SUMMER 2014 BODILY INJURY NEWS...Summer 2014 Bodily Injury News 3 How to evaluate claims of...

BODILY INJURY NEWSSUMMER 2014

The journal of the Thomas Miller Americas’ bodily injury team

The post traumaticstress disorder trap

Hidden surprises intowage contracts

How to evaluate claimsof traumatic brain injury

EDITORIAL

2 Bodily Injury News Summer 2014

Save the dateSet aside September 18th tojoin us at our Bodily InjurySeminar, at our offices inJersey City, New Jersey. Thisyear, the single-day formatwill focus on updates andrecent developmentsincluding procedural

differences between arbitration and trials, andresponding to adverse jury verdicts. This year, wealso have a guest speaker who will provide anoverview of the Costa Concordia salvage operation.The event is always extremely popular, combiningexpert instruction with engaging and practicalhands-on case studies and workshops. The seminaris followed by cocktails and dinner.

Our seminar is aimed at both US and non-US based operators, and has attracted increasing numbers ofattendees from non-US Members providing an evenmore varied and rewarding cross-section ofmaritime and legal expertise. We look forward toseeing you as part of the event. If you areinterested in attending this seminar, please [email protected]

This edition of BI News covers injuries caused bylifeboat drills, traumatic brain injuries, strategies fordealing with long-term illness claims, PTSD andhidden surprises in towage contracts.

As always, we welcome your feedback on thetopics we cover in our newsletter and invite you tosuggest future topics. Contact details for our BodilyInjury Team can be found on the back page. !

Mike JarrettPresident & CEO, Thomas Miller (Americas) Inc.

CONTENTS

Traumatic brain injury 3

Injuries during lifeboat drills 5

The PTSD trap 7

Long-term liability obligations 9

Overtime and unearned wages 11

Surprises in towing contracts 13

Personal Injury litigation 14

TMA Bodily Injury Team 16

Bodily Injury News

Bodily Injury News is the bi-annualnewsletter of the Thomas MillerAmericas’ Bodily Injury Team.

The topics it addresses are highlyrelevant to all our Members worldwidegiven more than half of the Club’spersonal injury claims over $100,000are brought in the American courts.

We welcome your feedback on the topics we cover as well as suggestions on subjects to address in futureissues. Please send your commentsand ideas to Louise Livingston [email protected]

The information in this newsletter is notlegal advice and should not be reliedupon as such.

Summer 2014 Bodily Injury News 3

How to evaluate claims oftraumatic brain injuryRecently, it seems that allegations of traumatic brain injuries are popping up more and more. What exactly is a traumatic brain injury and how does it affect your case? Dee O’Leary gives a short primer on traumatic brain injuries.

What is a traumatic braininjury and what causes it?Traumatic brain injury (TBI) is alsoknown as intracranial injury. A TBI iscaused by a bump, blow or jolt to thehead or a penetrating head injury that disrupts the normal function of the brain. Not all blows or jolts to the head resultin a TBI. The severity of a TBI mayrange from “mild,” i.e., a brief changein mental status or consciousness to“severe,” i.e., an extended period ofunconsciousness or amnesia after theinjury. The majority of TBIs that occureach year are concussions or otherforms of mild TBI.

What effect does atraumatic brain injury have?TBI can cause a host of physical,cognitive, social, emotional, andbehavioral effects, and the outcome canrange from complete recovery topermanent disability or death.Depending on the injury, treatmentrequired may be minimal or mayinclude interventions such asmedications, emergency surgery orsurgery years later

Distinct types of traumaticbrain injuriesThere are two major types of TBI:

1. Penetrating injuriesIn these injuries, a foreign object (e.g., a bullet) enters the brain and causesdamage to specific parts of the brain.This focal, or localized, damage occurs along the route the object has traveledinto the brain. Symptoms vary depending on the part of the brain that is damaged.

2. Closed head injuriesClosed head injuries result from a blowto the head which occurs, for example,in a car accident when the head strikesthe windshield or dashboard. These injuries cause two types of brain damage:

a) Primary brain damage, which isdamage that is complete at the time ofimpact, may include:

• Skull fracture: breaking of the bony skull

• Contusions/bruises: often occurright under the location of impact orat points where the force of the blowhas driven the brain against the bonyridges inside the skull

• Hematomas/blood clots: occurbetween the skull and the brain orinside the brain itself

• Lacerations: tearing of the frontal(front) and temporal (on the side)lobes or blood vessels of the brain(the force of the blow causes thebrain to rotate across the hard ridgesof the skull, causing the tears)

• Nerve damage (diffuse axonal injury): arises from a cutting, or shearing,force from the blow that damagesnerve cells in the brain’s connectingnerve fibers

b) Secondary brain damage, which isdamage that evolves over time after thetrauma, may include:

• Brain swelling (edema)• Increased pressure inside of the skull

(intracranial pressure)• Epilepsy• Intracranial infection • Fever • Hematoma • Low or high blood pressure • Low sodium

• Anemia • Too much or too little carbon dioxide • Abnormal blood coagulation • Cardiac changes • Lung changes

Symptoms of a traumaticbrain injuryThese may include:

• Unconsciousness • Inability to remember the cause of

the injury or events that occurredimmediately before or up to 24 hours after

• Confusion and disorientation • Difficulty remembering new

information • Headache • Dizziness • Blurry vision • Nausea and vomiting • Ringing in the ears • Trouble speaking coherently • Changes in emotions or sleep patterns

How is a traumatic braininjury diagnosed?If the injury is more severe, diagnosis iseasier because it is usually clear fromthe symptoms that some type of braininjury has occurred. If the brain injuryis milder, diagnosis can be morechallenging and further assessment maybe needed to diagnose the brain injury.

