(December 2023)
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 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 by 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 litigation costs. 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, which excludes
bodily injury to a master or crewmember of a vessel, is deleted.
The following two
exclusions are added:
13. Any bodily injury
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 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 would be 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 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 he refuses to sign the releases and instead waits for the case to
proceed through investigation, settlement, and a 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. 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 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 occasionally arise 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 state and federal laws 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.