St. Louis River Seminar Examines Maritime Law, Insurance Issues
The St. Louis Inland River Seminar returned to St. Louis September 20, welcomed by maritime attorneys, insurers, brokers and towing operators. It was held at the Missouri Athletic Club in downtown St. Louis.
In the past, the maritime law seminar was sponsored by the St. Louis Bar Association. But as attorney Ron Fox explained in his welcoming remarks, the Bar Association became concerned about the event’s cost and withdrew its support. Fox and his St. Louis-based firm, Fox Smith, thought it was too important to languish, so the firm stepped up. Any profits the seminar makes beyond recouping costs go to the Seamen’s Church Institute, Fox said.
More than 25 maritime companies and service providers were represented at this year’s seminar. Plans are already under way for next year’s seminar, which will take place at the Missouri Athletic Club on September 19, 2023.
The first session of a busy schedule featured Sal Litrico, CEO of American Patriot Container Transport LLC, giving an update on the progress of his plans for specialized container vessels on the inland waterways (see WJ, September 26).
Employment Agreements
The next session featured a panel of Fox Smith partners discussing “Agreements That Protect Marine Employers.” Margaret Gentzen began with a talk on which medical inquiries marine employers are allowed to make during the hiring process, both pre-offer and post-offer. Any medical inquiries should be the same for all candidates. They need not be directly related to job-related duties or “consistent with business necessity,” but any exclusions should be. Medical records should be kept separate from an employee’s regular employment file.
Fox Smith partner Stas Levchinsky led the audience through the issues involved when an employee claims injury aboard a vessel. He pointed out that under maritime law, marine employees are still regarded as “wards of the court,” and are given much more deference in disputed points than a non-maritime plaintiff would be given. Levchinsky discussed what information should be elicited in medical disclosure forms. He explained a McCorpen defense, in which companies may deny payment of maintenance and cure (normally automatic under the Jones Act and not dependent on fault) only if the employee can be shown to have willfully and fraudulently concealed an injury or illness from an employer during the initial health screening.
Levchinsky strongly recommended boarding and separation forms, which ask whether an employee was sick, injured or visited a hospital since his last time aboard the vessel (if returning), or while serving. He discussed several cases in which employees gave false answers on such forms to avoid disclosing plans to defraud the companies, and how important the forms were in resolving the cases. He also spoke on venue selection agreements, which specify in which legal venue any complaint against the company will be tried. These are important in keeping cases out of local plaintiff-friendly venues where judges and/or prosecutors may be elected. Federal court is usually preferable, he said, because the level of vetting of judges is higher.
Finally, Gentzen discussed how to conduct a separation or termination. She urged employers to update the employee handbook at least annually, and to have employees sign forms acknowledging they have read it. Even if disciplinary policies are progressive, listing various steps of increasing discipline, a company doesn’t necessarily have to follow all the steps if the conduct is egregious enough to warrant dismissal. In that case, she said, speed is important once the decision has been made. Some companies offer severance agreements in which a payment is offered for nondisclosure, but the termination is valid even if an employee declines to sign it. In some states, she noted, employees are allowed to record meetings without the notice or consent of the other party. Employers should be aware this may occur.
P&I Coverage
After a short break, a panel of four insurance experts spoke on protection and indemnity coverage. Baxter Southern, president of McGriff, Seibels & Williams of Missouri, detailed the history of P&I policies. They were developed in the late 19th century by British marine insurance firms to cover liabilities to shipowners that were not covered by the hull policies of the day, such as loss of life, personal injury and excess collision liabilities. The first coverage was provided by Mutual Protection Association. As legislation expanded, new risks demanded new forms of coverage. In the United States, P&I clauses were added to forms by the American Institute of Marine Underwriters.
The basis of the P&I policy is one of indemnity rather than direct liability, meaning that the insured must have the ability to pay any losses or damage before the underwriter is liable to pay or reimburse the insured under the policy.
Southern discussed the concept of “constructive total loss,” meaning the total expenses to raise and salvage a sunken vessel are more than its asset value. He explained that P&I coverage operates on a “named peril” basis—that is, each covered risk must be specifically named in the policy, as opposed to “all risk subject to exclusions” coverage, which doesn’t exist in maritime insurance. He said true total loss cases are rare in the inland industry, before sketching out several claim scenarios, their costs and how they would be covered.
Michael Ash, owner of the Ash Group, delved deeper into the history of P&I coverage and the development of “manuscript” policies with broad language that can automatically attach to any new vessel an operator builds or acquires. Often, manuscript policies will name specific surveyors, attorneys and investigators to be used.
Michael Brown, owner and principal at Michael N. Brown Consulting, explained the difference between “liner negligence” and “inchmaree” coverage. The former covers “accidents on shipboard,” while the latter, named after an 18th-century vessel, covers explosions on board or elsewhere that damage the hull. Ted Lucas, a partner and litigator at Fox Smith, wound up the panel with a discussion of claims scenarios when assets are chartered to a third party.
Injury claims
After a lunch break, Ron Fox led a panel on personal injury damages, medical issues, life care plans, post-traumatic stress disorder and future employment. He explained maintenance and cure payments, which, under maritime law, are due to a seaman who becomes ill or injured in the service of a vessel, without regard to fault. “Maintenance” refers to replacement of daily living expenses, and the employer can use a standard maintenance rate. If a seamen’s expenses are higher, he has the burden of proof, but some courts have limited daily maintenance rates. M&C payments end when a doctor has determined that a seaman has reached maximum medical improvement.
Fox discussed the various ways companies can defend against claims of Jones Act damages and the best ways to use defense experts. Any claims of future medical expenses by plaintiffs must be based on competent evidence. “Hedonic damages,” or loss of enjoyment, is only recoverable as an element of pain and suffering, rather than as a distinct category of damages.
Stephen Peterson, M.D., discussed the history of post-traumatic stress disorder as a diagnosis. It was developed by studying victims of traumatic events such as the Holocaust, Vietnam veterans and survivors of childhood sexual abuse. Evidence suggests it was prevalent throughout history, even if called by different names such as “shell shock” or “battle fatigue.” Peterson went over the various types of PTSD, their symptoms and how to properly link them to the traumatic event or events.
Reptile Theory
The day’s last panel examined various factors that can influence juries and verdicts. Fox Smith partner Bart Sullivan examined the “reptile theory,” a technique plaintiff attorneys use to subtly encourage jurors to put themselves in the shoes of a plaintiff. It must be used subtly because there are rules that prevent litigators from openly using “Golden Rule” arguments to directly solicit that identification.
“Reptile theory” is a way of getting around that prohibition, by suggesting to jurors that the defendant’s conduct, if allowed to continue or go unpunished, endangers the community. Sullivan gave examples of plaintiff attorney questions to company witnesses that suggest the company is agreeing to sets of moral requirements or rules, which the attorney can later claim were violated. Countering that strategy, he said, might involve explaining it in advance to jurors during voir dire. In court, it involves telling the company’s story of stressing safety and enforcement of safety rules.
Bill Kanasky Jr., a jury consultant with Courtroom Sciences Inc., discussed the neurocognitive reasons why jurors can react negatively to key witnesses’ demeanor, and how that can affect monetary awards.
