In the matter of the Complaint of Obsession Charters, Inc. as Owner of the Vessel Ocean Obsession II, Official Number 1041705 for Exoneration from or Limitation of Liability

Filing 29

ORDER granting 18 Motion for Reconsideration. Signed by Magistrate Judge Thomas B. Smith on 6/29/2017. (Smith, Thomas)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
IN THE MATTER OF THE COMPLAINT
OF OBSESSION CHARTERS, INC. AS
OWNER OF THE VESSEL OCEAN
OBSESSION II, OFFICIAL NUMBER
1041705 FOR EXONERATION FROM OR
LIMITATION OF LIABILITY,
____________________________________

Case No: 6:16-cv-2022-Orl-22TBS

ORDER
This case comes before the Court on Claimant’s Motion for Reconsideration of
Court’s Order Denying Claimant’s Motion to Stay Action and to Lift Injunction Restraining
Action against Petitioner (Doc. 18). Petitioner, Obsession Charters, Inc., has filed a
response to the motion (Doc. 23), and the matter is ripe for decision.
Claimant Julio Walcott alleges that he was injured while riding as a passenger on a
vessel owned by Petitioner (Doc. 1, ¶ 11; Doc. 11). He has filed a lawsuit in the state
court, claiming that his injuries are a result of Petitioner’s negligence (Id.). Medicare has
been paying Walcott’s medical expenses through a Medicare Advantage Plan
administered by Health First Health Plans (Doc. 1, ¶ 21; Doc. 16 at 3).
Petitioner brings this action under the Limitation Liability Act of 1851, 46 U.S.C. §
30501, et seq., seeking exoneration or limitation of its liability for all claims resulting from
the incident in which Walcott was injured (Id.). After this case was filed, the Court
enjoined the institution and prosecution of all suits and legal proceedings against Petitioner
and the vessel pending the resolution of the limitation proceeding (Doc. 7). The Court also
set a deadline for the bringing of claims against Petitioner and the vessel (Id.). The
deadline has passed, and only Walcott has filed an answer and claim (Docs. 10-11).
Walcott motioned the Court to stay this action and lift the injunction so that he could

pursue his state court action against Petitioner (Doc. 14). As grounds, Walcott argued that
his is the only claim against Petitioner, and that he was offering a stipulation which satisfied
the requirements articulated in Beiswenger Enters. Corp. v. Carletta, 86 F.3d 1032, 1041
(11th Cir. 1996)1 (Doc. 14, ¶¶ 4-6). Petitioner opposed the motion on the grounds that
Walcott is not the sole claimant in the case, the aggregate claims exceed the limitation
fund, and the proposed stipulation was inadequate (Doc. 16 at 1). In addition to Walcott’s
claim, Petitioner argued that Medicare has a statutory lien against both it and its insurer for
any payments made to Walcott (Doc. 16 at 1-2). Petitioner also contended that Medicare
has an independent, statutory cause of action against it which is superior to Walcott’s claim
against Petitioner (Id.). The Court denied Walcott’s motion after finding that this is a
multiple claimant case because there is a Medicare claim and lien against Petitioner, and
consequently, the stipulation offered by Walcott was inadequate (Doc. 17).
Walcott seeks reconsideration, arguing that when his motion to stay this proceeding
and lift the injunction was briefed, he did not have an opportunity to address Petitioner’s
argument concerning the application and effect of the Medicare Secondary Payer (“MSP”)
statute, 42 U.S.C. § 1395y (Doc. 18, ¶ 6). Walcott asserts that as a matter of law,
Petitioner’s arguments based on the MSP are wrong (Id.). He also argues that Petitioner,
but not its insurer, may be entitled to limited liability, and that the stipulation he is still

1 In Beiswenger, the Court said a stipulation by a sole claimant: (1) confirming that the vessel owner
had the right to litigate its claim to limited liability exclusively in the admiralty court; (2) stipulating that the
admiralty court had exclusive jurisdiction to determine all limitation of liability issues; (3) agreeing that the
value of the vessel and freight would be the limit of the fund available if limitation was granted; (4) promising
not to seek a determination of any limitation issues in any venue other than the admiralty court; (5) waiving
res judicata and issue preclusion with respect to all matters reserved exclusively for determination by the
admiralty court; and (6) stipulating that unless and until the admiralty court denied limited liability, the
claimant would not attempt to enforce any judgment in excess of the limitation fund against the vessel owner
or any co-liable party, would be sufficient. Id. at 1037-38, 1044.

