BODILY INJURYNEWSWINTER 2015/16

The journal of theThomas Miller Americas’ bodily injury team

A shipowner’sobligation to thoselawfully on board

Proof of negligencepost Scindia

The role of juryfocus groups

Negotiating damagesthrough BI mediation

Managing the cost ofmaritime healthcarein the US

EDITORIAL

2 Bodily Injury News Winter 2015/16

Mutual strengthAt the half year, the UK Club holds freereserves and hybrid capital of $559 million.The low number and cost of notified claimson the 2015 policy year is encouraging withfew large claims falling within the Club orPool retentions. Underlying claims inflationis currently running at around 4% perannum, however, this has been offset by the

continuing reduction in claims frequency. Although moving thepremium forward to meet claims inflation remains a key objectiveof the Club, the Board is very aware of the continuing stress incertain sectors of the shipping market and has therefore set theGeneral Increase for 2016 below the level of claims inflation, at2.5%. The Board has decided to lessen the impact of the GeneralIncrease decision by declaring a Mutual Premium Discount of2.5% on the total mutual call for the 2014 policy year. Thisdiscount will be applied by way of a credit to the final instalmentof the 2014 policy year mutual premium and will amount to a10% reduction for all mutual Members for that instalment. This isthe second such return made in the last four years.

The 2015 BI Seminar

This year’s seminar was busy and covered topics ranging fromlegal duties to longshore workers, crew, visitors and passengers,medical bill auditing, damages recoverable in personal injurycases, to calculating damages awards in an actual case handledby the Club. The seminar combined legal updates with practicaladvice and exercises, and was well attended by a broad range ofMembers. The response from delegates was overwhelminglypositive.

One World

This was the starting site of the post-BI Seminar festivities.Seminar guests, speakers and the Club toured the observatorylocated on the 100-102 floors of the building. Seeing the earlyevening New York skyline in 360 degrees was spectacular.Cocktails and dinner followed at the nearby Palm Restaurant.

Welcome Julia

Julia M. Moore, a New York maritime attorney with 27 yearslitigation experience, joined Thomas Miller Americas and the BITeam in October. Julia specializes in maritime personal injurydefense and insurance coverage matters. We look forward to hercontributions to the Team and the BI Seminars.

We welcome your feedback on the topics we cover in ournewsletter and invite you to suggest future topics. Contact detailsfor our Bodily Injury Team can be found on the back page. �

Mike JarrettPresident & CEO, Thomas Miller (Americas) Inc.

CONTENTS

A shipowner’s obligation tothose lawfully on board 3

Section 905(b) post Scindia 5

The role of focus groups in caseevaluation and trial preparation 8

Great expectations: Negotiatingdamages through BI mediation 8

Managing the cost of maritimehealthcare in the US 10

TMA Bodily Injury Team 12

Bodily Injury News

Bodily Injury News is the bi-annualnewsletter of the Thomas MillerAmericas’ Bodily Injury Team.

The topics it addresses are highlyrelevant to all our Members worldwidegiven more than half of the Club’spersonal injury claims over $100,000are brought in the American courts.

We welcome your feedback on thetopics we cover as well as suggestionson subjects to address in futureissues. Please send your commentsand ideas to Louise Livingston atlouise.livingston@thomasmiller.com

The information in this newsletter is notlegal advice and should not be reliedupon as such.

Winter 2015/16 Bodily Injury News 3

A shipowner’s obligation tothose lawfully on boardLife on a ship can be very busy, with many different people on board, but ashipowner has a duty of care to them all. Should anyone who is lawfully on board beinjured or killed, the owner, operator or charterer may be liable to pay compensation.Dee O’Leary summarizes the morning session from the seminar.

Greg O’Neill, a partner at NewYork’sHill, Betts & Nash LLP, provided abrief summary of the obligation of ashipowner to those persons on boardtheir ship.

Generally, there are three groups of peoplewho are owed a duty by the shipowner:visitors, passengers and seamen.