Imaging technology can be employedto help assess the severity, location and type of injury to the brain. CT scans andMRIs are two commonly used diagnostictests used to confirm a brain injury.

Healthcare providers may also utilizea neuropsychological assessment, whichis a specialized task-oriented evaluationof human brain-behavior relationships.

HEAD INJURIES


HEAD INJURIES

It relies upon the use of standardizedtesting methods to evaluate highercognitive function as well as basicsensory-responses. Evaluating cognitiveissues can be difficult because many ofthe symptoms are subjective. That difficulty is compounded by the absence of any prior neuropsychological testingfor comparison.

Traumatic brain injuries andLawsuits/ArbitrationsEvaluating a Plaintiff in a lawsuit, whoclaims to be suffering from a TBI, canprove to be even more problematic.Trying to disprove dizziness, difficultyconcentrating or fatigue is challengingdue to the subjective nature of these

complaints. Think about this… someone claims that they feel dizzy, irritable, haveblurred vision and are having troubleremembering things. How do youverify this? Is it due to a brain injury?Could it be old age? Hunger? Or couldit be lack of sleep or something else?

Plaintiffs will claim permanentdisability, ongoing need for cognitiveand other therapies which increase themedical costs and reduce or eliminatefuture employment options.

When faced with a TBI claim, particularly a mild TBI, an expert witness is required to disprove (or verify) theclaim. Neurologists, neuropsychologistsand psychologists to name a few, mayneed to be hired to perform a batteryof tests in order to determine whether

the plaintiff is truly suffering from a mild brain injury or just making allegationsof a TBI. CT Scans and MRIs can becostly and may be inconclusive, themere allegation of a TBI in a lawsuitcan significantly increase the cost of defending the lawsuit and has a significant impact on the claimed damages. !

REMEMBER1. Always take any head injury caseseriously and conduct a thoroughinvestigation.

2. When a TBI is alleged, locate thebest experts to examine, test andverify or disprove the injury


the drill on deck. While the lifeboat wasbeing lowered, the CO noted anincreased river current and stopped thelifeboat before it reached the water. Henotified the Master via VHF radio ofthe situation. The Master, believing theboat was waterborne, replied he wasstarting the motor. It wasunderstandably very noisy within thelifeboat at this time, so he was unable tohear further communications from theCO. He next tried to release the boatby pulling the release handle, but thesafety lock and interlock were stillsecured. A crew member noticed theMaster was attempting to release thelifeboat, and advised him of thenecessity to release the pin andinterlock. As the pin was removed andthe interlock disengaged, the hooksreleased and the lifeboat fell to thewater with a forceful impact. TheMaster suffered three fracturedvertebrae, which resulted in paralysis ofhis lower extremities. Other crewmembers suffered minor injuries.

Injuries and fatalities duringtraining exercises16% of lives lost by merchant mariners happen during training exercises or drillssupervised by qualified and experienced seafarers. Linda Wright investigates whythis figure is so tragically high and what we can do to reduce it.

For many decades it has been arequirement that lifeboats and otherlifesaving equipment are available to allpersons aboard a ship. Over time thedesign and capacity of lifeboats haveincluded protection and enhancedsafety for anyone using them. Thechanges were usually made as the resultof high profile incidents that causedinjuries and loss of life – most notablythe TITANIC in 1912.

Today, mandatory lifeboat drills areroutine. However, incidents since the1990s indicate a relatively high numberof injuries and deaths during drillscompared with other shipboardaccidents. Several international marinesafety organizations did studies to drawattention to the number of incidents,identify common factors, review thelaunching systems, and to make recommendations to the marine industryto improve safety during use of lifeboats. Each incident reviewed gave themlessons learned – but at what cost?

Marine safety studiesA study by a UK safety groupaccumulated data over a ten year periodindicated that lifeboats and theirlaunching systems had caused fatalities approaching 16% of the total lives lost by merchant mariners. Even more survived lifeboat incidents but suffered severe injuries of the spine and lower extremities. All of these accidents occurred duringtraining exercises or drills, supervised byqualified, experienced seafarers.

Varied causesThe causes of accidents were varied.Some involved malfunctions of thelifeboat equipment or operationalmisunderstandings; others human erroror miscommunication.

An example of miscommunicationcan be seen in an incident involving abulk carrier fitted with two fullyenclosed lifeboats each with a capacityof 25 persons. Both lifeboats weredesigned with on-load/off-load releasemechanisms. The off-load mode – usedonce the boat is waterborne – requiredthe removal of the safety pin and thepulling of a release handle in thewheelhouse to release the lifeboat fromthe ship. If the lifeboat was not yet inthe water, the crew had to pull thesafety pin and lift the safety interlock.

The Master was a Russian nationalnewly in command, and the remainingcrew members were Ukrainian, Polish,Chinese and Sri Lankan. The workinglanguage onboard was English. Thewhole crew, except the Master, hadworked together for several months andwere fully familiar with the launchingprocedures per the company/ship safetymanual. The Master and several othercrew members were in the lifeboat forthe drill. The Chief Officer monitored

LIFEBOAT DRILLS


LIFEBOAT DRILLS

Here, there was no malfunction oflaunching gear, but rather lack offamiliarity of the Master with thelaunching procedure, and amiscommunication (language issue?)between the Master and the ChiefOfficer. Directives were sent out by theOwner to all their ships’ crew membersregarding the essential need to have allparties confirm procedural steps duringlaunching drills.