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offering is adequate to protect Petitioner (Id. at 8-10). Petitioner opposes reconsideration
on procedural grounds and on the merits (Doc. 23).
The federal rules do not specifically provide for the filing of a motion for
reconsideration. Van Skiver v. United States, 952 F.2d 1241, 1243 (10th Cir. 1991), cert.

denied, 506 U.S. 828 (1992). Still, courts recognize that FED. R. CIV. P. 59(e)
encompasses motions for reconsideration. 11 CHARLES ALAN WRIGHT ET AL., FEDERAL
PRACTICE & PROCEDURE § 2810.1 (3d ed. 2012). Reconsideration is an extraordinary
remedy which is employed sparingly. United States v. Bailey, 288 F. Supp. 2d 1261, 1267
(M.D. Fla. 2003). Rule 59(e) does not exist to give parties an opportunity to relitigate old
matters. Michael Linet, Inc. v. Village of Wellington, Fla., 408 F.3d 757, 763 (11th Cir.
2005). The rule is also not intended to permit parties to raise new arguments which could
have been made before a motion was decided. Sanderlin v. Seminole Tribe of Florida,
243 F.3d 1282, 1292 (11th Cir. 2001). The circumstances in which reconsideration is
appropriate include when the court has misapprehended a party’s position or the facts, or
has decided an issue not presented for determination. Anderson v. United Auto Workers,
738 F. Supp. 441 (D. Kan. 1990). The authorities recognize four basic grounds upon
which a motion made pursuant to Rule 59(e) may be granted.
First, the movant may demonstrate that the motion is
necessary to correct manifest errors of law or fact upon which
the judgment is based. Of course, the corollary principle
applies, and the movant’s failure to show any manifest error
may result in the motion’s denial. Second, the motion may be
granted so that the moving party may present newly
discovered or previously unavailable evidence. Third, the
motion will be granted if necessary to prevent manifest
injustice. Fourth, a Rule 59(e) motion may be justified by an
intervening change in controlling law.

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11 CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE & PROCEDURE § 2810.1 (3d ed. 2012).
In this case, the Court grants reconsideration because it finds that it misapprehended the
law in its original decision.
Medicare is a federal entitlement program which pays health insurance benefits for
qualified elderly and disabled persons. See generally, 42 U.S.C. §§ 1395 et seq. When
Medicare was enacted, it was the primary payer of beneficiaries’ medical costs, even if
the beneficiaries could also recover some or all of their costs from other sources,
including private health insurance. Mason v. Sebelius, No. 11-2370 (JBS/KMW), 2012 WL
1019131, at *7 (D.N.J., Mar. 23, 2012) (citing Zinman v. Shalala, 67 F.3d 841, 843 (9th
Cir. 1995)). In 1980, Congress enacted the MSP to make Medicare the secondary payer
whenever a beneficiary could recover benefits from a “primary plan,” such as a private
health insurance provider which had a preexisting obligation to pay benefits, and which
could be expected to pay those benefits “promptly.” 42 U.S.C. § 1395y(b)(2)(A). To
encourage primary plans to timely pay for covered medical expenses, the MSP created in
the United States a right of action and a subrogation right to a private citizen’s right to
recover funds paid by Medicare. 42 U.S.C. § 1395y(b)(2)(B)(ii). The MSP also gives
private persons the right to recover damages from a primary plan that wrongfully denies
payment for healthcare that has been paid for by Medicare. 42 U.S.C. § 1395y(b)(3)(A).
Walcott argues that the Court’s decision, finding that there are at least two
claimants in the case, was wrong because Petitioner is not a “primary plan.” If Petitioner
is not a primary plan, then it follows that Medicare has no lien or claim against Petitioner
or the vessel. Walcott cites Mason v. Am. Tobacco Co., 346 F.3d 36 (2d Cir. 2003), which
was a putative class to recover from tobacco companies the Medicare payments made
for the treatment of individuals with tobacco-related illnesses. The court dismissed the

