Maintenance and Cure Update

MLA Fall Meeting - October 22, 2015

Aaron GreenbaumPusateri, Barrios, Guillot &

Greenbaum, LLC

The ongoing maintenance and cure obligation Arctic Storm, Inc. v. Madrid, 2015 U.S. Dist. LEX IS

102323 (W.D. Wash. May 22, 2015)

o Shipowner did not pay maintenance from date of fire-incident on vessel through first the crewmembers’ first medical appointments

o Shipowner required ongoing medical records before paying maintenance installments

o Back maintenance ordered - the incident was the “triggering” event for commencement of the maintenance and cure obligation

o Seaman has no obligation to supply updated records before receiving each new installment of maintenance

The Collateral Source Rule Blanchard v. United States, 2014 U.S. Dist. LEX IS

131958, 2014 A M C 2888 (W.D. La. Sept. 19, 2014)

o USACE vessel's wake caused injury to third-party pushboat’s deckhand – USA found 100% at fault at trial

o Plaintiff claimed past medical expenses and pushboat owner cross-claimed against USA for contribution for maintenance and cure

o USA argued that it was paying twice for the same damages, which would run afoul of the policy to avoid “overdeterrence and overcompensation.”

o Collateral Source Rule applied, although potentially “troubling,” USA ordered to play plaintiff’s damages and contribution to pushboat owner

Procedure for compelling maintenance and cure Helix Energy Solutions Group, Inc. v. Howard, 452 S.W.3d

40 (Tex. App. Houston-14th Dist. 2014)

o Texas state law applied to procedural issue of whether plaintiff could bring “Motion to Compel” payment of M&C

o Trial court's order compelling M&C = mandatory injunction

o Order compell ing M&C fai led to comply with Texas Rule of Civi l Procedure 683 and was void

o Seaman seeking relief must file MSJ or seek M&C trial on the merits

The automatic bankruptcy stay and maintenance and cure claims Bratkowski v. Cal Dive Int'l, Inc., 2015 U.S. Dist.

LEXIS 51643 (E.D. La. Apr. 20, 2015)

o Seaman filed suit under the Jones Act and for maintenance and cure

o Employer filed for Chapter 11 bankruptcy one month later and terminated ongoing maintenance and curative treatment

o Employer invoked the automatic bankruptcy stay under 11 U.S.C. § 362(a)

o The automatic stay suspended the district court’s “authority to continue the judicial proceedings pending against the debtor.”

o Seaman required to seek relief from the stay in the bankruptcy court, but district court noted “ongoing” duty to pay maintenance and cure

Direct actions against insurers for maintenance and cure Bratkowski v. Aspen Ins. UK, Ltd., 2015 U.S. Dist. LEXIS

78536, 2015 AMC 1567 (E.D. La. 2015)

o Following employer filing bankruptcy, seaman brought suit under Louisiana Direct Action statute against insurer for maintenance and cure

o Insurer argued that Louisiana direct action was not applicable – the accident occurred on the high seas on a vessel located on the OCS, not within the territorial waters of the State of Louisiana

o MSJ denied - genuine issues of material fact remained as to whether the failure to pay maintenance and cure resulted in an injury that “occurred in Louisiana.”

Borrowed Servant Doctrine and the maintenance and cure obligation In re Weeks Marine, Inc., 2015 U.S. Dist. LEXIS

8489, 2015 AMC 507 (M.D. La. 2015)

o Shipowner entered into a contract with a staffing service agency, in which would provide supplemental staffing of workers for shipowner

o Plaintiff signed an Employment Agreement with staffing agency to work as a crane operator for shipowner

o Plaintiff was injured while working for shipowner, staffing agency initially paid benefits and thereafter sought to terminate because plaintiff was a “borrowed servant” of the shipowner

o Applying the 9 factors in Ruiz v. Shell Oil Co., district court found plaintiff to be a borrowed servant of shipowner – staffing agency’s obligation to pay M&C terminated, shipowner ordered to institute payment

When is Maximum Medical Improvement reached? Hedges v. Foss Mar. Co., 2015 U.S. Dist. LEXIS 10510

(W.D. Wash. Jan. 29, 2015)o Seaman had undergone five surgeries for his lower back and

was recommended a surgical, trial spinal chord stimulator implant

o SCS = “an implanted, programmable neurotransmitter that interrupts pain signals to the brain by delivering small electrical impulses to the spinal column through stimulation leads.”

o Employer’s expert stated that stimulator was a palliative technique that did not address the cause of the patient's pain

o “Even if the distinction between curative and palliative treatment is relevant before maximum cure has been reached, cure includes all treatment that improves function. A treatment is curative even if the increased function is accomplished primarily through pain relief”

The McCorpen Defense

o A seaman who “knowingly fails to disclose a pre-existing physical disability during his or her pre-employment physical examination" may not recover maintenance and cure.”

o In order to establish a McCorpen defense, an employer must show that (1) the claimant intentionally misrepresented or concealed medical facts; (2) the non-disclosed facts were material to the employer's decision to hire the claimant; and (3) a connection exists between the withheld information and the injury complained of in the lawsuit.

