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Archive for the ‘Jones Act’ Category

The Louisiana Fifth Circuit Court of Appeal recently considered the validity a Jones Act settlement in the context of an exception of res judicata.  The plaintiff, Randy James Rudolph, was injured in a vessel collision while working as a deckhand.  Rudolph sued his employer, D.R.D. Towing (“employer”), and others in Louisiana state court alleging that he was a Jones Act seaman and was entitled to maintenance and cure.

Employer denied Rudolph’s allegations and also filed an exception of res judicata.  Employer claimed that Rudolph executed a receipt and release shortly after the accident in settlement of all claims.  In opposition, Rudolph submitted an affidavit accounting the purported settlement.  The trial court ultimately granted the employer’s exception and Rudolph appealed.

On appeal, the Louisiana Fifth Circuit discussed the “substantial federal jurisprudence recognizing the special status of seamen and defining the role of state courts in the application of the law with regard to seamen.”  Importantly, the burden is on the one who sets up a seaman’s release, here the employer, to show it was executed freely, without deception or coercion, and was made by the seaman with a full understanding of his rights.

The court highlighted the four factors that guide an analysis of the validity of a seaman’s release:

(1) The adequacy of the consideration—did the seaman receive fair compensation in light of the extent of injuries and the risk of trying his case?

(2) The available medical advice—did the seaman know the full extent of his injuries and the need for future medical care?

(3) The legal advice available and given—did the seaman have full knowledge of his legal rights?

(4) The nature of the negotiation—did the party seeking to secure the release overreach?

Applying these factors, the court found that Rudolph’s release was invalid.  The release, which was executed three days after the accident in employer’s offices, was overseen by a non-lawyer consultant hired by the employer.  The consultant knew at the time of the release that Rudolph was experiencing health issues and had a medical appointment later that day.  The consultant also failed to explain Rudolph’s right to maintenance and cure and indemnity and medical benefits.  Further, the consultant knew Rudolph was not represented by counsel and never advised him of his right to obtain counsel.  The court found that a transcript of the interaction supported Rudolph’s contention that he believed he was only settling his claims for the possessions he lost when the boat sank.  In addition, the $3,000 settlement amount was not adequate to cover Rudolph’s property losses and medical expenses.  In sum, the court found that Rudolph had not “signed the release with full understanding and knowledge of his rights and a full appreciation of the consequences of the release.”

Finding that the release was invalid, the court set it aside and reversed the trial court’s grant of the employer’s exception of res judicata and remanded the case for further proceedings.

Rudolph v. D.R.D. Towing Co., LLC, et al., 11-1074 (La. App. 5 Cir. 4/24/12); 2012 WL 1415135.

A Washington state appellate court recently examined the “obvious tension” between the standard on summary judgment requiring that doubts be resolved in favor of the non-mover and the canon of admiralty law that doubts be resolved in favor of a seaman.  The issue came up in the context of a seaman’s pretrial motion to reinstate maintenance and cure payments.

The plaintiff, a crewmember aboard a fish processing vessel, developed numbness and tingling in his hands and pain in his neck after having to work in a cramped area 16 to 18 hours per day.  The plaintiff treated with several doctors from 2006 to 2009.  An EMG study was performed in July 2009 but no further treatment was recommended at that time.  In August 2009, the plaintiff underwent an independent medical examination at the request of his employer, The Fishing Company of Alaska (“FCA”), which yielded normal results and no recommendation of further treatment.  FCA subsequently discontinued the plaintiff’s maintenance and cure, relying on the results of the independent medical examination.  The plaintiff sued for damages under the Jones Act and general maritime law.  After filing suit, the plaintiff moved to reinstate his maintenance and cure.  Applying the summary judgment standard, the court denied the motion because plaintiff failed to show the absence of a genuine factual issue as to his entitlement to maintenance and cure.

On appeal, the court discussed the background and principles underlying maintenance and cure and noted that the United States Supreme Court has held that “ambiguities or doubts regarding payment of a seaman’s entitlements must be resolved in favor of the seaman.”  Vaughan v. Atkinson, 369 U.S. 527, 532 (1962).  Although the plaintiff conceded that the conflicting medical opinions created a factual dispute, he argued that the trial court should not have applied the summary judgment standard but, rather, should have resolved the ambiguities in favor of reinstating his maintenance and cure.

