The decision of the Fifth Circuit in Wallace Boudreaux v Transocean Deepwater Inc denying a right to restitution of payments of ‘maintenance and cure’ to seamen.
Wallace Boudreaux (plaintiff) commenced work with Transocean Deepwater Inc (defendant) in January 2005. Despite being directly asked about prior back injuries, he failed to disclose pre-existing serious back problems. In mid-2005 he claimed to have suffered a back injury in the course of employment and payment of weekly benefits and medical expenses commenced.
Action & Trial
Benefits were ceased and in April 2008 the plaintiff commenced proceedings seeking further benefits as well as damages based on alleged default by the defendant in paying past benefits. Discovery occurred and the defendant became aware of the plaintiff’s pre-existing back complaints. The defendant duly – and without opposition – sought and was granted summary judgment denying the claim for further benefits, based on the common law principle that in maritime law an employer is not liable to pay weekly benefits or medical expenses where a seaman has intentionally misrepresented or concealed a pre-existing condition which is material to employment and causally related to the injury claimed (McCorpen defence).
The defendant followed up with a novel application seeking repayment of benefits already paid, arguing that its successful McCorpen defence established a right to restitution, based on principles of fraud and unjust enrichment. The United States District Court for the Eastern District of Louisiana agreed and gave summary judgment for the defendant.
The plaintiff appealed. The defendant asked the 5th Circuit Court of Appeals to recognize the proposed right to restitution following the making out of a McCorpen defence.
The Court of Appeals’ starting point was that the maritime employment relationship by definition included an obligation to pay an injured worker weekly payments and medical expenses. Further, prior cases had held that a worker’s fraud in obtaining employment did not void the employment relationship. The McCorpen defence was a somewhat incongruous qualification which allowed an employer to cease liability to pay benefits if a seaman had intentionally concealed a material medical condition in obtaining work. While the plaintiff’s conduct was disgraceful, the proposed right to restitution would be “a significant retreat from our hoary charge to safeguard the well-being of seamen”.
The Court noted that the seaman would retain the right to seek damages, but as a damages claim might fail or result in an award less than the restitution ordered if the point were accepted, an employer would in effect gain a judgment debt against the seaman which would markedly impede their economic recovery and distort decision-making in settlement negotiations.
The Court’s concerns were heightened by the fact that a McCorpen defence did not require an intentional concealment of a past injury but only a failure to disclose medical information if such was actively sought. The effect of this would be to “threaten injured seamen with the specter of crushing liability for misstatements found material”.
The Court of Appeals reversed the District Court’s award of summary judgment and gave judgment for the plaintiff.
A dissenting judgment was given by Clement J.