Court Opinion

ID: 1033739
Source: CourtListenerOpinion
Date Created: 2013-07-16 00:00:54.587948+00
Date Added: 2024-06-11T12:31:28.795456
License: Public Domain

Case: 12-30041         Document: 00512306106         Page: 1   Date Filed: 07/12/2013

                 IN THE UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT    United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                           July 12, 2013
                                           No. 12-30041                    Lyle W. Cayce
                                                                                Clerk

WALLACE BOUDREAUX,

                                                   Plaintiff - Appellant

v.

TRANSOCEAN DEEPWATER, INC.

                                                   Defendant - Appellee

                      Appeal from the United States District Court
                         for the Eastern District of Louisiana

Before HIGGINBOTHAM, CLEMENT, and HAYNES, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
       Our prior opinion is vacated and withdrawn, and this opinion is
substituted in its place.1 This case presents the question of whether a Jones Act
employer who successfully establishes a defense to liability for further
maintenance and cure under McCorpen v. Central Gulf Steamship Corp.2 is

       1
         No member of this panel nor judge in regular active service on the court having
requested that the court be polled on Rehearing En Banc (FED. R. APP. P. and 5th CIR. R. 35)
the Petition for Rehearing En Banc is DENIED.
       2
           396 F.2d 547 (5th Cir. 1968).
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                                       No. 12-30041

thereby automatically entitled to restitution for benefits already paid. The
district court answered in the affirmative, creating a right of action never before
recognized in maritime law. We reverse and render.

                                              I.
      Wallace Boudreaux began working for Transocean Deepwater, Inc.
(“Transocean”) in January 2005. He failed to disclose serious back problems in
Transocean’s pre-employment medical questionnaire, affirmatively answering
“no” to several inquiries regarding any history of back trouble. Less than five
months after his hire, Boudreaux claimed that he had injured his back while
servicing equipment.          As a consequence, Transocean paid the seaman
maintenance and cure for nearly five years.
      In April 2008, Boudreaux filed suit against Transocean, alleging a right
to further maintenance and cure, seeking punitive damages for Transocean’s
alleged mishandling of past benefits, and asserting claims for Jones Act
negligence and unseaworthiness.             During discovery, Transocean obtained
evidence of Boudreaux’s pre-employment history of back problems. Transocean
filed an unopposed motion for partial summary judgment on Boudreaux’s claim
for further benefits, invoking McCorpen as a defense to maintenance and cure
liability. Under McCorpen, a vessel owner’s obligation to pay maintenance and
cure to an injured seaman terminates upon proof that the seaman, in procuring
his employment, “intentionally” and “willfully” concealed a material medical
condition causally linked to the injury later sustained.3
      The district court granted Transocean’s unopposed motion. Thereafter,
Transocean filed a counterclaim to recover the maintenance and cure payments
it had already made to Boudreaux. Transocean moved for summary judgment

      3
          396 F.2d at 549; Johnson v. Cenac Towing Inc., 544 F.3d 296, 301 (5th Cir. 2008).

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on the counterclaim, contending that its successful McCorpen defense
automatically established its right to restitution under general maritime law.
Prior to the district court’s ruling on the motion, Transocean and Boudreaux
reached a bracketed settlement that resolved Boudreaux’s Jones Act negligence
and unseaworthiness claims and left for decision only the viability of
Transocean’s proposed counterclaim for restitution. Under the settlement,
Boudreaux was entitled to a lesser sum of money if the court recognized the
counterclaim and a greater sum if it did not.
      Though Transocean acknowledged that its restitution-via-McCorpen
theory was novel, it urged the district court to fashion a new maritime right of
action based on state law principles of fraud and unjust enrichment. In a
thoughtful opinion, the district court agreed and awarded summary judgment
to Transocean on its counterclaim, albeit without accepting Transocean’s state-
law theories. Boudreaux appeals.

                                       II.
      In light of the parties’ bracketed settlement, this case turns on the purely
legal question of whether a Jones Act employer who has paid maintenance and
cure to a seaman injured in its employ is, upon successfully establishing a
McCorpen defense to further liability, automatically entitled to a judgment
against the seaman for benefits already paid. Transocean made a strategic
decision not to litigate this case on its facts; rather, it asks this Court to hold
that any employer who establishes a McCorpen defense is automatically entitled
to restitution. We decline the invitation.
      We begin with an overarching reality: the First Congress, convening in
New York, created the federal district courts primarily in service of the maritime
law, thereby continuing the British law of the sea. Under that comprehensive

