying the location of his/her work or injury (maritime situs or not), among others. Depending on the circumstances, the classification of the injured worker or his employment will determine whether or not he or she is entitled to federal or state benefits. [Editor’s Note: Our LHWCA 101 article can be read here.]

On August 19, 2016, the U.S. Fifth Circuit was presented with a dispute about whether James Baker fell under the LHWCA or the state workers’ compensation scheme. And as mentioned, that decision was based on a dispute of classification. Specifically here, the court was asked whether the Big Foot Tension Leg Platform (“TLP”) should be classified as a vessel. Mr. Baker was injured while working as a marine carpenter, constructing the living quarters that would eventually be placed on Big Foot. If Big Foot was classified as a vessel, then Mr. Baker would qualify as a shipbuilder under the LHWCA and entitled to Longshore benefits.

What constitutes a vessel has been litigated several times over in the past decade or so in the Fifth Circuit and the U.S. Supreme Court. In 2005, the U.S. Supreme Court decided Stewart v. Dutra Construction Company, 543 U.S. 481 (2005). Therein, the Supreme Court ruled that Super Scoop dredge, a floating platform with a clam shell bucket to remove silt from the ocean floor, qualified as a vessel under 1 U.S.C. § 3. To reach that opinion, the Supreme Court noted that Super Scoop “carried machinery, equipment, and a crew over water, its function was to move through Boston Harbor, … digging the ocean bottom as it moved.” Super Scoop was not only capable of being used for transport of equipment and workers, it was being used for that purpose.

More recently, in Lozman v. City of Riviera Beach, 133 S.Ct. 735 (2013) the Supreme Court was asked to determine whether a “floating home” was a vessel under 1 U.S.C. § 3. In concluding that Lozman’s houseboat was not a vessel, the Court noted that the houseboat was not regularly used to transport people or goods over water, had no rudder or other steering mechanism, had an unraked hull, had a rectangular bottom ten inches below the water, had no special capacity to generate or restore electricity, and had small rooms that looked like ordinary nonmaritime living quarters. Lozman’s houseboat also had no means of self-propulsion and could only be moved over water by towing.

On the heels of Lozman, the Eastern District of Louisiana held in Warrior Energy Services v. ATP TITAN, 2013 W.L. 1739378 (E.D. La. April 22, 2013), that a hybrid semisubmersible/spar did not qualify as a vessel. The ATP TITAN, was a triple column, floating production facility moored in 4,000’ of water. The TITAN was classified as an industrial vessel by the U.S. Coast Guard, and had navigational lights, lifeboats, crew quarters, an onboard generator, and a drinking water plant. It was designed to be moved to new fields to aid in oil and gas production every five to eight years. The district court distinguished the TITAN from other drilling rigs that have been previously classified as vessels by highlighting the fact that the TITAN would remain in its current location for 5-8 years. Further, to move the TITAN would take a year of planning, and approximately 15 – 29 weeks to accomplish, and would cost between $70-80,000,000.00 to move. Referring to the Lozman “reasonable observer test,” the court held that a reasonable observer “would likely find that the ATP TITAN is not practically capable of carrying people or things over water.” The Fifth Circuit later affirmed the Eastern District’s ruling. Citing to Stewart, the court characterized the dispositive question as “whether the watercraft’s use as a means of transportation on water is a practical possibility or merely a theoretical one.” In its analysis, the Fifth Circuit found: (1) the TITAN was moored to the floor of the OCS by twelve chain mooring lines connected to twelve anchor piles, each weighing 170 tons and each embedded over 200’ into the sea floor, and by an oil and gas production infrastructure; (2) the TITAN had not been moved since it was constructed and been installed in its current location in 2010; (3) the TITAN had no means of self-propulsion, apart from repositioning itself within a 200’ range by manipulating its mooring lines; (4) and moving the TITAN would require approximately a year of preparation, at 15 weeks for its execution, and would cost between $70,000,000.00 and $80,000,000.00. The ATP TITAN decision was consistent with prior court rulings finding spars to not be vessels. [Editor’s Note: For more in depth review of Stewart, Lozman and ATP Titan, please review our prior blog posts here and here.]

Big Foot, like other TLP’s, is a type of offshore oil platform used for deepwater drilling. Although Big Foot can float, it is not capable of self-propulsion, has no steering mechanism, does not have a racked bow and has no thrusters for positioning once on location. Once completed, Big Foot was scheduled to be towed to a location approximately 200 miles off the coast of Louisiana and anchored to the sea floor by over sixteen miles of tendons. While under tow, Big Foot will be tended by a crew that is employed to control Big Foot during the voyage. However, once anchored, Big Foot will serve as a work platform for the life of the oilfield, which is estimated to be 20 years. The U.S. Coast Guard classified Big Foot as a “floating Outer Continental Shelf facility” pursuant to 33 CFR § 143.120.