In the absence of United States Ninth Circuit or Supreme Court guidance on the question, the court relied on unpublished decisions from the United States District Court for the Western District of Washington.  One of the cited cases, Buenbrazo v. Ocean Alaska, LLC, 2007 U.S. Dist. LEXIS 98731 (W.D. Wash. 2/28/2007), rejected the argument advanced by the plaintiff, reasoning that Vaughan did not intend to thwart well-established summary judgment procedure. To disregard genuine factual issues before each party could be heard on the merits “places too heavy a thumb on the scale in favor of the seaman.”

The plaintiff relied on another unpublished decision, Gouma v. Trident Seafoods, Inc., 2008 WL 2020442 (W.D. Wash. 5/3/2008), which refused to apply the summary judgment standard to a similar motion.  The court distinguished Gouma on the ground that in that case there was no dispute over the fact that the plaintiff was injured in the service of the vessel.  The only dispute was over the need for a certain medical procedure and whether the plaintiff had reached maximum medical cure.  In this posture, the court in Gouma found it appropriate to give the plaintiff a “presumptive continuance of maintenance and cure.”

The court of appeals declined to follow Gouma, explaining that it was merely persuasive authority and the passage relied on by the plaintiff was stated in dicta.  Distinguishing Gouma, the court pointed out that the plaintiff’s initial entitlement to maintenance and cure was at issue in this case and was more similar to Buenbrazo.

The court concluded that the summary judgment standard was properly applied.  The plaintiff did not suggest a more appropriate procedure under the applicable rules and did not suggest an alternative procedure in the trial court.  Although the court was “sensitive to the special solicitude traditionally paid to seamen,” the admonition in Vaughan was not meant to undermine the summary judgment procedure.

Dean v. The Fishing Company of Alaska, Inc., — P.3d –, 2012 WL 688229 (Wash. Ct. App. Mar. 5, 2012).

Plaintiff lodged a Jones Act suit against his employer, Anadarko Petroleum.   He was injured on the RED HAWK spar, which is a “floating gas-production platform moored in ocean water 5,000 feet deep approximately 210 miles from Sabine Pass, Texas.”  It is secure to the ocean floor by six anchor moorings.  The mooring lines are permanently taut top prevent lateral movement.  The employer intended that the RED HAWK spar would stay in place for the life of the oil field, but it has actually stayed in place longer.  Considering the nature of the RED HAWK spar, the employer moved for summary judgment, arguing that Plaintiff was not a seaman.  The district court agreed and the Fifth Circuit affirmed.

In its affirmance, the Fifth Circuit considered whether Plaintiff could in any way establish seaman status.  He could not.  A seaman must have “a connection to a vessel in navigation (or an identifiable group of such vessels) that is substantial in terms of both its duration and its nature.”  Because the RED HAWK spar was not a vessel, Plaintiff was not a seaman.  Indeed, “[d]isconnecting the RED HAWK from the sea floor would make disconnecting a casino boat from the shore look as easy as unplugging a toaster.”

Mendez v. Andarki Petroleum Co., No. 11-20047 (5th Cir. 03/26/2012) (per curiam).

After suffering an injury to his hand, Timothy Holloway filed suit under the Jones Act against his alleged employers, Pagan River Dockside Seafood and Joseph L. Melzer, Jr., claiming he was a seaman injured in the course of his employment.  Specifically, Holloway alleged he was a seaman employed under an oral contract whereby he would “lease” his employers’ boat and sell them the oysters and crabs he would catch, less a fee for the use of the boat.

Pagan River and Melzer answered Holloway’s lawsuit and moved to dismiss the complaint for lack of subject matter jurisdiction and for failure to state a claim.  In their motions to dismiss, they argued that Holloway had not adequately shown he was a seaman or that he was injured during the course of his employment as a seaman.  The district court agreed and granted the defendants’ motions to dismiss, finding that Holloway had not established that he was a seaman.  According to the court, Holloway failed to meet his burden to show the nature of his connection to the vessel sufficient to maintain jurisdiction under the Jones Act.

