Towboat Company’s One-Sided Review of, and Delay in Paying, Seaman’s Maintenance and Cure Claim Draws $300,000 Punitive Damages Judgment
In Stermer v. Archer-Daniels-Midland Co., 2014 WL 25153872014 (La. App. 3d Cir. June 4, 2014), American River Transportation Company (ARTCO) employed Adrienne Stermer as a cook on its towboat. About two weeks into her hitch, while the towboat was facing up to its tow and Stermer was in the galley, kneeling before an open refrigerator, cleaning a steak sauce tray, the vessel’s movements caused her to lose her balance and fall forward. Apparently no one warned her to “watch the bump.” Stermer tried to steady herself by grabbing a shelf inside the refrigerator, but her fingers went through the rack and her right hand was pushed backward. Her knees hit the floor. She tried to use her left hand to brace herself for the fall, but instead rolled onto her right ankle. Nevertheless, she got herself up, brushed herself off, and returned to work. While she had pain and swelling in her hands and right ankle, she just took Advil. Stermer testified she was afraid to report her accident for fear of being fired. But, five days later, when her hands and right ankle continued to swell and she could no longer tie her shoes, Stermer reported her injuries to the boat’s engineer, who informed the pilot. Stermer then completed an ARTCO accident report.
Adrienne Stermer worked as a cook aboard the ARTCO towboat, the M/V COOPERATIVE ENTERPRISE
Three days later, ARTCO put Stermer ashore in Paducah, Kentucky, and to a hospital there. The history of her injuries that Stermer gave to medical personnel at Western Baptist Hospital was consistent with what she had told the engineer and what she had written in her accident report. The ER physician diagnosed bilateral hand and wrist sprains and a right ankle sprain, and prescribed antiinflammatories, pain medication, and an air cast for Stermer’s right ankle. She then returned to her towboat, tried to work, but was relieved, and sent home to Louisiana.
Later, the vessel’s captain and a deckhand testified they were in the galley when Stermer claimed to have been hurt, that there were two bumps during the facing-up, but they did not see her fall into the refrigerator. Just five days after Stermer reported her accident, ARTCO sent Stermer a letter asserting her “recent complaints did not manifest itself [sic] in the service of the vessel” and that it would not pay her maintenance and cure. Three days later, ARTCO sent Stermer another letter, this time to fire her. It wrote her “willful disregard for the truth … demonstrated an unacceptable standard of conduct.”
A hand surgery specialist in Louisiana continued to treat Stermer, at first conservatively, but then with surgery, to repair a scapholunate dissociation. This is a tear in the ligament between the scaphoid and lunate bones in the wrist. This surgeon found Stermer’s injury was not preexisting. ARTCO obtained an “IME,” or “independent medical opinion,” from an orthopedic surgeon who opined the injury was present before the accident aboard the towboat. ARTCO, despite being kept continuously apprised of Stermer’s medical course, and despite Stermer’s demands for maintenance and cure, including a request to pay for her surgery, refused to pay maintenance and cure for two and a half years. It delayed approving the surgery for 27 months, even though its IME physician agreed Stermer needed the surgery.
Stermer brought claims in state court against ARTCO for negligence under the Jones Act and, under the general maritime law, for unseaworthiness, maintenance and cure, and retaliatory discharge. At trial, the judge awarded Stermer on her Jones Act negligence claim nearly $100,000 for lost employee benefits, $337,000 in lost wages, and $200,000 for pain and suffering. The court also found ARTCO’s refusal to pay Stermer maintenance and cure for two and a half years “arbitrary and capricious” and assessed an additional $300,000 in punitive damages and $150,000 in attorney’s fees. The court found she had not proved her unseaworthiness and retaliatory discharge claims.
ARTCO appealed only the punitive damages and attorney’s fee aspects of the trial court’s judgment. The Louisiana appellate court described the seaman’s maintenance and cure claim under the general maritime law, the deferential standard under which it is to be judged, and the consequences maritime employers face when they callously disregard their maintenance and cure obligation.
