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The United States Court of Appeals, Fifth Circuit, issued an opinion discussing whether cure awarded in a Jones Act claim should include the amount medical providers charged or the amount they accepted as full payment from a plaintiff’s insurer.

In November 2006, Leon Manderson began working as a licensed engineer for Chet Morrison Contractors, Inc. (CMC) aboard a dive vessel operating in the Gulf of Mexico.  In January 2008, Manderson, aboard another CMC dive vessel, left abruptly and was hospitalized, receiving treatment for ulcerative colitis, diabetes, and a liver condition.  Manderson did not return to work. 

The United States District Court for the Western District of Louisiana awarded Manderson maintenance and cure and attorney’s fees incurred in obtaining that relief.  The court subsequently ruled CMC liable for $14,680.00 for maintenance and $169,691.06 for cure. 

On appeal, CMC challenged the district court’s application of the collateral-source rule for determining the amount of cure awarded Manderson.  In an issue of first impression, CMC contended that the cure award should not have included the difference between the amount of Manderson’s medical providers charged and the lesser amount they accepted from his insurer as full payment.  The Fifth Circuit applied a de novo review.   

Cure is the shipowner’s obligation to pay necessary medical services for seamen injured while in its service.  This obligation is an implied term of a maritime-employment contract and does not depend on any determination of fault. 

The collateral-source rule is a substantive rule of law that bars a tortfeasor from reducing the quantum of damages owed to a plaintiff by the amount of recovery the plaintiff receives from other sources of compensation that are independent of the tortfeasor.  Generally, in tort actions, the collateral-source rule prohibits a reduction of compensatory damages by the difference between the amount billed for medical services and the amount paid.  Yet, as previously mentioned, maintenance and cure is an implied term of contract for maritime employment and is not predicated on the fault or negligence of the shipowner.  Accordingly, because of the unique nature of maintenance and cure, normal rules of damages, such as the collateral-source rule in tort, are not strictly applied. 

Nevertheless, the Fifth Circuit has identified an exception to this general rule:  Where a seaman has alone purchased medical insurance, the shipowner is not entitled to a set-off from the maintenance and cure obligation moneys the seaman receives from his insurer.

Having found Manderson purchased his own medical insurance, the court¾consistent with the Fifth Circuit precedent¾made no deduction from the cure award for payments by Manderson’s insurer.  In doing so, the court found the amount of cure was the greater amount charged by Manderson’s health-care providers.  CMC contended that the appropriate amount for cure was the lesser amount those providers accepted as full payment from Manderson’s insurer, and the Fifth Circuit agreed.   

An injured seaman may recover maintenance and cure only for those expenses actually incurred.  The relevant amount is that needed to satisfy the seaman’s medical charges.  The Fifth Circuit stated, “This applies whether the charges are incurred by a seaman’s insurer on his behalf and then paid at a written-down rate, or incurred and then paid by the seaman himself, including at a non-discounted rate.”  Regardless of what Manderson’s medical providers charged, those charges were satisfied by the much lower amount paid by his insurer.  Consequently, the district court erred by awarding the higher charged (but not totally paid) amount. 

Though Manderson’s payment of health-insurance premiums benefitted CMC, this benefit was not a problem here, where fault was not an issue and CMC was liable only for maintenance and cure.  By using the amount paid by Manderson’s health insurer, rather than the amount charged, the Fifth Circuit held Manderson entitled to recover $71,085.79 for cure, resulting in a difference of $98,605.27.

Manderson v. Chet Morrison Contractors, Inc., — F.3d —, 2012 WL 10541 (5th Cir. 01/03/12).

About the Author:  Tyler Moore is an associate at Mouledoux, Bland, Legrand & Brackett. She practices extensively in matters arising under the Longshore and Harbor Workers' Compensation Act, the Defense Base Act and the War Hazards Compensation Act. Prior to joining the firm, Tyler attended Loyola University New Orleans College of Law, where she was a member of the Loyola Law Review and the Maritime Law Society. Following graduation, Tyler clerked for the Honorable Larry W. Price of the U.S. Department of Labor’s Office of Administrative Law Judges in Covington, Louisiana. Tyler can be reached at tmoore@mblb.com or (504) 595-3000. Read more from this author

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