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body of jurisprudence, whose origins trace back to the middle ages, a seaman
injured in his employ enjoys a right to maintenance and cure — a small daily
stipend to pay for food, lodging, and basic medical care.4 The right is intrinsic
to the employment relationship and essentially unqualified: it cannot not be
contracted away by the seaman,5 does not depend on the fault of the employer,6
and is not reduced for the seaman’s contributory negligence.7
       To be sure, it has always been the rule that a seaman can lose the right to
maintenance and cure through gross misconduct. Traditionally, this exception
was narrowly confined to “injuries or illnesses resulting from extreme
drunkenness, brawls or the contraction of venereal disease.”8 In McCorpen, this
Court clarified that the exception includes instances where a seaman procures
his employment by “intentionally” and “fraudulently” concealing a material
medical condition causally related to the injury later sustained.9 The requisite
quantum of proof under McCorpen is the same as that for fraud claims. But

       4
        1 THOMAS SCHOENBAUM, ADMIRALTY AND MARITIME LAW § 6-28 (5th ed. 2012); see also
Calmar S.S. Corp. v. Taylor, 303 U.S. 525, 528 (1938) (“The maintenance exacted is
comparable to that to which the seaman is entitled while at sea, and ‘cure’ is care, including
nursing and medical attention during such period as the duty continues.”).
       5
       Terrebonne v. K-Sea Transp. Corp., 477 F.3d 271, 279 (5th Cir. 2007) (“[M]aintenance
and cure is an intrinsic part of the employment relationship, separate from the actual
employment contract. . . . [it] cannot be contracted away.”).
       6
        Calmar, 303 U.S. at 527 (“The duty, which arises from the contract of employment,
does not rest upon negligence or culpability on the part of the owner or master.”).
       7
           Chelentis v. Luckenbach S.S. Co., 247 U.S. 372, 379 (1918).
       8
           1B BENEDICT ON ADMIRALTY § 45 (Matthew Bender ed. 2012).
       9
        McCorpen, 396 F.2d at 549. One of the earliest published cases to develop a
McCorpen-esque defense to maintenance and cure liability is the Third Circuit’s decision in
Lindquist v. Dilkes. See 127 F.2d 21, 22–23 (3d Cir. 1941).

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McCorpen never addressed the issue of restitution for benefits already paid.10
Indeed, McCorpen itself is in tension with Still v. Norfolk & Western Railway
Co.,11 in which Justice Black clarified that a worker’s fraud in procuring his
employment does not vitiate the employment relationship, allowing him to
maintain a suit for damages under the Federal Employers’ Liability Act.12
Courts including ours have since recognized that Still’s logic and congressionally
rooted paternal policy applies with equal force to seamen.13 Yet if the seaman’s
dishonesty does not terminate his status as seaman or his damages remedy, the
right to maintenance and cure ought be an a fortiori case; after all, it is an
essential part of the employment relationship — a down payment on damages
that allows the seaman to subsist and pay for basic medical expenses in the

       10
           See McCorpen, 396 F.2d at 549; see also Patterson v. Allseas USA, 145 F. App’x 969,
970 (5th Cir. 2005) (“The issue of whether a shipowner may affirmatively recover maintenance
and cure payments it makes to a seaman if the shipowner makes these payments before
learning of the seaman’s conduct was not before the court in McCorpen . . . we decline to decide
this difficult res nova issue on this record.”).
       11
            368 U.S. 35 (1961).
       12
           See id. at 45 (“[T]he status of employees who become such through other kinds of
fraud . . . must be recognized for purposes of suits under the Act. And this conclusion is not
affected by the fact that an employee’s misrepresentation may have, as is urged here,
contributed to the injury or even to the accident upon which his action is based.”).
       13
          See, e.g., Johnson, 544 F.3d at 301–02 (“The Supreme Court’s decision in Still makes
clear that a seaman . . . is not barred from suit under the Jones Act because he conceals a
material fact in applying for employment.” (citations omitted) (internal quotation marks
omitted)); Brown v. Parker Drilling Offshore Corp., 410 F.3d 166, 178 (5th Cir. 2005) (“The
Supreme Court has effectively foreclosed any argument that misrepresentations in an
application for employment might void the necessary employment relation.”) (quoting Reed v.
Iowa Marine & Repair Corp., 143 F.R.D. 648, 651 (E.D. La. 1992)); Omar v. Sea-Land Serv.,
Inc., 813 F.2d 986, 989–90 (9th Cir. 1987) (“Maintenance and cure . . . derives from a seaman’s
employment on a vessel . . . . The remedial nature of the Jones Act and maritime law requires
a less technical, contractual definition of ‘employee’ than Sealand asks us to use.”) (citing Still,
368 U.S. at 45)).

