Petition of Rjf Intern. Corp. for Exoneration, No. C.A.01-588S.

• Decision Date: 10 August 2004
• Docket Number: No. C.A.01-588S.
• Citation: 332 F.Supp.2d 458
• Parties: PETITION OF RJF INTERNATIONAL CORPORATION FOR EXONERATION FROM OR LIMITATION OF LIABILITY, CIVIL AND MARITIME.
• Court: U.S. District Court — District of Rhode Island

332 F.Supp.2d 458

PETITION OF RJF INTERNATIONAL CORPORATION FOR EXONERATION FROM OR LIMITATION OF LIABILITY, CIVIL AND MARITIME.

No. C.A.01-588S.

United States District Court, D. Rhode Island.

August 10, 2004.

Robert Edward Collins, Thomas E. Clinton, Thomas J. Muzyka, Esq., Kenneth M. Chiarello, Esq., Clinton & Muzyka, P.C., Boston, MA, Michael Richard Hagopian, Warwick, RI, for Petitioner.

Anthony C. DiGioia, Esq., U.S. Attorney's Office, Providence, RI, Clifford M. Pierce, Boston, MA, for Intervenor-Plaintiff.

John S. Foley, Esq., Howard B. Klein, Jennifer Anne Barry, Esq., Decof & Decof P.C., Providence, RI, John W. Merting, John W. Merting, P.A., Gulf Breeze, FL, Andrew V. Buchsbaum, Esq., Friedman & James LLP, New York City, Dennis J. Roberts, II, Esq., Providence, RI, Gabriella G. Gaal, Esq., Warwick, RI, for Claimants.

Lane W. Newquist, Esq., Anthony C. DiGioia, Esq., U.S. Attorney's Office, Providence, RI, for Movants.

Richard Donovan, Boston, MA, Pro Se.

DECISION AND ORDER

SMITH, District Judge.

"From time immemorial, the law of the sea has required shipowners to ensure the maintenance and cure of seamen who fall ill or become injured while in service of the ship." LeBlanc v. B.G.T. Corp., 992 F.2d 394, 396 (1st Cir.1993). And in more modern times it is not uncommon that a seaman receiving maintenance and cure from a shipowner may be so severely injured that he also becomes entitled to disability benefits under the Social Security Act of 1965. By being "disabled" under the Social Security Act, a seaman becomes eligible for Medicare, which covers (at least in part) the same medical obligations the shipowner is required to pay as part of its maintenance and cure obligation. Accordingly, in such circumstances, a seaman has two potential sources available for coverage of his financial obligations. The question presented is whether Medicare supplants maintenance and cure as the payor of first resort when a seaman becomes Medicare eligible.

This tragic case involves a young seaman, James Avery ("Avery" or "Claimant"), who was injured on August 11, 2001 while working on the Petitioner's vessel when it was docked in Newport, Rhode Island.¹ Before the Court is RJF International Corporation's ("RJF" or "Petitioner") Motion to Terminate Maintenance and Cure Benefits. RJF contends that it no longer is obligated to provide Avery with "cure" due to his entitlement to Medicare benefits. RJF primarily relies on the Second Circuit's decision in Moran Towing & Transp. Co. v. Lombas, 58 F.3d 24 (2d Cir.1995), which held that an injured seaman's eligibility for free medical treatment under Medicare satisfies a vessel owner's obligation to furnish cure. This is a matter of first impression in this Circuit.

On March 19, 2004, the Court heard oral argument on RJF's motion.² The parties submitted post-hearing briefs relating to the interpretation of several complex statutory schemes at issue in this case. For the reasons discussed below, the Court denies the petition of RJF.

I. Facts

For the complete background of the facts relating to this Motion, the reader is directed to the Court's published decision in RJF I. See 261 F.Supp.2d 101 (D.R.I.2003), aff'd 354 F.3d 104 (1st Cir.2004). For purposes of this Motion, a brief précis will suffice:

On August 11, 2001, Avery was a seaman working on the M/V Reflections, a vessel owned by Petitioner. While the vessel was docked at Bannister's Wharf in Newport Harbor, Avery fell from the ship, struck his head on a dock, and then fell into the water. As a result of the accident, Avery suffered severe brain injuries, for which he has been treated at numerous healthcare facilities. Avery has not reached a state of maximum medical recovery, id. at 106, and is currently receiving various outpatient services to assist in his recovery.

On February 1, 2004, Avery became eligible for benefits under Parts A and B of the Medicare Program, which entitle him to a monthly payment of $510 in Social Security benefits, from which a Medicare Part B monthly premium of $66.60 is deducted.

