Employer Not Automatically Entitled to Restitution for Maintenance and Cure Paid to Seaman Who Intentionally Misrepresents or Conceals Pre-existing Medical Condition
In Boudreaux v. Transocean Deepwater, Inc., 2013 U.S. App. LEXIS 5288 (5th Cir. Mar. 14, 2013), the U.S. Fifth Circuit Court of Appeals, perhaps the country’s most experienced and prolific appellate court in admiralty and maritime cases, in an opinion authored by Judge Patrick E. Higginbotham, reaffirmed the judiciary’s historical deference to seamen.
Before Wallace Boudreaux began work as a Jones Act seaman for Transocean, he answered “no” on the employer’s pre-employment medical questionnaire which asked if he had a history of back troubles. After five months of working for Transocean, Boudreaux said he’d injured his back while servicing equipment. Transocean then paid him maintenance and cure for nearly five years. Boudreaux later sued Transocean alleging it had failed to properly fulfill its general maritime law maintenance and cure obligation to him.
In the discovery phase of Boudreaux’s lawsuit, Transocean found out Boudreaux had had a history of back problems before he began work for Transocean. It then filed an unopposed motion for partial summary judgment on Boudreaux’s claim for further benefits, invoking McCorpen v. Central Gulf Steamship Corp., a 1968 Fifth Circuit Court of Appeals decision. McCorpen holds that a maritime employer does not owe its seaman employee maintenance and cure if it can show the seaman intentionally misrepresented or concealed a pre-existing medical condition that, had it known about at the time of hiring, it would not have hired the person. But Transocean went a step further. It filed a counterclaim against Boudreaux seeking to recoup the money it had paid Boudreaux and his medical providers. It claimed that since it successfully established its McCorpen defense, it should automatically be entitled to these funds. The Fifth Circuit disagreed.
The New Orleans-based appellate court wrote that a “maritime employer’s obligation to pay an injured seaman maintenance and cure is an essential part of the employment relationship, whether characterized as contractual or otherwise.” The court noted that in cases where the seaman does not have a Jones Act negligence or general maritime law unseaworthiness-based damages verdict against the employer which such a restitution claim might merely offset, “the employer would gain an affirmative judgment against the seaman. Although most likely uncollectible, the judgment would stand as a serious impediment to the seaman’s economic recovery, and its threat would have a powerful in terrorem effect in settlement negotiations.”
The Fifth Circuit was also reluctant to adopt Transocean’s argument because it is easier for the employer to escape maintenance and cure liability under the McCorpen rule than it would be to prove the seaman committed fraud. Under McCorpen, the employer need only show the seaman had an objective intent to conceal, that he or she “failed to disclose medical information in an interview or questionnaire that is obviously designed to elicit such information.”
Whereas, to win a fraud claim, one must show the alleged fraudster had a subjective intent to defraud, that is, the plaintiff in such a claim must show the person actually, in their mind, intended to defraud, or as the court described it here, “fraud hinges on the subjective state of mind of the alleged wrongdoer.” The court also noted issues of fraud are usually left to a jury to decide and should not be decided on summary judgment by a judge.
Taking the above into account and also the history of solicitude courts have shown to seamen, the court wrote, “a restitution-via-McCorpen counterclaim would, in practice, threaten injured seamen with the specter of crushing liability for misstatements found material. With respect, such a result is inimical to the existing fabric of maritime law.” It concluded:
“We are offered no reason to depart from precedent. There is only the change of advocates and judges, by definition irrelevant to the settling force of past jurisprudence — always prized but a treasure in matters maritime. All this against the cold reality that the sea has become no less dangerous, and the seaman no less essential to maritime commerce.”
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Materials Vessel Operator Provides to U.S. Coast Guard to Further Agency’s Marine Casualty Investigation Not Exempt From Discovery by Injured Claimant
Patricia Guest, one of about 4,500 passengers and crew aboard the CARNIVAL SPLENDOR cruise liner in November 2010, allegedly slipped and fell, injuring her shoulder. She claimed in a personal injury lawsuit against Carnival Corporation her accident occurred while the vessel, including its stabilizers, was disabled and adrift following an engine room fire and that the ship “violently lurched,” causing her fall.