A visitor is someone who may goaboard the vessel to perform some typeof service, often times for pay.Theobligation to visitors is “a duty ofreasonable care to all who are on boardfor purposes not inimicable to theshipowners’s legitimate interests.”Keramec v. Compagnie GeneralTransatlantique (U.S. S.Ct. 1959)

A passenger is one who travels in apublic conveyance (ship) by virtue of acontract (ticket), express or implied, forconsideration given (fare).The obligationto passengers is “a duty of reasonablecare under the circumstances.”Rainey v. Pacquet Cruises (2d Cir. 1983)

A seaman is defined as a person withan employment relationship that is(1) substantial in both time and natureto a vessel or group of vessels; (2) thevessels are in navigation; (3) the personcontributes to the function of the vesselor the accomplishment of the missionof the vessel. A Seaman’s primaryremedies are:

• Maintenance and Cure(General Maritime Law)

• Unseaworthiness(General Maritime Law)

• Jones Act Negligence(Statutory, gives right to jury trial)

Maintenance and Cure

This remedy arises out of contract,express or implied, with the employerof the seaman. It was the only remedythroughout the 19th century. It iswithout regard to fault, meaning that itis an absolute duty.The seaman mustprove two things:

• The seaman suffered an injury orbecame ill.

• At the time he suffered the injury orillness, the seaman was in the serviceof the ship.

The employer has an obligation to treatthe injury or illness and to provide foodand lodging until the seaman reachesMaximum Medical Improvement(MMI).MMI means that future medicaltreatment cannot improve the seaman’s

physical condition or ability tofunction. It is a medical decision, not alegal decision.With respect tomaintenance and cure, all doubts areresolved in favor of the seaman, and ifthere is a question of fact, the employermust pay until the issue is resolved. Ifthe employer fails to pay, he may besubject to punitive damages if theseaman can show that the failure to paywas willful, callous and arbitrary.

Unseaworthiness

The vessel owner owes a seaman astrict and absolute duty to provide aseaworthy vessel. This duty is awarranty.The vessel owner has a dutyto furnish a vessel that is “…reasonablyfit for its intended purpose.”Thestandard is not perfection, butreasonably fit for intended use. It is

DUTY OF CARE

4 Bodily Injury News Winter 2015/16

DUTY OF CARE

any negligence which plays a part…any part…no matter how small…

Lastly, Greg O’Neill touched on theDeath on the High SeasAct, or DOHSA46 USC Section 30302, which appliesto passengers, seaman and visitors:

• For death of an “individual”

• Caused by “wrongful act, neglector default”

• Beyond three nautical miles

• Against person or vessel responsible

• Non-jury

• Pecuniary loss only

Previous issues of Bodily Injury Newshave covered Maintenance and Cureand Jones Act Negligence.�

liability without regard to fault.Thedamages are compensatory (pain andsuffering, loss of income) but notpunitive.

Jones Act Negligence

Jones Act (Merchant Marine Act) (1920),46 USC §30104 provides,

“A seaman injured in the course ofemployment or, if the seaman diesfrom the injury, the personalrepresentative of the seaman may electto bring a civil action at law, with theright of trial by jury against theemployer. Laws of the United Statesregulating recovery for personal injury to, ordeath of, a railway employee apply to anaction under this section.”

Creates a statutory cause of action fornegligence

Eliminates many elements of commonlaw negligence to make recovery easierand “to pass the human cost of doingbusiness from the employee to theemployer”.

The Jones Act provides both an injuryand survival cause of action that can bebrought against the employer only.There is a right to a trial by jury anddamages are limited to compensatoryand pecuniary.

Most importantly, there is relaxedcausation standard, i.e. any conductwhich “in whole or in part” causes theinjury or death, known as the“featherweight” burden. In other words,

Winter 2015/16 Bodily Injury News 5

PROOF OF NEGLIGENCE

Section 905(b) post Scindia:A real and impactful defenseBob Blanck, of Blanck & Cooper in Miami, explained the significance for shipownersand others in the maritime industry of Section 905(b) the Longshore and HarborWorkers’ Compensation Act. Noreen Arralde examines the issues.

In 1972, Congress amended theLongshore and HarborWorkers’Compensation Act, commonly referredto as “LHWCA.”The amendmentsprovided an increase in the statutorybenefits longshore workers receive fromtheir employers, which improved thecondition of the longshore community,and in exchange abolished the ability oflongshore workers to sue vessel ownersfor a breach of the warranty ofseaworthiness. Under the LHWCAamendments, liability is based on anarrow negligence standard, as opposedto unseaworthiness. Congress intendedto shift responsibility from the vessel toparty best able to prevent injuries: thestevedore-employer.

