Protecting a shipowner from the negligence of a shoreside medical provider

Steamship Mutual’s Stephanie Hayward, Syndicate Executive Claims, Americas Syndicate has written on the matter of protecting a shipowner from the negligence of a shoreside medical provider.

Hayward said that a shipowner had a non-delegable duty to provide adequate medical care to crew members, but when a crew member’s medical care was passed to a shoreside medical provider and the medical provider provided negligent care resulting in further injury to the crew member, the question arose as to whether or not the shipowner was liable.

Referring to cases in US law, Hayward said that a shipowner was liable for the negligence inflicted on its employees by its officers, agents or employees (Hopson v. Texaco, Inc., 383 U.S. 262 (1966)).

For there to be an agency relationship, the injuries needed to be caused in whole or in part by the fault of others performing, under contract, operational activities of the crew member’s employer. A shipowner would therefore be liable for the negligence of an onshore physician it chooses to treat its crew members (Central Gulf S.S Corp v Sambula 405 F 2d 291 (5th Cir. 1968)).

In Randle v. Crosby Tugs, LLC, No. 17-30963 (5th Cir. 2018) a crew member alleged that the shipowner should be held vicariously liable for the shoreside medical provider’s medical malpractice. In this case the shipowner had called for an ambulance when the crew member suffered a stroke, but, importantly, they did not select the hospital to which the crew member was taken. The 5th Circuit clearly stated that an agency relationship is only formed when the principal takes an affirmative act to select the agent, regardless of the shipowner’s non-delegable duty to provide medical care.

Whilst a shipowner has a non-delegable duty to provide adequate medical care, the non-delegable duty in itself does not create an agency relationship. Therefore, a shipowner who does nothing more than call for an ambulance to take a crew member to hospital should not create an agency relationship between the shipowner and the hospital. The agency only occurs when the shipowner takes an affirmative act to select the agent (Olsen v Am.S-S Co.,176 F.3d 891,896 (6th Cir.1999)).

Federal Admiralty Law

On the question as to whether a shipowner can seek recovery of damages paid in respect of the shoreside medical provider’s negligence under Federal Admiralty Tort, Hayward wrote that, for Federal Admiralty Tort jurisdiction to apply to a claim against the shoreside medical provider, the test in Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534, 115 S. Ct. 1043, 130 L.Ed. 2d 1024 (1995) needed to be met:

  1. “(a) A party seeking to invoke such jurisdiction over a tort claim must satisfy conditions of both location and connection with maritime activity. In applying the location test, a court must determine whether the tort occurred on navigable water or whether injury suffered on land was caused by a vessel on navigable water. 46 U. S. C. App. § 740. In applying the connection test, a court first must assess the “general features of the type of incident involved” to determine if the incident has “a potentially disruptive impact on maritime commerce”

It was therefore unlikely that Federal Maritime Law would apply to the medical negligence of a shoreside medical provider as the test in Grubart is unlikely to be satisfied.

If the Grubart test is satisfied:

• Would shipowners be able to seek an equitable indemnity and contribution for Jones Act negligence against the shoreside medical provider?

As referred to above in Olsen a shipowner is liable for the negligence of an onshore doctor “when the shipowner selects a doctor, who acts negligently”. In the circumstances, the shipowner will only be entitled to equitable indemnity and contribution for settlement of Jones Act negligence if the medical provider was acting as an agent.

• Can a shipowner seek indemnity for a breach of Federal Maritime implied contract?

In Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 133-34, 76 S. Ct. 232, 100 L.Ed. 133 (1956) the court considered the liability of a stevedoring contractor to reimburse a shipowner for damages paid by the shipowner to the stevedoring contractor’s longshoremen in respect of injuries he received during the course of his employment on the ship. The United States Supreme Court held there to be an implied warranty of workman like performance in every contract between a maritime contractor and a shipowner.

In California Home Brands, Inc. v. Ferreira, 871 F.2d 830 (9th Cir. 1998) it was explained that “the warranty of workmanlike performance is intended to ease the burden of absolute liability by permitting a shipowner to recover against a contracting party whose poor workmanship created the dangerous condition”. The Ryan indemnity was extended by Waterman Steamship Corp v Dugan & McNamara Inc.; 364 U.S 421,81 S. Ct.200, 5 L.Ed.2d 169 (1960) to situations where there was no express contractual relationship. Waterman, like in Ryan, also involved the shipowner seeking to recover from the stevedoring contractor the amount they have paid in satisfaction of the longshoreman’s injury claim.

However in Joiner v Diamond M Drilling Co.; 677 F.2d 1035,1038 (5th Cir. 1982) a crew member was injured on board and was transferred to a hospital shoreside where he deteriorated and passed away and the shipowner sought contribution and indemnity against the medical facility. It was held that the Ryan indemnity did not apply to private land locked physicians where there was no special relationship.

“A private land-locked physician who treats a patient who happens to have been injured at sea, does not thereby enter into an implied maritime contract. We can find absolutely no support for the proposition that an ordinary, private, onshore physician who treats an injured sailor has thereby submitted himself to the rules of maritime commerce. Rather, it has been consistently held that it is state law which controls in cases such as this.”

Even if there is a special relationship the court in Royal Caribbean Cruises v. Swedish Health Services, 76275-3 (Wash. Ct. App. 2018) said:

“Absent any evidence that the payments were made as a result of a referral by RCCL the payments alone do not establish an implied contract”.

This was, notwithstanding the fact that RCCL had paid the medical provider to treat crewmembers for 15 years.

In the circumstances for the shipowner to claim a breach of an implied contract against a shoreside medical provider they must prove that there was a special relationship over and above a history of past dealings. There needs to be a referral by shipowner to the shoreside medical provider.

Hayward also covers matters relating to US state law.

Conclusion

Hayward concluded that a shipowner would be liable for damages for negligence of a shoreside medical provider “only if they selected that provider”.

It was unlikely that the shipowner would be able to recover damages from the shoreside medical provider under Federal Admiralty Law unless they were able to satisfy the test in Grubart.

However, even if the shipowner was able to satisfy the Grubart test they would have to show that the shoreside medical provider was acting as their agent. “Agency requires more than just a special relationship between the shipowner and shoreside medical provider and will require a referral by the former to the latter.”

If there is no agency relationship between shipowner and the shoreside medical provider, then the shipowner would find it difficult to seek a contribution or indemnity in both Federal and State court.

Hayward said that, in these circumstances, the shipowner should maintain a defence that they are not liable for the shoreside medical providers negligence and they should not settle the claim to include the shoreside medical provider’s share of the damages. If they do so then the settlement should include, if permitted, a stipulation that the crew member is assigning their rights against the shoreside medical provider. However, consideration should be made as to the time limits for bringing a claim in subrogation against the shoreside medical as the claim might be time barred.

Hayward concluded that, if there was an agency relationship, careful review of the relevant State Law should be made upon receipt of a claim from the crew member to determine what steps should be taken under State Law to protect the shipowner’s position for recovery against the shoreside medical provider and where the shipowner intends to pursue a claim for equitable subrogation, attention should be given to the time limits for bringing such a claim.

https://www.steamshipmutual.com/publications/Articles/no-referral-no-liability092020.htm