PETITION OF RJF INTERNATIONAL CORPORATION FOR EXONERATION

(2004) | Cited 0 times | D. Rhode Island | September 2, 2004

ORDER

Before the Court is the motion of Claimant Kimberly M. Hanna("Claimant") to Compel Maintenance and Cure payments fromPetitioner RJF International Corporation ("Petitioner" or "RJF").The payments are sought to cover expenses incurred in connectionwith the medical treatment of Claimant's son, James Avery("Avery"). RJF responded to the Motion by filing an Opposition,as well as by filing a Motion to Terminate its Maintenance andCure Obligation to Avery. This is the third time the parties havecome before this Court on the issue of maintenance and curebenefits since RJF initiated this admiralty action on December12, 2001, in an effort to limit its liability under Rule F of theSupplemental Rules for Certain Admiralty and Maritime Claims.See also Limitation of Vessel Owner's Liability Act, 46U.S.C. app. § 181 et seq. (2004).1

In the Motion to Compel currently before the Court, Claimantcontends that RJF has failed to pay cure benefits relating tocertain previously incurred medical bills.2 Specifically,Claimant contends that RJF has failed to make cure paymentsrelating to a surgery that Avery underwent to relieve hiscontractures3 and spasticity.4 Additionally,Claimant contends that RJF has failed to make cure payments for aBlue Cross/Blue Shield of Florida subrogation claim that relatesto Avery's admissions to Newport Hospital and Rhode IslandHospital immediately following the accident.

A. Payments Relating to the Surgery

In support of its decision to withhold cure payments relatingto the surgery, RJF contends that the surgery to relieve Avery'scontractures and spasticity was palliative in nature, as opposedto curative, and therefore is not part of its cure obligation.Courts have held that a shipowner is only responsible fortreatment that is curative in nature, and not for medical carethat is solely palliative such as the alleviation of pain anddiscomfort. RJF I, 261 F. Supp. 2d at 104 (citing Cox v. DravoCorp., 517 F.2d 620, 626 (3d Cir. 1975)). RJF relies on theFirst Circuit's opinion affirming RJF I, which discussed thisdistinction, 354 F.3d at 107. While the First Circuit held thatthere was sufficient evidence for this Court to conclude thatAvery had not yet reached maximum medical improvement, itrecognized the difference between palliative treatment andcurative treatment: "Of course, [RJF] might have tried todistinguish between curative treatment still possible andaccompanying palliative measures, and then argued that the costof palliation offered in the course of treatment should besegregated and excluded from [RJF]'s obligation."354 F.3d at 107.

Based on the First Circuit's palliative/curative distinction,RJF claims that even though a claimant may not have yet reachedmaximum medical recovery (and therefore would still be entitledto cure payments), that does not entitle a claimant to recoverpayments for treatments that solely relieve the symptoms of aninjury. Here, RJF argues that the surgery to relieve thespasticity and contractures is just that — a procedure that wasintended not to cure those conditions, but merely to relieveAvery of the symptoms of contractures and spasticity.

RJF reads too much into the First Circuit's discussion. Inorder to qualify as "curative" under existing case law, thesurgery for the contractures and the spasticity does not need tocure those problems completely and permanently. Instead, to beconsidered "curative," the surgery must merely improve thecontractures and spasticity. Here, even though Avery's spasticityand contractures are ultimately incurable, the seriousness ofthose conditions can be lessened and Avery's condition improved.

RJF argues that it is Claimant's obligation to prove that thesurgery was curative in nature. Although it is unclear whetherClaimant must meet this burden, the issue was addressed inClaimant's response to RJF's first motion to terminatemaintenance and cure payments. In RJF I, this Court noted thatDr. David E. LeMay clearly stated in his deposition that Avery'sadmission to an inpatient rehabilitation clinic to deal with thecontractures would be more than palliative.261 F. Supp. 2d at 105. If rehabilitation for the contractures wasacceptable in RJF I, it is difficult for this Court to understand howsurgery designed to alleviate permanently the effect of the contractureswould not be deemed curative. Indeed, following the surgery, itis apparent that Avery is able to stand — a clear improvementfrom his pre-surgery state. (Claimant's Suppl. Mem. at 6, 7.)Moreover, Avery's toes are no longer "clawed" (id. at 8) andhis susceptibility to urinary tract infections and skin breakdownhas been reduced (id. at 5). There was no evidence produced byRJF that these measures were merely temporary improvements orprocedures designed only to create a more comfortable state.Thus, the evidence provided by Claimant stands unrebutted.

