(December 2020)
The Merchant Marine Act of 1920
(also known as the Jones Act) is a federal law that regulates maritime
commerce in waters of and between ports in the United States. One part of the act
prevents any vessels except for those that are United States Flag vessels to
transport people and cargo in those waters. In addition, those vessels are
required to have been constructed in the United States, be owned by citizens of
the United States, and to be crewed by citizens and permanent residents of the
United States.
One part of the Act contains provisions allowing injured sailors to make claims against and collect from their employers based on negligence on the part of other crew members, the masters, or the owners of such vessels. Such claims must be based on negligence in the working environment or unseaworthiness. The act considers a negligent working environment to be one where the vessel owner fails to exercise a reasonable degree of care under the circumstances and that such negligence results in unintended injuries to other parties.
The intent of this portion of the Act is to help the injured person receive the medical benefits he or she is entitled to on a timely basis without the costs of litigation. However, the Act is complex, and many employees must seek out legal assistance just to file their claims.
The definition of a seaman under this act is an individual engaged or employed aboard a vessel in any capacity, and this includes off shore oil rigs. The definition includes the master and the crewmembers.
Changes in the maritime industry resulted in
the need to significantly rewrite the Jones Act in 2006. Although there were
many changes, the law itself and seamen's rights did
not change. The Act was recodified to remove ambiguities, contradictions, and
imperfection, but the actual Act itself did not change.
The only deviation from the strict recodification was the introduction of an amendment to preserve the spirit and meaning of the statutes being recodified. The amendment was added because of a review of language in a cause of action for a seaman's personal injury, or death that was found to be inconsistent with the interpretation of Jones Act claims that the U.S. Supreme Court had adopted in a 1924 case, Panama Railroad Company v. Johnson, (264 U.S. 375). The amendment revised the language to keep it consistent with the purpose of the original Jones Act as the Court had interpreted it.
The Act applies to the master, sailors, and other crewmembers of vessels that operate on navigable waters of the United States. It also applies to workers who perform duties on offshore oil platforms. Only workers who have a permanent connection to the vessel or platform are covered. Examples are employees who are responsible for the vessel or platform’s maintenance, repair, welfare, operation, or navigation.
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Examples:
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Some interesting court cases have centered on the issue of who The Jones Act covers. One of them is McDermott International, Inc. v. Wilander, 498 U.S. 337, 111 S.Ct. 807, 112 L.Ed.2d 866 (1991). In this case, a paint foreman assigned to a “paint boat” was injured. He filed to recover under the Jones Act, but the workers compensation carrier initially denied coverage because he did not assist in the navigation of the vessel. The United States Supreme Court reviewed the law and determined that a seaman could do many types of functions on board a vessel and was not limited to only transportation-related functions. The end result was that members of a crew who work permanently aboard a vessel that service or maintain the vessel are considered seaman and therefore covered. A similar case was Chandris, Inc. v. Latsis, 115 S.Ct. 2172, 132 L.Ed.2d 314 (1995). An engineer of a cruise ship company who supervised ship engineering departments while the ship was at sea sustained an eye injury that eventually resulted in him losing 75% of the sight in that eye. He filed a claim under the Jones Act. The claim was initially denied based on him not being a seaman because he did not have anything to do with navigating the vessel. The United States Supreme Court ruled that workers who have work-related duties that contribute to the vessel's function in a significant way in terms of the nature of the activity and the time involved are seaman.
There are three maritime endorsements that can be used to modify WC 00 00 00 C–Workers Compensation and Employers Liability Insurance Policy.
A.
How This Insurance Applies
One item is modified, and one is added.
Item 2 is amended to reflect that only employment necessary or incidental
to work described in Item 1 of the Maritime Coverage Endorsement Schedule is
covered.
A new item is inserted as item 3. It provides territorial limitations as
to where the bodily injury must occur. It is required to be in the territorial
limits of the continental United States of America, Alaska, Hawaii, or Canada
or within a vessel that is sailing between ports within those limits.
The other items in this section are renumbered but unchanged.
C.
Exclusions
Exclusion 10 that excludes bodily injury to a master or crewmember of a
vessel is deleted.
The following two exclusions are added:
13. Any bodily injury that is covered by a Protection and Indemnity
coverage form or policy or a similar policy issued to the named insured or for
its benefit is excluded. This exclusion applies even if the other policy has an
insurance clause, deductible, limitation of liability clause, or a similar
clause that causes it not to apply.
14. The named insured's duty to provide transportation, wages,
maintenance, and cure is excluded. However, this exclusion does not apply when
a premium is entered in Item 2 on the endorsement schedule. Exclusion 14 in
the endorsement is amended to clarify that even when premium is paid to remove
this exclusion that punitive damages related to this exclusion continue not to
be covered.
D. We
Will Defend
A statement is added to this section. It explains that the insurance
company treats any suit or other legal action in rem against a vessel the named
insured owns or charters as a suit against the named insured.
