Boudreaux v. Transocean Deepwater, Inc.

• Decision Date: 12 July 2013
• Docket Number: No. 12–30041.,12–30041.
• Citation: 721 F.3d 723
• Parties: Wallace BOUDREAUX, Plaintiff–Appellant v. TRANSOCEAN DEEPWATER, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

721 F.3d 723

Wallace BOUDREAUX, Plaintiff–Appellant

v.TRANSOCEAN DEEPWATER, INC., Defendant–Appellee.

No. 12–30041.

United States Court of Appeals, Fifth Circuit.

July 12, 2013.

Wynn E. Clark, Esq., Gulfport, MS, Paul Maury Sterbcow, Esq., General Attorney, Lewis, Kullman, Sterbcow & Abramson, New Orleans, LA, Christopher Collins Van Cleave, Attorney, Corban Gunn & Van Cleave, Biloxi, MS, for Wallace Boudreaux, Plaintiff–Appellant.

John Anthony Scialdone, Esq., Todd Gregory Crawford, Esq., John Steven Garner, Esq., Fowler Rodriguez Valdes–Fauli, Gulfport, MS, for Transocean Deepwater, Incorporated, 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Our prior opinion is vacated and withdrawn, and this opinion is substituted in its place.¹ This case presents the question of whether a Jones Act employer who successfully establishes a defense to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 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 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 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'scontributory 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 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 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 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 regimehardly 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 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...