Blanchard v. United States Army Corps of Engineers

Filing 62

MEMORANDUM RULING re 59 Corrected MOTION to Alter Judgment re 50 JUDGMENT and Amend Findings and Conclusions filed by USA. For the reasons herein, the motion is DENIED. Signed by Magistrate Judge Patrick J Hanna on 9/19/2014. (crt,Alexander, E)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE-OPELOUSAS DIVISION
CHAD BLANCHARD

CIVIL ACTION NO. 12-cv-3140

VERSUS
THE UNITED STATES OF AMERICA

MAGISTRATE JUDGE HANNA

MEMORANDUM RULING
This case comes before this Court by consent of the parties pursuant to 28
U.S.C. § 636(c). Following trial on the merits, the United States on behalf of the
U.S. Army Corps of Engineers filed a Motion to Amend Findings, Conclusions
and Judgment pursuant to Fed.R.Civ.P. 59. [Doc. 59]. For the reasons which
follow, the motion is denied.
Factual and Procedural Background
On August 18, 2011, the plaintiff, Chad Blanchard, worked as a deckhand
aboard the M/V ALLURA, a two-man pushboat. The vessel was moored on the
Atchafalaya River. Blanchard was working alone on the vessel when a Corps of
Engineers’ vessel, the M/V MISSISSIPPI, sailed past the ALLURA, trailing a
wake. The wake rocked the ALLURA, causing Blanchard’s accident and injury.
At the time of the accident, Blanchard was an employee of Stallion Oilfield
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Services, Ltd. which also owned the ALLURA. His status as a seaman under the
Jones Act is stipulated.
As a result of the accident, Blanchard brought a claim under the general
maritime law against the United States, as owner and operator of the M/V
MISSISSIPPI. He also brought a claim for damages against Stallion under the
Jones Act and general maritime law as well as a claim for failure to timely or
adequately pay maintenance and cure. Stallion filed a cross-claim against the
United States seeking indemnity for any maintenance and cure benefits paid or to
be paid to the plaintiff. The United States answered the cross-claim and filed its
own cross-claim against Stallion for tort contribution.
Following trial on the merits, this Court ruled that Stallion was not
negligent under the Jones Act, and the M/V ALLURA was not unseaworthy. The
Court also denied the plaintiff’s claim that Stallion unreasonably failed to timely
or adequately pay maintenance and cure. The Court found the United States to be
100% at fault for the accident which caused the damages at issue. Damages were
awarded in the amount of $585,784.06, plus post-judgment interest. Of that total,
the parties stipulated that $42,794.44 was for past medical expenses.
Since Stallion was found free from fault, judgment was rendered in favor of
Stallion against the United States, for recovery of maintenance and cure payments
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made to Blanchard by Stallion in the stipulated amount of $104,550.36, plus postjudgment interest. The stipulated amount awarded to the plaintiff for past medical
benefits is the same figure as the stipulated amount paid as cure by Stallion for
which this Court found Stallion was entitled to be indemnified by the United
States. The Court ruled that Stallion’s obligations to pay Blanchard maintenance
and cure benefits continue into the future until Blanchard reaches maximum
medical improvement, and that the United States remains liable for
reimbursement to Stallion for those amounts paid. The cross-claim of the United
States against Stallion was denied. Judgment was entered consistent with these
rulings on June 23, 2014.1
The United States contends in its motion that it is being required to pay the
plaintiff’s medical expenses twice-once to the plaintiff and once to Stallion-and
that this Court’s application of the collateral source rule to allow that to occur was
erroneous.
Applicable Substantive Law and Analysis
This case was tried to the bench and the Court issued its findings of fact and
conclusions of law pursuant to Fed.R.Civ.P. 52. The United States couches its
motion under Rule 59 as a “purely legal” question. Pursuant to Rule 59(a)(2) the