Complex lifeboat designsAs the design of lifeboats hasprogressed, the requirement tounderstand the mechanics of launchingoperations has become morecomplicated. The Club handled a claimin which a deck officer was killed whena lifeboat fell from its stowage level tothe ocean below. After the aft hookdisengaged during a drill, the boat fell 9to 10 meters in a vertical position. Thelifeboats had been taken ashore a fewmonths earlier for inspection andtesting, and then reinstalled by a shorecrew. This accident occurred during thefirst drill in which the boats werelowered to the water. An investigationrevealed the crew were not familiarwith the hooks or the importance ofthe reset lever being properly alignedwith green marks. The complicatedoperating instructions and diagramssupplied by the manufacturer wereunclear and of poor quality. Ownersshould contact manufacturers forclearer instructions if the crewmembers do not understand them.

Flawed design and mysteriousmalfunctionsSometimes the design of the launchingsystem is itself flawed. One incidentinvolved a release mechanism of a safetyhook which opened without anyphysical action by the crew. The boatfell over 8 meters to the water causingthree crew members to sustain fracturesto their ankles, legs and spine. Theinvestigation discovered that when thehoisting wire became kinked on thedrum, the mass force of that actioncaused the hook to release without anycontact by a crew member. Therecommendation was to replace suchsafety hooks with a modified versionwhich included a safety lock pin.

Some lifeboat incidents occur whichcannot be explained by the experts.Another lifeboat drill injury occurred when a boat was being raised by a winch to within a foot or two of being in thefully stowed position. The winch was automatically programmed to stop at thispoint, as the rest of the stowing was done by use of a hand crank on deck. Allmechanisms were working properly butwhen a crew member inserted the handcrank to fully stow the boat, the handcrank suddenly began to rotate andwhipped around and struck the crewmember in the head causing injury andhearing loss. There was no brakemalfunction and the incident could notbe duplicated in further testing. Therewas corrosion on the electrical paneland some improper fuses in place, butthe investigation was inconclusive as tothe cause of the hand crank failure.

With mandatory requirement toperform lifeboat drills Members mustproperly train their crew members in allaspects of the procedures for launch andretrieval of the boats. The lessonslearned from the prior incidents can besummarized:

• The entire crew should be capable ofoperating the lifeboat systems, easilyunderstanding the mechanics andprocedures even with minimumtraining or experience.

• Communication between the crewduring drills must be clear, withconfirmed completion of each stepthroughout the exercise.

• When the design of the lifeboat

launch system and its components arecomplicated, Members shouldconsistently train on the operation,repair and maintenance of the entirelifeboat system. If necessary, requirethat the manufacturer supply easilyunderstood instructions and diagramsto explain the proper operation ORcreate a common operatingprocedure safety manual independentof the manufacturer instructions.

Constant trainingThe only remedy for human error iscontinuous training and adequate riskassessment procedures. The mosteffective training for the seafarers is forthem to know why something is done aparticular way, to better understand theprocedures – not just remember them.As a result their understanding gives thecrew members more confidence in thesystems. Training should specificallyaddress the launching of lifeboats. Drillsmust be reliable and safe withminimum risk to those participating.

The IMO amended SOLAS in 2006 and 2008 to address conditionsunder which lifeboat drills areconducted, introduce changes to themaintenance and inspectionrequirements, and drills withoutrequiring crew members to be onboardthe boat. The review and studiesincluded guidance for the launch offree-fall lifeboats during drills, and theservicing of launching systems and on-load/off-load release mechanisms.The intent is to prevent accidents andinstill confidence in the crew membersduring abandon-ship drills. !


PTSD CLAIMS

The post-traumatic stressdisorder trapNoreen D. Arralde outlines how recent changes to the DSM make it even easier toobtain a diagnosis of this already overdiagnosed condition.

Being diagnosed with post-traumatic stress disorder (PTSD) just got easier and for employers and shipowners who findthemselves defending against spuriousPTSD claims, that’s not good news.

The DSM V changesThe Diagnostic and Statistical ManualFifth Edition (DSM V), which wasreleased by the American PsychiatricAssociation (APA) in May 2014,contains new guidelines and criteria formany psychiatric conditions. DSM Vwas released amid considerablecontroversy, particularly with respect toits criteria for diagnosing PTSD, acondition which many experts believeis already drastically overdiagnosed.

The new DSM criteria make it easierto diagnose PTSD in three significantways. First, DSM V eliminates therequirement that a person experienceextreme fear, helplessness and horror atthe time of a traumatic incident.Second, it adds a set of symptoms thatmake a PTSD diagnosis much morelikely. Third, it allows a diagnosis ofPTSD to be made even if the personreporting symptoms did not experienceor witness a traumatic event, but merelylearned that a traumatic event occurredto a relative or friend.

Opening the floodgatesThese changes open the floodgates forabuse by civil litigants motivated bysecondary gain. PTSD is already acommon claim in attempting toestablish or exaggerate damages in civillawsuits. Since the symptoms of PTSDare entirely subjective, i.e., there is noway to independently verify thereported symptoms, under the formercriteria the means by which expertscould try to limit the misuse of the

PTSD diagnosis was to challengewhether the triggering event wasextreme enough to warrant thediagnosis and whether the person hadan immediate reaction of extreme fear,horror or helplessness. DSM Veliminates those requirements. Anotherlimiting factor, that the personreporting symptoms experienced directpersonal contact with the traumaticevent, has also been eliminated.

