ancient duties, modern perspectives: recent developments in the law of maintenance and cure kimbley...

ANCIENT DUTIES, MODERN PERSPECTIVES:RECENT DEVELOPMENTS IN THE LAW OF MAINTENANCE AND CURE

Kimbley A. KearneyClausen Miller P.C.

Louise S. LivingstonThomas Miller (Americas), Inc.

Thomas J. Bethune, IVBlessey Marine Services, Inc.

Francis J. Barry, Jr.Moderator

Deutsch, Kerrigan & Stiles

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MAINTENANCE AND CURE – AN ANCIENT DUTY

REVISITEDA vessel owner’s liability for the maintenance, cure and wages of “a seaman [who] falls sick, or is wounded, in the service of the ship” derives from “ancient Codes” of the sea, “promulgated as far back as 1200 A.D.”

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In modern times, the seaman’s lot has “improved considerably.”

Nevertheless, a seaman’s entitlement to maintenance and cure has been diligently guarded by the courts.

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Today, we will consider:

• Recent decisions interpreting the rights and duties of seamen and vessel owners in the maintenance and cure arena;

• What the cases reveal about the scope of the duty of the vessel owner today; and

• The perils of breaching that duty.

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DAMAGES AVAILABLE TO THE SEAMAN

WHEN THE VESSEL OWNER GETS IT WRONG

THE RULE

Unreasonable failure to pay maintenance and cure exposes the ship owner to liability for damages for “‘the aggravation of the seaman’s condition, determined by the usual principles applied in tort cases to measure compensatory damages.’” Atlantic Sounding Co., Inc. v. Townsend (2009)

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WHAT MUST BE SHOWN

Prolonged pain and suffering or mental anguish is insufficient without showing actual aggravation of the injury.

Weeks Marine, Inc. v. Garza (Texas 2013):

• Jury award of $2.5 million for aggravation of a seaman’s injury overturned for insufficient evidence to establish proximate causation.

• Delay in surgery and prolonged recovery were attributable to the physician’s conservative treatment plan, not the vessel owner’s failure to pay.

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MORE RULES

Townsend instructs that punitive damages for the “willful and wanton disregard of the maintenance and cure obligation” remain available.

Attorney’s fees are recoverable by a seaman whose maintenance and cure benefits are withheld “in bad faith, callously, or unreasonably.”

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INVESTIGATING THE MAINTENANCE AND CURE CLAIM –

THE STARTING POINT FOR DEFEATING THE CLAIM OR INCREASING EXPOSURE FOR

DAMAGESTHE RULE

Failure to conduct any investigation into a seaman’s maintenance and cure claim is the kind of “callous,” “willful and persistent” conduct that can give rise to the imposition of punitive damages.

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Mai v. American Seafoods Co. (Wash. Ct. App. 2011)

EXAMPLES of such conduct include:

• Laxness in investigating a claim; • Termination of benefits in response to the

seaman’s retention of counsel or refusal of a settlement offer; and

• Failure to reinstate benefits after diagnosis of an ailment previously not determined medically.”’

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The Vessel Owner Has The Right To Require The Seaman To Establish

Prima Facie Entitlement To Maintenance And Cure

Hale v. Maersk Line, 732 S.E.2d 8 (Va. 2012):

There is an “escalating scale of liability” for the manner in which a vessel owner handles a maintenance and cure claim.

THE RULES:

1. The ship owner is entitled to investigate and require corroboration of the claim before paying maintenance and cure.

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THE RULES

2. After investigating a seaman’s entitlement to maintenance and cure, the ship owner is entitled to deny the claim based on certain defenses.

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3. Unreasonably rejecting a claim after investigation exposes the ship owner to liability for compensatory damages in addition to benefits.

4. Where there is no reasonable defense to the claim and the ship owner exhibits “callousness and indifference,” the ship owner is liable for punitive damages and attorney’s fees.

5. But, “[a]n employer may be exempt from penalties, if ‘the employer deliberately relies on a reasonable, but ultimately wrong, legal argument to withhold payment.’”