Scindia: The negligencestandard

In 1981, the United States SupremeCourt defined the legal standardapplicable to 905(b) in the case ScindiaSteam Nav. Co., Ltd. v. De Los Santos. InScindia, the Court articulated threenarrow duties the vessel owes tolongshoremen, stating that a plaintiffmust prove the breach of one of thesethree duties to prevail in a case againstthe vessel:

• Turnover Duty

• Active Control Duty

• Duty to Intervene

Longshoremen are considered to be“expert and experienced” in their field.The burden is on the longshoreman-plaintiff to prove breach of a narrowduty by the vessel. Courts generallyfocus on the conduct of the plaintiff asopposed to the defendant.

Status requirement

Although 905(b) claims are typicallyfiled by longshoremen, they are not theonly ones permitted to pursue suchclaims. In order to pursue a 905(b)claim, a plaintiff must be “engaged inmaritime employment.” Section 905(b)applies to independent contractors,provided they meet this status test.Examples of independent contractorswho have been permitted to pursue a905(b) claim include:

• Independent contractor employed todetermine the effect of rust on thethickness of vessel tank walls wasentitled to 905(b) claim.Hill v.Texaco, Inc. (5th Cir. 1982).

• Independent contractor employed toprovide seismic services aboard a vesselwas eligible to bring a 905(b) claim.Hudson v. SchlumbergerTech. Corp. (5thCir. 2011).

905(b) statute of limitationsand laches

LHWCA does not provide a specificperiod in which suit must be filed.Courts generally hold that the three (3)year statute of limitations that applies tomaritime torts also applies to 905(b)claims. However, not bringing a claimwithin three years is not necessarilyfatal as the court can still apply thedoctrine of laches. Under the doctrineof laches, plaintiff bears the burden ofshowing excusable delay and lack ofprejudice to the defendant.

905(b) and shipowners/charterers

By its terms, 905(b) applies to owners ofcargo ships, cruise vessels, bulk carriers,

tankers, etc. But 905(b) can also applyto bareboat/demise charterers andvoyage/time charterers, if it can beshown they have operational controlover the vessel and breach one of theScindia duties.The initial inquiry in sucha case is to look at the charter party todetermine whether any of the traditionalresponsibilities of the vessel owner havebeen transferred to the charterer by theterms of the charter party.

What consitutes a vesselunder 905(b)?

According to the US Supreme Court,under the LHWCA the word “vessel”includes every description of watercraftor other artificial contrivance used, orcapable of being used, as a means oftransportation on water. For example, adredge for removing silt from the oceanfloor,which navigated short distances bymanipulating its anchors and cables, wasa vessel since it was practically capableof maritime transportation, regardlessof whether dredge was in motion at aparticular time or was primarily usedfor transportation. Stewart v DutraConstr. Co., 1 (U.S. 2005). However, anunfinished ship was not a vessel, althoughthe hull was afloat on navigable waters,since it was not itself navigable.Rosetti vAvondale Shipyards, Inc. (5th Cir. 1987).A barge firmly moored to provide apermanent painting platform was notconsidered a vessel, but a barge spuddedin place, which occasionally movedfrom site to site during a dock buildingproject was considered a vessel underthe LHWCA.

Turnover duty

The turnover duty is the mostcommonly litigated Scindia duty.The

6 Bodily Injury News Winter 2015/16

PROOF OF NEGLIGENCE

duty is a narrow one. It requires vesselowners to turn over the ship to thestevedore in such a condition that askilled and competent stevedore cancarry out its work in reasonable safety.It does not require the vessel to be in aperfectly safe condition.The vessel isgenerally not liable for injuries causedby an open and obvious condition sincesuch injuries could be anticipated andprevented by a competent stevedore.

