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posted Feb. 21, 2010    Bookmark and Share

SUING RONALD REAGAN: MY FIRST MARITIME CASE

An uphill battle by a novice lawyer results in a largesse of legal insight

by John Merriam


“Sue the government for shutting down the old Marine Hospital,” my new boss ordered. He was referring to the U.S. Public Health Service Hospital on Seattle’s Beacon Hill, now the headquarters for Amazon.com.  We were in my office at his law firm, on the top floor of the Seattle Trade Center, overlooking Elliott Bay.

“OK,” I eagerly replied.  “What legal theory should we use for a cause of action against the government?”  I was a brand-new lawyer, having taken the bar exam a week earlier. 

Actually, I wasn’t even a lawyer yet.  Until the results from that summer’s exam were announced and I was sworn in as a member of the bar, I was a lowly "Admission to Practice" Rule 9 Intern.  My boss was a sole practitioner, until he hired me, with a personal injury practice heavily weighted toward merchant seamen injured on the job.

“I don’t know—think of something.  Seamen have used the Marine Hospitals for 200 years.  Reagan can’t just shut them down.”  My boss left my desk and went into his own office.  He closed his door, leaving me to stare out the window and wonder how to start this project.  It was August 1982. 

The stately brown building atop Beacon Hill was built in 1932 as a U.S. Public Health Service Hospital, long after the Marine Hospitals were absorbed by the Public Health Service in 1902.  It provided free medical care to military dependents and American Indians, as well as merchant seamen and commercial fishermen.  It was scheduled to close its doors for good the following month, on September 30, 1982. 

Starting a year earlier, on October 1, 1981, seamen and others were gradually squeezed out of free medical care.  Only those who remained inpatient retained their entitlement, for a maximum of one year.  Seamen receiving treatment on an outpatient basis were cut off immediately.  Congress had established the Marine Hospitals in 1798, but in the Budget Act of 1981, passed by Congress on August 13, seamen were given a mere seven weeks’ notice that their near-200-year entitlement to medical attention was to end.

Ronald Reagan was on a roll during his first year in office in 1981.  His poll numbers were so high that it took Democrats in Congress quite a while to grow a backbone and slow him down.  In July 1981, a month before the fatal Budget Act was enacted, he got Congress to pass the then-largest tax cut in U.S. history.  Reagan also requested and got an enormous increase in military expenditures. 

At the same time that the new President was lowering tax rates (mostly for the wealthy) and giving billions more to the Pentagon, he also promised to balance the budget by cutting so-called entitlement programs.  Most of the budget cuts were to education, housing, food stamps, welfare and social service agencies, and to other programs designed to help the neediest Americans. 

My take on “Reaganomics” was that the President was taking money away from poor people and giving it to his rich pals and the Pentagon.  Congress stopped some of Reagan’s proposed budget cuts, but there wasn’t much organized support for the Public Health Hospitals. 

Reagan was immensely popular and used television addresses to the public to sell his agenda, which caused hesitant Congressmen to cave in.  Meanwhile, during the first year of Reagan’s presidency, the national debt reached $1 trillion, the then-largest amount of indebtedness in American history.  During Reagan’s eight years in office, the nation’s debt tripled.  The poverty rate rose, even as the benefits of economic growth flowed to those in upper income brackets.  

I couldn’t remember anything from law school about how to stop the President and Congress from using budget cuts to cut off programs that Congress had created in the first place.  I ran up a huge hot water bill in my house while standing in the shower trying to think of a legal theory that would justify suing the government for closing the hospitals.  Congress is immune from lawsuits—they can’t be sued for what they do. 

The actual shut-down of the hospitals would be performed by the executive branch of the government, headed by President Reagan who signed the Budget Act into law, so it was the executive branch I would have to sue.  I hit the law books in a desperate search for support of the theories I came up with, most of which were far-fetched at best.


The Marine Hospitals were originally paid for by a “hospital tax", a head-tax on seamen coming into the U.S., from 1798 to 1884. Later—until about 1907—there was a “tonnage tax” on ships.  At some point proceeds from those taxes were paid into the general fund instead of to the hospitals directly. Starting in 1905, the Marine Hospitals were supported by general government revenue.  By then, the Marine Hospitals were properly called the Public Health and Marine Hospital Service of the United States when that agency was created in 1902 (the modern version is the US Public Health Service, or USPHS).