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Hale v. Maersk Line (Va. 2012)

• Hale claimed that he suffered physical and psychological injury during an attack while on shore leave.

• When Hale rejoined the ship, the Master and Chief Mate observed signs of his intoxication including the smell of alcohol on his breath

and lack of motor skills.

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• Master interviewed Hale and asked that Hale submit to a Breathalyzer test, which he refused.

• Hale was terminated because Maersk had a “zero tolerance” policy for the use of drugs and alcohol.

• Korean physicians and ER physicians in U.S. found no objective signs of trauma other than Hale’s black eye.

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HALE held: As a matter of law, • Hale had insufficient evidence to support a claim for

punitive damages;• Even if Maersk’s investigative findings proved to be

wrong, its denial of maintenance and cure was not unreasonable.

• The trial court properly set aside the jury verdict awarding compensatory and punitive damages.

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KEY REASONS

• Two medical examinations after the incident indicated that Hale suffered only contusions, a black eye and some internal rectal tenderness.

• There was evidence that Hale’s injuries were actually caused by his drunken assault of police officers.

• Hale never provided Maersk with any documentation that he was deemed unfit for duty or needed any additional medical care.

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“Investigation” Will Not Shield a Vessel Owner From Liability Once The Seaman Has Established A Prima Facie

Right To Maintenance and CureMai v. American Seafoods Co.

• Affirmed an award of past-due maintenance, compensatory damages and attorneys’ fees.

• Rejected the vessel owner’s contentions that it had the right to withhold benefits while “investigating” the seaman’s medical condition.

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MAI HELD:

• The right to investigate is limited to establishing “that a seaman’s claim is legitimate.”

• A seaman cannot be required to submit to an IME once she has established prima facie entitlement to maintenance and cure

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KEY REASONS

• Nine months before it approved Mai’s knee replacement, ASC acknowledged that the surgery would be curative in nature;

• ACS never claimed that she achieved maximum medical cure before that surgery;

• ASC had access to two years of Mai’s medical records and that it paid her treating physicians without questioning their qualifications;

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• ASC did not dispute Mai’s need for further medical treatment but claimed it needed second IME to explore the availability of alternative treatment less expensive than surgery.

• Facts of case indicated that the “true reason” for the request for the second IME was to develop expert testimony for anticipated litigation, rather than any serious question about Mai’s need for surgery.

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The Vessel Owner Can’t Turn a “Blind Eye”

To Accessible Evidence Corroborating Validity of A Maintenance and Cure Claim

THE RULE

• A vessel owner must properly train its claim handlers to recognize the limits of a seaman’s obligation to “prove” his entitlement to maintenance and cure and may not turn a “blind eye” to the seaman’s evidence. Stermer v. Archer-Daniels-Midland Co. (La. Ct. App. 3d Cir. 2014)

• Failure to adequately investigate a “hotly contested” maintenance and cure claim gave rise to a $300,000.00 punitive damages award and an award of attorney’s fees.

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Stermer v. Archer-Daniels-Midland Co. (La. Ct. App. 3d

Cir. 2014)KEY REASONS

• ARTCO’s investigation of the claim was so lax that the imposition of punitive damages was justified.

• ARTCO’s adjuster relied entirely on the statements of the employees who denied Stermer had been injured without giving consideration to any contrary evidence.

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Stermer v. Archer-Daniels-Midland Co. (La. Ct. App. 3d

Cir. 2014)• Stermer’s claim was corroborated.

• ARTCO’s adjuster was unaware that the law requires maintenance and cure benefits to be paid when any doubt exists about the validity of the claim.

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Reasonableness of M&C decisions cannot be

determined by hindsight!!Rose v. Miss Pacific, LLC, 2012 WL 75028 (D.Or. Jan. 10, 2012):• Court held that the proper focus of determining whether the

defenses asserted will preclude the imposition of punitive damages for failure to pay M&C is whether the defense was “reasonable in light of what the employer knew when first asserting the defense.”