On appeal, the Fourth Circuit began its analysis by outlining the elements of a Jones Act claim.  A plaintiff must allege that (1) he is a seaman under the Act; (2) he suffered injury in the course of his employment; (3) his employer was negligent; and (4) his employer’s negligence caused his injury at least in part.  The court noted that, in addition to their maritime jurisdiction, federal courts have subject matter jurisdiction over Jones Act claims by virtue of their federal question jurisdiction under 28 U.S.C. § 1331.

The court expressed frustration with what it described as the parties’ and the district court’s blurring of the line between a motion to dismiss for lack of subject matter jurisdiction and a motion to dismiss for failure to state a claim.  It noted United States Supreme Court decisions in recent years warning against “drive-by jurisdictional rulings” that dismiss a claim for lack of jurisdiction without analyzing whether the dismissal is more properly for failure to state a claim.  In other words, a federal court’s subject matter jurisdiction is not generally dependent on a plaintiff’s failure to plead or eventually be able to prove an element of a federal cause of action.  It is a more fundamental question of whether “the plaintiff’s claim is determined by application of a federal law over which Congress has given the federal courts jurisdiction.”

Distinct from the question of subject matter jurisdiction, the “sufficiency of the complaint or the evidence pleaded to support the complaint” is challenged on a motion to dismiss for failure to state a claim, motion for judgment on the pleadings, or a motion for summary judgment.  The court explained that a plaintiff that can plead a colorable federal claim invokes a district court’s federal question jurisdiction and deficiencies in pleading or proving the claim must be addressed through other procedural mechanisms.  Here, regardless of how thinly supported his claim may have been, because Holloway alleged the elements of a Jones Act claim, he “provided an adequate basis to invoke the Jones Act and thus to require the district court to exercise federal jurisdiction over the case.”   

Plaintiff suffered serious on-the-job injuries when he fell from a cylindrical cell tower.   Thereafter, Plaintiff and his wife sued Plaintiff’s employer, as well as other companies involved in Plaintiff’ work on the day he fell.  After a trial, the jury returned a verdict that Plaintiff had not established the facts necessary to recover under the Jones Act, despite incurring nearly eleven million dollars in actual damages. 

On appeal to the United States Court of Appeals, Sixth Circuit, Plaintiff complained about the admission of an expert report which contained unflattering facts about Plaintiff’s past, including “extensive prior alcohol, methamphetamine, cocaine, and marijuana use; a failure to pay child support and termination of his parental rights; numerous arrests for alcohol intoxication, convictions for trafficking methamphetamine, driving while impaired, possession of marijuana, and failure to appear in court; and physical abuse leading to hospitalization.” 

The Sixth Circuit was satisfied that the expert’s opinion was properly admitted.  The expert,who has a thirty-year career addressing brain-trauma victims, reviewed Plaintiff’s medical records and conducted a two-day examination and interview.  Further, the court found the opinion relevant for purposes of a damages calculation:

The Clarks’ contention that the district court abused its discretion in finding [the expert's] testimony ‘relevant to the task at hand’ is also meritless.  The Clarks argue that his prior substance abuse, physical injury, convictions and jail time, and failure to pay child support had no bearing on the task before the court–determining liability for his fall–and should have been excluded because it was irrelevant and used exclusively to inflame the jury.  While these facts may not be pertinent to the apportionment of negligence, they are relevant to the damages calculation.  The substance abuse and physical injury testimony, while unfavorable to Clark, was relevant to determining the amount of Clark’s impairment attributable to the fall.  Additionally, Clark’s criminal history and failure to pay child support were relevant to the jury’s future-earnings calculation.  In fact, the Clarks opened the door for this testimony when they presented an economics expert’s opinion predicting a robust future earnings capacity despite Clark’s previously spotty employment record.  This expert attributed the recent birth of Clark’s child as a basis for concluding that his future earnings would be more predictable and reliable, as Clark now had new familial obligations.  This projection, however, failed to take into consideration a major reason for Clark’s checkered employment record–his time spent incarcerated–and ignored Clark’s history of nonsupport of a first child.  The defendants’ introduction of Clark’s criminal history and failure to pay child support were relevant to the future-earnings calculation and to rebut the Clarks’ economic expert’s opinion.

Clark v. W & M Kraft, Inc., No. 07-4272, 07-4314, 2012 WL 616627, slip op. (6th Cir. Feb. 27, 2012).