Going even further, DSM V adds a setof symptoms to the criteria whichproponents of the changes referred to as “often seen in patients with PTSD.” But these changes make it nearly impossibleto challenge a diagnosis of PTSD basedupon symptomatology. The symptomsassociated with PTSD according toDSM V are: re-experiencing, avoidance,negative cognitions and mood, andarousal. So, if a person reports


PTSD CLAIMS

re-experiencing the traumatic event, hemeets the criteria for PTSD; whereas ifanother person reports avoiding the traumatic event, he too meets the criteria for PTSD. Symptoms of negative ordepressed thoughts or mood indicatePTSD, just as do symptoms of heightedor aroused thoughts or mood.

In adopting these changes to DSM V,the APA does not appear to have beenat all concerned about the realities ofcivil litigation. The new PTSD criteriaare rife with potential for abuse.

PTSD is alreadyoverdiagnosedThere are a growing number of expertswho are beginning to question howfrequently PTSD is diagnosed. Thecondition was first diagnosed in thewake of the Vietnam War as a way tocategorize post-combat reactionspreviously called shell-shock. PTSDwas originally based on the idea thatcertain combat experiences were so

traumatic they could give anyonePTSD. It has been a generally acceptedstatistic that 30 percent of Vietnam Warveterans suffered from PTSD.

In recent years, however, some experts have begun to challenge the accepteddata about the prevalence of PTSDamong Vietnam veterans. By examiningrecords of reported symptoms anddiagnoses for more than one thousandveterans, a Columbia Universityscientist found the percentage of vetswho suffered from PTSD was closer to18 percent and other scientists haveargued that even those figures are toogenerous, and that PTSD wasoverdiagnosed among Vietnam vets byas much as 300 percent.

The same pattern of overdiagnosiscontinued in the wake of the wars inIraq and Afghanistan. The generallyaccepted reported data states one in fivesoldiers suffered from PTSD.Subsequent studies, however, usingmore stringent criteria, concluded justover four percent of soldiers serving in

Iraq and Afghanistan showed symptomssignificant enough to warrant a PTSDdiagnosis. Despite these subsequentstudies, the “one in five” statistic is stillwidely reported.

There are no readily available studiesreporting on the prevalence of a PTSD diagnosis among the general population. There is reason to believe, however, thatthe pattern of overdiagnosis among civillitigants is as high, if not higher, thanamong veterans.

Gaming the systemThe reason for the upsurge of PTSDamong war veterans may well be thedesign of the benefits system. SincePTSD is considered a disability relatedto military service, veterans diagnosedwith the disorder are eligible to receivedisability pay. Veterans diagnosed withPTSD typically show littleimprovement from treatment, and as agroup report worse symptoms untilthey are diagnosed as fully disabled—atwhich time their disability paymentsreach a maximum level.

Civil litigants have the same financialincentive to game the system byobtaining a PTSD diagnosis. Becausethe diagnosis depends upon self-reported behaviors and feelings and ismade even easier to obtain under DSMV, employers should expect to see moreclaims of PTSD from employees whosuffer work-related accidents, even ifthose accidents are not consideredparticularly traumatic.

For the Club’s Members, DSM Vlikely means more claims of PTSDfrom injured workers and also morebystander PTSD claims from thirdparties, such as passengers, who may bediagnosed with PTSD simply becausethey learned that a traumatic eventoccurred to someone close to them.

Opportunity lostDSM V presented an opportunity totighten the criteria for PTSD, so thatbetter diagnosis and treatment for thosetruly suffering from PTSD could beachieved. Instead, the APA has created amodel which will likely be exploited bylawyers and misused in the courts,fueling the suspicions surroundingPTSD. !


Ending long-term liabilityobligationsTreatment for serious injury and incurable disease can last decades and be anadministrative burden on shipowners. Markus McMillin shines a spotlight onstructured settlements as a viable solution.

Maintenance and cure is owed to acrew member when he or she becomesinjured or ill during their service to theship. It is a strict liability obligation ofthe employer without regard to fault.A shipowner is obligated to providemaintenance and cure until such a timeas an ill or injured seaman is either (1) found “fit for duty” or (2) reaches“maximum medical improvement”. A seaman reaches maximum medicalimprovement when the condition willnot improve with additional medicaltreatment. The fact that a seamancontinues to receive palliative treatment(to simply relieve pain) does not entitle

him or her to further maintenance andcure if the medical conditioncomplained of does not improve.

But what about the case where aseaman has a serious injury or incurabledisease where curative treatment cancontinue for years or even decades? Asdiscussed in prior articles, theshipowner is obligated to continue topay maintenance and cure in situationswhere there is a likelihood of futureimprovement of the seaman’s condition.In some cases, the maintenance andcure obligation can continueindefinitely. This obligation can be anadministrative and financial burden for

a shipowner. However, there issometimes a viable solution to theproblem: a structured settlement.

A structure involves the purchase ofone or more annuities from a lifeinsurance company which guaranteepayment of certain sums of money overtime. The cost of an annuity is wellbelow the total future benefits paid out.

Settlement with structuresIn a recent case, the Club handled for aMember, a 64 year old crew member fellfrom a piece of equipment and shattered his tailbone causing nerve damage and

STRUCTURED SETTLEMENTS


STRUCTURED SETTLEMENTS

rendering him incontinent for both his bladder and bowel. An incidental finding during the work up on his tailbonesuggested kidney cancer for which theMember was also responsible to treatunder the maintenance and cureobligation. The crew member waseventually found to have reachedmaximum medical improvement for allmedical conditions but had on-goingneed for medications and medicalsupplies for the remainder of his life. To achieve a full resolution of a clear liabilityincident, a settlement proposal was made consisting of several different structuresto cover some elements of the claim inaddition to a lump sum payment onothers. The crew member agreed to thesettlement which included payments(some for the remainder of his life) forlife insurance to a specific retirementdate, pension contributions, healthinsurance contributions, lost wages, and medications and medical supplies. When the settlement package was paid out tothe crew member directly and intoannuities on his behalf, the Memberwas relieved of any further financialobligation. One important point was toidentify the costs of future medical treatment under Medicare and to protectMedicare’s interests by way of a structure.