Under the judge-made general maritime law, which is older than English common law, shipowners are legally obligated to provide medical care to seamen injured or taken ill while in the service of the ship.  The government assumed that obligation in 1798 when it created the Marine Hospitals, and tried to shed it in 1981 with passage of the Budget Act. 

I reasoned that Congress shouldn’t be allowed to dodge this obligation to those who depended on it at the time of their illness or injury. Both seamen and shipowners had long relied on the government to provide free medical care. That would be my main legal theory, that the government had assumed the responsibilities of shipowners. 

While Congress could certainly disclaim this responsibility for seamen injured or taken ill in the future, it would offend the legal principle of equity to do so retroactively, for those already relying on the government to provide medical care.

However, there was a big problem with this argument.  In 1949, the U.S. Supreme Court ruled that shipowners were only obligated to provide injured seamen with maintenance and cure until the seamen reached “maximum cure” (Farrell v. United States, 336 U.S. 511).  Maintenance and cure is the seaman’s substitute for workers’ compensation.  "Maintenance" is a barebones living stipend during the seaman’s medical treatment; "cure" is the payment of medical bills. 

“Maximum cure” means that a seaman is as good as he is going to get.  When he stops improving, according to the Farrell decision, the shipowner can cut off his benefits. For example, a seaman’s leg is amputated, the result of walking down a defective gangway.  He’s entitled to maintenance and cure until his stump heals and he’s fitted with an artificial leg.  After that, he’s cut off.  If his stump later transforms into a different shape and the seaman needs a new artificial leg, tough luck! 

The problem was that most—if not all—seamen depending on ongoing "cure" from the Public Health Hospital were at maximum cure—some having been injured as long ago as World War II.  Their problems were chronic and usually incurable.  I had to get around the Farrell decision.  This time I dove into the general maritime law, starting with the ancient sea codes, looking for support. 

Farrell v. United States was a 5-4 decision.  Some of the four dissenters—led by Justice William O. Douglas—believed that seamen injured in the service of the ship should be entitled to maintenance and cure for life.  At least one of the sea codes—some of which were written in the Middle Ages—seemed to support that position, at least when it came to seamen injured when defending their ship from “sea rovers” (pirates). 

But even a well-reasoned and eloquent dissent by four Justices on the Supreme Court is like having the second-best hand in a game of poker.  The Farrell majority’s decision was the law of the land and I was stuck with it.  I read the opinion for the fourth or fifth time.

Farrell, the merchant seaman involved in the Supreme Court decision, got hurt during World War II while on shore leave from a U.S. freighter in Sicily.  His injuries were permanent and incurable.  The shipping company paid him a few bucks per day as maintenance and he received free treatment at a Public Health Hospital.  The question presented to the Supreme Court was how long the shipowner had to keep paying maintenance.  No one cared about "cure" because, at the time, it would be provided for life—gratis—by the Public Health Hospitals.

Although the decision states that the obligation to furnish maintenance and cure ceases at maximum cure, the case really involved a dispute over maintenance only.  Anything written about "cure" was dictum—not part of the ruling—and not legally binding as precedent.  So, if the shipowners’ obligation to provide cure didn’t necessarily end at the point of maximum cure, how far did it extend?


The U.S. Constitution was drafted in 1787 and ratified in 1789.  Article III, section 2 of the Constitution gives judges the authority to rule on matters pertaining to the maritime law. Judges can supplement acts passed by Congress.  In that era, American maritime law parted ways with legal precedent from English Admiralty courts. 

How long then was the shipowners’ obligation to provide cure to seamen between 1789 and 1798, before the Marine Hospitals were established?  In other words, how long would shipowners have been required to take care of seamen injured in the service of their ships, had their responsibilities not shifted to the government?  No one could say for sure because there were no reported cases on the issue in U.S. courts before 1798.  I started gathering caselaw and other material to support an argument that seamen in the U.S. were owed lifelong medical care from shipowners before 1798, when the government took over. 

After coming up with legal authority and argument that would prevent, I hoped, getting me laughed out of court—or worse, get me fined for filing a frivolous lawsuit—I started looking around to see exactly whom I was representing, and to try to get some financial support for the lawsuit.