The appeals court in its opinion wrote how maintenance and cure “is an ancient duty imposed upon the owner of a ship to provide food, lodging and necessary medical services to seamen who become ill or injured during service to the ship” and how “[r]ecovery is not dependent upon negligence of the vessel or the owner and the burden of proof in seeking maintenance and cure is relatively light.” To win a maintenance and cure claim, “a seaman need only prove that the injury arose during his service of the vessel” and the seaman does not even have to prove his or her duties caused the injury.
Continuing, the appeals court noted that while an employer is entitled to investigate a seaman’s claim for maintenance and cure, to rely on recognized defenses to deny benefits when appropriate, and to require corroboration of the claim, the employer cannot be “lax” in its investigation. Further, the court wrote, “when an employer’s investigation of a seaman’s claim reveals that doubts or ambiguities exist as to whether the seaman is entitled to maintenance and cure, they are resolved in favor of the seaman.” “If an employer fails to properly investigate a claim for maintenance and cure or unreasonably rejects a claim after investigating the claim, the employer may be liable for compensatory damages that are a consequence of the failure to pay maintenance and cure. … The employer may also be liable for punitive damages and attorney fees if it is ‘more egregiously at fault’ in denying a proper claim for maintenance and cure. … This higher degree of fault has been explained as ‘callous and recalcitrant, arbitrary and capricious, or willful, callous and persistent.’ … An employer’s failure or refusal to consider the medical evidence of an injury or illness submitted by a seaman in support of his claim for maintenance and cure is grounds for concluding the employer’s failure to institute maintenance and cure is arbitrary and willful.”
The appellate court affirmed the trial court’s $300,000 punitive damages award for willful failure to timely pay maintenance and cure, but sent the case back to the trial court to develop further evidence on the lower court’s attorney’s fee award. It found ARTCO “considered only evidence that indicated the incident Ms. Stermer reported did not occur before denying her claim for maintenance and cure,” yet disregarded seven key facts that supported the validity of Stermer’s maintenance and cure claim. The appeals court held: “The totality of the evidence leads to the conclusion that once ARTCO had evidence that no accident occurred, it did not consider evidence corroborating Ms. Stermer’s claim that she was injured October 9. Under these facts, we find that ARTCO’s investigation of Ms. Stermer’s claim was neither diligent nor reasonable and, therefore, find no manifest error in the trial court’s conclusion that ARTCO was arbitrary and capricious in denying Ms. Stermer’s claim.” The appeals court also tacked-onto the judgment $10,000 for Stermer’s attorney’s fees on appeal.
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Federal Appeals Court Affirms Unseaworthiness Findings and $1.2 Million Pain & Suffering Damages to 52-Year-Old Tug Crewman
I posted in Towboatlaw on this case in January 2013, four days after U.S. District Judge Nina Gershon entered her decision in Harrington v. Atlantic Sounding Co., 2013 U.S. Dist. LEXIS 2988 (E.D.N.Y. Jan. 7, 2013), finding Atlantic Sounding Co., Inc. and Weeks Marine, Inc. negligent under the Jones Act and the tug CANDACE unseaworthy under the general maritime law. She found no contributory negligence and awarded Frederick J. Harrington Jr., 52 at the time of the accident, $478,948 in past lost wages and loss of future earning capacity, $500,000 for past pain and suffering, and $700,000 for future pain and suffering. The defendants appealed to the U.S. Second Circuit Court of Appeals.
Three days ago, in Marasa v. Atlantic Sounding Co., 2014 U.S. App. LEXIS 1073 (2d Cir. Jan. 21, 2014) (unpub.), this appeals court largely affirmed the judgment, which, with prejudgment interest, totaled $1,727,471.16. The Second Circuit only reduced the judgment by $16,308, the sum which the defendants previously paid pursuant to a Claim Arbitration Agreement.
Of particular interest in the appeals court’s decision is its approval of the trial court’s findings in favor of the injured crewman on his claim for general maritime law unseaworthiness, and the trial judge’s award of $1.2 million for past and future pain and suffering damages.
