Appliers Beware: Louisiana Federal Court Voids Insurance Policy, Denies First-Party Hurricane Claim

When an employee is injured on the job and the employee’s request for workers’ compensation benefits is disputed, La. R.S. 23:1201.1 allows an employer to request a preliminary determination hearing (“PDH”) with the Office of Workers’ Compensation (“OWC”). If the workers’ compensation judge rules at the PDH that benefits are owed, the employer has ten days to comply with the judge’s ruling. The First Circuit recently ruled that an employer can find “safe harbor” if it technically complies with the rigorous deadlines of the statute, which if missed can have profound consequences, subjecting the employer to penalties and attorney fees.

In Kilbourne v. Dixon Correctional Institute, the court recently affirmed a ruling that found an employer complied with La. R.S. 23:1201.1 and could not be subject to penalties or attorney’s fees when it mailed the disputed workers compensation benefits within ten days of the judge’s ruling at the PDH. The ruling was affirmed even though the employee did not receive payment within ten days of the hearing.

The employer in Kilbourne stopped issuing weekly workers compensation benefits after two doctors found the claimant’s ongoing complaints were unrelated to the work accident and the claimant could return to full duty work. The employee then filed a disputed claim with the OWC and requested reinstatement of his benefits. He also requested an award of penalties and attorney’s fees because he claimed the employer’s suspension of indemnity benefits was arbitrary and capricious. The employer requested a PDH to address these issues.

The OWC judge issued a preliminary determination that although the employee was owed supplemental benefits from the date his payments of benefits stopped, the employer was not arbitrary and capricious in its decision to stop payment. Within ten days of the mailing of the PDH ruling, the employer issued and mailed benefit checks to the employee and filed a form with the OWC to provide notice the employer was paying the benefits. Nevertheless, the employee disagreed with the PDH ruling and the matter went to trial.

At trial, the employee argued that he should have received penalties, attorney fees, and interest on the back benefits paid after the PDH ruling. The employee argued the employer failed to comply with section 1201.1 because he did not receive the indemnity benefits until more than ten days after the PDH ruling. However, evidence showed the benefit payments were postmarked and mailed within ten days of the receipt of PDH ruling.

Accordingly, the trial court found that the employer was immune from an award of penalties and attorney fees pursuant to the “safe harbor” provision of section 1201.1. Interest also could not be owed on back pay when the employer complied with the statute. The First Circuit affirmed this decision on appeal. Although providing the claimant funds within 10 days of the PDH ruling remains the best practice for an employer, this ruling informs employers that they should find safe harbor from what could be significant penalties and attorney’s fees if they meet the technical requirements of the statute and mail their compliance with the judge’s ruling within ten days of the PDH.

Case Reference: Kilbourne v. Dixon Correctional Institute, 2022-0455,(La. App. 1 Cir. 11/4/22) ____So. 3d ___,2022 WL 16706951.

In a decision released October 9, 2013, the U.S. Fifth Circuit upheld the grant of the defendants' Motion to Dismiss by concluding that the Federal Power Act ("FPA") preempts property damage claims based in Louisiana state tort law where the alleged damage is the result of operations that comply with the FERC-issued license. Simmons v. Sabine River Authority, No. 12-30494, - F.3d - , (5th Cir. 10/09/2013).

This issue, recognized as a question of first impression in the Fifth Circuit, arose in a case where the plaintiffs, all Louisiana owners and residents of property located downstream from the federally-licensed hydroelectric Toledo Bend Dam situated on the Sabine River, sued Sabine River Authority of Louisiana and various Entergy defendants to recover damages for flooding incidents and to enjoin the opening of the Dam's flood gates in such a way as to cause inundation of the downstream properties.

On behalf of defendants, Keogh Cox moved to dismiss the suit by claiming state tort law claims for damages and injunctive relief interferes with the exclusive authority of the Federal Energy Regulatory Commission ["FERC"] to regulate and control the operations of the federally-licensed Toledo Bend project such that the plaintiffs' claims were preempted under the FPA. The District Court granted the motion after extensive briefing and argument by Keogh Cox attorneys, John P. Wolff, III, Nancy B. Gilbert, Martin E. Golden, and Virginia J. McLin.

In affirming the district court's ruling, the Fifth Circuit recognized U.S. Supreme Court precedent that has interpreted the FPA as "occupying the field of public water use and power generation except for water use rights." As a result, in accord with Ninth Circuit law, it interpreted the general savings clause in the FPA [16 U.S.C. § 821] narrowly to exempt only "a state property law regime [that] enables users of streams and wells to obtain proprietary rights in a continuing quantity of water." The Court also recognized that state damage claims can have the same effect as a state regulation and may serve as a collateral attack on a federal license, such that it refused to interpret the limited savings clause [16 U.S.C. § 803(c)] to permit "state tort law to supplant FERC's exclusive control of dam operations." Because "applying state tort law to set the duty of care for the operation of the FERC-licensed project would 'stand as an obstacle to the accomplishment and execution of the full purposes and objectives' of the FPA," the Fifth Circuit held plaintiffs' state law property damages claims were conflict preempted under the FPA.