Cruise liner CARNIVAL SPLENDOR
The U.S. Coast Guard conducted an investigation into the engine room fire and the failure of the ship’s automatic CO2 fire suppression system to deploy. Guest’s lawyers, as part of her lawsuit’s discovery process, asked Carnival for photographs it had taken, communications between it and the Coast Guard with respect to this investigation, and reports, memoranda, and documents Carnival had submitted to the Coast Guard. In response, Carnival claimed a federal law protected it from having to turn over the materials it had given to the Coast Guard.
The federal statute in question, codified at 46 U.S. Code Section 6308, is entitled “Information barred in legal proceedings.” It states, in pertinent part:
“…no part of a [U.S. Coast Guard] report of a marine casualty investigation…including findings of fact, opinions, recommendations, deliberations, or conclusions, shall be admissible as evidence or subject to discovery in any civil or administrative proceedings, other than an administrative proceeding initiated by the United States” and “[a]ny member or employee of the Coast Guard investigating a marine casualty…shall not be subject to deposition or other discovery, or otherwise testify in such proceedings relevant to a marine casualty investigation, without the permission of the Secretary [of the Department of Homeland Security].”
A Coast Guard regulation, appearing at 46 C.F.R. § 4.07-1(b), states the “investigations of marine casualties and accidents and the determinations made [by this agency] are for the purpose of taking appropriate measures for promoting safety of life and property at sea, and are not intended to fix civil or criminal responsibility.”
In Guest v. Carnival Corp., 2012 U.S. Dist. LEXIS 184936 (S.D. Fla. Nov. 7, 2012), a U.S. Magistrate Judge found that when reading Section 6308 together with Section 4.07-1(b), “it is clear that the scope of the statutory protection [of Section 6308] is limited to the Coast Guard’s investigative report, and anything included within that report, in order to avoid having the Coast Guard’s investigative report and its conclusions influence the litigation process.” But, the Court found, Section 6308 did not protect vessel owners like Carnival from having to hand-over to parties like Guest the materials Carnival had provided to the Coast Guard in furtherance of the Coast Guard’s investigation. The Court wrote:
“Ultimately, the issue before this Court is whether or not the material that Defendant produced to the Coast Guard is precluded from discovery pursuant to 46 U.S.C. § 6308(a). Defendant has failed to provide the Court with any compelling support for that proposition, and this Court has been unable to find the same independently. In addition, a review of the applicable case law unequivocally demonstrates that 46 U.S.C. § 6308(a) extends to the specific Coast Guard investigative report and, arguably, any other Coast Guard document produced in the course of its investigation that contains any findings of fact, opinion or conclusions – not, however, a litigant’s own documents. Accordingly, Defendant’s objections are overruled…..Defendant shall produce copies of all documents, photographs and any other materials provided to any governmental agency, classification society or flag state, including but not limited to the U.S. Coast Guard, in connection with the fire; the failure of the fire suppression systems; and the loss of propulsion aboard the vessel. Defendant shall produce the above-described documents within seven (7) days of this Order.”
About two months later, the parties announced to the Court the case had settled.
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Jury Awards $100,000 in Punitive Damages to Whistleblower Engineer Under Seaman’s Protection Act
Jeffrey Polek, a newly-licensed engineer aboard Grand River Navigation Co., Inc.’s M/V MANISTEE, reported to the U.S. Coast Guard a fracture in the vessel’s side shell, after his reports of the fracture to company personnel were shrugged off. A Michigan federal court jury decided Grand River “unlawfully terminated Plaintiff’s employment because of his good faith report of the hull fracture to the Coast Guard, and further found that Defendant’s retaliatory conduct toward Plaintiff merited an award of punitive damages to punish Defendant for its wrongful conduct.” In Polek v. Grand River Navigation, 872 F. Supp. 2d 582 (E.D. Mich. 2012), the jury awarded Polek $1,000 in statutory damages, $33,500 in compensatory damages, and another $100,000 in punitive damages. In awarding punitive damages, the jury found, and the federal district court agreed, the vessel owner’s conduct was unreasonable and reprehensible.