As to unseaworthiness, the Second Circuit wrote how its precedent has long held that a vessel can be unseaworthy if its crew is inadequately trained: “Our precedent recognizes that ‘a vessel being operated by an incompetent captain or crew is considered unseaworthy,'” citing Complaint of Messina, 574 F.3d 119, 127 (2d Cir. 2009), Matter of Guglielmo, 897 F.2d 58, 61 (2d Cir. 1990), Tug Ocean Prince, Inc. v. United States, 584 F.2d 1151, 1155 (2d Cir. 1978), and 1B Benedict on Admiralty § 24 (2004) (recognizing that “an unseaworthy condition . . . on an otherwise fit vessel” can be created by “incompetent training or experience” or “unsafe method of work”).
In affirming Judge Gershon’s assessment of $500,000 in past and $700,000 in future pain and suffering damages, the Second Circuit found, first, that even though the injured crewman, Frederick J. Harrington Jr., died while the appeal was pending (Madeline Marasa is the personal representative of Harrington, in whose name the appeal was defended), the defendants were unentitled to a reduction in his estate’s future pain and suffering damages award. Second, the appeals court discussed how the trial court found “Harrington’s injury resulted in extraordinary pain and suffering, requiring multiple spinal surgeries and daily medication.” Judge Gershon had described in detail Harrington’s two back surgeries and the many activities he could no longer perform, given his injuries. Accordingly, the Second Circuit did not find the $1.2 million pain and suffering damages award excessive, and affirmed.
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Federal Judge Refuses to Enforce Release Deckhand Signed While Unrepresented by Counsel, Lacking Specialized Medical Advice, and Paid Only $860 for Serious Back Injury
While deckhanding for Double J. Marine, LLC aboard its towboat, the M/V MISS KAYLYNN, Matthew Nuber seriously injured his back while pulling on a face wire. On the day of the accident, Nuber only had the benefit of an emergency room physician’s opinion, without any diagnostic testing, such as an x-ray or an MRI, that he had only pulled a muscle. One week later, Nuber returned to the ER where another physician released him to work full duty, still without any diagnostic testing, and without the opinion of a specialist, such as an orthopedic or neurosurgeon.
A deckhand handling a face wire aboard a barge.
Later the same day, deckhand Nuber met with the vessel owner’s claims adjuster at a gas station and signed a “Receipt, Release, and Hold Harmless Agreement.” The adjuster read and explained the release to Nuber and Nuber signed the release, purportedly knowingly giving up all his claims against Double J for the shipboard accident. In exchange for signing the release, Double J paid Nuber only $860. Nuber returned to work for Double J the next day.
About one month later, Nuber’s back pain returned. Double J placed him on light duty, until Nuber could no longer continue to work. Then, Double J finally sent Nuber to see a back specialist, an orthopedic surgeon, who promptly ordered an MRI. The doctor diagnosed Nuber with herniated discs, recommended surgery, and opined the shipboard accident had caused the back injury. Nuber then demanded Double J pay him maintenance and cure under the general maritime law. Double J responded by filing this lawsuit, seeking a declaratory judgment that the release Nuber signed insulated it from Nuber’s claims. Nuber then filed a Jones Act negligence, general maritime law unseaworthiness and maintenance and cure lawsuit against Double J in state court.
In Double J. Marine, LLC v. Nuber, 2013 U.S. Dist. LEXIS 173408 (E.D. La. Dec. 11, 2013), U.S. District Judge Martin L.C. Feldman of the Eastern District of Louisiana denied Double J’s motion for summary judgment, finding there were fact issues as to whether the release was enforceable. Consistent with longstanding admiralty law, Judge Feldman discussed how the courts are charged with being protective of the rights of seamen:
“Seamen are wards of admiralty law, whose rights federal courts are duty-bound to jealously protect. … In protecting their rights, the Court must be ‘particularly vigilant to guard against overreaching when a seaman purports to release his right to compensation for personal injuries.’ … At the same time, however, the Court must balance the utility of maintaining confidence in the finality of such settlements. … In carefully scrutinizing releases or settlement agreements involving seamen, the Court must ultimately determine whether the seaman had ‘an informed understanding of his rights and a full appreciation of the consequences’ of executing the release at the time he executed it.”