In a recent unpublished decision, the United States Fifth Circuit Court of Appeals explained the nature of its review of the denial of a motion for new trial.  The plaintiff in the underlying case was injured while working on a commercial fishing vessel.  He filed a Jones Act negligence and unseaworthiness claim against his employer.  After a three-day jury trial, a unanimous verdict was returned in favor the employer.  The district court subsequently denied the plaintiff’s motion for new trial, finding the verdict was not against the great weight of the evidence.  The plaintiff appealed the district court’s denial of his motion for new trial.

On appeal, the Fifth Circuit noted several pieces of evidence in the record to support the jury’s verdict.  For example, the vessel’s captain testified that the plaintiff had violated company policy by attempting to moor the vessel while it was still moving.  The captain also testified that immediately following the accident, the plaintiff had remarked that it was a result of his own “dumb, stupid mistake.”  Further, the plaintiff had given a statement that the accident was not caused by an unseaworthy condition of the vessel.

The court commented in a footnote that the plaintiff seemed to concede that there was evidence to support the verdict.  However, the plaintiff argued that the evidence was not credible and should be disregarded.  The court took this argument as an indication that the plaintiff misunderstood the nature of its review.  The court explained that it was bound to accept the evidence in support of the verdict as true and that its task was to decide whether there is an “absolute absence” of evidence, not second guess the credibility determinations of the jury.  The Fifth Circuit affirmed the district court’s denial of plaintiff’s motion for new trial.

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).

Plaintiff injured his arm while working at the Employer’s “Docksider” facility.  The Docksider was constructed as a deck barge in 1972.  Twenty-seven years later it was converted to a stationary floating transfer facility.  It receives electricity from a generator on shore.  Further, the Docksider is held in place by two welded I-beam brackets.  It can move vertically to account for the tide and waves, but it cannot transport people or materials.  Following his injury, Plaintiff instituted an action against the Employerunder the Jones Act, 42 U.S.C. § 30104, and the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), 33 U.S.C. § 905(b).

The Eastern District of Louisiana dismissed Plaintiff’s claims with prejudice.  It determined that the Docksider was not a “vessel” under the Jones Act or the LHWCA.  The Docksider’s use for transportation on water was only theoretical.  Since 1999, the Docksider has been permanently moored.  Considering the fact that Employer does not plan to move the Docksider, that it gets electricity from an on-shore generator, and that it would require an eight-man crew a full day to remove the Docksider from its moored position, the Docksider is not considered a “vessel.”

Poolson v. Malley Repairs, Inc., No. 09-7105, 2011 WL 6000873, slip op. (E.D. La. Nov. 30, 2011).

Plaintiff, a Jones Act seaman, instituted a maritime action against his employer to recover for injuries sustained when a skiff he was piloting allided with a bridge.  Additionally, Plaintiff argued that he should recover for the allegedly negligent medical treatment he received immediately after the crash.  The United States Court of Appeals for the Fourth Circuit ultimately agreed with the district court’s decision to dismiss Plaintiff’s Jones Act negligence and unseaworthiness claims.

Further, the Fourth Circuit agreed that Plaintiff’s employer was not liable for the allegedly negligent medical treatment Plaintiff received after his accident.  To be certain, a shipowner can become vicariously liable for a seaman’s injuries when the shipowner selects a doctor who acts negligently. A shipowner’s vicarious liability is based upon the level of control the owner had when selecting the physician.  Where a ship carries an on-board physician employed by the ship, vicarious liability attaches to the shipowner for the physician’s negligence.  Vicarious liability can also attach when the shipowner engages the services of on-shore physicians.  Liability does not attach, however, when the seaman selects his own physician.  Further, when a shipowner merely refers the seaman to a negligent physician, vicarious liability may not attach because of the lack of an agency-based relationship.  Here, Claimant’s physicians were emergency physicians who responded to a 911 call.