Examples of cases in which the courtsfound no breach of the turnover duty:

• Plaintiff slipped while climbing downangle-iron supports into engineroom.The presence of anti-corrosivesubstance not uncommon and thecourt granted summary judgment.Romero v. Cajun Stabilizing Boats, Inc.(W.D. La. 2007)

• The vessel owner had no duty towarn of slippery soybean residuebecause it was common and shouldhave been anticipated. Stass v.American Commercial Lines, Inc. (5thCir. La. 1983)

But in the following case, the courtsfound the vessel breached its turnoverduty:

• A longshoreman was injured by abundle of wood that fell on him aftera vessel-owned sling broke.Thevessel owner knew or should haveknown of possible defects in the sling,which would not have been apparentto the stevedore through the exerciseof reasonable care.Revak v. Interforest(E.D. Pa. 2009)

The focus is on whether the stevedoreshould anticipate the defective conditionor, through the exercise of reasonablecare, could have discovered it.

Often inadequate lighting is said to be abasis for a 905(b) claim, although it isthe duty of the stevedore, not the vesselowner, to provide adequate lighting forstevedoring operations.Dow v.Oldendorff Carriers GMBH & Co., KG(5th Cir. La. 2010).

Active control duty

The active control duty is triggeredonce stevedoring operations have begun.Generally, the vessel owner is notrequired to supervise, inspect, ormonitor the stevedore’s work. But thevessel may be liable if it “activelyinvolves itself in the cargo operationsand negligently injures a longshoremanor if it fails to exercise due care to avoidexposing longshoremen to harm fromhazards they may encounter in areas, orfrom equipment, under the activecontrol of the vessel during thestevedoring operation.” Scindia. Simplyobserving cargo operations, as may becustomarily done by the ship’s crew,does not rise to the level of “activecontrol.”Manuel v. Cameron (5th Cir.1997).

The test as to whether the vessel ownerretained active control over the workincludes:

• Whether the area in question isconfined to stevedore’s work area

• Whether the work area has beenturned over to the stevedore

• Whether the vessel owner controlsmethods and operational details ofwork.

Duty to intervene

The duty to intervene applies after cargooperations have begun, but unlike theactive control duty“concerns the vessel’sobligations with regard to cargo operationsin areas under the principal control ofthe independent stevedore.” Scindia.

The vessel owner has a duty to interveneto protect the longshoremen if it hasactual knowledge that the ship or its gearposes a danger to the longshoremen andthat the stevedore is failing, unreasonably,to protect the longshoremen from theharm. Constructive knowledge doesnot constitute a breach of the duty tointervene. Courts have repeatedly heldthat the duty to intervene requires thata plaintiff show “something more” thanthe vessel owner’s mere knowledge of adangerous condition. Futo v. Lykes Bros.Steamship Co. (5th Cir. La. 1984).

Dual employment doctrine

What happens when the vessel owneremploys the longshoremen as well? If alongshoreman is injured as a result ofthe vessel owner’s negligence in itscapacity as vessel owner, then a 905(b)suit against the vessel may bemaintained. If a longshoreman isinjured as a result of the vessel owner’snegligence in its capacity as stevedore-employer, then the only remedy isstatutory compensation.Gravatt v. Cityof NewYork (2d Cir. N.Y. 2000).

Indemnity issues betweenstevedores and vessels

The 1972 amendments eliminated astevedore’s obligation to indemnify avessel owner or its charterer and voidedcontractual indemnification clauses.Indemnification clauses in contracts arevalid only if they do not violate 905(b).Below is an example of anindemnification clause in use today:

(Stevedore) shall defend, indemnify and holdharmless (Vessel Owner), its employees,agents, successors, and affiliated companiesagainst losses, damages, suits, expenses,claims and demands, including court costsand legal fees involving claims for death orpersonal injury or property damage, includingpollution clean-up or damages, arising outof or in any way related to, directly orindirectly, the work contemplated by theAgreement, but not to the extent such lossor damage is caused solely by the negligentact or omission of (Vessel Owner), itsagents or employees. A determination ofpartial invalidity of this indemnificationunder the provisions of the Longshoreand Harbor Workers’ Compensation Actshall have no effect on the validity ofany portion thereof not held invalid, norshall a determination or declaration ofinvalidity of this indemnification as awhole affect the validity of thisAgreement in its entirety.

Note the indemnification clausespecifically acknowledges 905(b)’s anti-indemnity requirement.

