Transocean May Cut Injured Rig Crew’s Pay, Offers Settlements
Lawyers for injured Deepwater Horizon rig workers say Transocean Ltd.’s deep-water unit is trying to force the crew into accepting “insulting” settlements, citing a letter sent to employees and a court filing saying the company may stop paying salaries in December.
Transocean has been paying its employees who were members of Deepwater Horizon’s 126-person crew full pay and benefits since the rig exploded and sank off the Louisiana coast while drilling a well for BP Plc in April, company lawyers said. The incident killed 11 crew members and sparked the worst marine oil spill in U.S. history.
The company “may discontinue payment of full wages and benefits” on Dec. 15, Transocean said in an Oct. 15 court filing. The company previously sent letters to crew members offering six months pay in exchange for an agreement not to sue Transocean.
“All of this is calculated to pressure the families to settle quick and cheap,” Houston attorney Kurt Arnold said of the settlement offers and pay-cut notices sent to 23 injured Deepwater Horizon workers he represents. Arnold also represents the family of one deceased rig worker, which didn’t receive the pay-cut letter from Transocean Deepwater Drilling Inc.
“Transocean is going to continue payments to the families of the deceased workers,” Arnold said in a telephone interview. “They didn’t have the nerve to cut them off.”
Gratuitousness Does End
Edward F. Kohnke, one of Transocean’s trial lawyers, said the company has continued paying all its Deepwater Horizon employees, even those who haven’t returned to work or who have sued the company. He said the company hasn’t made a final determination when it will discontinue salaries for which workers.
“Transocean has been generous in not requiring these employees to go back to work,” Kohnke said in a telephone interview. “I think it is an effort to put people on notice that this gratuitousness does end at some point. It’s a way of forcing a resolution.”
The company’s letters, sent in September and October, informed surviving workers their salaries would be replaced with the “maintenance and cure” benefits required under maritime law. The workers’ lawyers say this amounts to $375 every two weeks, or roughly $25 a day, plus reimbursement of approved medical expenses. The settlement offer of six months pay was made in the same letters.
Pretty Insulted
“Many of my clients were pretty insulted by it,” Houston lawyer Tony Buzbee said of Transocean’s letters to 18 surviving crew members he represents. “I just wrote on it in big, bold letters, ‘NO,’ and faxed it right back to them.”
Workers who received the letters make between $80,000 and $160,000 a year, according to their lawyers, and almost all of them have been unable to return to their jobs on offshore rigs because of either physical or mental injuries.
More than 60 lawsuits have been filed over personal injuries and wrongful deaths from the disaster, many seeking millions in future lost wages and punitive damages.
These crew lawsuits are part of the multidistrict litigation that’s consolidated more than 400 oil-spill damage lawsuits before one New Orleans judge for joint pre-trial processing.
Transocean has been trying to limit its financial liability from the rig disaster since May, when it asked a U.S. judge to utilize a 159-year-old maritime statute to cap its possible losses at $27 million.
Insurance Gain
The company claims that’s the value of the destroyed rig’s unpaid drilling fees at the time it sank, although Transocean told U.S. securities regulators in a August filing that the company recorded a gain of $267 million from the rig’s insurance policy.
The workers’ lawyers say the Transocean settlement offers require crew members to drop claims against all companies involved in the Deepwater Horizon disaster, including BP. BP has set aside $20 billion to pay claims from the incident.
“That’s not going to happen,” Buzbee said of dropping his clients’ lawsuits against BP and the other companies, citing “overlapping indemnity clauses” in contracts between firms involved in the offshore well. He said he’s also advising workers still undergoing medical treatment not to settle until they know the full extent of their injuries and ability to work in the future.
Buzbee said he’s willing to help clients pay their living expenses to alleviate financial pressures on them to settle quickly.
“If they can’t pay their mortgage, I’ll loan them the money, which I’m allowed to do under the law,” Buzbee said. “Until we get teed up to trial in one of these lawsuits, the company’s not going to make a reasonable offer. We’ll just have to ride it out.”
The case is In Re: Oil spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 2:10-md-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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