Estate of Cowart v. Nicklos Drilling Co.

Floyd Cowart (plaintiff) was injured while working on an oil rig on a platform that was owned by Transco Exploration Company (Transco) in a location subject to the Longshoremen’s and Harbor Workers’ Compensation Act (act). Cowart was employed by Nicklos Drilling Company (Nicklos) (defendant), which paid temporary benefits to Cowart for several months after his injury. Cowart’s physician then released Cowart to work with a 40 percent permanent partial disability. The United States Department of Labor (department) gave Nicklos’s insurance carrier an informal notice that Cowart was entitled to permanent-partial-disability payments, but there was no official award, and no payments were made at that time. Cowart also sued and settled with Transco, with Nicklos funding the settlement under an indemnification agreement with Transco. Cowart then filed a claim for disability payments from Nicklos, and Nicklos denied liability, relying on § 33(g) of the act, which required a person entitled to compensation to obtain written approval from the employer and its insurer before any settlement of a third-party claim. Cowart had not obtained prior written approval of the Transco settlement. An administrative-law judge (ALJ) awarded benefits, relying on past decisions of the benefits review board (board), which held that a person not yet receiving benefits was not a person entitled to compensation and that, because the 1984 amendments to the act adding the forfeiture language did not change this phrase, Congress presumably adopted the board’s interpretation. The appellate court reversed, holding that § 33(g) unambiguously provided for forfeiture if a claimant failed to meet the written-approval requirement. In a per curiam opinion, the en banc court of appeals confirmed the panel’s decision, and the United States Supreme Court granted a petition for certiorari filed by Cowart’s estate (plaintiff).