B. Payments to Blue Cross/Blue Shield

On or about July 27, 1999, Claimant obtained health insurancefrom Blue Cross/Blue Shield (the "Policy") for Avery.5Claimant purchased the insurance with her own funds by personalcheck, and executed an Automatic Payment Option AuthorizationAgreement in order to pay for future premiums on the Policy.Until Avery became eligible for Social Security, the bank accountfrom which the premiums were automatically deducted was funded byClaimant. However, after Avery became eligible for SocialSecurity benefits, the bank account was funded by his SocialSecurity benefits. Avery is the named owner and beneficiary ofthe Policy. (Stipulated Ex. L3.) The Policy has a lifetimecoverage cap of $1,000,000. (Id.) The Policy also contains asubrogation provision, which requires the policyholder (in thiscase, Avery) to reimburse Blue Cross/Blue Shield for medicalexpenses it has covered that may also be covered by a latersettlement or judgment. (Stipulated Ex. L1, L3.)

After treating Avery immediately following the accident, RhodeIsland Hospital and Newport Hospital submitted charges relatingto that treatment as claims under the Policy.6 Blue Crosssubsequently processed the claims and paid the medical providersfor the treatment, which resulted in a reduction of Avery'slifetime cap under the Policy.7 Claimant contends thatRJF, as part of its cure obligation, should reimburse BlueCross/Blue Shield for its payments to the medical care providers,which would result in Avery's insurance cap being restored to itsoriginal amount.

RJF argues, however, that it is not obligated to reimburse BlueCross/Blue Shield (and therefore Avery as the holder of thePolicy), because there is no evidence that Avery purchased thePolicy with his funds and, as a result, incurred an "actualexpense." RJF relies on the maintenance and cure principle that ashipowner will not be required to pay for medical care that isfurnished at no expense to the injured seaman. E.g., Bavaro v.Grand Victoria Casino, No. 97 C 7921, 2001 WL 289782, *7 (N.D.Ill. Mar. 15, 2001) (collecting cases). RJF submits that theevidence shows that the insurance premiums have been paid foreither by Avery's mother (prior to Avery's eligibility for SocialSecurity) or from Avery's Social Security benefits.

Claimant contends that the bank account from which the fundsare drawn is funded by Avery's Social Security benefits, andtherefore provides evidence that Avery incurs an expense. Itcannot be disputed, however, that Avery was not receiving SocialSecurity benefits at the time his mother purchased the Policy,nor was he receiving Social Security benefits at the time he wasinjured. Consequently, there is no evidence that Avery was payingfor the Policy at the time he was injured. In fact, the evidenceis to the contrary — that his mother paid the premiums on thepolicy until the bank account became funded by the SocialSecurity benefits. Accordingly, this Court holds that Claimant isnot entitled to reimbursement for payments to Blue Cross/BlueShield relating to the treatment at Newport Hospital and RhodeIsland Hospital because those costs were incurred at no expenseto Avery. However, this Court does hold that Claimant is entitledto reimbursement for payments of any out-of-pocket expenses paidto Blue Cross/Blue Shield to the extent that the payments weremade from the account after it became funded by Avery's SocialSecurity benefit (or by Avery in some other manner).8

C. Attorney's Fees

As part of its Motion to Compel, Claimant seeks attorney's feesand costs due to RJF's alleged intentional delay in making themaintenance and cure payments. Because this Court finds thatRJF's actions were not callous, willful, or recalcitrant,Claimant's request for attorney's fees is denied. See Robinsonv. Pocahontas, Inc., 477 F.2d 1048, 1051 (1st Cir. 1973)(holding that a claimant must prove the shipowner was "callous,willful, or recalcitrant in withholding [maintenance and cure]payments" in order to receive an award of attorney's fees andcosts).