After his injury, Mr. Baker filed for Longshore benefits. At the time, he was working on the living quarters that were to be placed on Big Foot, which he claimed qualified him as a shipbuilder entitling him to Longshore benefits. The determining factor would be whether Big Foot was a vessel. The U.S. Fifth Circuit again reviewed the U.S. Supreme Court’s decision in Stewart and Lozman to compare Big Foot to the vessels analyzed in those cases. Mr. Baker argued that Big Foot was akin to Super Scoop, which was the focus of the Stewart case. The Department of Labor countered with a comparison to the Lozman houseboat. The Fifth Circuit was persuaded by the later. In reaching its opinion, the Fifth Circuit stated “like the floating home in Lozman, Big Foot has no means of self-propulsion, has no steering mechanism or rudder and has an unraked bow. Big Foot can only be moved by being towed through the water, and when towed to its permanent location, Big Foot will not carry items being transported from place to place but only mere appurtenances.” The crew aboard Big Foot only supervised its transportation, and would not be present upon permanent anchoring. Big Foot will not be used to transport equipment and workers over water in the course of its regular use. In fact, Big Foot’s only intended travel over water was its transport to its final location. Given these undisputed facts, and using the Lozman reasonable observer test, the Fifth Circuit stated that “a reasonable observer looking to Big Foot’s physical characteristics and activities, would not consider it to be designed to any practical degree for carrying people or things over water.” Thus, the Fifth Circuit continued to clarify the types of offshore facilities that do not qualify as vessels for the purpose of Longshore coverage.

Alternatively, Mr. Baker also argued that his work on the living quarters had a substantial nexus to the extraction of natural resources on the Outer Continental Shelf, sufficient to trigger OCSLA jurisdiction. This argument stems from the 2012 U.S. Supreme Court case, Pacific Operators Offshore, LLP v. Valladolid, 132 S.Ct. 680 (2012). Therein, the U.S. Supreme Court extended OCSLA jurisdiction to non-OCS situses where the injured employee established a “significant causal link between the injury that he suffered and his employer’s on-OCS operations conducted for the purpose of extracting natural resources from the OCS.” The Fifth Circuit rejected this argument as well. The Fifth Circuit held that “while not an office employee, Baker’s job of constructing living and dining quarters is too attenuated from Big Foot’s future purpose of extracting natural resources from the OCS for the OCSLA to cover his injury.” The court found persuasive the fact that Mr. Baker’s job did not require him to travel to the OCS at all, “making his work geographically distant from the OCS.” The Fifth Circuit further noted that Mr. Baker’s employer had no role in moving, installing, or operating Big Foot once placed on the OCS. As a result, Mr. Baker did not fall under the coverage of the LHWCA as extended by the OCSLA.

As new and uniquely-designed floating offshore structures hit the market, injured workers and their lawyers will continue to try to fit them within the definitions of a vessel for purposes of the Jones Act inclusion and/or Workers Compensation coverage. The emerging case law continues to provide guidance on how such vessels should be classified, and should be carefully considered when faced with a similar dispute.

The City of Baton Rouge and the surrounding areas have been struck by devastating floods.  Thousands were stranded. The roadways to their homes are flooded and most impassable.  Flooding is not new to Louisiana.  Just over ten years ago, the state experienced one of the most devastating natural disasters on record with Hurricane Katrina.  Since then, numerous other storms have taken swipes at the state –  Gustav, Rita, Isaac, to name a few. 2016 has been the year of unnamed storms thus far for the citizens of Louisiana. Alexandria, Monroe, Shreveport, and Lake Charles each flooded in the months preceding the “Great Flood of 2016” currently affecting Baton Rouge.

Storms are uncontrollable, but as a patent attorney, I turn to technology that we can control for assistance in the aftermath. There is a glimmer of hope that we are not alone, that similar events throughout the world have resulted in great innovations some of which are currently being implemented throughout Baton Rouge to speed the recovery and rescue stranded citizens.  These innovations are far and wide, including solar technology, mobile cell phone towers, power stations, water filtration apparatuses. Even the oft-hated drones are being used to locate people and assess flooding from vantage points that would have previously been limited to helicopters.

One of the more popular examples of these innovations is the Aqua Dam by Layfield, which is being used across the area to block water from roadways.  We have all heard the moniker that you cannot fight fire with fire; the Aqua Dam is proof, however, that you may be able to hold off water with water.  Patented as U.S. Patent nos. 8,840,338 in 2014 and 9,297,133 in 2016, the Aqua Dam is a portable reservoir body apparatus comprising a plurality of interior bladders contained within an exterior housing (the outer tube).  The interior bladders are filled with fluids causing them to expand and fill the cavity of the outer tube.  The unit further comprises a series of fasteners to maintain its shape, thereby creating a displacement dam which prevents the passage of water.  These units are being used on the interstate, major highways and bridges.  In most instances, the flood water is being pumped straight from the road into the dam being formed to keep the water at bay, opening the roadways.

