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Transocean Not Entitled to Restitution From Seaman's Fraud

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By Brett Snider, Esq. on July 16, 2013 10:01 AM

In a strange and salty case, the Fifth Circuit refused to essentially create a new remedy by right for maritime employers who are tricked into paying for employees' fake injuries.

The Boudreaux v. Transocean Deepwater court dealt with an offshore drilling company who wanted to extract all the benefits it had erroneously paid to a former employee, Boudreaux, due to his lying about a pre-existing condition that contributed to an at-work injury.

The key here is how Transocean asked the court to remedy the problem.

Transocean's Not-So-Finest Employee

Wallace Boudreaux worked for Transocean (the same company from the Deepwater Horizon disaster) in 2005, and injured himself after only five months, causing Transocean to pay for his maintenance and cure for almost five years.

Unlike a Bordeaux, Boudreaux did not get more robust or well-rounded with age, and he filed suit in 2008 claiming further maintenance and cure, asserting claims under the Jones Act.

Transocean counterclaimed upon learning that Boudreaux had willfully concealed his past history of back injuries and prevailed on a partial summary judgment motion to dismiss his Jones Act claims.

Having mostly settled the issue of future payment of benefits to the defrauding seaman, Transocean asked the Fifth Circuit to grant them restitution for all the past payments to Boudreaux under a case called McCorpen.

The McCorpen Defense

In a 45-year-old Fifth Circuit opinion, McCorpen v. Central Gulf Steamship decided that a merchant seaman's failure to disclose a pre-existing condition to an employer would make him ineligible to claim maintenance and cure for injuries related to that condition.

In a somewhat more recent decision, the Fifth Circuit affirmed the McCorpen defense stating that intentional or willful concealment of a material medical fact would end an employer's obligation to pay maintenance and cure from injuries that stem from the concealed medical fact.

While it seems clear that this would extend to any future payments that Transocean might have owed Boudreaux, Transocean wanted the Court to bless an automatic restitution of past payments after winning a successful McCorpen defense.

A Whole New Remedy

To be clear, under a sort of unjust enrichment theory, the facts of Boudreaux would be a great basis for the lower court to grant restitution to Transocean.

However, Transocean is essentially asking for a shortcut remedy borne out of the briny depths of their successful McCorpen defense, granting any employer automatic restitution for past benefits on the merits of the McCorpen ruling.

The Fifth Circuit cites Still v. Norfolk & Western Railway Co., a Supreme Court decision which allowed for the obligations of employment to continue despite employment being obtained via fraud, which suggests seamen should continue to be owed maintenance despite lying through their teeth about the cause of the injury.

The Boudreaux court settles that to allow employers to recover in this way, would upset the balance in maritime laws favoring the well-being of seamen. So, the Fifth Circuit denied their recovery.

Bottom Line

Maritime employers can sue separately for fraud to attempt to recover ill-gotten maintenance and cure gains, but the court holds their maritime employees dear.

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