In another case, a crew member was

diagnosed with polycystic kidneydisease (PKD) which manifested itselfwhile the crew member was in theservice of the ship. PKD is an incurablegenetic disease. Although she was foundto be unfit for duty, her condition wasinitially stable after the use ofmedication and no further treatmentwas recommended. Unfortunately, therewas no specific maximum medicalimprovement determination was madeby her treating doctor. Some monthslater, the crew member requestedfurther cure but it was denied by theMember on the basis that the crewmember was stable and there was noindication at the time the crew memberneeded further treatment includingdialysis or a kidney transplant. The crewmember eventually sought furthertreatment on her own.

The case was arbitrated on whetheror not maintenance and cure should bereinstated. By the time arbitrationcommenced, some three year later, thecrew member’s condition haddeteriorated to the point of herneeding to start dialysis.

The arbitrator ruled in favor of thecrew member awarding damages andthat maintenance and cure bereinstated. The cure obligation andtreatment duration was left open-ended

– basically until she receives a kidneytransplant plus at least two years ofpost-transplant treatment (predicted tobe in the region of 8-10 years in total)or if no transplant could be arranged,until her condition deteriorated to thepoint of her death, expected to beanything up to 10 years.

Due to the financial andadministrative burden of the on-goingcure obligation, structured settlementoptions were proposed to plaintiff ’scounsel, but the estimated future carecosts he claimed for his client werecompletely unrealistic. Now, 18 monthspost-arbitration, the Member hasevidence of the actual annual treatmentcosts for this crew member. TheMember can make another structuredsettlement proposal to resolve the casewith finality.

In conclusion, treatment for someserious injuries or incurable diseases can last years or even decades. Theshipowner’s maintenance and cureobligation can last the same period of time as well. Although the final numbers have to of course be agreed to by bothparties, a structured settlement is aviable solution to relieve a shipownerfrom the administrative and financialburden of long-term maintenance andcure obligations. !


UNEARNED WAGES

Entitled to recoverOn 25th June 2013, the Second CircuitCourt of Appeals issued a decision inPadilla v. Maersk Line Limited in favourof the class of plaintiff seamen who had been discharged from service of the ship before the end of their contract due toillness or injury. The central issue onappeal was whether the plaintiffs wereentitled to recover, as part of their claimfor unearned wages, overtime pay theywould have earned had the voyagebeen completed. In issuing its decision,the Second Circuit affirmed the districtcourt’s ruling that these seamen wereindeed entitled to recover overtime aspart of unearned wages.

To understand the impact of thedecision, it is first necessary to brieflyreview a seafarer’s entitlement tomaintenance, cure and unearned wages.Under the General Maritime Law, aseaman who falls ill or is injured duringhis service to the ship is entitled tomaintenance (reasonable livingexpenses) and cure (medical expenses)until he reaches maximum medicalimprovement. Failure to paymaintenance and cure can result in anaward of punitive damages against ashipowner.

The right to unearned wagesA seaman is also entitled to collect hisunearned wages to the end of thevoyage. While there is much debateabout what “to the end of the voyage”means, there is no doubt that a seamanwho is injured or falls ill is entitled,under most circumstances, to someform of unearned wages. In fact, as onecourt noted, “[t]he loss of unearnedwages is no less an aspect of damages toa seaman than the loss of maintenanceand cure.” Moreover, the right to

unearned wages is correlative to theright to maintenance and cure; thus theseaman should be awarded all three (ifclaimed) or none at all.

At issue in Padilla was whether, as part of unearned wages, the class of plaintiff seaman was entitled to recover overtime wages in their calculation of unearnedwages. The lead plaintiff, Mr. Padilla had been a chief cook aboard the MAERSKARKANSAS. His voyage was scheduled to end on 26th February 2007.

However, on 6th November 2006 hesustained an injury and was dischargedfrom the vessel unfit for duty. Maerskvoluntarily paid his unearned wages athis base pay, as well as maintenance andcure, for the duration of his contract,but refused to pay him overtime wages.In May 2007, Padilla sued Maersk onbehalf of himself and a proposed class ofsimilarly situated seafarers who had notbeen paid overtime as part of theirunearned wages.

In the district court, Maersk arguedthat Padilla’s union contract limited hisrecovery to base wages but the districtcourt was not convinced, holding that

unearned wages include overtime paywhere a seafarer reasonably expects toearn overtime pay on a regular basisthroughout his service in an amountthat was not speculative and he wouldhave earned but for the injury or illness(in the case of Mr. Padilla, the courtfound that this amount would beapproximately $13,000).

The case proceeded at the districtcourt level and, after certifying the class,the court awarded damages to theplaintiff class in the amount of$836,819.40 in unpaid overtime wages.An appeal to the Second Circuitfollowed. On appeal, Maersk arguedthat the class was not entitled toinclude overtime in unearned wagesbecause overtime was not encompassedin the definition of “unearned wages”under the General Maritime Law. Theplaintiffs, on the other hand, arguedthat, because overtime was a substantialand routine component of the wagesthe plaintiffs’ compensation, they wereentitled to overtime payments becausethe General Maritime Law requiredthat they be restored to the sameposition they would have been in “butfor” the injury or illness.