That a single federal agency should control public water use and dam operations was noted to be especially appropriate because the Toledo Bend Dam spans Texas and Louisiana state lines and, if not preempted, different causes of action and standards of conduct could have been imposed under the laws of the two states.

The country was recently captivated by the Johnny Depp and Amber Heard trial, arguably the most high-profile defamation case in recent history. Following a colorful trial, a Virginia jury found that a 2018 Washington Post op-ed by Heard defamed Depp. As a result, Depp was awarded $10 million in compensatory damages and $350,000 in punitive damages. At the same time, the jury awarded Heard $2 million dollars in compensatory damages for defamatory statements made by one of Depp’s attorneys, ostensibly on Depp’s behalf. The trial had millions of people asking a number of different questions, including the basic question “What is defamation?” Recent Louisiana cases such as Yanong v. Coleman, 53-933 (La. App. 2 Cir. 5/17/21), 317 So. 3d 905, 911, reh’g denied (June 24, 2021), writ denied, 21-01107 (La. 11/10/21), 326 So. 3d 1249 help to provide an answer.

As explained in Yanong, a party claiming defamation in Louisiana must prove four elements:

(1) a false and defamatory statement concerning another;

(2) an unprivileged publication to a third party;

(3) fault (negligence or greater) on the part of the publisher; and

(4) resulting injuries.

**To prove the third element of “fault,” malice must be shown.

The Yanong court explained that claims of defamation must be balanced against the right to free speech found in the state and federal Constitutions.

Louisiana recognizes two categories of defamatory words: (1) words that are defamatory per se and (2) words that are defamatory in meaning. Id. at 9. Words that are defamatory per se “expressly or implicitly accuse another of criminal conduct, or which by their very nature tend to injure one’s personal or professional reputation, without considering extrinsic facts or circumstances.” Id. When words are deemed defamatory per se, there is a presumption of fault on the part of the defendant that may be rebutted by showing that the statement was true or protected by a privilege such as fair commentary on a matter of public concern. Id. Words that are defamatory in meaning are words that, when taken in context, “a listener could have reasonably understood the communication to have been intended in a defamatory sense.” Id. at 9-10. Proof of words that are defamatory in meaning creates no presumption of fault.

Louisiana defamation suits frequently arise in the employment context. However, defamation claims in the employment context face obstacles. Such cases sometimes fail on the second element, publication to a third party, because “inter-corporate communications…[are] merely a communication of the corporation itself,” meaning an employer may need to communicate the alleged defamatory statement to an outside third party outside for it to be considered “published to a third party.” Cook v. Par. Of Jefferson, 2022 WL 19350, at *11 (E.D. La. Jan. 3, 2022). However, defamation claims do not always fail on the publication element and they are not limited to “A-list” celebrities or multi-million dollar cases.

In Yanong, the Louisiana Second Circuit affirmed a $15,000 compensatory damage award to a plaintiff who successfully proved that statements made by defendants on a podcast show and on Facebook were defamation per se. Yanong, p. 8. Under the facts of the case, the defendants on a live “podcast” expressed on multiple occasions their belief that the plaintiff was a victim of sex-trafficking and that she was purchased by her much-older husband. Id. at 1. The defendant(s) also labeled the plaintiff’s marriage as “legalized prostitution,” and stated that they had contacted foreign authorities to inform them the plaintiff was a victim of “trafficking.” Id. at 2. The statements continued onto social media, where one defendant insinuated the plaintiff’s husband purchased her from a catalogue or an internet matchmaking site. Id.

On appeal, the defendants argued the plaintiff did not prove the publication element of her case. Id. at 5. The appellate court found this contention meritless. The defendants “were fully aware they were engaging” in communications with third parties, they were recoding a podcast, were “shown onscreen on all the broadcasts,” and made comments that showed “they were aware that they had an audience and third parties were engaged in the interactive broadcast.” Id. at 17-19. Thus, the Second Circuit found Plaintiff met her burden on the publication element and affirmed the trial court’s judgment. Id. at. 20.

While the publication element can present a hurdle in some cases, the publication need not be in a national media source as featured in the Depp-Heard case. The Yanong decision reminds that statements made on social media and podcasts can meet the required standard.

A Decade Old Article Finds New Life: Televised Testimony - Keogh Cox.