## Facts

- Floyd Cowart, an employee of Nicklos Drilling Co., was injured while working on an offshore platform owned by Transco Exploration Co. in an area covered by the Longshore and Harbor Workers’ Compensation Act (LHWCA).
- The Department of Labor provided Compass Insurance Co. (Nicklos’s LHWCA carrier) informal notice that Cowart was due permanent disability payments, but no payments were made.
- Cowart filed a negligence action against Transco and settled the claim; Nicklos funded the settlement under an indemnification agreement with Transco.
- Cowart did not obtain formal, prior, written approval of the settlement from Nicklos or Compass.
- After settling, Cowart pursued LHWCA disability benefits from Nicklos and Compass.
- Nicklos and Compass denied liability, asserting that 33 U.S.C. § 933(g) required forfeiture of benefits due to the unapproved third-party settlement.

## Issues

1. Whether a worker is a “person entitled to compensation” under 33 U.S.C. § 933(g)(1) only after receiving LHWCA payments or an award, or instead once the worker’s substantive right to LHWCA compensation has vested.
2. Whether § 933(g)(2) terminates all LHWCA compensation and medical benefits when a worker settles with a third party without prior written employer/carrier approval, even if the employer has not paid and is not under an order to pay.

## Decision

- The Supreme Court affirmed the judgment denying benefits.
- A worker becomes a “person entitled to compensation” when the statutory right to compensation vests upon a compensable injury, not only after payment or an adjudicated award.
- Because Cowart settled a third-party claim without the required prior written approval, § 933(g)(2) terminated all rights to LHWCA compensation and medical benefits.
- The forfeiture applies regardless of whether the employer or insurer had made payments or acknowledged entitlement at the time of settlement.

## Legal Principles

- “Person entitled to compensation” in LHWCA § 33(g)(1) includes a worker who qualifies for compensation based on a vested statutory right, even if entitlement has not been adjudicated and no benefits have been paid.
- Under § 33(g), a worker who settles a third-party claim without obtaining prior written approval from the employer and carrier forfeits all LHWCA compensation and medical benefits as specified in § 33(g)(2).
- The statutory text and structure make the written-approval requirement and forfeiture rule operate without regard to prior payments, an award, or employer acknowledgment of liability.

## Conclusion

The Court held that LHWCA § 33(g) imposes a strict written-approval condition on third-party settlements once a worker’s right to compensation has vested, and an unapproved settlement triggers complete forfeiture of LHWCA compensation and medical benefits even when no benefits have yet been paid or ordered.


Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992)