“But for” testIn affirming the district courtapplication of the “but for” test, theSecond Circuit found that there was nodispute that the seafarers on defendant’svoyages regularly received substantialovertime payments. As a matter of fact,said the court, “the record reflect[ed]that…Padilla and other Maerskseafarers regularly earned 100% ormore of their base pay in overtimewages.” Accordingly, the courtconcluded that under the GeneralMaritime Law unearned wages includesovertime pay:

Second Circuit holds overtimeincluded in unearned wagesIf crew expect significant and quantifiable income from overtime, it must be includedin unearned wages. Jana Byron explains.


UNEARNED WAGES

In reaching this conclusion, we alignourselves with the other circuits who applythe same test. See Flores v. CarnivalCruise Lines, 47 F.3d 1120, 1122-24(11th Cir. 1995) (holding that tips shouldbe included in the measure of unearnedwages because a seaman would haveearned them but for his injury); Lipscomb,83 F.3d at 1109 (concluding thataccumulated time off is part of seaman’sunearned wages under general maritimelaw); Aksoy v. Apollo Ship Chandlers, Inc.,137 F.3d 1304, 1306 (11th Cir. 1998)(calculating unearned wages as average tipincome plus guaranteed minimum wage);Morel v. Sabine Towing & Transp. Co., 669F.2d 345, 346 (5th Cir. 1982) (holding thataccumulated leave time is part of total

wages and payable in addition tomaintenance); Shaw v. Ohio River Co., 526F.2d 193, 199 (3d Cir. 1975) (same).

Implications for MembersThe Club believes that its implicationsof Padilla are significant and potentiallyfar reaching. First, on its face, Padillainstructs very clearly and articulatelyand leaving no room for doubt thatwhere a crew member expects toreceive significant and quantifiableincome from overtime during thecourse of his employment, suchovertime should be included inunearned wages paid to him. Moreimportantly, however, the close

correlation between unearned wagesand the doctrine of maintenance andcure needs to be kept in the forefrontof every shipowner’s mind whenmaking a determination of the amountof unearned wages due to a seaman.Failure to pay maintenance and curecan expose a shipowner to significantpunitive damages and there has been ajudicial trend towards expanding theapplication of punitive damages toother areas on maritime law, such asclaims for unseaworthiness. It is not astretch to expect to see a decision oraward for punitive damages for ashipowner’s failure to pay properunearned wages that includeanticipated overtime wages. !


On a summer day in August a largeforeign flag bulk carrier was departing aUS West Coast Harbor. As usual, tugswere engaged to assist the ship awayfrom the berth, tug lines were releasedfrom the ship and retrieved by the tug.This task was coordinated between thetugs and ship by the crew at the ship’smooring station and the crew memberon the tug’s forward deck. As far as theship’s Master and crew knew, it was anuneventful departure.

Imagine the Owner’s surprise a yearlater when they were served with aSummons and Complaint by an injured tug crew member.The complaint was for negligence under the General Maritime Law of the United States. Plaintiff alleged a permanently disabling injury to hisleft knee as a result of the ship‘s crew suddenly dropping the tug’s line without ensuring plaintiff was out of the way.

Having had no notice of any accident at the time of the ship’sdeparture, the Owners were not able toinvestigate the alleged accident. Thoughit made the lawsuit very difficult todefend, it is common not to have areport of injury from the tug.

Indemnity provisionThe real surprise for Owners was theindemnity provision in the tug escort terms and conditions clearly covering (a) any claims, liabilities and costs (including attorneys’ fees) that are asserted against the tug operator; (b) which ariseout of or are related to any servicerendered by [tug operator] pursuant to the Schedule, (c) including claims, liabilities and costs attributable to [tug operator’s] ownnegligence or the unseaworthiness of it’s tugs(d) in excess of $100,000.

The indemnity provision clearly

covered plaintiff ’s alleged accident andinjury during the performance of tugservices. The charterparty betweenOwners and subcharterers requiredOwners to indemnify subcharterers forliability arising out of employment oftugs and stevedores.

Maintenance and cureThe tug crew member was equallyclearly a Jones Act seaman and thusentitled to maintenance and cure3 fromhis employer. By the time Owners werenotified of the lawsuit, the tug companyhad been paying maintenance and curebenefits for over one year; the totalamount exceeded the $100,000 amountthe tug company retained.

During the litigation the tug operatorinformally asserted its indemnity claimagainst Owners. Plaintiff alleged a permanently disabling knee injury. He wasawarded damages by the Court including an award for future medical expenses totreat his depression arising from hispermanent inability to return to his job.Despite that judgment, which was paid by Owners, the crew member continued to receive treatment well beyond thetime estimated by the Court. Thus, theOwner’s obligation to indemnify thetug company also continued.

Maximum MedicalImprovmentMany jurisdictions in the US place anextremely high burden on employers todemonstrate a crew member hasreached MMI and is no longer entitledto maintenance and cure. In somejurisdictions it is virtually impossible tochallenge an injured seaman’s treatingphysician’s opinion that on-going

treatment is required. The case was inone of those jurisdictions. Owners,with assistance from the tug operator,attempted to negotiate a settlement ofthe maintenance and cure obligationwith plaintiff ’s attorney withoutsuccess. Next, Owners and the tugoperator filed a court action to reducethe amount payable to the crewmember – again without success. Bythis time, over 1½ years had passed.Prior to filing yet another action incourt Owner’s counsel approachedplaintiff ’ attorney about a settlement –this time negotiations were successful.The success was likely due in part tothe fact the crew member wanted to bere-employed by the tug company in adifferent capacity. The on-goingmaintenance and cure claim was adisincentive for the tug company to re-hire the plaintiff. The end result wasa significant additional expense toOwners in excess of $150,000.