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Rec. Doc. 50.
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court may “amend findings of fact and conclusions of law or make new ones, and
direct entry of a new judgment.” This rule “accords with reason” in order for a
judge not to be “forced to perpetuate a finding of fact or conclusion of law which
he discovers to be erroneous.” United States v. Hollis, 424 F.2d 188, 191 (4th Cir.
1970).
In its findings and conclusions, this Court acknowledged that it was
troubled by the fact that, based on the jurisprudence applying the collateral source
rule, it did not appear the government was entitled to a credit in the award to the
plaintiff for past medical benefits paid on behalf of the plaintiff even though it
would owe indemnity to Stallion for the cure benefits it paid. Since the Court
could find no authority that would allow the government such a credit and the
issue had not been specifically briefed prior to trial, the Court invited the
government to bring this motion if it had any authority to suggest to the contrary.
While providing no jurisprudence specifically on point, the government essentially
argues both the policy set forth in distinguishable cases and equity should preclude
the government from paying damages for the same injury to two different entities
with two different causes of action-the plaintiff pursuant to his tort cause of action,
and the employer pursuant to its indemnity cause of action.
This case presents a clash of multiple well-settled principles. “The collateral
source rule bars a tortfeasor from reducing the damages it owes to a plaintiff ‘by

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the amount of recovery the plaintiff receives from other sources of compensation
that are independent of (or collateral to) the tortfeasor’. . . One purpose of the
collateral source rule is to ensure that tortfeasors bear the costs of their own
conduct. . . Properly understood, however, the ‘rule also prevents tortfeasors from
paying twice for the same injury-a result that would achieve both overdeterrence
and overcompensation.’” Johnson v. Cenac Towing, Inc., 544 F.3d 296, 304 (5th
Cir. 2008) (quoting Davis v. Odeco, Inc. 18 F.3d 1237, 1243-1244 (5th Cir. 1994)).
In this case, there is no question that the government has no connection with
the benefits paid by Stallion pursuant to its maintenance and cure obligation.
There is also no question that cure payments were made independent of the
government because, under federal maritime law, “a seaman's right to maintenance
and cure is implied in the employment contract between the seaman and the
shipowner. It in no sense is predicated on the fault or negligence of the
shipowner.” Bertram v. Freeport McMoran, Inc., 35 F.3d 1008, 1013 (5th
Cir.1994); Manderson v. Chet Morrison Contractors, Inc., 666 F.3d 373, 380-81
(5th Cir. 2012). When a seaman is injured his employer as shipowner is “almost
automatically liable for the cost of medical treatment.” Id., (quoting Brister v.
A.W.I. Inc., 946 F.2d 350, 360 (5th Cir. 1991)). The “duty to pay maintenance and
cure . . . is unrelated to any duty of care under tort law.” Id., (quoting Davis v.
Odeco, Inc. 18 F.3d at 1246); Adams v. Texaco, Inc., 640 F.2d 618, 620 (5th Cir.

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1981). “[T]he seaman’s right to receive, and the shipowner’s duty to pay,
maintenance and cure is independent of any other source of recovery for the
seaman (e.g., recovery for Jones Act claims).” Bertram v. Freeport McMoran,
Inc., 35 F.3d at 1013 (quoting Brister v. A.W.I. Inc., 946 F.2d at 361.).
The right to cure in the event the seaman is injured or falls ill while in the
service of the ship is a benefit the plaintiff obtained by accepting his employment
and being exposed to the perils of working aboard a vessel. It assures the seaman
that he will be entitled to curative medical treatment for either illness or injury
funded by his employer until the point he reaches maximum medical improvement.
In that sense, the character of cure is in the nature of a fringe benefit and the
source is completely independent of the tortfeasor.
Since the government has no connection to the payment of cure benefits,
and the contractual obligation to pay those benefits by the employer is completely
independent of and unrelated to the duty owed by the government to the plaintiff
under tort law, the payments derive from a collateral source. By strict application
of the collateral source rule, the United States as the tortfeasor, would not be able
to reduce the damages it owes to the plaintiff by the amount of those payments.
The outcome would be no different if the plaintiff had received worker’s
compensation benefits or private health insurance benefits instead of cure.
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It is equally well-settled that the employer may recover maintenance and
cure payments “from a third-party whose negligence partially or wholly caused the
seaman's injury.” Id.; Savoie v. LaFourche Boat Rentals, 627 F.2d 722, 723 (5th
Cir.1980); Adams v. Texaco, Inc., 640 F.2d at 620. “Indemnification of the
innocent employer is based on the commonsense principle that a party whose
neglect has caused or contributed to the need for maintenance and cure payments
should reimburse the cost of those payments . . .” Bertram v. Freeport McMoran,
Inc., 35 F.3d at 1014 (quoting Savoie v. Lafourche Boat Rentals, 627 F.2d at 723).
“[I]mposition of liability on the tortfeasor ... is not too ‘indirect’ a consequence of
his negligence to allow recovery. The shipowner's obligation—imposed by the law
itself—is not so unforeseeable by a tortfeasor as to bar recovery.” Id., (quoting
Adams v. Texaco, Inc., 640 F.2d at 620, n. 2).
The government does not contest either of these propositions, rather, the
government argues that it is paying for the same damages twice, and in doing so,
the result would run afoul of the policy to avoid “overdeterrence and
overcompensation.” Davis v. Odeco, Inc., 18 F.3d at 1244 n. 21.
In Johnson v. Cenac Towing, which is readily distinguishable but
persuasive, the court, citing Davis as controlling, refused to apply a set-off for
benefits received by the plaintiff from a Blue Cross plan funded entirely by his