Judge Feldman further wrote how the seaman’s employer bears the burden of proving the validity of a release, how the amount of money he or she is paid for the release is significant, as is the nature and extent of any medical and legal advice the seaman had available to him or her when signing the release:
“The party claiming that the matter has been settled bears the burden of demonstrating that a seaman’s release of claims was ‘executed freely, without deception or coercion, and that it was made by the seaman with full understanding of his rights.’ … Adequacy of consideration is one factor for the Court to consider in determining whether the seaman had an informed understanding of his rights. … However, the Court ‘lacks authority, especially where the seaman testifies to complete satisfaction, to void the agreement simply because the court thinks the seaman could have negotiated a better deal.’ … Another factor the Court considers in determining whether the seaman had an informed understanding of his rights is the nature of medical and legal advice available to him. … In this regard, a seaman ‘may have to take his chances’ that a properly diagnosed condition is ‘more serious and extensive than originally thought.’ … Other factors the Court considers include whether the parties negotiated at arm’s length and in good faith, and whether there is the appearance of fraud, deception, coercion, or overreaching.”
Here, Judge Feldman had to review competing versions of the gas station release signing: a transcript of the “ceremony” versus an affidavit from Nuber. He concluded the release could not be summarily enforced against Nuber. The Court’s analysis:
“Double J. contends that the record establishes that, at the time of releasing his rights, Nuber had an informed understanding of his rights and a full appreciation of the consequences. The Court disagrees. The record includes, on the one hand, a transcript of the meeting between Nuber and the adjuster in which Nuber indicated that he understood his rights and agreed to release them, and on the other, an affidavit executed by Nuber in which he swears he did not fully understand the ramifications of the release. That alone creates a genuine issue regarding whether Nuber executed the release freely and with a full understanding of his rights.”
* * *
“The record also reveals that Nuber has only completed the 10th grade in special education classes, that he only received $530 in [new] consideration for settlement, and that he was not represented by counsel when he executed the release. ‘Although a court may uphold a release even when the seaman is not represented by his own attorney, [the Fifth Circuit] has repeatedly emphasized the importance of counsel in determining whether a seaman fully understood his rights and the consequences of releasing those rights.’ … Neither did Nuber receive an independent medical opinion regarding his injuries before executing the release.”
* * *
“Double J. contends that the record clearly establishes that Nuber received adequate medical advice. The Court again disagrees. The record reveals that, before he signed the release, Nuber was treated twice at River Parishes Hospital where he was diagnosed with a pulled muscle and told to return to work. The emergency room physicians did not conduct any diagnostic testing, and did not refer Nuber to a specialist. When Nuber later sought more treatment, Dr. Nutik ordered an MRI, diagnosed Nuber with herniated discs, and recommended surgery. The record at least reveals a genuine issue regarding the adequacy of the medical advice Nuber initially received, if not a mutual mistake regarding the nature of Nuber’s injury.”
* * *
“Finally, although Double J. maintains that the parties negotiated at an arm’s length and in good faith, the record shows that Nuber signed the release at a gas station on the very same day he received treatment. Double J. has failed to meet its burden of establishing that Nuber signed the release freely, without deception or coercion, and with a full understanding of his rights.”
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Tug Operator’s Lack of Training and Procedures Lead to Deckhand’s Crushing Death in Capstan and $1.6 Million Judgment
Two days after Christmas 2009 aboard the Tug TURECAMO GIRLS, deckhand Ricardo Young was crushed to death in the tug’s capstan. Medical experts testified Young was conscious for over two minutes to experience his body being torn apart as the towing line, attached to a sludge barge weighing 15 million pounds, wrapped him around the capstan while the captain attempted a “swing maneuver” on the Hackensack River. The case was tried to the bench. In In re Moran Towing Corp., 2013 U.S. Dist. LEXIS 161482 (S.D.N.Y. Nov. 11, 2013), the court found Moran directly and vicariously negligent under the Jones Act and its tug unseaworthy under the general maritime law.
The Tug TURECAMO GIRLS
The court found:
“Moran failed to adequately implement any procedures or guidelines that would provide its crew with the requisite training, skill and knowledge to safely perform a swing maneuver, operate the capstan or handle towlines. … In fact, Moran issued no policies as to line-handling whatsoever, including ongoing training or standards for handling a line under strain. Additionally, Moran did not provide a safe work environment in which to handle the capstan, forcing Young to operate in a danger zone. These failures proximately contributed to Young’s death.”