P.S.The Club has recently learnedthe plaintiff is now fully fit for duty andis requesting his old job back. !

TOWING CONTRACTS

Hidden surprises in towing contractsLouise S. Livingston gives us an insight into indemnityprovisions in a tug escort’s terms and conditions.

You may have missed…Our May 2012 Bodily Injury News gave particular emphasis to ‘maintenanceand cure’. The breadth of exposurethrough this avenue of claim is notwidely understood. The seeminglylimitless potential for punitive damageswhere owners fail to pay maintenanceand cure is explored as is the trendtowards palliative treatment whichraises the prospect of a continuedcost for owners. Recent issues anddevelopments arising from crew injurythrough falling overboard and partingmooring lines are also reviewed.

3 Maintenance and Cure is a strict liability obligation of the employer to provide a daily stipend and pay formedical care until the crew member is determined to have reached Maximum Medical Improvement (MMI).


PERSONAL INJURY LITIGATION

Los Angeles County has California’s largest court system and had about 4,400 employees and 540 judges with an annual operating budget of $734 million in 20121. A projected $85 million budget shortfall for the fiscal year beginning 1st July 2013, prompted cuts and forced the closure of seven regional courthousesand the elimination of more than 500jobs2. These cuts have resulted in drasticchanges to the way personal injury lawsuits are administered in the Superior Court for the County of Los Angeles.

Filing new casesGenerally speaking, prior to 18th March 2013, personal injury lawsuits could befiled in any judicial district in Los Angeles County where the bodily injury occurred or where a personal injury

defendant resided. Personal injury caseswere direct calendar matters, assigned toa specific judge and courtroom (ordepartment) for all purposes, includingdispositive motions and trial.

As of 18th March 2013, all personalinjury lawsuits are to be filed in theCentral District of Los Angeles at the Stanley Mosk Courthouse in downtown Los Angeles. Most of those matters which had been filed in other Courthouseswere transferred to downtown LosAngeles. From 1st June 2014, only fourcourt rooms in Los Angeles will hearpersonal injury matters for all pre-trialpurposes. Departments 91, 92, 93, and97, affectionately called “the PI Courts,”handle all personal injury law andmotion matters, including all dispositivemotions, such as motions for summaryjudgment and or adjudication.

Judicial case managementWith the new changes, Trial and FinalStatus Conference hearing dates areautomatically set when a Complaint isfirst filed at the Stanley MoskCourthouse. No other hearing dates arescheduled by the Court. PI lawsuits areno longer closely monitored by theCourt as they had been in the past. Thelawsuits are now exempt from thecustomary Case Management Ruleswhich practicing Los Angeles attorneysand their clients have becomeaccustomed to. For instance, the Courtno longer holds a Case ManagementConference at the start of the litigationor Status Conferences. Thus, there areno early meet and confer requirementsamongst counsel. Court-orderedalternative dispute resolution sessions,such as mediations, arbitrations orsettlement conferences are a thing ofthe past, as are mandatory Post-Mediation Status Conferences.

Reserving hearing dates formotionsPrior to March 18, 2013, motion hearing dates could be reserved with a simplephone call to your assigned Judge’scalendaring clerk. Now, counsel mustutilise an online Court ReservationSystem (CRS). The CRS must also beused for scheduling an ex parte hearingor motions to be heard before a generalappearance is made. The filing/reservation fees for scheduling a law and motion hearing are non-refundable. Because of the limited number of Judges available to hear all PI motions, it ismore often than not the case that theearliest available hearing date will fallafter a statutory deadline to have themotion heard. The parties are then

Personal Injury litigationshake-upLisa M. Conner of Flynn, Delich & Wise LLP explains the major changes to personalinjury litigation procedures in Los Angeles County Superior Courts.

1 http://articles.latimes.com/2013/jun/13/local/la-me-court-cuts-201306132 Id.


PERSONAL INJURY LITIGATION

forced to either stipulate to a Trialcontinuance, to include a continuanceof all statutory and proceduraldeadlines, or to file an ex parteapplication to continue the Trial.

Discovery disputes in the PI CourtsThe PI Courts no longer entertainmotions to compel further responses to discovery requests unless and until (a) the parties have participated in an InformalDiscovery Conference (IDC) or (b) themoving party submits evidence, by wayof a declaration, that the opposing partyhas failed or refused to participate in anIDC. The purpose of the IDC is to helpthe parties informally resolve discoverydisputes by agreement rather than bymotion practice. PI Court judges areavailable to conduct 30-minute, in-person IDCs on a daily basis. While the PI Court judges will not make a ruling atthe conclusion of an IDC, the parties will have a very good idea of how the judgewould rule should the moving party proceed with filing a motion to compel.

Personal Injury trialsAs discussed above, Trials are scheduledwhen a PI Complaint is first filed at theStanley Mosk Courthouse. The assigneddate is usually set approximately 1½years after the Complaint is filed. Trialcontinuances are now routinely granted with or without good cause and withoutarticulating any reason or justification forthe change, provided that all parties agreeand there is no violation of the “five-yearrule,”set forth in California Code of Civil Procedure Section 583.310. However,the Stipulation to Continue Trial mustbe filed at least eight court days prior tothe Final Status Conference date.

Under former Superior Court Local Rules, jury fees were to be posted within 25 days of trial. The Revised SuperiorCourt Local Rules now require thatjury fees must be posted within 365days of filing the Complaint.