To the folks at Layfield, we salute you and appreciate your innovative contributions.  The Aqua Dam structures have and will continue to open our roadways, allowing evacuees to escape and rescuers to enter flooded areas. To others, and particularly the citizens of Louisiana, please keep innovating.  We cannot prevent all future flooding, but we can help diminish their impact with innovations like these.

If your home has been damaged by the recent floods in southeast Louisiana, you will need to submit a flood claim, if you have flood insurance.  Steps for submitting the claim and reaching agreement with an adjuster on the dollar amount for the covered loss or appealing denial of payment can be found here.

However, for the many homeowners who do not have flood insurance or are under-insured, financial assistance is available through FEMA’s Individuals and Households Program (“IHP”).  The IHP provides financial assistance and direct services, such as temporary housing, to those who have necessary expenses and serious needs as a result of a disaster or emergency, if they are unable to meet the needs through other means (like flood insurance).

Financial assistance through the IHP can be used to repair damage to a primary residence caused by disasters or to replace a disaster-damaged home that is uninsured or under-insured.  Examples of items covered for repair include:  foundation and roof; windows and doors; floors, walls, and ceilings; septic or sewage system; well or other water system; heating, ventilating, and air conditioning system; electrical, plumbing, and gas systems; and entrance and exit ways from the home, including privately owned access roads.

The IHP also offers Other Needs Assistance that can be used to provide financial assistance to replace or repair essential household items, such as furnishings and appliances.  Miscellaneous items purchased or rented to assist with recovery or cleaning efforts, such as dehumidifiers, can be covered as well.

Additional information on FEMA’s Individuals and Households Program and eligibility can be found here.

By emergency declaration issued August 18, 2016, the Commissioner of the Louisiana Department of Insurance adopted Emergency Rule 27. Emergency Rule 27 allows the Department of Insurance to suspend certain statutes in the Louisiana Insurance Code and the rules and regulations promulgated under those statutes that may affect families and business affected by the current flood crisis in Louisiana.

While Emergency Rule 27 suspends many provisions of the Louisiana Insurance Code, most of the suspended provisions affect the ability of an insurer to cancel, terminate, non-renew, or non-reinstate a policy of insurance. One of its most significant provisions provides that an insurer may not terminate, cancel, or non-renew a policy of insurance as a result of the “inability of an insured . . . from complying with any policy provisions,” this includes non-payment of premiums. Insurers are further forbidden from imposing any interest, penalty, or other charge as a result of the enactment of Emergency Rule 27. Furthermore, the rule extends to September 10, 2016, any deadline for the submission of evidence or the completion of any act related to any claim for coverage under a policy of insurance made prior to August 12, 2016.

Emergency Rule 27 currently applies to policy holders residing in the following parishes: Acadia, Allen, Ascension, Avoyelles, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson Davis, Lafayette, Livingston, Point Coupee, St. Helena, St. James, St. John the Baptist, St. Landry, St. Martin, St. Tammany, Tangipahoa, Vermillion, Washington, West Baton Rouge, and West Feliciana. Emergency Rule 27 applies to any policy of insurance in effect as of 12:01 a.m. on August 12, 2016, and will remain in effect through September 10, 2016.

Additional information and a copy of Emergency Rule 27 may be found on the Louisiana Department of Insurance’s website.

President Obama has declared 20 parishes in Louisiana to be Major Disaster Areas.  The presidential declaration recognizes the obvious, grim reality of the tragedy in Louisiana, but more importantly enables flood victims in these parishes to apply for federal disaster assistance from the Federal Emergency Management Authority.  A previous article on the Kean Miller Louisiana Law Blog addressed this issue.

While you may obtain financial assistance from FEMA, a federal declaration of disaster does not suspend the payment of your mortgage note, rent, car payments, student loan payments, credit card payments, or payments on open accounts. Many lenders and creditors are offering assistance to victims of the flood but there are five important general rules to bear in mind:

  1. The assistance is not automatic; you must apply for it. If you ignore and fail to pay a debt, you will probably not be able to avoid the consequences of the non-payment later by claiming inability to pay due to flooding.
  2. You should work directly with the lender or creditor on the debt in question. Avoid third-party intermediaries. You and your creditor share an interest in avoiding default on your obligation. Third parties do not share that interest. You need to be sure you know exactly what information the creditor gets from you, and exactly what the creditor is offering to you.
  3. Save all records associated with your request for assistance, including all correspondence, e-mails, forms and, if possible, a log of telephone conversations.
  4. Once you have applied for assistance, do not hesitate to follow up with the creditor on a recurring basis.
  5. You should be sure that you completely understand what your future obligation will be on the debt in question. For example, at the expiration of a grace period, will you owe a balloon payment to cover payments deferred? Will your payments increase in the future to cover temporary reductions? Will your deferred obligation include interest or fees incurred during the grace period? You should get, in writing, from your creditor a clear explanation of what you will owe, and when you have to pay what you owe, after the expiration of the relief period.