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suit, holding that the tobacco companies had no preexisting arrangement to pay
insurance benefits to the members of the class, and that the MSP did not apply to
tortfeasors generally. Id. at 42-43.
In December 2003, Congress amended the MSP to provide that: “An entity that
engages in a business, trade, or profession shall be deemed to have a self-insured plan if
it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in
part.” 42 U.S.C. § 1395y(b)(2)(A)(ii). This amendment expanded the definition of “primary
plan” to include tortfeasors, and in the process, abrogated the holding in Mason v. Am.
Tobacco Co. See Taransky v. Sec. of U.S. Dept. of Health and Human Serv., 760 F.3d
307, 313-314 (3d Cir. 2014). The Court could stop here, and deny Walcott’s motion for
reconsideration because it relies on cases that are no longer good law. Instead, the Court
continues its discussion in order to reach the correct result, even though Walcott failed to
argue the pertinent law.
Having established that Petitioner may qualify as a primary plan, the next question
is whether anyone besides Walcott now has a claim against Petitioner or the vessel. After
due consideration, the Court finds that at this point in time, Walcott has the only claim. As
Judge Corrigan observed in Glover v. Philip Morris USA, Inc.,
Section 1395y(b)(2)(B)(ii), as amended by the [Medicare
Prescription Drug, Improvement, and Modernization Act of
2003], requires a primary plan to reimburse Medicare “if it is
demonstrated” that the primary plan “has or had a
responsibility” to make payment for an item or service.
Applying this language, it cannot be “demonstrated” that an
alleged tortfeasor, which has neither been adjudicated as
liable nor has agreed to settle a tort claim, “has” an existing
“responsibility” to reimburse Medicare or “had” a previous
responsibility to do so.
380 F.Supp.2d 1279, 1290 (M.D. Fla. July 26, 2005), affirmed, 459 F.3d 1304.

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Walcott has an unestablished, unresolved negligence claim against Petitioner.
Until it is established by a settlement or judgment that Petitioner is liable to Walcott,
Petitioner has no obligation to reimburse Medicare and an action under the MSP cannot
be brought against Petitioner. Thus, Walcott is the only claimant in this limitation action.
See Bio-Medical Applications of Ga., Inc. v. City of Dalton, Ga., No. 4:08-cv-0134-HLM,
(N.D. Ga. Oct. 13, 2009) (Motion for summary judgment on MSP Act claim granted
because plaintiff failed to show that defendant was obligated to make payments on behalf
of patient); Brockovich v. Scripps Health, No. 06-cv-1569WNLS, 2006 WL 4484161, at *5
(S.D. Cal. Dec. 7, 2006) (“[T]he MSP requires that the evidence demonstrating
responsibility to pay exist before a claimant files an MSP action, and be specific and

identifiable, because those are the common, limiting features of the means Congress
enumerated.”) (emphasis in original).
Petitioner contends that the stipulation proffered by Walcott is not sufficient
because it does not bind the Medicare Advantage Plan administered by Health First (Doc.
16 at 5-8). The Court rejects this argument because Petitioner currently has no liability for
Medicare related claims.
Walcott also argues that only the owner of the vessel is entitled to the protections
of the Limitation Act (Doc. 18 at 8-10). Accordingly, he contends that because Petitioner’s
insurers and/or underwriters do not own the vessel, that they are not entitled to a
limitation of their liability (Doc. 18 at 8-10). Petitioner disputes this claim. The Court is
unsure why this argument is being made at this time. The current injunction only
precludes actions against Petitioner and the vessel. And, it has not been established in
this proceeding that there is any insurance company or underwriters who are obligated to
respond to Walcott’s claim.