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employer who was also the tortfeasor. Key to the decision in both cases was the
benefits paid under the employer-funded plan did not apply to work-related
injuries and the plaintiffs were probably not entitled to those benefits.
Nonetheless, in essence, the employer paid twice for the same thing because the
collateral source rule applied. However, the court was clearly aware of what
appeared to be an inequitable result:
Under the terms of the Blue Cross plan, however, if Blue Cross
extends benefits for a work-related injury and the employee's “injury
or illness is found to be compensable under law,” then Johnson or
Cenac (as the tortfeasor) “must reimburse” Blue Cross for the benefits
extended. Additionally, the plan entitles Blue Cross to recover any
payment made in error to an employee for non-covered services. If
Blue Cross were to seek reimbursement from Cenac for the benefits
extended to Johnson, Cenac would be placed in the position of paying
three times for Johnson's injury. That result certainly cannot be
justified under the collateral source rule. In such an event, Johnson
must hold Cenac harmless for reimbursement demanded by Blue
Cross against Cenac.
Johnson v. Cenac Towing, Inc., 544 F.3d at 307.
Equally persuasive and also distinguishable is the recent decision of
Manderson v. Chet Morrison Contractors, Inc. in which the court stated “[t]he
collateral-source rule appears incompatible with maintenance and cure.” Id., 666
F.3d at 381. The court found the amount of cure the employer owed was not what
the health care provider charged, rather it was what the provider accepted in full
satisfaction from private health insurance for which the premiums were funded

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entirely by the seaman. Citing Davis, the court stated that “an injured seaman may
recover maintenance and cure only for those expenses ‘actually incurred’”, then
recognizing the employer received the full benefit of the seaman’s bargain, stated
“‘[a]lthough this benefit conferred on CMC may . . . have presented a problem in
the tort context (with CMC paying compensatory damages), it is not a problem
here, where fault is not an issue and CMC is liable only for maintenance and
cure.” Id., at 382. (Emphasis added).
This Court interprets these cases as placing the policy of requiring the
tortfeasor to bear the cost of its conduct as a priority in applying the collateralsource rule even at the expense of making the tortfeasor pay more than it might
otherwise pay. What makes this case different from any other collateral source
case involving worker’s compensation benefits, or the dicta in Johnson as it
pertains to private insurance benefits, is the employer is not statutorily or
contractually subrogated to the rights of the plaintiff. Rather, the employer’s claim
for reimbursement of maintenance and cure is a separate, non-derivative claim.
Applying the rationale of Jones v. Waterman S.S. Corp., 155 F.2d 992 (3rd
Cir. 1946), that was recognized as good law in Bertram, had the plaintiff never
amended his original complaint, leaving the United States as the sole defendant
found to be 100% at fault, by operation of the collateral source rule, the United
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States would be cast in judgment for the full amount of Blanchard’s past medical
expenses regardless of the fact that those medical expenses were already paid by
Stallion. Even if the plaintiff executed the judgment or settled with the tortfeasor,
the plaintiff would still have been able to bring a separate cause of action against
Stallion for maintenance and cure for which Stallion could seek indemnity from
the United States. The reasoning of Waterman is premised on the fact that the third
party tortfeasor and the employer who owes maintenance and cure pursuant to its
employment contract with the seaman are not joint tortfeasors and the indemnity
claim is not a derivative right through the seaman, but a separate and distinct cause
of action which vested in Stallion when it paid its first maintenance or cure
benefit. Jones v. Waterman S.S. Corp., 155 F.2d at 995-96, 999-1001; Bertram v.
Freeport McMoran, Inc., 35 F.3d at 1013-1014.
In both Bertram and Waterman, the seaman had settled with the tortfeasor.2
The employer brought claims for reimbursement of maintenance and cure paid to
the seaman and the settlements were neither used as a bar nor a means to reduce
the employer’s full reimbursement for maintenance and cure benefits paid. In a
thorough discussion of Waterman and its progeny, the court’s reasoning is what