David Loud, a patient advocate working in the Public Health Hospital on Beacon Hill, was very helpful in supplying information, as well as connecting me with patients in dire straits who would make good representative plaintiffs.  He told me that seamen comprised about 20% of the patient population in the Seattle hospital, while nationwide at USPHS Hospitals the percentage of seamen was about 40%.  Using these figures, I estimated that 5,000 permanently disabled seamen would be cut off from medical care were the USPHS hospitals to close.  That was more than enough to bring the lawsuit as a class action.

Next I tried to drum up some financial support.  None of the maritime unions that I contacted were interested.  There had been an earlier, unsuccessful effort to prevent closure of the USPHS Hospitals, involving some of the unions, David Loud and many other groups and individuals.  I tried to convince union port agents and their lawyers that I was bringing a case based upon different legal theories. 

It didn’t work.  Everyone I talked to at various unions balked, feeling they were under siege from Reagan’s assaults on organized labor.  Other potential allies told me my effort was doomed.  On top of the general pessimism, I sensed an underlying distrust of lawyers—like I just wanted to get paid big bucks, by the hour, when everybody knew I couldn’t win.

When I told my new boss that no one would fund the lawsuit, he told me to file it anyway.  “We’ve got to help these guys,” he said.  “Look at Morgan Jones.”  Morgan was a client whose case my boss had just settled out of court, and who would become the lead plaintiff in our class action against the government.  “He broke his ankle on a gangway in April last year and got osteomyelitis.  He was in the Marine Hospital until August, just before this new law was passed.  His doctors didn’t decide to amputate his lower leg until after the cut-off date last September 30th.  Because he was outpatient on that one day, he’s all of a sudden ineligible for amputation by his doctors at the Hospital.  That’s not right!” 

My boss paused and fixed his gaze on a Sea-Land ship docking at Pier 5, no doubt wondering if anyone had been hurt on the voyage south from Anchorage.  “Anyway,” he continued, “we’ll get awarded attorney fees when we win.  This will be good practice for you.”  It looked like we’d be suing the government pro bono

On August 18, 1982, 16 days after I was hired—and after a crash course in maritime and constitutional law more intense than studying for the bar exam—I filed a class action lawsuit on behalf of approximately 5,000 permanently disabled seamen in U.S. District Court for the Western District of Washington at Seattle. 

I named as defendants President Reagan, Secretary of the Dept. of Health and Human Services Richard Schweiker, Surgeon General C. Everett Koop, and Director of the Seattle USPHS Hospital Richard Tomkins.  I thought that getting the clerk of the federal court to sign a Summons to Ronald Reagan, ordering him to answer the lawsuit, was a pretty cool way to start my legal career.   


In the lawsuit I claimed that the government was prevented from shutting down the USPHS Hospitals on a variety of grounds, from constitutional guarantees of due process to "equity"—the English common law notion of fairness.

The case was assigned to Judge Donald Voorhees.  Appearing for the government was William McIntyre, an Assistant U.S. Attorney with the Dept. of Health and Human Services based in Oregon.  The government lawyer immediately filed a motion for summary judgment, requesting that the case get thrown out of court.

Other than that, however, McIntyre didn’t seem to fight very hard.  I don’t know if his lackluster effort was the result of:  1) he figured I was tilting at windmills and was confident I would lose;  2) he didn’t like Ronald Reagan; or 3) he was worried about his own pension getting slashed in the next round of budget cuts. 

Bill didn’t shoot an arrow at my Achilles’ heel, never once arguing that even if the government had assumed the obligation of shipowners to provide seamen with maintenance and cure, that obligation stopped long ago for most of my clients, all of whom were permanently unfit for duty.

At oral argument on the government’s motion for summary judgment and my motion for class certification, Judge Vorhees granted both motions. He basically ruled that Congress can do anything it wants.  He also granted my motion to certify the class of plaintiffs, which meant that all 5,000 seamen were thrown out of court.

