In Re: 4-K Marina, LLC, 914 F.3d 934 (5th Cir. 2019)
The Fifth Circuit U.S. Court of Appeals recently ruled that a vessel owner or operator that causes injury to a Jones Act crewmember on another vessel is not required to reimburse costs associated with cure for unaffected pre-existing injuries.
In June 2015, a tug was underway and pushing barges on the Mississippi River when the lead barge struck a stationary tug – the situation is defined as an allision or when an underway vessel strikes a stationary vessel. On the stationary tug were two crewmembers who claimed injuries as a result of the allision. The stationary tug’s operator paid one of the crewmember’s maintenance and cure pursuant to its Jones Act obligations.
In turn, the stationary tug’s operator sought reimbursement from the underway tug’s operator arguing that the underway tug was the cause of the cure – or medical – payments. The underway tug reimbursed some of the stationary tug’s maintenance and cure payments, but it refused to pay for any medical bills related to the crewmember’s claimed back injuries because the cremember’s back injuries were a pre-existing condition that was not caused or affected by the allision. Further, the crewmember made misrepresentations concerning the pre-existing condition before and after the allision.
The stationary tug argued that the underway tug should reimburse the medical costs notwithstanding the fraudulent nature of the back injury claim because of the almost “absolute” maritime obligation of cure payments to crewmembers. In other words, in an abundance of caution, the stationary tug made cure payments under its Jones Act duty and the underway tug should reimburse those payments. However, the 5th Circuit upheld the district court’s finding that the stationary tug was a sophisticated maritime company that could have discovered the pre-existing medical condition. Since the stationary tug did not have an obligation to pay cure for the pre-existing medical condition it could not recoup those costs from the underway tug.
The takeaway from this case is that a maritime company with maintenance and cure obligations should exercise due diligence in issuing payments. However, it is a balancing act because a company exposes itself to possible punitive damages and attorneys’ fees if the denial is egregious.
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