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                                        No. 12-30041

immediate aftermath of his injury.14 Though the viability of the McCorpen
defense cannot seriously be questioned at this late hour, Transocean’s novel
attempt to extend the defense into an affirmative right of recovery finds virtually
no support, and we are not inclined to accede.15
       The district court’s concern with the egregious facts here is
understandable, but the sweeping counterclaim it endorses would mark a
significant retreat from our hoary charge to safeguard the well-being of
seamen.16 Already, even without fraud, an employer may offset any Jones Act
damages recovered by the seaman to the extent they duplicate maintenance and
cure previously paid.17 This, if the employer “show[s] that the damages assessed
against it have in fact and in actuality been previously covered.”18 As a fully
developed Jones Act damages model duplicates, “in fact and in actuality,” past
payments for maintenance and cure, it is not clear that the current regime
affords a dishonest seaman anything more than the sums to which he is already

       14
         See Fitzgerald v. U.S. Lines Co., 374 U.S. 16, 18 (1963) (“[R]emedies for negligence,
unseaworthiness, and maintenance and cure . . . serve the same purpose of indemnifying a
seaman for damages caused by injury, depend in large part upon the same evidence, and
involve some identical elements of recovery.”).
       15
         In Vitcovich v. Ocean Rover O.N., an unpublished memorandum decision, the Ninth
Circuit sanctioned a restitution-via-McCorpen counterclaim; however, the decision is devoid
of analysis. See 1997 WL 21205 (9th Cir. 1997). Courts that have meaningfully engaged with
the proposed counterclaim’s broader implications for maritime practice have rejected
Vitcovich. See Dolmo v. Galliano Tugs, Inc., 2011 WL 6817824, at *2 (E.D. La. 2011), aff’d 479
F. App’x 656 (5th Cir. 2012); Hardison v. Abdon Callais Offshore, LLC, 2012 WL 2878636, at
*7 (E.D. La. 2012); Am. River Transp. Co. v. Benson, 2012 WL 5936535, at *5 (N.D. Ill. 2012);
Cotton v. Delta Queen Steamboat Co., Inc., 36 So. 3d 262 (La. Ct. App. 2010).
       16
          See Karim v. Finch Shipping Co. Ltd., 374 F.3d 302, 310 (5th Cir. 2004) (“[T]he
protection of seamen was one of the principal reasons for the development of admiralty as a
distinct branch of law.” (citation omitted)).
       17
            See Wood v. Diamond M Drilling Co., 691 F.2d 1165, 1171 (5th Cir. 1982).
       18
            Id. at 1171 (internal quotation marks omitted).

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entitled under Still — unless the damages recovery is insufficient to absorb the
prior payments.19 Yet we are urged to strike a new balance and allow an
employer who establishes a McCorpen defense to automatically recover prior
payments, without requiring the employer to prove duplication and regardless
of the outcome of the primary suit. In cases where no damages are recovered,
or the award is insufficient to offset the seaman’s restitution liability, 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 high-low settlement confected by
the parties in this case evidences this effect, hinging on whether the risk factor
of affirmative recovery will be allowed by this Court.
       Transocean asks us to weigh again conflicting values — of protecting
seamen from the dangers of the sea, and employers from dishonesty. But the
existing regime hardly leaves employers powerless in the face of seaman fraud.
Contrary to Transocean’s suggestion, an employer is entitled to investigate a
claim for maintenance and cure before tendering any payments to the seaman
— without subjecting itself to liability for compensatory or punitive damages.20

       19
          We have recognized that cure payments are inherently duplicative of a Jones Act
damages award for past medical expenses. Brister v. A.W.I., Inc., 946 F.2d 350, 361 (5th Cir.
1991). Maintenance payments also duplicate a lesser-included portion of a Jones Act recovery,
as they compensate the seaman for the loss of fringe benefits (food and lodging) he would have
enjoyed aboard the vessel had he not been injured. See, e.g., Williams v. Reading & Bates
Drilling Co., 750 F.2d 487, 490 (5th Cir. 1985) (holding that a Jones Act damages award for
lost compensation includes both wages and fringe benefits); see also Averett v. Diamond
Offshore Drilling Servs., Inc., 980 F. Supp. 855, 859 (E.D. La. 1997) (“[The seaman] has
already received wages plus fringe benefits which included the food and lodging as part of his
general damage award under the Jones Act and General Maritime Law. Thus, he is not
entitled to recover this item under his maintenance and cure remedy.”).
       20
          See Morales v. Garijak, Inc., 829 F.2d 1355, 1358 (5th Cir. 1987) (“Upon receiving a
claim for maintenance and cure, the shipowner need not immediately commence payments;
he is entitled to investigate and require corroboration of the claim. . . . A shipowner who is in