II. "Cure "

"Cure" refers to the shipowner's obligation to provide health-care expenses incurred during the period of the injured seaman's recovery. LeBlanc, 992 F.2d at 397 (citing Aguilar v. Standard Oil Co., 318 U.S. 724, 730, 63 S.Ct. 930, 87 L.Ed. 1107 (1943)). A seaman's entitlement to cure is, for the most part, automatic upon falling injured or ill. "The right attaches `largely without regard to fault; a seaman may forfeit his entitlement only by engaging in gross misconduct.'" Ferrara v. A. & V. Fishing, Inc., 99 F.3d 449, 454 (1st Cir.1996) (quoting LeBlanc, 992 F.2d at 397). An injured seaman's right to cure continues until he has reached the point of "maximum medical recovery." In re RJF, 354 F.3d at 107 (citing Vaughan v. Atkinson, 369 U.S. 527, 531, 82 S.Ct. 997, 8 L.Ed.2d 88 (1962)).

III. Medicare

The United States administers the Medicare program, 42 U.S.C. § 1395 et seq., through the Department of Health and Human Services ("HHS"). Medicare is health insurance for the elderly and disabled, and is funded by contributions through payroll deductions (commonly known as "FICA"). When an individual becomes eligible for Medicare, contributions to the Medicare program continue through co-payments, deductibles, and premiums. Medicare is divided into two parts ("Medicare Part A" and "Medicare Part B"), which differ in terms of their benefits, eligibility, and administration. Medicare Part A, 42 U.S.C. § 1395c et seq., provides for the payment of inpatient hospital and related post-hospital benefits on behalf of eligible individuals. Part A benefits are available to individuals age 65 and older who receive Social Security or railroad retirement benefits, and to individuals under age 65 who have been receiving Social Security disability benefits for 24 months. 42 U.S.C. § 1395c. Part A benefits are also available to individuals age 65 and older who have not earned the necessary work credits for Social Security retirement benefits by making voluntary monthly premiums. 42 U.S.C. § 1395i-2. Part A payments are made from the Federal Hospital Insurance Trust Fund, 42 U.S.C. § 1395i, which is financed by hospital insurance taxes paid by employers, employees, and the self-employed, as well as by voluntary monthly premiums.

Medicare Part B, 42 U.S.C. § 1395j et seq., is the supplemental medical insurance program, which covers physicians' services and various ancillary health care expenses. Part B benefits are available to individuals eligible for Part A coverage who choose to enroll in the supplemental program and pay monthly premiums. 42 U.S.C. §§ 1395p and 1395r. The benefits are paid from a separate trust fund, the Federal Supplementary Medical Insurance Trust Fund, 42 U.S.C. § 1395t, which is financed by the premiums paid by enrollees, together with matching government contributions. 42 U.S.C. § 1395w.

Originally, Medicare was the primary source of payment for the medical expenses of all of its beneficiaries, with one exception — where payment had been or could reasonably be expected to have been made by a workers' compensation law or plan. 42 U.S.C. § 1395y(b)(1). However, as Medicare expenditures rose dramatically, Congress looked to private insurance to cover a greater share of medical services. See H.R.Rep. No. 96-1167, 96th Cong., 2d Sess. 389, reprinted in 1980 U.S.C.C.A.N. 5752. In 1980, Congress passed the Omnibus Budget Reconciliation Act, which contained the Medicare Secondary Payer ("MSP") provisions. The intention of the MSP statute was to reduce Medicare spending, as well as insure the financial integrity of the Medicare program. See P.L. No. 96-499, § 953; P.L. No. 97-35, § 2146; P.L. No. 97-248, § 116; P.L. No. 98-369, § 2301; P.L. No. 99-272, § 9201; and P.L. No. 99-509, § 9319; see generally United States v. Baxter Int'l., Inc., 345 F.3d 866, 874 (11th Cir.2003) (noting that the MSP is a collection of statutory provisions codified during the 1980s with the intention of reducing federal health care costs). In general, the MSP shifts the responsibility for making primary payment for the services provided to Medicare beneficiaries from Medicare to other health care payors.

In pertinent part, the MSP statute, in its current form, provides as follows:

(A) In general

Payment under this subchapter may not be made, except as provided in subparagraph (B), with respect to any item or service to the extent that —

. . . . .

(ii) payment has been made or can reasonably be expected to be made promptly (as determined in accordance with regulations) under a workmen's compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance.

In this subsection, the term "primary plan" means ... a workmen's compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies.

42 U.S.C. 1395y(b)(2). The MSP also allows HHS to recover payments made by Medicare when it turns out that the service in question has been or should have been covered by a primary plan. 42 U.S.C. § 1395y(b)(2)(B)(iii) (providing the United States a direct right of action to recover a conditional Medicare payment from any entity that is or was responsible for paying for the service under a primary plan). The United States is entitled to double damages when a primary plan fails to reimburse Medicare for its conditional payments. 42 U.S.C. 1395y(b)(2)(B)(iii).

As explained in Cochran v. U.S. Health Care Financing Admin., 291 F.3d 775, 777 (11th Cir.2002):

[I]f payment for covered services has been or is reasonably expected to be made by someone else, Medicare does not have to pay. In order to accommodate its beneficiaries, however, Medicare does make conditional payments for covered services, even when another...