The court further found:
“Moran also failed to provide any written policies or safety procedures regarding the swing maneuver as required under the ISM [International Safety Management Code] and RCP [American Waterways Operators Responsible Carrier Program]. Moran adheres to the ISM and the RCP, which respectively require that ‘the company should establish procedures, plans and instructions, including checklists as appropriate, for key shipboard operations concerning the safety of the personnel’ and ‘establish documented procedures for the use of . . . winches.’ … The capstan is a type of winch, and line-handling is arguably the most important ‘shipboard operation.’ … Despite subscribing to these safety requirements, Moran did not have any written guidelines, instructions or procedures whatsoever for line handling during swing maneuvers or capstan operations. … Moran did not have a risk assessment for a swing maneuver or handling lines under pressure, or safety procedures for capstan operations in any of its Port Advisories or safety meetings, or require its captains and crews to dedicate time during the safety meetings to discuss or practice the swing maneuver or capstan operations for lines under strain. … Additionally, Moran’s [safety and operations manual] contains no instructions with respect to line handling or the swing maneuver.”
The court held Moran had failed to prove it was entitled to limit its liability under the Vessel Owners’ Limitation of Liability Act and that Young’s widow and estate were entitled to about $1.6 million in damages.
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Influential U.S. 5th Circuit Court of Appeals: Jones Act Seaman Can Recover Punitive Damages In General Maritime Law Unseaworthiness Claim
In McBride v. Estis Well Service, L.L.C., 2013 U.S. App. LEXIS 20187 (5th Cir. Oct. 2, 2013), a panel of the U.S. Fifth Circuit Court of Appeals, one of, if not the, most respected federal appellate courts when it comes to the development of maritime law in the United States, found that the Jones Act, which has been held to prohibit the recovery by seamen of non-pecuniary damages in a negligence claim brought under that statute, was no bar to the recovery of a form of non-pecuniary damages, specifically punitive damages, under the general maritime law in a seaman’s unseaworthiness action. The Court described how punitive damages were available under the general maritime law long before the passage in 1920 of the Jones Act, and how the Jones Act did not expressly eliminate such damages.
The Fifth Circuit navigated around the Supreme Court’s decision in Miles v. Apex Marine Corp., 498 U.S. 19 (1990), by following the Supreme Court’s more recent decision in Atlantic Sounding Co., Inc. v. Townsend, 557 U.S. 404 (2009). In Townsend, the Supreme Court wrote:
“Because punitive damages have long been an accepted remedy under general maritime law, and because nothing in the Jones Act altered this understanding, such damages for the willful and wanton disregard of the maintenance and cure obligation should remain available in the appropriate case as a matter of general maritime law. Limiting recovery for maintenance and cure to whatever is permitted by the Jones Act would give greater pre-emptive effect to the Act than is required by its text, Miles, or any of this Court’s other decisions interpreting the statute.”
The Fifth Circuit in McBride v. Estis Well Service, L.L.C built on the foundation excavated by the Supreme Court in Townsend, writing:
“…Townsend established a straightforward rule going forward: if a general maritime law cause of action and remedy were established before the passage of the Jones Act, and the Jones Act did not address that cause of action or remedy, then that remedy remains available under that cause of action unless and until Congress intercedes.”
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We viewed this as a good decision for our clients and the river industry workers we regularly represent. Unfortunately, on September 25, 2014, all the judges of the Fifth Circuit Court of Appeals, sitting en banc, revisited this decision and overruled it, and on May 18, 2015, the U.S. Supreme Court decided not to review that decision. Perhaps after this issue has been addressed by other federal circuit courts of appeal, and conflicts develop amongst the circuits, the U.S. Supreme Court will agree to address the issue of the recoverability by Jones Act seamen of both punitive and loss of consortium / loss of society damages under the general maritime law. We believe they are recoverable under the sound logic of the U.S. Supreme Court’s 2009 decision in Atlantic Sounding Co. v. Townsend.
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