This is a very difficult and emotional case for Claimant and anexpensive one for Petitioner. The parties have able and forcefuladvocates who are trying to protect their clients' interests,while behaving professionally towards one another. Where thestakes are very high, as they are here, no doubt there will betimes when disagreements erupt over payments for care andtreatment. Nevertheless, all parties are reminded that this Courtexpects that its orders will be followed swiftly and completelyand that all counsel will cooperate fully with each other to thatend.

Therefore, for the foregoing reasons, the Court hereby ORDERSas follows: (1) Claimant's Motion to Compel cure payments with respect to the surgeries for the contractures is GRANTED; (2) Claimant's Motion to Compel cure payments with respect to the Blue Cross/Blue Shield Policy is DENIED, to the extent that it seeks reimbursement for treatment covered by the Policy prior to Avery's eligibility for Social Security benefits; (3) Claimant's Motion to Compel cure payments with respect to the Blue Cross/Blue Shield Policy is GRANTED, to the extent that it seeks reimbursement for treatment covered by the Policy following Avery's eligibility for Social Security benefits; and (4) Claimant's request for attorney's fees and costs is DENIED.IT IS SO ORDERED.

1. RJF first sought to terminate its maintenance and cureobligation because Avery had reached the point of maximum curedue to the permanency of his medical condition. In re RJF Int'lCorp., 261 F. Supp. 2d 101, 106-07 (D.R.I. 2003) ("RJF I"),aff'd 354 F.3d 104 (1st Cir. 2004). This court held thatthe evidence with which it had been presented did not reveal thatAvery had reached the point of maximum medical recovery. Id. at106. RJF next moved to terminate its maintenance and cureobligation based upon Avery's eligibility for Medicare. RJFargued that Medicare is the functional equivalent of medicaltreatment formerly provided to injured seamen at Public HealthService Hospitals. Since eligibility for such treatment at PublicHealth Service Hospitals (when they existed) terminated aclaimant's right to maintenance and cure, the same result shouldlogically follow from Avery's eligibility for Medicare. In awritten opinion, In re RJF Int'l Corp., No. C.A. 01-588S, 2004WL 1879921 (D.R.I. Aug. 10, 2004) ("RJF II"), this Courtdisagreed with RJF's argument because, even if Medicare is thefunctional equivalent of care formerly provided at the PublicHealth Service Hospitals, the Medicare Secondary Payor provisionsbar the U.S. Department of Health and Human Services fromproviding Medicare payments when other payors (in this case, RJFor its insurer) are obligated to make payments.42 U.S.C. 1395y(b)(2).

2. Initially, the parties also disagreed over RJF's obligationto make certain maintenance payments, but those issues wereresolved by agreement of the parties prior to the hearing on thismotion.

3. Contractures are limitations in the range of motion of ajoint resulting from tight muscles and tight tendons. Stedman'sMedical Dictionary 405 (27th ed. 2000).

4. Spasticity is increase in muscle tone while the muscles areat rest, often the result of concentrated muscle spasms. Id. at1662.

5. At the time Claimant purchased the insurance, Avery was aminor and therefore unable to enter into a binding contract underFlorida law.

6. The parties disagree over why the charges were submitted toBlue Cross/Blue Shield under the Policy, as opposed to RJF aspart of its cure obligation. RJF contends that it was Claimantthat instructed the hospitals to submit the charges under thePolicy, instead of RJF. Claimant, meanwhile, contends thatofficers and/or employees of RJF are responsible for the chargesbeing submitted to Blue Cross/Blue Shield. (Claimant's Suppl.Mem. at 10.) This dispute, however, has no bearing on who isresponsible for the costs, and therefore will be leftunresolved.

7. Although the claims submitted under the Policy weresubstantial, the subrogation claim originally was only $1,251.92.The expenses incurred by the medical care providers are actuallymuch higher, but because they were "preferred providers" Avery'scharges are significantly limited under Blue Cross/Blue Shield's"Preferred Provider" network. The lifetime cap, however, is notreduced by the subrogation amount, but by the actual costincurred.

8. This Court takes the position that while it can order RJFto make certain payments to Claimant for out-of-pocket expensesrelating to the Policy, it has no authority to order RJF to makeany payments to Blue Cross/Blue Shield since it is not a party tothis action.

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