Winter 2015/16 Bodily Injury News 7

PROOF OF NEGLIGENCE

905(b) and the benefits ofbeing an additional insured

Nothing prevents a stevedore fromincluding a vessel owner as anadditional insured on its liability policy.LeBlanc v. Global Marine Drilling Co.(5th Cir.1999). But read carefully theterms of the policy because manyinsurance policies covering stevedoringoperations do not cover claimsoccurring on a vessel. For a stevedore’sinsurance policy to cover a vesselowner’s liability, the watercraftexclusion must be deleted, as well asany other policy provision that wouldlimit or exclude coverage to vesselowners. In addition, the vessel ownermust be named as an additional assuredwith a waiver of subrogation and thepolicy must contain a provision makingit primary coverage.

Don’t assume that an insurancecertificate showing additional insuredcoverage is sufficient. The vessel ownermust confirm, by reading the policy,that it provides cover for shipboardliabilities.

Longshore compensationlien and attempting to settlea case

The LHWCA gives the stevedore-employer a subrogation right to recoverthe full amount of compensationbenefits paid from the proceeds of alongshoreman’s third-party suit.Moreover, the stevedore may intervenein the longshoreman’s third-party suitand assert a lien to the extent of thecompensation benefits paid.Theclaimant cannot settle a third-party suitindependent of the LHWCA lien.

There is no reduction of the lien forthe stevedore-employer’s negligence.There is also no reduction of the lienfor the claimant’s negligence, althoughthe lien holder may be persuaded toreduce the lien in cases of substantialclaimant negligence, since the prospectof any substantial recovery at trial of thethird-party suit is diminished.

Generally, when a 905(b) claimantrecovers from a third-party by judgmentor settlement, the funds are distributedas follows: (1) the claimant pays thecosts of litigation plus attorney’s fees;

(2) the stevedore-employer (itsLHWCA insurer) receives credit forany compensation liability not yetsatisfied and reimbursement forcompensation already paid; and (3) theclaimant retains what is left, if anything.

If a third-party case has a settlementvalue of $500,000 and the stevedore-employer has paid out $250,000 inmedical and indemnity benefits, whichis not at all unusual, the settlementfigures might look like this:

As can be seen above, settling these casescan be very difficult unless you can putpressure on the stevedore-employer’sLHWCA insurer to reduce the lien.�

Settlement payout $500,000

Less costs of litigation $10,000

Less attorney’s fees $166,500(1/3 of gross recovery isa typical attorney’s fee)

Less LHWCA lien $250,000

Net claimant recovery $73,500

8 Bodily Injury News Winter 2015/16

FOCUS GROUPS

Are focus groups useful?The seminar’s afternoon breakout session examined the role of focus groups in caseevaluations and trial preparation. Markus McMillin reports on the damages awardedwhen attendees were asked to evaluate a hypothetical case.

The hypothetical case involved analleged injury to the shoulder, back,neckand leg of a Jones Act seaman who wasknocked down by a heavy power cordwhile laying up a ship for the winter.The hypothetical seaman underwentmonths of physical therapy along withnerve block injections into his back. Heclaimed he could not return to workafter the incident. He claimedpost-traumatic stress disorder and majordepression as a result of his injuries.The shipowner argued the seaman’sx-rays were normal,MRIs only showedmild arthritis or degenerative changes,and his injuries were minor in nature.

As the focus of this year’s seminar wasdamages, the delegates divided intogroups, and each group was asked to listall of the damages they thought theseaman could claim based upon the factpattern provided.Most groups namedthem all. They included: past and futurelost wages; past and future medicalcosts; past and future pain and suffering;past and future loss of enjoyment of life;value of replacement services and a lifecare plan.

All the groups were presented withadditional facts from both the plaintiffand defense points of view regardingplaintiff ’s claimed damages, along with

a jury verdict form. Again, as the focuswas damages, we asked the groups toassume shipowner liability (with 25%comparative fault to plaintiff) andascertain the amounts of damages theywould award the plaintiff (beforecomparative fault). Some groups had avery difficult time coming to aconsensus, but after being pressed, dueto time, the results were as follows:

Group One: $180,000

Group Two: $400,000

Group Three: $440,000

Group Four: zero

Group Five: $500,000

The results varied greatly (zero to$500,000), which illustrates howdifficult it really is to predict theoutcome – and set reserves – for bodilyinjury cases.