M/V MANISTEE
At trial, Grand River downplayed the severity of the hull fracture. The Court found, however:
“…there was evidence that the fracture was below the waterline when the vessel was in a loaded configuration and was the type of damage about which the Coast Guard expected to be notified. Both Captain Brezinski and first mate George Bouhall testified at trial that they were admonished by the Coast Guard for not reporting the hull fracture. While Plaintiff acknowledges that Defendant is correct in observing that it was not ‘cited’ by the Coast Guard, Plaintiff notes that the Coast Guard still issued a Form CG 835 which is a directive to effectuate repairs in a specified period of time—here, immediately upon the vessel’s return to Cleveland.”
The Court also found that Polek repeatedly expressed his “concern not only for his own safety, but the safety of his fellow shipmates,” and that Grand River “disregarded his legitimate concerns.”
Polek presented evidence at trial showing that Grand River’s conduct in concealing facts from the Coast Guard was not an isolated occurrence. In response to Polek’s expression of “legitimate and bonafide safety concerns,” Grand River personnel labeled Polek a “potential liability to the company,” called his concerns the “non-sensical ravings of a junior engineer,” and branded him a “weenie.”
In addition to assessing punitive damages, to emphasize their feelings about Grand River’s conduct, the jury returned a note along with their verdict which stated:
“On [b]ehalf of the jury we wish to extend one additional comment to Grand River Navigation Co., Inc. After extensive discussion regarding the content of the case we collectively recommend that the company invest the resources necessary to improve the management skills of their organization’s structure.”
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The Seaman’s Protection Act, enacted by the U.S. Congress in 2010, codified at 46 U.S. Code § 2114, formally entitled, “Protection of seamen against discrimination,” provides as follows:
(a)
(1) A person may not discharge or in any manner discriminate against a seaman because—
(A) the seaman in good faith has reported or is about to report to the Coast Guard or other appropriate Federal agency or department that the seaman believes that a violation of a maritime safety law or regulation prescribed under that law or regulation has occurred;
(B) the seaman has refused to perform duties ordered by the seaman’s employer because the seaman has a reasonable apprehension or expectation that performing such duties would result in serious injury to the seaman, other seamen, or the public;
(C) the seaman testified in a proceeding brought to enforce a maritime safety law or regulation prescribed under that law;
(D) the seaman notified, or attempted to notify, the vessel owner or the Secretary of a work-related personal injury or work-related illness of a seaman;
(E) the seaman cooperated with a safety investigation by the Secretary or the National Transportation Safety Board;
(F) the seaman furnished information to the Secretary, the National Transportation Safety Board, or any other public official as to the facts relating to any marine casualty resulting in injury or death to an individual or damage to property occurring in connection with vessel transportation; or
(G) the seaman accurately reported hours of duty under this part.
(2) The circumstances causing a seaman’s apprehension of serious injury under paragraph (1)(B) must be of such a nature that a reasonable person, under similar circumstances, would conclude that there is a real danger of an injury or serious impairment of health resulting from the performance of duties as ordered by the seaman’s employer.
(3) To qualify for protection against the seaman’s employer under paragraph (1)(B), the employee must have sought from the employer, and been unable to obtain, correction of the unsafe condition.
