The Louisiana Third Circuit Court of Appeal recently decided an apparently novel issue under maritime law. The Third Circuit held that an employer that arbitrarily delays paying maintenance and cure is liable for the plaintiff’s attorney’s fees, even those incurred after the payment of maintenance and cure, if the employer pays the benefits conditionally and “under protest.”
The employer in Stermer v. Archer-Daniels-Midland Company initially refused to pay maintenance and cure for 2.5 years following the plaintiff’s accident, believing that the plaintiff had faked her accident. However, after finally deposing the plaintiff and after the U.S. Supreme Court ruled in Atlantic Sounding Co., Inc. v. Townsend, 557 U.S. 404 (2009), that a seaman may recover punitive damages for the employer’s “willful and wanton disregard of its maintenance and cure obligations,” the employer paid all past due maintenance and cure and kept the plaintiff current thereafter. However, the employer made the payments “under protest” and reserved its rights to contest entitlement to maintenance and cure at trial.
The employer sought to limit its obligation for attorney’s fees to the time period between the accident and its payment of maintenance and cure, which was a couple of years before the trial. The Third Circuit found that the “issue of entitlement to attorney fees for work done in ‘proving up’ the claim at trial after a ‘conditional tender’ of maintenance and cure, but with a ‘reservation of rights’ to contest entitlement to maintenance and cure at trial, appears to be res nova.” Finding no contrary jurisprudence, and relying upon the liberal nature of maintenance and cure, the court upheld the trial court’s grant of attorney’s fees throughout trial and appeal. The court reasoned that the plaintiff was entitled to continued attorney’s fees after maintenance and cure was paid because her attorney had to prove her entitlement to maintenance and cure at trial. As a result, the Court of Appeal affirmed the trial court judgment of approximately $637,000 in damages, plus punitive damages of $300,000, and $309,174 in attorney’s fees.
Judge Pickett, writing in dissent, criticized the majority’s decision, arguing that it will “reduce and/or eliminate an employer’s incentive to pay maintenance and cure if the employer finds the seaman’s claim questionable.” Moreover, Judge Pickett maintained that the “designation of the payment ‘under protest’ has no legal significance whatsoever. . . . Whether the payments are made is the issue. Payment of maintenance and cure ‘under protest’ does not afford the employer any more rights or subject the seaman to any additional burden.”
This issue will surely be addressed by other decisions in the future. However, all maritime employers should consider this case when determining whether to pay maintenance and cure.
Stermer v. Archer-Daniels-Midland Co., No. 15-0811 (La. App. 3 Cir. 2/24/15)