Al-Zawkari v. American S.S. Co.

Decision Date09 June 1989
Docket NumberP,No. 87-1809,AL-ZAWKAR,87-1809
Citation871 F.2d 585
PartiesHizamlaintiff-Appellant, v. AMERICAN STEAMSHIP COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

D. Michael O'Bryan (argued), O'Bryan Law Center, P.C., Birmingham, Mich., for plaintiff-appellant.

John A. Hamilton, Foster, Meadows & Ballard, P.C., Detroit, Mich., Fenton F. Harrison (argued), Buffalo, N.Y., for defendant-appellee.

Before KENNEDY, KRUPANSKY and BOGGS, Circuit Judges.

KRUPANSKY, Circuit Judge.

Plaintiff-appellant Hizam Al-Zawkari (plaintiff) has initiated the instant appeal from a judgment following a bench trial in favor of defendant, American Steamship Company. Plaintiff was employed by the defendant as a seaman between 1970-1983. In November, 1983, plaintiff became ill aboard defendant's ship, and was hospitalized for several months, as a result of which he incurred substantial medical expenses. All of these expenses, however, were reimbursed by his insurance company, Blue Cross, or by the Seafarers' Welfare Plan (SWP), a plan fully funded by shipowners to cover the medical expenses of seamen. As a result, plaintiff incurred no out-of-pocket liabilities.

Plaintiff initiated the instant action to recover maintenance and cure from defendant. 1 Plaintiff argued that the amount of "maintenance" paid him by defendant was insufficient and in conflict with the intent and purpose of the Supreme Court's decisions imposing the maintenance requirement upon shipowners. Plaintiff also asserted that he was entitled to "cure" reimbursement despite the payment of his medical expenses by his insurer and by the SWP. In addition plaintiff attempted to recover punitive damages and attorney fees because of defendant's refusal to endorse the payment of his demanded benefits.

The case was tried to the court on the stipulations of the parties and testimony developed during the course of the trial. On July 20, 1987, the court issued its opinion and judgment concluding that plaintiff was not entitled to payments in addition to those already received for maintenance and cure nor to punitive damages and attorney's fees.

The instant case arose as a result of plaintiff's illness incurred while working on defendant's ship. He was hospitalized in St. Luke's Hospital in Saginaw, Michigan from November 9-17, 1983; the University of Michigan Hospital between November 17, 1983 and February 9, 1984; and in a Brooklyn, N.Y. hospital from October 8-29, 1984, January 29-31, 1985, and February 14-27, 1985. All of plaintiff's medical expenses have been paid by the SWP or by Blue Cross and the health care providers have accepted such payments as full satisfaction of their respective claims.

Plaintiff was a member of the Seafarers' International Union (the Union) and, pursuant to the union's collective bargaining agreement with defendant, seamen including plaintiff were entitled to maintenance of $8 per day. Defendant commenced maintenance payments when it was notified of plaintiff's disability and continued those payments whenever it received documentation of plaintiff's continuing disability.

The maintenance payment of $8 per day has existed for at least 20 years and has been reaffirmed each time the collective bargaining agreement between the union and the defendant has been renegotiated. Appellant charged that since the Supreme Court defined the maintenance rate as the amount of money necessary to provide a seaman with food and lodging equivalent to that which he would have received on board ship, see Calmar Steamship Corp. v. Taylor, 303 U.S. 525, 58 S.Ct. 651, 82 L.Ed. 993 (1938), and which, like the minimum wage, for example, could not be waived by contract, a payment of $25 per day was more realistic than the negotiated $8 per day stipulated by the collective bargaining agreement.

Pursuant to the collective bargaining agreement, defendant was also obligated to provide payments for necessary medical care and attention ("cure"). Plaintiff had attained maximum medical benefit status under the SWP in March 1985. Plaintiff argued that defendant was required to provide "cure" even if he personally funded his own supplemental insurance coverage apart from the coverage afforded by SWP. 2 Twenty thousand dollars of plaintiff's medical bills were paid by the SWP and $185,000 was paid by Blue Cross. Defendant urged that these payments completely satisfied its "cure" obligation since shipowners have funded SWP for the very purpose of discharging shipowners' "cure" obligations. Historically, shipowners had discharged their "cure" obligation by providing disabled seamen with medical services through the U.S. Public Health Service (USPHS), which had also been funded by the shipowners. The USPHS was phased out of existence when it was replaced by the SWP, which shipowners currently utilize to discharge their obligations to provide cure for disabled seamen.