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If the employer finds any “causal link” between the seaman’s present injury and
a concealed prexisting disability, it can bring suit under McCorpen and
terminate its obligation to pay — even if the seaman’s on-the-job accident (and
the employer’s negligence) contributed to the injury. And to the extent that the
employer has already paid benefits, it is entitled to recoup them when there are
damages to offset. In our view, this scheme achieves a fair reconciliation
between protecting seamen in the wake of debilitating on-the-job injury and
ensuring that shipowners can protect themselves from liability for sums
attributable to concealed preexisting injuries. The scheme has held its own for
decades and we are not so bold as to now claim a new view — one that the
hundreds before us have either overlooked or rejected.
       Today, we merely render explicit what has been implicit for many years:
that once a shipowner pays maintenance and cure to the injured seaman, the
payments can be recovered only by offset against the seaman’s damages award
— not by an independent suit seeking affirmative recovery. The case for
exercising our extraordinary power to create a new right of action has not been
made. 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. This against the cold reality that the sea has become no less
dangerous, and the seaman no less essential to maritime commerce.

                                            III.
       We REVERSE the district court’s order awarding summary judgment to
Transocean on its counterclaim and RENDER judgement for Boudreaux.

fact liable for maintenance and cure, but who has been reasonable in denying liability, may
be held liable only for the maintenance and cure[,] [not compensatory or punitive damages].”).

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EDITH BROWN CLEMENT, Circuit Judge, concurring in the judgment.
       Transocean asks us to recognize a counterclaim for restitution upon a
successful establishment of a McCorpen defense. While I believe that such a
counterclaim is possible under maritime law and general equitable principles,
see Pizani v. M/V Cotton Blossom, 669 F.2d 1084, 1089 (5th Cir. 1982) (“A court
of admiralty is, as to all matters falling within its jurisdiction, a court of equity.”
(quoting The David Pratt, 7 Fed. Cas. 22, 24 (D. Me. 1839)), the majority has
expressed concern about recognizing this counterclaim wholesale with little in
terms of caselaw to guide us.1 Given the lack of precedent on this issue, the
majority does not see this case as the ideal vehicle for evaluating the proposed
counterclaim because it does not present sufficient information on the practical
effect the claim would have on a seaman.
       Although I concur in the judgment—if not the discussion of Still v. Norfolk
& Western Railway Co.—I would recognize (not inconsistently with the majority
opinion) that an employer may assert a counterclaim for maintenance and cure
as a set-off to Jones Act damages when restitution will not result in an undue
adverse impact on the seaman, and when maintenance and cure is not entirely
duplicative of Jones Act damages. Cf. Colburn v. Bunge Towing, Inc., 883 F.2d
1
          But see Souviney v. John E. Graham & Sons, No. 93-0479, 1994 WL 416643, at *5
(S.D. Ala. 1994) (unpublished) (“Because plaintiff intentionally concealed material facts about
the very back injury for which he now seeks recovery against the defendant . . . as a matter
of law, plaintiff is not entitled to receive maintenance and cure benefits. To the extent that
such benefits have been paid by the defendant, the defendant is entitled to recover the amount
of those benefits by way of judgment against the plaintiff.”); Quiming v. Int’l Pac. Enters., Ltd.,
773 F. Supp. 230, 235-37 (D. Haw. 1990) (granting a counterclaim for $30,000 of maintenance
and cure after defendants established that the plaintiff was never legally entitled to receive
the benefits); see also Bergeria v. Marine Carriers, Inc., 341 F. Supp. 1153, 1154-56 (E.D. Pa.
1972) (“In addition to our finding that [a] counterclaim [for improperly paid maintenance and
cure] is cognizable within the maritime jurisdiction, it must also be allowed as a contractual
set-off.”).

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372, 378 (5th Cir. 1989).2 I see nothing in our caselaw at variance with this
conclusion, and believe that it is necessary, especially in the wake of Atlantic
Sounding Co. v. Townsend, 557 U.S. 404 (2009), for this court to be able to
continue to promote the “combined object of encouraging marine commerce and
assuring the well-being of seamen.” Aguilar v. Standard Oil Co., 318 U.S. 724,
727 (1943).

      2
        This is the result Boudreaux and Transocean sought by way of their bracketed
settlement agreement. On the facts of this case, I would find recovery permissible.

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