I appealed to the 9th U.S. Circuit Court of Appeals, based in San Francisco, but lost again. The 9th Circuit basically said, "What Congress giveth, Congress can take away."  The panel of three appellate judges shot down my arguments one by one but gave the seamen a green light to go after shipowners for their medical expenses years, sometime decades, after they were hurt or taken ill. Probably all the seamen in this class were at maximum cure, so it's my theory—it's almost axiomatic—that a class of merchant seamen who have been declared "permanently not fit for duty" can demand that medical attention continue to be paid by the shipowners.

I tried the last possible appeal: the US Supreme Court declined to review the case in 1985.  The seamen lost. The case, by the way, is reported at Jones v. Reagan, 748 F.2d 1331 (9th Cir. 1984), cert. denied, 472 U.S. 1029 (1985). 

A positive outcome of my attempt to sue Reagan is that for 25 years I’ve successfully represented disabled seamen by using the theory that I gained from the Circuit Court decision.  The cases all settled, and have never resulted in a reported court decision, so the entitlement to lifetime cure for permanent maladies is still an open question, at least in this part of the country. 

The 1st Circuit Court of Appeals (for New England and Puerto Rico) ruled against lifetime cure, but within the 9th Circuit and the state courts of Washington, I’ll keep on pushing for it. 

The USPHS Hospital on Beacon Hill closed its doors on September 30, 1982.  The building then became Pacific Medical Center, a public development authority serving low-income patients.  The building closed as a hospital in 1987 but continued to house Pacific Medical Center in a limited capacity.  Amazon moved in during 1999, but the company is planning to move to the South Lake Union area of Seattle in mid-2010.  The old hospital is currently called the Amazon Pac-Med Building. 


John Merriam was a merchant seaman from 1970 to 1982, while working his way through college and law school. He is now a sole practitioner at Fishermen’s Terminal in Seattle, representing seamen on wage and injury claims.

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Comments (23)

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#1 - Vreni J. - 02/22/2010 - 21:22
Interesting article! And historically, itsounds like it was right there at the cusp of things, when the great Reagan Revolution whose effects we are still seeing today, in spades.

#2 - ira graham - 02/24/2010 - 10:35
very good practice for a new lawyer. he could have used lt.col. oliver north as a defendant, that would have opened a different can of (worms) Reagan is credited with winning the cold war but it was the american taxpayer that bore the brunt of that battle.

#3 - Jeff - 03/04/2010 - 08:50
Mr. Merriam,

Thoroughly enjoyed your article. I worked with the USPHS in New Orleans during the hurricane Katrina relief efforts and was surprised to learn that they are the oldest uniformed service in the united states. As a merchant mariner I felt affronted when first learning of the cessation of this service to merchant seaman though it happened only a few months after I was born! Just another example of a society that has little regard for the seaman that formed the nation and sustain domestic trade to this day. Cheers!

Jeff

www.adeeplife.blogspot.com

#4 - Dana - 12/30/2010 - 12:47
Wonderful article! While working at the "Old Marine Hospital" as it became Pac-Med, I was inspired by David Loud and Dr. Putch.

#5 - Jack - 02/17/2011 - 18:22
If companies don't pay for this themselves why should the taxpayers fund it forever? There is only so much money that taxpayers, even wealthy taxpayers, can give before the pool runs dry. I think we are seeing that now with our enormous budget deficits. Try to run a state worker's comp system this way and people would not go for it.

#6 - Jack - 02/18/2011 - 22:00
And now, any seaman who gets onboard and develops cancer (even if they smoke) or liver disease (even if they drink) or steps on the boat with a mouth full of rotten teeth still gets all of that care paid for as long as it is not diagnosed before the current boat trip. How can it possibly be fair for a company or taxpayers to subsidize that? This is not the 1790's and seamen should be a little responsible for their own care.

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 Some good might have come out of the case.  The Court of Appeals gave seamen a green light to go after shipowners for their medical expenses years, sometime decades, after they were hurt or taken ill.  The seamen were permanently disabled and all, probably, were at maximum cure.  Although “maximum cure” is never mentioned in the appellate decision, it is almost axiomatic that maximum cure did not prevent “a class of merchant seamen who have been declared permanently not fit for duty” (748 F.2d at 1334) from demanding that medical attention continue to be paid for by the shipowners.  I’ve been using this theory in applicable cases for the past 25 years.  The cases all settled and never resulted in a reported court decision, so the entitlement to lifetime cure for permanent maladies is still an open question, at least in this part of the country.