This fact pattern was closely based upona real case that was recently tried by aMember with support from the Club.Prior to that trial, we completed anin-depth focus group exercise conductedby a jury consulting service company.Wewanted to ascertain the possible exposurelevels, help us decide if we wanted to

try the case, and assist defense counselin constructing effective trial themesand strategies if we did try the case.

All three groups (with 12 people perpanel) evaluated both liability anddamages. All three panels determinedthe shipowner/Member was liable tothe seaman for his injuries. But, they allalso found a sizeable amount ofcomparative fault by plaintiff as well(about 40-60%).The results were asfollows (damage numbers beforecomparative fault was applied):

Group A: $460,000 - $1,500,00

Group B: $783,000

Group C: $312,500

Like the seminar breakout exercise, thefocus group damage numbers alsovaried greatly; however, when plaintiff ’scomparative fault was applied, even thehighest number (around $900,000which is $1,500,000 x 60% liability tothe shipowner) was far below plaintiff ’s“bottom-line” demand in the real case:$2.2 million. So, with these kinds ofresults, we felt fairly confident that wewould beat plaintiff ’s number at trial.And we did.The jury actually returneda defense verdict in the case!

Such a result illustrates that focusgroups are far from perfect (here, allthree focus group panels found liabilityas compared to the real jury, which didnot), but focus groups do greatly assistin providing the Member and Clubparameters of exposure, help us decidecase values and whether the case shouldbe tried.They also are fantastic tools fordefense counsel to better understandwhat trial themes and strategies shouldwork at trial. Finally, they also give us asmall snapshot into the minds ofAmerican jurors - and sometimes thatcan be a very scary experience! �

Winter 2015/16 Bodily Injury News 9

MEDIATION

Great expectationsDuring the seminar, Louis Selig of Selig ADR, Houston, guided us through the processof negotiating damages through bodily injury mediation. Here, Louise Livingstonhighlights some of the facts he revealed.

The psychology of gain vs.risk vs. loss

As most participants in US mediationsknow,mediation is at least 75%psychology.The essence of thepsychology of mediation is the conceptof gain versus risk versus loss.When aperson is faced with a choice solelybetween risk and loss, risk is alwayschosen. However, when a person ispresented with a choice between theperception of gain in addition to risk orloss, gain is invariably chosen.The taskof the mediator, particularly for theplaintiff ’s side, is to help the partiesunderstand their losses, risks andpotential for gain.

What does this mean in practice? Mostplaintiffs in personal injury cases areunfamiliar with the litigation process, itscosts and unpredictable risks.Theirlawyers have told them how much theircase is worth and have usually not beenobjective about the case value.As aresult, plaintiffs often approachmediation with a false sense of thevalue of their case. They think only ofgain and choose risk. As a result, theinitial stages of negotiation appear tothem as a loss.

One of the goals of the mediationprocess is to help clarify plaintiff ’scurrent loss (injury, disrupted life,economic loss, loss of position andsense of self worth) and prospective lossof the case at trial or defendantestablishing significant comparativefault. As negotiations progress, a solidsettlement offer to plaintiff can begin tobe viewed as a gain even if it looks likea loss in comparison to their unrealisticexpectations.

The defense’s perspective, while usuallymore experienced with the mediationprocess, is similar. The available defensesmay initially appear very strong in view

of the exorbitant plaintiff ’s demand.Over the course of negotiationshowever, the benefit of economiccertainty may become more appealingthan the costs and risks of trial.

What is the negotiation andwhen does it start?

Everyone dislikes the initial rounds ofnumbers which simply exchangesabstract figures. Negotiations reallybegin when a gap is formed afterplaintiff is close to their bottom linesettlement demand and defendant isclose to their top settlement authority.Closing that gap between the parties iswhat the mediator helps the partiesnegotiate.

Dealing with life care plans

Life care plans are part of the legallandscape and are here to stay. Aplaintiff never loses by including a lifecare plan in their settlement demand.Many life care planners are expertwitnesses who generate the plan figuresbut don’t admit until cross examinationthat they are paid consultants.Sometimes the life care plans aregenerated by medical care providers

whose testimony about what theirpatient needs can be compelling to ajury. Ultimately, juries don’t awarddefense verdicts because they disliked aplaintiff ’s life care plan.