(b) A seaman alleging discharge or discrimination in violation of subsection (a) of this section, or another person at the seaman’s request, may file a complaint with respect to such allegation in the same manner as a complaint may be filed under subsection (b) of section 31105 of title 49. Such complaint shall be subject to the procedures, requirements, and rights described in that section, including with respect to the right to file an objection, the right of a person to file for a petition for review under subsection (c) of that section, and the requirement to bring a civil action under subsection (d) of that section.Share on:
Unseaworthiness Under the General Maritime Law: Court Decision Highlights Jones Act Seaman’s Powerful Claim to Recover for Injury
In Laborde v. SGS North America, Inc., 2012 U.S. Dist. LEXIS 170544 (M.D. La. Nov. 29, 2012), Brent Laborde sued his employer, SGS, as a seaman under the Jones Act, 46 U.S.C.A. § 30104, for personal injuries he
sustained while moving a heavy coil of rope aboard the M/V Helen G, which was also owned, operated, and maintained by SGS. He claimed SGS was negligent and the M/V Helen G was unseaworthy. SGS filed a motion for partial summary judgment, asking the federal trial court to dismiss Laborde’s unseaworthiness claim. In his opinion denying SGS’s motion, Judge James J. Brady of the U.S. District Court for the Middle District of Louisiana reviewed the law on the vessel owner’s warranty of seaworthiness which it owes its crewmembers, and what can constitute an “unseaworthy” condition aboard a vessel.Citing the U.S. Supreme Court’s decision in Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 550, (1960), the Baton Rouge-based court discussed how a shipowner’s warranty of seaworthiness encompasses a duty to “furnish a vessel and appurtenances reasonably fit for their intended use.” Other courts have explained this duty as requiring the vessel owner to “provide a vessel, including her equipment and crew, which is reasonably fit and safe for the purpose for which it is to be used.” Boudreaux v. United States, 280 F.3d 461, 468 (5th Cir. 2002). Unseaworthiness can also be “manifested by an unsafe method of work, such as the failure by a shipowner to provide adequate equipment for the performance of an assigned task.” Johnson v. Offshore Express, Inc., 845 F.2d 1347, 1354-1355 (5th Cir. 1988).
In Usner v. Luckenbach, 400 U.S. 494, 498 (1971), the Supreme Court held that “unseaworthiness is a condition, and how that condition came into being – whether by negligence or otherwise – is quite irrelevant to the owner’s liability for personal injuries resulting from it.”
To win an unseaworthiness claim, the seaman plaintiff must also establish causation, that is, prove that the “unseaworthy condition played a substantial part in bringing about or actually causing the injury and that the injury was either a direct result or a reasonably probable consequence of the unseaworthiness.” Johnson v. Offshore Express, Inc., 845 F.2d at 1354.
Under the general maritime law, there is a difference between “transitory unseaworthiness,” which subjects a vessel owner to liability, and “instant unseaworthiness,” caused by a single, unforeseeable act of operational negligence, which does not. A transitory unseaworthy condition, like a permanent defect, will render a ship unseaworthy.
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New York State’s Highest Court Dismisses Claim That State Inspectors Failed to Certify Safe Passenger Capacity of Tour Boat “Ethan Allen”
Tour boat Ethan Allen in operation sometime before it capsized and sank on October 2, 2005
The New York Court of Appeals on November 29, 2012, resolved the issue of whether the State of New York “can be held liable to individuals who were injured and the personal representatives of those who lost their lives due to the tragic capsizing of a public vessel — the Ethan Allen.” The court, in Metz v. State of New York, held “that because the State owes no special duty to these claimants, the claims that the State’s inspectors failed to certify safe passenger capacity on the vessel must be dismissed.”
Forty-seven mostly elderly passengers were aboard the tour boat “Ethan Allen” on October 2, 2005, for what was to be a one-hour cruise to view foliage along Lake George. The boat suddenly capsized and sank in 70-feet deep waters. Twenty passengers died. Several others were injured. As a “public vessel,” the Ethan Allen was subject to yearly state inspections, following which an inspector appointed by the Commissioner of the New York State Office of Parks, Recreation and Historic Preservation would issue a certificate indicating the vessel’s maximum passenger capacity. When the Ethan Allen sank, it was carrying 47 passengers and one crewmember, thus within the 48-passenger limit set forth in its state-issued certificate of inspection.