To qualify for SWP benefits, a seaman must:

1. have had 125 days of covered employment in the calendar year immediately preceding the year in which his/her claim accrues, and

2. have had one (1) day of covered employment in the six (6) month period immediately preceding the date on which the claim accrues, and

3. have applied for care within 180 days of his/her last day of employment unless he/she can prove that he/she has been under continuous medical care since his/her last job upon a covered vessel. (Amend. # 25, 4/1/83); and

4. any employee who had worked for at least one (1) day and who was aboard ship working for an employer who was obligated to make contributions to the SWP on the employee's behalf was eligible for emergency care regardless of length of service.

The district court ruled that plaintiff was entitled to maintenance of $8 per day and that his care was "emergency care" covered by the SWP, thereby discharging the shipowner's responsibility to plaintiff for maintenance and cure. From these rulings, plaintiff initiated the instant timely appeal.

Initially, this court's attention is directed to an exploration of the requirements imposed by admiralty law upon the issues joined in the instant case. The duty to provide maintenance is extrinsic to the collective bargaining agreement. See Cortes v. Baltimore Insular Line, 287 U.S. 367, 53 S.Ct. 173, 77 L.Ed. 368 (1932). Indeed, some cases state that the right to maintenance cannot be abrogated by contract. Id.; DeZon v. American President Lines, 318 U.S. 660, 63 S.Ct. 814, 87 L.Ed. 1065 (1943). In Aguilar v. Standard Oil Co., 318 U.S. 724, 63 S.Ct. 930, 87 L.Ed. 1107 (1943), the Supreme Court explained that the right to maintenance is an "implied provision in contracts of marine employment."

While the duty to provide maintenance cannot be entirely abrogated, as an implied contractual provision, the right to maintenance can be modified and defined by contract. See Gardiner v. Sea-Land Service, Inc., 786 F.2d 943, 949 (9th Cir.), cert. denied, 479 U.S. 924, 107 S.Ct. 331, 93 L.Ed.2d 303 (1986). The Gardiner court reasoned that "when a benefits package includes an express reference to a precise rate of maintenance," id. at 949, it must be presumed that this rate was arrived at by negotiation. 3 Accordingly, the maintenance per diem rate, like any other benefit, which is the ultimate result from give and take collective bargaining between the parties, should be binding on them. Thus, the Gardiner court properly enforced a collective bargaining per diem maintenance rate of $8. Id. See also Castro v. M.V. Ambassador, 657 F.Supp. 886 (E.D.La.1987) (following Gardiner ); Dixon v. Maritime Overseas Corp., 490 F.Supp. 1191 (S.D.N.Y.), aff'd, 646 F.2d 560 (2d Cir.1980), cert. denied, 454 U.S. 838, 102 S.Ct. 145, 70 L.Ed.2d 120 (1981) (despite inflation, the union contract establishes a rate of maintenance of $8 per day and that rate is binding on the seamen). Courts generally have decided that it is more appropriate for the courts to enforce privately negotiated contractual rates of maintenance, rather than engaging in overt legislation of particular dollar figures. 4

Plaintiff next charged that he was entitled to reimbursement of his total medical expenses from defendant despite the fact that the SWP would have covered the totality of plaintiff's medical expenses. Appellant argued that under circumstances where a seaman has purchased private medical insurance, the seaman alone is entitled to the benefits of his personally funded insurance policy and the shipowner is not entitled to set off the contributions of a collateral source to the shipowner's obligations of providing for the seaman's cure.

The counterpoint to the seaman's argument rests in existing legal precedent which explains that the purpose of cure is purely compensatory and unrelated to the negligence of the employer and restricts a seaman's recovery to only out-of-pocket "cure" expenses. Because the liability of the shipowner to reimburse the seaman for the totality of his out-of-pocket "cure" expenses, either directly or through shipowner-funded medical plans such as the SWP, is absolute, a seaman who personally funds a duplicate personal medical plan to reimburse himself for his out-of-pocket "cure" expenses is not entitled to the benefits of that duplicate coverage to the detriment of the shipowner, which has its funded plan in place, by denying it the right to set off the payments advanced by the seaman's duplicate benefits policy. The shipowner should not be penalized by a double liability or payment under circumstances where it has satisfied its absolute liability by providing for the full payment of the seaman's total out-of-pocket "cure" expenses through a shipowner's exclusively funded medical plan, i.e., the SWP, which the seaman, for whatever reason, refuses or fails to impress with his claim. 5

This rule is consistent with pertinent case authority. In ...

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