Next number vs. lastnumber

This is a technique which allows theparties to consider settlement figureswithout actually making a firmsettlement demand or firm settlementoffer. It saves the last demand/offerposition for future negotiations if needed.

Here is how it works. A defendant couldsay it will move from $500,000 to$750,000 as a last firm offer. $750,000is the last number.The defendant couldalso say that if plaintiff would demand$1M to settle the case, the defendantwould pay it or seek authority to pay it.The $1M is the next number.The nextnumber message can be accompanied byan additional statement to the effect thatno further firm offers will be made untilplaintiff makes a more realistic demand.Plaintiffs can use the same technique,thus allowing the parties to preserve theirlast firm settlement positions whileexploring other settlement numbers.�

10 Bodily Injury News Winter 2015/16

HEALTHCARE

range from $400 to $7,000 within thesame state.The average CT scan in theUS in 2011 was $523. In comparison,the same CT scan was $122 in Canada,$141 in France, and $272 in Germany.These prices are often listed in ahospital’s Charge Master – a price list ofevery procedure and medical supplyoffered to patients. California is theonly state to require hospitals to posttheir Charge Master to enable billpayers to compare and negotiate finalcosts. No one pays 100% of the billedcharges for healthcare service in theUnited States.

Managing the cost of maritimehealthcare in the USWhile the quality of care in the United States is generally regarded as high, thecost of such care is inconsistent. Linda L. Wright explains how best to minimizethose costs.

When a crew member, passenger,longshore worker or other maritimeworker is injured, the cost of treatmentis very difficult to predict.The pricemedical providers charge is not relatedto the quality of service, but rather towhat the market will allow.The Clubrecommends all Members develop asystem to manage the medicaltreatment of the injured party, with thegoal of minimizing costs while ensuringthe party receives the necessary care.

Unlike in other developed countries,the United States does not have a

uniform healthcare system.Medicalfacilities are free to charge any pricethey wish for procedures and services.As there are no regulations regardingcosts, the same procedure at differenthospitals may be billed at a wide rangeof figures. For instance, a CT scan can

No one pays 100%of the billedcharges for health-care service in theUnited States

Winter 2015/16 Bodily Injury News 11

HEALTHCARE

Keeping costs under control

It is important to ensure that the injuredparty is in fact receiving the necessarytreatment.With serious injuries,managing the medical services can bedifficult without the assistance of anurse case manager (NCM).The NCMis the liaison between the medicalprovider and your claims team.TheNCM’s assessment of the treatmentplan can determine the length of stayand appropriate procedures necessary toensure progress toward a fit forduty/maximum medical improvementstatus. Frequent NCM updates, withreports and test results included, assist inmonitoring the health of the crewmember and preparing for return to thevessel or repatriation home.

Bills, bills, bills

A first step should be the appointmentof a medical bill auditing company toreview and reduce the fees/costs. A trueaudit of the services provided on eachinvoice is the most efficient way. Savingsfrom overcharges, coding/billingcompliance, and errors (duplicate orunrelated services) can best bedetermined by a diligent review of eachitem on a bill.Members should receive acopy of the itemized bill with procedurecodes and fees to compare to the medicalreports. If there are questions, theNCM should obtain explanations fromthe doctor or the hospital.

Alternatively,Members could enlist amedical review company that hasprearranged percentage discounts frommedical providers. For example, if a billfor a serious injury or illness totals$100,000 and the bill review has acontract to offer 25% discount, $25,000would be saved on the bill.

However, it is important to recognizethat a blanket discount for all servicesmay not always be the best strategy tominimize costs.When the services areindividually audited, procedures may beeliminated as redundant or unnecessary,alternatively reductions per the workerscompensation code may be applied. Anexample of such disparity is apparent ina case involving a crew member whorequired bilateral rotator cuff surgeries.

The first shoulder surgery was billed at$60,000 and the contracted discountprovided by the bill reviewer reducedthe costs to $40,000.Not bad. Butwhen the second surgery wasperformed six months later, theshipowner engaged a medical auditor.The line by line review for theprocedure – performed by the samedoctor with the same $60,000 price tag– resulted in a final bill for $28,000.This was a huge cost difference for theMember because the bill was audited.