New York’s “Navigation Law” requires a certificate of inspection to operate a a public vessel upon the state’s waters. A state inspector must carefully examine the vessel and its equipment and only if satisfied that the vessel is in all respects safe and conforms to the requirements of the Navigation Law execute the certificate of inspection. The state inspector is also required to set forth in the certificate of inspection the number of passengers the vessel can safely transport and the number of crewmembers necessary to safely operate the vessel.
The Ethan Allen after it was raised from 70 feet of water in Lake George
The Ethan Allen was built in 1964 and first inspected by the U.S. Coast Guard. The vessel’s last U.S. Coast Guard-issued certificate of inspection stated its maximum passenger capacity was 48 persons and that two crewmembers were required to be aboard. Testimony in the case indicated that when New York took over issuing the Ethan Allen’s certificate of inspection in 1979, until the date of the accident, the boat’s passenger capacity remained at 48. The boat’s passenger capacity remained unchanged even though its owners modified it in 1989 by replacing its canvas canopy with a heavier one made of wood. Several state inspectors testified they did not independently verify the vessel’s passenger capacity by conducting a stability test, but rather relied on the number certified from the previous year. One inspector agreed the passenger capacity figure was simply “rubber stamped,” based on the previously-issued capacity figure from the prior certificate of inspection. Another inspector referred to the Coast Guard COI’s passenger capacity number as “gospel.”
The New York Court of Appeals agreed with the plaintiffs that “[t]he 48-passenger limit certified by the State inspectors was, however, much higher than the level at which the vessel could safely be operated. Notably, since this accident, the State has increased the average weight per passenger from 140 pounds — an approximation apparently adopted in the 1950s and utilized by the Coast Guard — to 174 pounds.” The plaintiffs sued the State of New York, claiming it was “negligent in certifying an unsafe passenger capacity, resulting from the use of outdated passenger weight criteria, and in failing to require a new stability assessment after the vessel had been significantly modified.” In response, the state raised several affirmative defenses, including governmental immunity, which was the primary focus of the appeal to the New York Court of Appeals.
The Court of Appeals wrote that its prior decisions had established that “claimants must first establish the existence of a special duty owed to them by the State before it becomes necessary to address whether the State can rely upon the defense of governmental immunity,” and that “it is well settled that the State ‘is not liable for the negligent performance of a governmental function unless there existed ‘a special duty to the injured person, in contrast to a general duty owed to the public.'”
The Court of Appeals held the inspections of the Ethan Allen were “governmental functions” and that “in the absence of some special relationship creating a duty to exercise care for the benefit of particular individuals, liability may not be imposed on a municipality for failure to enforce a statute or regulation.” The Court held that while “[t]he statutory scheme at issue here does require inspectors to issue a certificate of inspection indicating that the vessel is safe and, specifically, certifying the number of passengers the vessel can safely transport…these statutory obligations do not create a special duty of care owed by the State to particular passengers.” Further, the court found that “recognizing a private right of action would be incompatible with the legislative design. The Navigation Law does not provide for governmental tort liability, but instead for fines and criminal penalties to be imposed upon vessel owners and operators.” The court found that when the state leglislature amended the Navigation Law in response to the Ethan Allen tragedy, “it imposed additional safety standards and enhanced certain penalties, but still did not provide for a private right of action.” Thus, the court wrote, “[u]nder these circumstances, we can infer that the Legislature has determined that these penalties are the best way to enforce violations of the Navigation Law and that the failure to establish a private right of action against the State was deliberate.”
The court concluded: “Although the law is clear, the upshot is that, regardless of any negligence on the part of the State, the victims of this disastrous wreck are essentially left without an adequate remedy. The Legislature currently has a proposal before it to require public vessels to carry marine protection and indemnity insurance (2011 NY Assembly Bill A6699). We note that such a requirement — had it existed — might have been able to provide a modicum of relief here.”
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