Baldwin Haspel Burke & Mayer LLC

Maritime Update: No Reimbursement to Jones Act Employer from a Liable Party for Maintenance & Cure Paid for a Concealed, Pre-Existing Condition

Bill Schwartz - 

This is a maritime case involving an allision. The issue presented to the 5th Circuit in the case of “In the Matter of 4K Marine and Central Boat Rentals” and decided on January 30, 2019, was whether the owner of the stationary, “innocent” vessel must be reimbursed for the medical expenses of its employee who fraudulently claimed his pre-existing injuries had resulted from the allision. The district court said “no” and this was affirmed by the court of appeals.

In June 2015, the M/V TOMMY, a tug owned and operated by Enterprise Marine Services, LLC, was pushing a flotilla of barges on the lower Mississippi River. Its lead barge made contact with the M/V MISS ELIZABETH, a tug that along with its barges was essentially stationary and near the river’s bank. That tug was owned by 4-K Marine and operated by Central Boat Rentals, Inc. (“CBR”). On board the M/V MISS ELIZABETH were the wheelman Prince McKinley and a deckhand named Justin Price. Both alleged they were injured in the allision.

CBR made a claim that Enterprise Marine reimburse it for amounts it paid to its crewmember McKinley for medical expenses under its obligations for maintenance and cure as his Jones Act employer. Enterprise Marine refused to reimburse those expenses on the basis that McKinley’s back condition was not the result of the allision. After a bench trial, the district court found that McKinley’s knee problems were caused by the accident. His back problems, though, predated the accident and were unaffected by the allision. The court also found that McKinley fraudulently withheld “material issues about pre-existing medical conditions and medications both before and after the incident.” This is the McCorpen defense.

Based on these findings, the district court held that CBR had no obligation to pay for McKinley’s back surgery, and Enterprise Marine had no obligation to reimburse CBR for those expenses. Enterprise Marine also sought the return of the amounts it had already reimbursed for maintenance and cure that were not related to McKinley’s knee problem. The district court refused to grant that relief to Enterprise on the grounds that each party was a sophisticated maritime company, knowledgeable about its obligations and its defenses. Enterprise Marine’s failure to make a reasonable investigation earlier in the process meant it would not now be allowed to recoup unnecessary reimbursements to CBR.

The Court of Appeals upheld these findings by the district court.

The case can be found here.

If you have any questions regarding this maritime matter, please contact Bill Schwartz at (504) 569-2900 or wschwartz@bhbmlaw.com.


  |  

Meritas

Connect with us