Appeals Court reverses district court’s decision to create a new right of action for employers

NEW ORLEANS –A seaman who was found to have lied about existing back problems when he was hired by an offshore oil rig owner has won an appeal that will not force him to reimburse workers' compensation payments he received when he was injured.

Wallace Boudreaux, a seaman working for Transocean Deepwater Inc., won an appeal at the U.S. Court of Appeals for the Fifth Circuit concerning a district court’s decision to expand shipowners' rights in light of employee fraud. When Boudreaux filled out a pre-employment medical questionnaire for Transocean Deepwater, he allegedly denied having a history of back problems. Several month later, Transocean started paying “maintenance and cure” to Boudreaux when he claimed to have injured his back on the job. Seeking to procure further maintenance and cure payments, Boudreaux filed suit against Transocean in April 2008. During discovery, Transocean asserts it found Boudreaux had a history of back problems and had lied when filling out the questionnaire.

Transocean was granted summary judgment against Boudreaux’s claim for more benefits, but it filed a counterclaim, arguing that it was automatically entitled to recover maintenance and cure payments it had made. Although Transocean's counterclaim was novel in maritime law, the district court granted the employer’s request for summary judgment.

The court of appeals found that there was “virtually no support” for Transocean’s argument and that if the district court’s decision were upheld, it would “mark a significant retreat from our hoary charge to safeguard the well-being of seamen.”

The court noted that it is not “so bold as to now claim a new view” without case law to guide it. But it did clarify a shipowner’s right, stating that “payments can be recovered only by offset against the seaman’s damages award” and not through an independent suit.

In a per curiam opinion, Circuit Judges Patrick Higginbotham, Edith Brown Clement and Catharina Haynes reversed the district court decision  to award summary judgment and rendered judgment for Boudreaux.

Case No. 12-30041.