Meche v. Doucet, 777 F.3d 237 (5th Cir. 2015)

o Even if a seaman’s current employer did not subject him to a pre-employment examination or interview, if its predecessor company did, then the current employer was entitled to rely on the plaintiff’s representations

o Seaman claimed that his niece had completed his medical questionnaire and he had simply signed it without first reading it. Also claimed that he had verbally notified his employer of his past injuries after completing the questionnaire

o “If a seaman intentionally provides false information on a pre-employment medical questionnaire and certifies that the information therein is true and correct, that seaman may not later argue that his concealment was not intentional based on his statement, which the employer disputes, that he verbally disclosed medical information that contradicted the written questionnaire.”

Bosarge v. Cheramie Marine LLC, 2015 U.S. Dist. LEXIS 101768

(E.D. La. Aug. 4, 2015)o Seaman suffered a back injury prior to the incident, which he

did not disclose on his pre-employment medical questionnaire

o McCorpen MSJ denied. Genuine issues of facts existed as to whether:

o The concealed information would have affected the employer’s decision to hire the plaintiff, as his prior injury was “extremely minor”; and

o That the “plaintiff had subsequently been cleared for full work duty by a prior employer”

o Court relied on MRI results from a prior employer in 2013 that were returned normal, clearing plaintiff to work full duty

Foret v. St. June, LLC, 2014 U.S. Dist. LEXIS 127317 (E.D. La. Sept. 11, 2014)

o Court applied the McCorpen defense, notwithstanding that the fact that the seaman was not required to complete a pre-employment medical questionnaire OR undergo a pre-employment physical

o Seaman voluntarily informed employer that he had previously had neck and shoulder surgery, but failed to inform as to previous back condition

o Seaman told his employer that he was “healed” at the time of the interview, which was “entirely inconsistent” with his medical history

o Seaman knew that the disclosure of his pre-existing back and neck injuries was “plainly desired” by the employer and the seaman had “intentionally concealed and misrepresented the existence and extent of these injuries,” McCorpen defense applied

Punitive DamagesCampbell v. Offshore Liftboats, LLC, 2015 U.S. Dist. LEXIS

34981,2015 AMC 1075 (E.D. La. March 20, 2015)o Seaman argued that employer had delayed its maintenance

and cure investigation and failed to pay benefits timely. Court disagreed.

o Upon receipt of maintenance and cure demand, employer began investigation into his work history and to determine, first, whether the plaintiff was a seaman under the Jones Act and the appropriate rate of compensation without proof of the plaintiff’s incurred food, lodging or medical expenses

o Maintenance and cure instituted within 10 days and without any supports for daily living expenses, maintenance instituted at $35.00 a day – the court dismissed seaman’s claim for punitive damages

Hicks v. Tug Patriot, 783 F.3d 939 (2d Cir. 2015)

o Seaman injured his shoulder in the service of the vessel and subsequently underwent surgery – shipwowner hired a PI who videotaped the seaman planting a small tree and playing with his grandson

o When treating physician requested authorization for additional MRI, shipowner provided the surveillance and “falsely” suggested that seaman’s job was light duty

o Seaman found fit for duty, employer terminated maintenance and cure

o Under “severe” financial stress from being paid maintenance at $15.00 a day, which was terminated, plaintiff returned to work while still injured, house put into foreclosure, and unable to pay health insurance

Hicks v. Tug Patriot, 783 F.3d 939 (2d Cir. 2015), cont’d

o Jury found that shipowner’s failure to pay maintenance and cure was “unreasonable and willful” and awarded $123,000 in punitive damages

o Based on the finding of willfulness, the district court, upon a motion under Fed. R. Civ. P. 54(d), granted the plaintiff an additional $112,083.77 in attorney's fees

o U.S. Second Circuit affirmed the decision, diverging from prior precedent and holding that the amount of recoverable punitive damages is not limited to the amount of reasonable attorney’s fees, which are available when the refusal to pay maintenance is “willful.”

Jefferson v. Baywater Drilling, LLC, 2015 U.S. Dist. LEXIS 9314,

2015 AMC 571 (E.D. La. Jan. 27, 2015)o Seaman incurred a disabling skin condition working aboard the

vessel

o Shipowner’s human resources manager’s maintenance and cure investigation consisted of speaking with plaintiff’s coworkers and reviewing incident report – decided it was pre-existing herpes or condition related to reaction to medicine brought aboard vessel

o No further investigation, no review of medical records, no request that seaman undergo test for herpes or allergic reaction to medication – maintenance and cure denied

o Maintenance and cure investigation was “impermissibly lax,” “arbitrary and capricious,” and following bench trial, court awarded $10,000 in punitive damages