5th Circuit weighs in on cure: seaman can only recover adjusted (not retail) medical charges

by Matthew H. Ammerman on January 22nd, 2012

Leon Manderson was a licensed engineer aboard a Chet Morrison Contractors (CMC) dive vessel operating in the Gulf of Mexico. In January 2008, Manderson, aboard another CMC dive vessel, got sick and left the vessel. He was hospitalized for ulcerative colitis, diabetes, and a liver condition. He was a seaman and sued CMC under the Jones Act and general maritime law.

Manderson alleged that his colitis, etc. was aggravated due to overwork. He said CMC made him work 12 hours per shift, failed to provide qualified personnel to relive him from duty, and failed to post a watch schedule in violation of Coast Guard regulations.

In a non-jury trial, the trial judge rejected all of Manderson's negligence claims because CMC did not violate Coast Guard regulations, and, even if it did, such violations did not cause Manderson's alleged injuries. Manderson v. Chet Morrison Contrs., Inc., 2012 U.S. App. LEXIS 18 (5th Cir. Jan. 3, 2012).

I. Manderson cannot recover retail charges if his doctors accepted a discount

However, the trial judge found Manderson's colitis that manifested at work compensable under the cure obligation and awarded $14,680 for maintenance and $169,691.06 for cure. The judge also found CMC acted "in an arbitrary and capricious manner in failing to pay maintenance and cure" and, as a result, awarded Manderson $110,950 in attorney's fees and costs on those claims.

Almost $100,000 of the medical award consisted of undiscounted medical charges by Manderson's doctors. 5th Circuit rejected that award -- it held that a seaman cannot recover the full retail prices charged by his doctors if those bills were satisfied by the employer's insurer's payment of adjusted amounts. Manderson should only recover what was "actually incurred" rather than obtain a higher recovery based on his doctors' retail charges. Manderson at 18. This is important because often medical charges are used as the numerical basis for pain and suffering damages.

As an aside, the Texas Supreme Court recently held the same pursuant to a state law only allowing recovery for medical charges that were actually paid or incurred. Haygood v. De Escabedo, 2011 Tex. LEXIS 514 (Tex. 2011).

II. No attorneys' fee award against CMC says appeals court

The 5th Circuit also rejected the trial judge's award of over $100,000 in attorney's fees to Manderson. Fees should only be awarded if the employer "has exhibited callousness and indifference to the seaman's plight." The employer's actions must be as "egregiously at fault," "recalcitrant," "willful," and "persistent."

CMC was not arbitrary and capricious in denying cure. Its underwriter promptly investigated the claim when filed. Though ultimately found liable for maintenance and cure, CMC showed that it was not arbitrary in denying it. There was a causation issue -- Manderson had prior flare-ups of colitis outside of work. He filed for private disability claiming his ulcerative colitis was not work-related and did not fill out a work injury report after being hospitalized. Manderson also failed to reveal his pre-existing history of high glucose levels and diabetes to CMC at the time he was hired. In addition, one of his three conditions -- Hepatitis C and related liver transplant -- was found to not be compensable. CMC also fulfilled its duty to investigate by promptly referring the claim to its underwriter who investigated the matter.

The 5th Circuit's holding highlights the importance of: (1) a prompt investigation; and, (2) the employer supporting its decision to deny maintenance and cure with credible evidence.

Manderson v. Chet Morrison Contrs., Inc., 2012 U.S. App. LEXIS 18, 1-28 (5th Cir. Jan. 3, 2012)

Posted in General Maritime Law: Maintenance, General Maritime Law: Cure    Tagged with Maintenance and cure, actually incurred, pai or incurred, manderson, seaman



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