Note: In rem within the
United States is often about the court taking and holding an object for some
legal purpose. An example is a vessel found to have illegal narcotics on board.
G.
Limits of Liability
Item 2 Bodily Injury by Disease is changed in two significant ways:
Schedule
The endorsement schedule has spaces to enter the following:
Note:
This broadens the limits because there
is no each employee disease limit.
The purpose of this endorsement is to extend workers compensation coverage to seamen instead of only providing coverage under Employers Liability. The Voluntary Compensation Maritime Coverage Endorsement does not stand-alone. WC 00 02 01 B–Maritime Coverage Endorsement must also be attached when it is used.
A.
How This Insurance Applies
This insurance applies to both bodily injury by accident and bodily
injury by disease. It also covers death because of such bodily injury. The
following explains the conditions of coverage:
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Example:
Paul worked on a barge for 20
years. After he retired, he contracted a disease he believed the barge
caused. The policy that responds is the one that was in effect the day Paul
retired. It is the only one to respond, even if he had worked for many
different barge companies. |
B. We Will Pay
This is the major coverage statement. It
explains that the insurance company pays those amounts that are equal to the
benefits the named insured would be required to pay if the employer and its
employees listed in Item 1 on the endorsement schedule were subject to the
workers compensation law entered in Item 1 on the endorsement schedule. The insurance
company agrees to pay, but only the amounts that an injured person would be
entitled to receive under the state’s law.
Note: This is not the same as fully providing
workers compensation coverage. It is only using a specific state’s workers
compensation benefit schedule and pays as it requires.
C.
Exclusions
Two new exclusions are added:
D.
Before We Pay
Note: This section is particularly important
because the employee who receives these voluntary benefits is giving up his/her
rights to sue the named insured. This is similar to workers compensation
coverage that is continued as the exclusive remedy. No double dipping
permitted!
Persons entitled to benefits must do the
following before the insurance company pays the benefits:
The insurance company's duty under this endorsement ends immediately when
the person who is entitled to these insurance benefits fails to do the actions
above or when that person claims damages from the named insured or the company
for the injury or death.
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Example: Matthew is injured while working on a tow
boat. His employer has purchased the voluntary compensation maritime coverage
endorsement, so the insurance company contacts him and explains his available
benefits but also explains his obligations and the rights he must relinquish. Scenario 1: Matthew accepts the benefits. He signs the releases and is
soon able to return to work. Scenario 2: After the discussion with the
insurance company, he talks with an attorney who explains how much more he
could receive for his injury because of the available limits under the Jones
Act. Matthew likes the case presented to him, so refuses to sign the releases
and instead waits for the case to proceed through investigation, settlement,
and potential jury trial. |
E. Recovery from
Others
If the insurance company recovers from others, it keeps an amount equal
to its expenses of the recovery and the benefits it paid. It then pays the
balance to the person entitled to it. Similarly, if the person entitled to
benefits of this insurance recovers from others, he or she must reimburse the
company for the benefits it previously paid.
Schedule
Schedule entries consist of the following:
This endorsement is used when some of a
non-maritime employer’s workers employees perform some of their work on a
vessel and therefore could be excluded under WC 00 00 00 C based on Exclusion
C. 10. A good example is a carpenter or a caterer who occasionally works on a
vessel.
Part Two–Employers Liability Insurance, C. Exclusion 10. is deleted when
this endorsement is attached but that deletion is conditional. It is deleted
only when employees whose payroll would be included in the scheduled codes and
classifications perform the work.
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Example: Jerry’s Sandwich shop offers delivery
service. His shop is located on the pier, so his employees often deliver to
workers on the docked vessels. In order to prevent any potential denial of
coverage, Jerry requests this endorsement to be attached. He lists only the
classification and code for his delivery drivers. |
Coverage under the Jones Act applies when the ship or vessel is subject to admiralty law or jurisdiction. This means that it applies only when the ship or vessel is in or on navigable waters. Navigable waters are considered bodies of water that provide a continuous route that facilitates interstate or international commerce.
WC 00 00 00 V–Workers Compensation and Employers Liability Insurance Policy provides coverage when a vessel is not in waters described above and does not fall under maritime or admiralty law. In those cases, the vessel is usually subject to the workers compensation laws, statutes, and regulations of the state involved.
Situations arise from time to time, where a worker's duties are such that it is difficult to determine whether state workers compensation, USL&HWCA, or Jones Act coverage applies. In those cases, the worker may not recover under both a state law and a federal law or under two or more federal acts. Any awards made are offset by any other compensation already awarded or received.
The Jones Act provides financial benefits to both the employer and the employee. It has provided a lifeline to many sailors injured in their jobs of sailing vessels. Unfortunately, because of the very lucrative benefits available and the Act’s complexity, it has also produced numerous lawsuits, despite the original law’s best intentions.