Ignoring its Wards: The Fifth Circuit Restricts Cure Awards for Seamen in Manderson v. Chet Morrison Contractors

Michael Dehart | Note

Plaintiff Leon Manderson (Manderson) began working for defendant Chet Morrison Contractors (CMC) in November 2006. Until January 2008, Manderson worked for CMC as a licensed engineer aboard the M/V JILLIAN MORRISON, a CMC dive vessel operating in the Gulf of Mexico. In January 2008, Manderson abruptly left work aboard another CMC dive vessel and was subsequently hospitalized. Manderson had procured his own health insurance completely independent of his employment with CMC and paid all insurance premiums from March 2008 to January 2009. He was treated for ulcerative colitis, diabetes, and a liver condition. After receiving treatment, Manderson did not return to work. In June 2008, Manderson brought suit against CMC, alleging claims under the Jones Act and general maritime law. He alleged that CMC was negligent per se under the Jones Act because it violated work-hour statutes and Coast Guard safety regulations. Under general maritime law, Manderson claimed that the M/V JILLIAN MORRISON was unseaworthy due to CMC’s failure to comply with manning statutes, failure to maintain a valid certificate of inspection, and failure to repair the vessel’s marine sanitation device. He requested damages, maintenance and cure, and attorney’s fees for CMC’s allegedly arbitrary and capricious denial of maintenance and cure.

After a bench trial, the district court found for CMC on Manderson’s Jones Act and general maritime law claims. However, the court awarded Manderson $14,680 for maintenance and $169,691.06 for cure. At trial, Manderson introduced insurance records detailing the amount charged for his necessary medical care, the amount accepted by his medical providers, and, the amount paid by his insurer for treatment. In determining the cure award, the court refused to deduct payments made by Manderson’s insurer. The $169,691.06 amount for cure reflected the exact amount that Manderson’s medical providers had charged for treatment. Because Manderson had previously purchased his own health insurance, his insurance provider eventually accepted a lower amount from his health insurer for treatment.

Both parties appealed to the United States Court of Appeals for the Fifth Circuit. Manderson challenged the district court’s denial of his Jones Act and unseaworthiness claims, and CMC challenged the amount of cure awarded by the district court, the attorney’s fees awarded, and the amount of attorney’s fees awarded. CMC contended that the appropriate amount of cure should be the amount the hospital accepts as full payment, not the amount Manderson’s medical providers charged. Specifically, CMC challenged the district court’s implicit application of the collateral-source rule in determining the amount of cure awarded to Manderson. The Fifth Circuit declined to extend the application of the collateral-source rule to payments for cure and held that the appropriate amount for cure was the amount that Manderson’s medical providers accepted from his medical insurer as full payment for treatment. Manderson v. Chet Morrison Contractors, Inc., 666 F.3d 373, 382, 2012 AMC 573, 585-86 (5th Cir. 2012).