Fifth Circuit: No Right to Restitution for Maintenance and Cure Payments

When Plaintiff was hired, he completed a pre-employment medical questionnaire.  Plaintiff failed to disclose his serious preexisting back problems, affirmatively answering “no” to several inquiries about those problems.  After working for Employer for a few months, Plaintiff allegedly injured his back.  Employer paid maintenance and cure for five years.  After Plaintiff filed suit for additional maintenance and cure, Employer learned through discovery about Plaintiff’s extensive back problems.  Employer won a partial summary judgment on a McCorpen defense, which extinguished liability for maintenance and cure because  Plaintiff’s failure to disclose the prior back problems.

Then, Employer filed a counterclaim against Plaintiff to recover the maintenance and cure payments already made.  The district court issued an opinion awarding Employer restitution for the sums previously paid.

The Fifth Circuit, in a 2-1 opinion, determined that the district court erred by awarding restitution, no matter the egregious facts concerning Plaintiff’s maintenance and cure claim.  In short, restitution is not available even if a seaman obtains maintenance and cure based on fraud.

A maritime employer’s obligation to pay an injured seaman maintenance and cure is an essential part of the employment relationship, whether characterized as contractual or otherwise.  In Still v. Norfolk & Western Railway Co., Justice Black’s opinion for the Court 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.  Courts including ours have since recognized that Still’s logic and congressionally rooted paternal policy applies with equal force to seamen.  The McCorpen defense rests, if somewhat uneasily, alongside Still and progeny, permitting an employer to extricate itself from its maintenance obligation by demonstrating that the seaman “intentionally concealed” a material medical condition in obtaining his employment.  Though most courts have accepted McCorpen, Transocean’s novel attempt to invoke the case as an affirmative right of recovery finds virtually no support, and we are not inclined to accede.

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.  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.  This, if the employer “show[s] that the damages assessed against it have in fact and in actuality been previously covered.”  Yet we are urged to strike a new balance and allow an employer who establishes a McCorpen defense to automatically recover prior maintenance, 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.

Don’t forget to check out Judge Edith Brown’s dissent, which is well worth the read:

Just because honest seamen are entitled to avoid the hassles of complex workers’ compensation schemes does not mean that seamen who intentionally or willfully conceal prior medical conditions are entitled to the same benefits.  This court recognized as much in McCorpen, and has consistently applied that principle for over fifty years.  This case is therefore distinguishable from Still, in which the Supreme Court held that an employee could recover under the Federal Employers’ Liability Act even if the individual obtained his job by false representations.  . . .  Here, there is no question as to whether Boudreaux is entitled to the benefits of maintenance and cure as a result of his misrepresentations.  He is not and was not, and I would therefore hold that Transocean is entitled to restitution.  There is no reason to reject this general equitable principle in the face of willful and intentional misconduct engaged in on land by a non-maritime employee, simply because, by virtue of that very misconduct, the individual later obtained maritime employment and became unjustly enriched at the expense of his maritime employer.

Boudreaux v. Transocean Deepwater, Inc., — F.3d —- (5th Cir. 2013).