Stermer v. Archer-Daniels-Midland Co.
14 La.App. 3 Cir. 147, 140 So. 3d 879, 2014 WL 2515387 (2014)
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Rule of Law:
A maritime employer's failure to pay maintenance and cure is arbitrary and capricious, warranting punitive damages and attorney fees, if its investigation is lax, considers only evidence refuting the seaman's claim, and fails to resolve doubts in the seaman's favor.
Facts:
- Adrienne Stermer worked as a cook for American River Transportation Company (ARTCO) on a motor vessel.
- On October 9, 2007, while squatting to clean a refrigerator, the vessel bumped a tow, causing Stermer to lose her balance and fall, injuring her hands, wrists, and right ankle.
- Fearing job loss, Stermer did not report the injury until October 14, 2007, after her pain and swelling worsened.
- Two other ARTCO employees who were present, Captain Thomas Jones and Bobby Stark, told the company that no accident occurred and Stermer was not injured.
- On October 17, an emergency room physician diagnosed Stermer with bilateral hand and wrist sprains and a right ankle sprain.
- On October 19, ARTCO formally denied Stermer's claim for maintenance and cure, and on October 22, it terminated her employment.
- Over the subsequent years, Stermer’s right wrist injury was diagnosed as a serious scapholunate ligamentous tear requiring surgery, which her doctor causally linked to the October 9 incident.
- Despite receiving ongoing medical reports and a recommendation for surgery from its own independent medical examiner, ARTCO refused to pay maintenance and cure until March 2010 and did not approve the necessary surgery until May 2010.
Procedural Posture:
- Adrienne Stermer filed suit against her employer, American River Transportation Company (ARTCO), in a Louisiana state trial court.
- Stermer asserted claims for Jones Act negligence, unseaworthiness, retaliatory discharge, and unreasonable failure to pay maintenance and cure.
- Following a trial, the court found that ARTCO's refusal to pay maintenance and cure was arbitrary and capricious.
- The trial court awarded Stermer compensatory damages, as well as $300,000 in punitive damages and $150,000 in attorney fees for the maintenance and cure claim.
- The trial court dismissed Stermer's other claims for unseaworthiness and retaliatory discharge.
- ARTCO (appellant) appealed the trial court's judgment awarding punitive damages and attorney fees to the Louisiana Court of Appeal, Third Circuit.
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Issue:
Does a maritime employer's refusal to pay maintenance and cure for nearly two and a half years constitute arbitrary and capricious conduct justifying punitive damages when the refusal is based on an investigation that credits employee statements denying the incident while disregarding corroborating medical evidence and the legal principle that ambiguities must be resolved in the seaman's favor?
Opinions:
Majority - Pickett, Judge
Yes. A maritime employer’s refusal to pay maintenance and cure is arbitrary and capricious where its investigation is neither diligent nor reasonable. ARTCO's investigation was deficient because it considered only the evidence that refuted Ms. Stermer's claim—the statements from two coworkers—while ignoring substantial corroborating evidence. This included her consistent medical reports from the day of the injury, objective diagnoses of sprains and a ligament tear, and the fact that the vessel did experience bumps as she described. Furthermore, ARTCO’s claims adjuster admitted ignorance of the fundamental maritime law principle that all doubts and ambiguities in a maintenance and cure claim must be resolved in favor of the seaman. By conducting a one-sided investigation and terminating her employment shortly after the report, ARTCO demonstrated a willful and persistent refusal to honor its obligations, justifying the trial court's award of punitive damages.
Analysis:
This decision reinforces the high standard of duty maritime employers have for providing maintenance and cure. It clarifies that an employer's investigation into a claim cannot be a cursory or biased search for a reason to deny benefits. The ruling emphasizes that the maritime principle of resolving doubts in the seaman's favor is a mandatory component of a reasonable investigation, not an optional guideline. This precedent strengthens protections for seamen by holding employers accountable for conducting thorough, good-faith investigations that consider all available evidence, especially medical corroboration, before denying a claim.