• “Even if a fact is disputed, it is not unreasonable to rely on it.”

• Court rejected a medical opinion on causation disclosed after the vessel owner asserted its fraudulent concealment defense and instead focused on what the owner knew at the time of the denial.

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THE SEAMAN’S DUTY TO DISCLOSE PRIOR INJURY AND THE MCCORPEN DEFENSE

McCorpen v. Central Gulf Steamship Corp., 396 F.2d 547 (5th Cir. 1968):

• The “gross misconduct” defense applies where the seaman conceals the existence of a pre-existing medical condition or injury to the shipowner at the time of hire.

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THE SEAMAN’S DUTY TO DISCLOSE

THE RULE: NO MEDICAL EXAM

• Where the shipowner does not require a pre-employment medical examination or interview, a seaman must disclose past illness or injury only when in his own opinion the shipowner would consider it important.

• Shipowner will be liable if there were reasonable grounds for the seaman's good-faith belief that he was fit for duty.

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THE SEAMAN’S DUTY TO DISCLOSE: McCorpen Defense

THE RULE: MEDICAL EXAM

• Where the shipowner requires a seaman to submit to a pre-hiring medical examination or interview; AND

• Seaman intentionally misrepresents or conceals material medical facts that were “plainly desired”…

• Seaman is NOT ENTITLED to an award of M&C.

• Only applies when a causal link between pre-existing medical condition and the “disability incurred during the voyage.”

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Recent Examples of Application of the McCorpen Defense

Meche v. Alex Doucet; Key Marine Services, L.L.C., No. 14-30032 (5th Cir. January 22, 2015)• Meche was a captain of a crew boat working off of Louisiana,

and he alleged that he was injured during vessel operations, aggravating his pre-existing spinal condition.

• Key denied M&C. • District Court found that since Key did not have a pre-

employment physical and that “Meche did not consider his pre-existing condition to be a matter of importance, Meche did not conceal his medical history and was owed M&C.

• Court awarded M&C, punitives, attorney’s fees, costs, and pre- and post-judgment interest.

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Meche v. Alex Doucet; Key Marine Services, L.L.C., No. 14-30032 (5th Cir. January 22,

2015)

• Appellate Court focused on “non-disclosure” vs. “intentional concealment”

• Key purchases former employer ; relies on existing personnel file• Court: Meche intentionally misrepresented medical facts in his

pre-employment physical with former employer.• Court: No economic sense to require a successor company to

reexamine personnel files of acquired company in order to assess M&C liability for previously concealed medical issues.

• Court: Meche cannot argue that concealment was not intentional by claiming that he verbally disclosed his issues during an employment interview.

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Boudreaux and Recovery of Maintenance and Cure

Payments Can the shipowner recover the payments made?

THE RULE

Once a shipowner pays maintenance and cure to the injured seaman, the payments can be recovered only by offset against the seaman’s damage award—not by an independent suit seeking recovery. Boudreaux v. Transocean Deepwater, Inc. (5th Cir. 2013)

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Latent Illnesses and the Outer Boundaries of the Course and

Scope AnalysisMessier v. Bouchard Transportation (2nd Cir. 2012) A case of first impression.

• A routine blood test conducted during treatment for the lower back pain sprain seaman suffered aboard ship ultimately led to a diagnosis of B-cell lymphoma.

• Evidence established that Messier’s lymphoma existed while he was in service of defendant’s ship.

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Messier v. Bouchard Transportation (2nd Cir. 2012)

THE “OCCURRENCE RULE”

A seaman is entitled to “maintenance and cure for any injury or illness that occurs or becomes aggravated while he is serving the ship,” regardless of whether it (absent active concealment) existed prior to employment.

Same Result: Ramirez v. Carolina Dream, Inc. (1st Cir. 2014) for aplastic anemia.

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ancient duties, modern perspectives: recent developments in the law of maintenance and cure kimbley...

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