A costly maintenance and cure benefits denial

In 2009, the U.S. Supreme Court sent shock waves through the industry when it ruled that a Jones Act employer could be liable for punitive damages for the wrongful denial of maintenance and cure benefits. 

Maintenance and cure, which are similar to land-based employees’ worker’s compensation benefits, are owed to seamen who become injured or ill while in the service of the vessel, irrespective of fault. In the case of Atlantic Sounding Co. Inc. v. Townsend, the Supreme Court ruled that punitive damages could be awarded upon showing that an employer “arbitrarily and capriciously” failed to provide the injured or ill seaman with such benefits.

Since that 2009 ruling, a handful of district courts have awarded punitive damages for the non-payment of maintenance and cure. But a recent case from the state of Washington Supreme Court got the attention of maritime employers and admiralty attorneys. Clausen v. Icicle Seafoods garnered significant attention for the amount of punitive damages given. Although the maintenance and cure damages were only $37,000, the court awarded punitive damages of $1.3 million for the employer’s failure to pay it. This was on top of other general damages of more than $450,000 and attorney’s fees and costs of $428,000 that the seaman incurred in fighting for his benefits.

But the most significant aspect of the Clausen case is that it declined to follow the formula enunciated by the Supreme Court in the Exxon Valdez case, which suggested that punitive damages be measured at a 1:1 ratio against compensatory damages. The court in the Clausen case upheld a punitive damage award that was more than double the compensatory damages. Thus, this case highlights the judiciary’s ability to harshly penalize Jones Act employers who inexcusably fail to meet their maintenance and cure obligations. 

While offering no firm guidelines for determining the amount of a punitive damage award, the Washington state court emphasized that the measure of damages should reflect the nature of the offending party’s misconduct. 

About the author

Workboat Staff

Leave A Reply

© Diversified Communications. All rights reserved.