Plaintiff made an interesting argument trying to link the 911 call to vicarious liability.  He argued that the employer “constructively selected [the allegedly negligent physicians] by instituting a written emergency response policy that instructs the employees to ‘call 911 first.’”  The Fourth Circuit stated that, while “it is a close question, we conclude that the existence of the ‘call 911 first’ policy alone is insufficient as a matter of law to determine that [the employer] selected or otherwise engaged [the allegedly negligent physicians]….”  Instead, the ‘call 911 first’ policy was “the equivalent of providing each employee with a list of every medical provider in the region,” as opposed to identifying a physician employed, selected or engaged by the employer.

Dise v. Express Marine, Inc., No. 10-1721, 2011 WL 5588913 (4th Cir. Nov. 17, 2011) (unpublished).

A seaman brought suit against his employer, seeking $1 million in damages for reduced earning capacity and $250,000.00 for past and future maintenance and cure.  Plaintiff claimed that in May, 2005 he sustained injury to his back as a result of the employer’s negligence while performing anchor maintenance aboard his vessel.

When the employee reported his alleged injury to his low back, his employer began maintenance and cure payments.  (Maintenance, a daily living allowance and cure, payment for medical treatment the employer is obligated to pay the ill or injured seaman).  By the time the seaman filed his lawsuit in Federal Court in New Orleans, his employer had paid a total of $276,263.36. 

Through discovery, it was established that the seaman intentionally concealed from his employer at the time of his post-hire medical interview significant back injuries, including treatment for back pain in 1997, 1998 and 2000.  He also concealed an MRI conducted on October 24, 2004, revealing an annular disc fissure at L4-5 and disc protrusion at L5-S1 with neural impingement; and a 50-pound lifting restriction from the physician who performed a prior pre-employment physical for Diamond Offshore, a prior employer.

After it discovered that the seaman had concealed his true history of longstanding and well documented low back problems, the employer took two actions.  First, it moved for partial summary judgment to dismiss the seaman’s maintenance and cure claims, pursuant to the precedent set by McCorpen v. Central Gulf S.S. Corp., 396 F.2d 547 (5^th Cir. 1968), (under McCorpen, a Jones Act employer is not bound to make maintenance and cure payments if the employee intentionally withheld pre-existing health conditions material to the employer’s decision to hire him and there is a connection between the withheld pre-existing condition and the injury complained of in the lawsuit.)

The seaman, realizing that the evidence of his deception was indisputable, sought to dismiss his maintenance and cure claim.  Judge Ivan Lemelle, however, granted the motion and dismissed the seaman’s maintenance and cure claim.

The employer then filed a Counterclaim against the seaman seeking restitution of the maintenance and cure payments and brought a motion seeking declaration that it was legally entitled to said restitution.

Judge Lemelle recognized this was an issue that the courts had not previously addressed.  However, the employer contended that the seaman who receives benefits by fraudulently concealing his true medical condition has been unjustly enriched and that restitution is the appropriate remedy.  The employer also relied on Louisiana law principals of unjust enrichment and workers’ compensation laws that allow for restitution based on the employee’s fraud.  The seaman countered saying that the general maritime law does not provide for this remedy, and that the Louisiana Fourth Circuit Court of Appeal had previously rejected such a claim in its 2010 opinion in Cotton v. Delta Queen Steamboat Company.

After a comprehensive analysis of decisions of other courts and various compensation schemes from across the nation, Judge Lemelle concluded that restitution was proper.  He noted, “the facts of this case are unique because the seamen not only failed to disclose his condition during the initial stages of employment, but he also concealed it by failing to timely disclose it to his employer and his own attorney until years later, and then only on the eve of the ruling on the McCorpen issue.  This seaman’s inactions were more than unreasonable; they were intentionally done and void of good faith.”

Significantly, the judge noted that the employer would have a right of credit for its maintenance and cure payments against any judgment it may pay with respect to the seaman’s still viable Jones Act negligence and unseaworthiness claims.

This is an important decision about which maritime employers should be aware.  It recognized the right to restitution and the right of the employer to credit against any adverse judgment on the negligence/unseaworthiness dispute, as the seaman will likely not have the resources to make restitution himself.  See, Boudreaux v. Transocean Deepwater, Inc., 2011 WL 5025268 (E.D. La.).

It should also be noted that this is one of several recent decisions from the U.S. District Judges in New Orleans in which seaman’s claims for maintenance and cure have been dismissed.  If there is clear evidence of fraud or misconduct, the Judges will provide relief to the employer.