Parties must report to their assignedPI Court (Department 91-93, 97) onthe date of Trial. Parties will then besent to the Master Calendar Court(Department 1) to receive their TrialCourt assignment. The Master CalendarCourt manages the assignment of trials

to thirty-one dedicated Trial Courts.These thirty-one departments, spreadthroughout Los Angeles County, aredevoted solely to trials. Counsel willnot know whether their trial will betaking place in Los Angeles, LongBeach, Santa Monica, Van Nuys,Chatsworth, Torrance, Pasadena orPomona until they receive their TrialCourt assignment. Obviously, thismakes it difficult to evaluate for clientsthe demeanor of the judge and themake-up of the juror pool. Counselcannot confirm for experts or witnesseswhere a trial will be taking place, normake their own travel arrangements,until assigned to a Trial Court.

A party has fifteen days after theassignment of a trial judge to exercise aperemptory challenge, pursuant toCalifornia Code of Civil Procedure Section 170.6(a)(2). Interpreting the new Local Rules, the peremptory challengemust be made at the time of theassignment in Department 1, or a partymay waive its right to challenge theassigned trial judge by making anappearance before that judge. AFrequently-Asked Questions (FAQ)circular issued by the Los AngelesSuperior Court on September 16, 2013, summarized the situation, indicating thatunder the new system a party essentially has 20-30 minutes to vet the assignedjudge before deciding whether toexercise a challenge under Section170.6. It will be important to stay incommunication with one’s client once the trial judge is assigned to immediately agree whether to file a challenge.

Transfer of particular casesto Independent CalendarCourtParties seeking to transfer a case from aPI Court to an Independent Calendar(I/C) Court must file and serve aMotion to Transfer form or aStipulation. PI Courts will transfer amatter to an I/C Court if the case isnot a “Personal Injury” case or if it is“complicated.” In determining whethera PI case is “complicated,” the PI Courtwill consider whether the case willinvolve numerous parties, cross-complaints, witnesses (including expertwitnesses), and/or pretrial hearings.Parties opposing a motion to transfer

have five court days to file anOpposition (using the same Motion toTransfer form). The PI Courts will notconduct a hearing on any Motion toTransfer or Stipulation, but will makean independent determination whetherto transfer the case.

Future changesThe handling of PI litigation by LosAngeles County continues to evolve.Case in point, pursuant to a recent“Notice to Attorneys” issued by thePublic Information Officer of theSuperior Court, effective March 1,2014, the North District of the LosAngeles County Superior Court systemhas “resume[d] handling filings and pre-trial matters in unlimited jurisdictionpersonal injury cases at the AntelopeValley Courthouse.” Similar to the PICourts at the Stanley MoskCourthouse, the courtrooms these cases“will be assigned to will adjudicate allpretrial matters, they will not conducttrials.” Cases pending at the AntelopeValley Courthouse will eventually bereferred to Department 1 at the StanleyMosk Courthouse for a Trial Courtassignment. There is an online toollocated on the Los Angeles Superior Court website (www.lasuperiorcourt.org) to assist attorneys or pro se litigants indetermining whether a PI case shouldbe filed at Stanley Mosk Courthouse orthe Antelope Valley Courthouse.

The judges in the PI Courts havebeen accommodating during thisperiod of transition and often spendtime during their morning andafternoon calendars explaining toattorneys how the process is evolving.Litigators can expect that there will befurther changes and modifications tothe Los Angeles Superior Court systemwith respect to PI matters. !

Ms Conner is a partner at Flynn Delich & Wise in Long Beach, California. Her practice includes defending shipowners and theirP&I Underwriters in all aspects of personalinjury and wrongful death cases. She alsodefends cases under the US Longshoreand Harbor Workers’ Compensation act.She is an active member of the MaritimeLaw Association of the United States andthe Longshore Claims Association.

Louise S. LivingstonDirect: +1 415 343 0121

Louise is an attorneyspecializing in bodily injuryclaims. Before joiningThomas Miller (Americas) inMarch 2002, Louise was apartner in a San Franciscomaritime law firm. She leadsTM(A)’s Bodily Injury Team.

Jana Byron Direct: +1 201 557 7433

Jana joined Thomas Miller(Americas) in November2005 after seven years ofpractice as an attorneyspecializing in maritimematters.

Dee O’Leary Direct: +1 201 557 7402

Dee joined Thomas Miller(Americas) in December2007 after 17 years practicing law in New YorkCity with a firm specializingin maritime matters.

Linda Wright Direct: +1 415 343 0122

Linda joined Thomas Miller(Americas) in May 2010.Previously, she was a P&IClub correspondent on the Pacific West Coast for29 years.

Thomas Miller Americas’ Bodily Injury Team

This dedicated team supportsMembers based both in the UnitedStates and abroad in dealing with adiverse and complex range of personalinjury and illness cases. The onecommon factor is the influence of USjurisdiction or emergency response.

In the past six months, the team hashandled cases ranging from suspiciousdeath, passenger’s leisure activityinjuries, long-term occupational illness,engine room and cargo handlingfatalities, through to shore-sideaccidents, loss of limbs in mooringactivity and even sexual assault.

As well as supporting Member’s claimsand enquiries directly, the team sharetheir collective experience through thepages of “Bodily Injury News”.

Markus McMillin Direct: +1 415 343 0113

Markus joined ThomasMiller (Americas) in 2006,having worked at twomaritime law firms in SanFrancisco.

Noreen D. ArraldeDirect: +1 201 557 7333

Noreen joined ThomasMiller (Americas) in 2012after 13 years with a USlitigation firm and six yearsas claims manager for aglobal container shippingcompany.

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