The importance of engaging anappropriate medical managementcompany at the onset of an injury orillness is high. However, the choice of amedical manager is sometimes made bythe local vessel agent (prior tocontacting the Club), who may havebeen recruited by a specific company. Ifthe Club and Member are not involvedimmediately after the incident, medicalmanagement control may be lost to theagent’s choice. Often the Club seesexpensive management handlingcharges and weak discounts across the

board from these arrangements.

When evaluating potential medicalreview vendors,Members shouldconsider both their professionalexperience in the medical field andtheir knowledge of the maritimepersonal injury/illness field. Theirtechnical understanding of cost of care,usual and customary (U&C) fees,accuracy of the charges/coding, andreasonableness of the fees should beconfirmed. Ethically, they should betransparent regarding their relationshipwith all medical providers, sharing acopy of the itemized invoice with aMember’s claims team, and answeringany questions regarding the process andtheir fees.

The Bodily InjuryTeam has researchedmany of the medical managementcompanies, and is available to answerquestions on bill auditing and nursecase managers.The team can alsoprovide recommendations when aserious case requires expert treatmentand cost management.�

A major medical incident occurs…

DO:

• Ensure your crew’s health and welfare is your first priority

• Give instructions to your ship managers and local agents to contact the Club andowners immediately so they may initiate medical oversight at the onset

• Assign a nurse case manager on all cases where the crewmember is admittedinto the hospital

• Have all medical bills reviewed and audited by a reputable cost containmentcompany who specializes and understands the maritime industry

• Require that you be given a copy of all medical bills before you pay for medicalservices and review fees

DO NOT:

• Rely on your port agent as your contact for medical treatment management orreview of providers’ invoices

• Pay medical bills unless they have been reviewed and audited by a reputable costcontainment company

• Pay medical bills until you receive a copy of the itemized invoice submitted by themedial providers

• Accept a discount off of a medical bill without an explanation from the provider

Louise S. LivingstonDirect: +1 201 557 7407

Louise is an attorney specializingin bodily injury claims. Beforejoining Thomas Miller (Americas)in March 2002, Louise was apartner in a San Franciscomaritime law firm. She leadsTM(A)’s Bodily Injury Team.

Julia M. MooreDirect: +1 201 557 7433

Julia joined Thomas Miller inOctober 2015 after 27 yearswith various US litigation firmsspecializing in maritimematters.

Dee O’LearyDirect: +1 201 557 7402

Dee joined Thomas Miller(Americas) in December 2007after 17 years practicing law inNew York City with a firmspecializing in maritimematters.

Linda WrightDirect: +1 415 343 0122

Linda joined Thomas Miller(Americas) in May 2010.Previously, she was a P&I Clubcorrespondent on the PacificWest Coast for 29 years.

Markus McMillinDirect: +1 415 343 0113

Markus joined Thomas Miller(Americas) in 2006, havingworked at two maritime lawfirms in San Francisco.

Noreen D. ArraldeDirect: +1 201 557 7333

Noreen joined Thomas Miller(Americas) in 2012 after 13years with a US litigation firmand six years as claimsmanager for a global containershipping company.

TMA BODILY INJURY TEAM

Expertise andexperienceA specialist group from both the New Jerseyand San Francisco offices empowered witha significant settlement authority to dealwith the particularly demanding cases ofbodily injury in America.

This dedicated team supports Membersbased both in the United States and abroadin dealing with a diverse and complexrange of personal injury and illness cases.The one common factor is the influence ofUS jurisdiction or emergency response.

The team has handled cases ranging fromsuspicious death, passenger’s leisureactivity injuries, long-term occupationalillness, engine room and cargo handlingfatalities, through to shore-side accidents,loss of limbs in mooring activity and evensexual assault.

As well as supporting Member’s claims andenquiries directly, the team share theircollective experience through the pages of“Bodily Injury News”.

Thomas Miller (Americas) Inc

New JerseyHarborside Financial Center, Plaza Five, Suite 2710,Jersey City, N.J. 07311, USAT +1 201 557 7300E newjersey.ukclub@thomasmiller.com

San Francisco44 Montgomery Street, Suite 1480,San Francisco, California 94104, USAT +1 415 956 6537E sanfrancisco.ukclub@thomasmiller.com

New Jersey

San Francisco