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This brings the Court to Walcott’s proposed stipulation. The first paragraph
provides:
Petitioner has the right to litigate the issue of whether it is
entitled to exoneration from or limitation of its liability under
the provisions of the Limitation of Liability Act, 46 U.S.C. § 181
et seq., in this Court, and this Court has exclusive jurisdiction
to determine that issue.
(Doc. 14-1, ¶ 1). This language is sufficient to protect Petitioner’s right to litigate its claim
to limited liability and exoneration in this Court.
Next, Walcott acknowledges this Court’s exclusive jurisdiction to determine the
value of the vessel at the relevant point in time:
Petitioner has the right to have this Court determine the value
of the vessel OCEAN OBSESSION II (the "Vessel")
immediately following the incident at issue, and this Court has
exclusive jurisdiction to determine that issue.
(Id., ¶ 2). To avoid confusion, this paragraph should be revised to make it clear that this
Court has exclusive jurisdiction over all limitation and exoneration issues.
The third paragraph of the stipulation states:
Claimant will not seek a determination of the issues set forth
in paragraphs 1 and 2, above, in any state, federal or other
court, and consents to waive any res judicata effect the
decisions, rulings or judgments of any state, federal or other
court might have on those issues. In addition to any res
judicata effect, Claimant further consents to waive any related
defense of issue preclusion with respect to all matters reserved
exclusively for determination by this Court, including without
limitation those identified in paragraphs 1 and 2, above.
(Id., ¶ 3). Again, to avoid ambiguity, this paragraph should be amended to change
“consents to waive,” to “waives” any res judicata effect and the defense of issue
preclusion.
In paragraph four, Walcott stipulates that:
Claimant will not seek to enforce any judgment rendered in
any state, federal or other court, whether against Petitioner or
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another person or entity that would be entitled to seek
indemnity or contribution from Petitioner, by way of crossclaim
or otherwise, that would expose Petitioner to liability in excess
of $300,000 or such other value of the Vessel immediately
following the incident at issue as may later be determined by
the Court, until such time as this Court has adjudicated the
Petitioner's right to exoneration from or limitation of its liability.
(Id., ¶ 4). This language, taken from Beiswenger is satisfactory to protect Petitioner. Id. at
1043.
The fifth paragraph of Walcott’s stipulation provides:
In the event this Court finds Petitioner is entitled to limit its
liability in this action, Claimant will not seek to enforce any
judgment rendered in any state, federal or other court,
whether against Petitioner or another person or entity that
would be entitled to seek indemnity or contribution from
Petitioner, by way of crossclaim or otherwise, in excess of
Petitioner's limit of liability as determined by the Court. In
addition, should this Court find that Petitioner is entitled to
exoneration from liability, Claimant shall have no recovery
from Petitioner.
(Id., ¶ 5). This paragraph should be amended to state that Walcott will not seek to enforce
any judgment he obtains until he has received prior leave from this Court.
The final paragraph of the stipulation states:
In the event this Court determines that the Petitioner is entitled
to exoneration from or limitation of its liability, Claimant agrees
that any claim based upon fees and/or costs awarded against
Petitioner and in favor of any party in any state, federal or
other court proceeding will have first priority against the
available fund.
(Id., ¶ 6). This paragraph is acceptable.
For the foregoing reasons, the motion for reconsideration (Doc. 18) is GRANTED.
Walcott has fourteen days from the rendition of this Order within to submit a revised
stipulation for the Court’s consideration and approval.

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DONE and ORDERED in Orlando, Florida on June 29, 2017.

Copies furnished to Counsel of Record

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