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In Waterman, the plaintiff had actually gone to trial against the tortfeasor and
recovered damages. However, the trial court granted a new trial and the plaintiff settled with the
tortfeasor. Jones v. Waterman S.S. Corp, 155 F.2d at 994-95.
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compels the conclusion reached in this case:
At bottom, Houma's contention misapprehends the parties'
relationships to one another, and the nature of Energy's cross-claim.
Energy's maintenance and cure obligation arises as a matter of law,
through its relationship with Bertram and despite its being without
fault. . . .Second, again in contrast to Hardy, Energy's claim against
Houma is not for recovery over for “the amount of damages [Energy]
owes the plaintiff”, i.e., Bertram. . . . Rather, it is for reimbursement
of maintenance and cure; and that claim is “not a derivative right
through [Bertram,] but [wa]s a separate and distinct cause of action
which [vested] in [Energy] when it [wa]s ascertained what sum of
money [wa]s due” from Energy to Bertram. Waterman, 155 F.2d at
1001; accord, United States v. Tug Manzanillo, 310 F.2d 220, 222
(9th Cir.1962) (employer's right to recover maintenance and cure
from tortfeasor accrued “the moment the [employer] paid these sums”
to seaman, regardless of release between seaman and tortfeasor).
Bertram v. Freeport McMoran, Inc., 35 F.3d at 1015 (emphasis in original)(some
citations omitted).
Indemnity, by definition, transfers the entire debt from the indemnitee to the
indemnitor, or in this context, the tortfeasor. Since Stallion’s indemnity claim is
not based on Stallion being subrogated to the rights of the plaintiff, but is a
separate, vested cause of action in Stallion, the tortfeasor must make Stallion
whole and not at the expense of reducing the plaintiff’s recovery as a matter of
law.
While it is a convenient fact that the amounts paid by Stallion as cure are
the same as the amounts of Blanchard’s past medical expenses, a blanket statement

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that an exception should be created to set off a past medical expense by amounts
paid in cure by a third party, a clear collateral source, creates a slippery slope this
Court is not inclined to take. It is a fundamental concept that cure does not apply
to palliative treatment because the seaman is considered to have reached maximum
medical improvement. Pelotto v. L& N Towing, Co., 604 F.2d 396, 4001 (5th Cir.
1979). However, a plaintiff who brings a claim for damages under the general
maritime law is entitled to all past medical expenses caused by the accident and
injury. Since cure is only owed by the employer to the point the seaman reaches
maximum medical improvement, palliative medications beyond that date could
quite conceivably fall into the category of past or future medical expenses.
Conclusion
While it may appear Blanchard may double-recover by way of the collateral
source rule, the fault-free cross-claimant and injured party Stallion will recover
only once, with its recovery limited to the actual loss suffered. Since Blanchard
and Stallion have separate and independent losses, it cannot be said that the solefault tortfeasor defendant in this case is “paying twice for the same injury” as the
United States suggests. In fact, the defendant will pay once, for two separate
injuries, as suggested by Waterman and followed in Bertram, which happen to be
in the same amount.
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As this Court has acknowledged, this result may be troubling, but the
collateral source rule is clear, as is the maintenance and cure recovery provision,
and given the priority afforded to the policy that the tortfeasor should bear the
responsibility for its conduct the Court finds no basis for deviation from either
rule. Therefore, the defendant’s motion is DENIED.
Signed at Lafayette, Louisiana this 19th day of September, 2014.

____________________________________
Patrick J. Hanna
United States Magistrate Judge

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