Both Freddie Mac and Fannie Mae have implemented disaster relief guidelines.[1]  You can determine if your loan is a FHLMC or FNMA loan by visiting the “look-up” pages on the Freddie Mac and Fannie Mae websites.  To apply for relief, however, you must contact your loan servicer (the bank or other entity to which you make your mortgage payments).  FHLMC and FNMA essentially direct the loan servicer to help you; the servicer will follow that directive. The specific assistance rendered will be decided by the loan servicer. The assistance may include forbearance (i.e., giving you additional time to catch up on late payments), reduction in your payments, and waiver or reduction of late fees, penalties. If the modification to your loan obligation is temporary, you must be sure you understand what your obligation will be upon the completion of that time (probably 12 months, or less).  The loan servicer is obligated to tell you what you need to know.  Your loan servicer is not required to provide you any specific relief; just because a neighbor received help of a certain kind does not mean you will receive the same help.  Freddie Mac and Fannie Mae websites offer an overview of the types of assistance available.

The Federal Housing Administration (FHA) is a government agency which insures millions of home loans.  On August 18, 2016, FHA directed the lenders who hold mortgage notes insured by FHA to help flood victims in the disaster areas:

HUD (U.S. Department of Housing & Urban Development) has instructed FHA lenders to use reasonable judgment in determining who is an “affected borrower.” Lenders are required to reevaluate each delinquent loan until reinstatement or foreclosure and to identify the cause of default. Contact your lender to let them know about your situation. Some of the actions that your lender may take are:

  • During the term of a moratorium, your loan may not be referred to foreclosure if you were affected by a disaster.
  • Your lender will evaluate you for any available loss mitigation assistance to help you retain your home.
  • Your lender may enter into a forbearance plan, or execute a loan modification or a partial claim, if these actions will help retain and pay for your home.
  • If saving your home is not feasible, lenders have some flexibility in using the pre-foreclosure sales program or may offer to accept a deed-in-lieu of foreclosure.

HUD Disaster Resources

Even if your home loan is not owned by Freddie Mac or Fannie Mae, or insured by FHA, you should contact your lender to see if it offers disaster assistance. Regions Bank, for example, has announced its intention to assist its customers who were victims of the flood. You can check Regions’ Disaster Resource Center for details. JP Morgan Chase announced that it is “automatically waiving late fees for mortgage, credit card, business banking and auto loans as well as overdraft, ATM and monthly service fees on deposit accounts through August.”  Other banks offering assistance include Whitney Bank and Iberia Bank.

You should assume that your lender or other creditor will offer you some type of assistance if you reside in the disaster area IF you contact the lender and qualify for the assistance. Lenders and other creditors may also offer assistance to individuals who work in the disaster area, even if they don’t live there.  You will only find out the assistance available to you by contacting your lender.

Farmers may be entitled to targeted financial assistance through various disaster relief programs administered by the Farm Service Agency of the U.S. Department of Agriculture.

Vehicle lenders are stepping up to offer relief as well.  Toyota Financial Services announced on August 16, 2016, that it is offering payment relief options to flood victims, including extensions and lease deferred payments.  Although we have not found specific announcements from other major vehicle lenders, it is reasonable to assume that others offer disaster relief.

We  have also found no specific announcements of assistance of credit card issuers, but if you anticipate difficulty in staying current on credit card obligations, contact the issuer and ask for disaster assistance.

The LSU College of Agriculture’s website offers an excellent compendium of disaster-related resources and links useful for any victim of flooding.

The Louisiana Office of Financial Institutions Website contains, among other resources, a list of agencies to contact for assistance.  Any third party entity listed on the LOFI webpage can be trusted (notwithstanding my general warning against reliance upon third parties in obtaining disaster assistance).

Your lenders and creditors are generally not required by law to offer disaster assistance. But lenders and creditors want to help flood victims manage their obligations while they cope with the more immediate challenges of safety, food, shelter, electricity, and medical needs. There is no guarantee that you will receive assistance from a given creditor, but you may rest assured you will not receive assistance if you don’t apply for it.

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[1] The Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage Association (“Fannie Mae”) are government-sponsored entities which together own or guarantee payment on approximately 60% of the home mortgage loans in the United States. There is a very good chance that your home mortgage note is owned by one of these “government-sponsored enterprises.” The entity to whom you actually pay your note is servicing the loan; it no longer owns the loan, if it ever did.