Shipboard Medical Liability Case May Alter the Status Quo

The U.S. Court of Appeals for the Eleventh Circuit was faced with some controversial questions in Franza v. Royal Caribbean Cruises, LTD, 2014 U.S. App. LEXIS 21375 (11th Cir., 11/10/14), a case in which an injured ship's passenger received allegedly negligent treatment in the ship's medical clinic by contractor medical providers. The passenger soon died.

First, the appellate court had to decide if it should follow the so-called “Barbetta Rule,” enunciated by the Fifth Circuit in Barbetta v. S/S Bermuda Star, 848 F.2d 1364 (5th Cir. 1988), which says that under no circumstances may a ship's passenger hold a ship operator liable under agency theory for the negligence of onboard medical personnel, no matter how much control the ship's owner exercises over its medical staff. As we discussed in Part One of this article, the Eleventh Circuit determined that the Barbetta Rule was not relevant to today's world, where principals are often compelled to answer for the acts of their agents, and where ship owners are no longer cut off from communication with their ships when they have gone out to sea. Quoting Oliver Wendell Holmes (The Path of the Law, 10 Harv. L. Rev., 469 (1897)), the court declared that, ultimately, it “should not follow a rule of law simply because 'it was laid down in the time of Henry IV,' particularly where the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past.”

Having determined that the Franza case's ship operator could conceivably be held financially responsible for its medical staff's negligence, the court had to next determine if the facts alleged by the plaintiff were adequate to keep her claim alive in the face of the operator's motion to dismiss. Therefore, the court had to decide whether plaintiff Patricia Franza, the deceased ship passenger's daughter, had properly alleged either that the ship's medical personnel were the cruise operator's 1) actual agents; or 2) apparent agents.

Actual Agency

The elements required to show actual agency are that: 1) the principal acknowledged that the agent would act for it; 2) the agent showed an acceptance of the undertaking; and 3) the principal exercised control over the agent's actions. Whetstone Candy Co. v. Kraft Foods Inc., 351 F.3d 1067, 1077 (11th Cir. 2003). As to the first two of these, the court found that the plaintiff's allegations were adequate. “Most importantly,” stated the court, “Franza specifically asserted that both medical professionals were 'employed by' Royal Caribbean, were 'its employees or agents,' and were 'at all times material acting within the scope and course of [their] employment.'”

Franza's arguments for the third element ' that the cruise line employed and exercised control over the doctor and nurse ' were particularly strong. Among other relevant allegations, the plaintiff had claimed that the shipowner:

• Directly paid the doctor and nurse salaries, and did not pay them piecemeal for services provided;
• Created, owned and operated the on-board medical facility;
• Stated in its promotional materials that the ship had its own medical center;
• Provided uniforms to the doctor and nurse bearing the Royal Caribbean name and logo (and the medical professionals knowingly wore those uniforms);
• Told immigration authorities that the doctor and nurse were “members of the ship's crew”;
• Purchased all medical supplies for the ship's medical center; and
• Billed on-board patients directly, so that money paid for medical services flowed to the liner's operator, not to the medical professionals.

Taking these things into account, the Eleventh Circuit appeals panel determined that the plaintiff's complaint “unambiguously” established an agency relationship between the employer cruise line and the nurse and doctor. “Thus,” stated the court, “applying the standard principles of agency, we are compelled to hold that Franza' s complaint sets out a plausible basis for imputing to Royal Caribbean the allegedly negligent conduct of its onboard medical employees.”

Apparent Agency

The question whether a passenger could use the alternative theory of apparent agency to hold a cruise line vicariously liable for the onboard medical negligence of its contractors was one of first impression for any U.S. Circuit Court, although some district courts ' including the Franza district court ' had already concluded that this type of liability could be imposed. That is because while respondeat superior responsibility derives from a principal's right to control the conduct of its agent, liability under a theory of apparent agency flows from equitable concerns. Barbetta did not address apparent agency, as that holding was based on the notion of control, and the shipowner's lack thereof. Absent any controlling precedent to the contrary, federal courts at the trial level had, therefore, historically not hesitated to impose liability on ship operators for the medical negligence of their contractors on the theory of apparent agency. The Eleventh Circuit agreed with these courts, stating that because they had “long applied the principles of apparent agency in maritime cases,” it could “discern no sound basis for allowing a special exception for onboard medical negligence, particularly since we have concluded that actual agency principles ought to be applied in this setting as well.”

The appellate court differed with the Franza trial court, however, in finding that Patricia Franza's apparent agency claim was adequately pleaded. It noted that there are three elements of a claim for apparent agency: 1) a representation by the principal to the plaintiff, which 2) causes the plaintiff reasonably to believe that the alleged agent is authorized to act for the principal's benefit, and which 3) induces the plaintiff's to rely on that appearance of agency to his detriment.

Beginning with the representations made by the ship operator to Franza's now-deceased father, the court found that Franza claimed Royal Caribbean: 1) said the ship's medical staff was employed by them in promotional materials; 2) publicly used proprietary language to describe its medical centers; 3) billed passengers directly for medical services; 4) compelled the medical staff to wear uniforms with the cruise line's name and logo, 5) held out the allegedly negligent medical care providers to passengers and immigration officials as “members of the crew”; and 6) introduced the doctor to the ship's passengers as “one of the ship's Officers.”

The second element was met because the court found that all the aforementioned representations might reasonably have induced Franza's father to believe that the doctor and nurse were authorized by Royal Caribbean to act on its behalf.

The final element ' that Franza's father relied on Royal Caribbean's alleged representations to his detriment ' was the element that the district court had found lacking in Franza's allegations. It dismissed Franza's apparent agency claim, stating that her complaint “d[id] not state how [the decedent] relied on, or changed his position in reliance on, his alleged belief that the doctor and/or nurse was Royal Caribbean's agent.” But the Eleventh Circuit found that Franza had indeed made these allegations in her complaint. Specifically, the complaint stated that the decedent “relied to his detriment on his belief that the physician and nurse were direct employees or actual agents of” Royal Caribbean in that he “followed the advice of the nurse and/or physician who did not seek any further medical testing or evaluation while the ship was in Bermuda, that he relied on the ship's nurse and/or physician, [and] that he did not follow-up with the ship's medical staff as he was told that he did not have any serious injury.” Thus, Franza had specifically stated that her father relied on Royal Caribbean's representations, and that because of that reliance, he did not seek alternative or additional medical care ' to his detriment.

“Of course,” stated the Eleventh Circuit, “we recognize that Franza could have taken her allegations one step further. Thus, she could have specifically claimed that [the decedent] would not have followed the advice of the ship's medical personnel had he suspected they were not actually the agents of Royal Caribbean. Effectively, however, that sort of statement would only put Franza's existing message in the negative. We do not require plaintiffs to perform such linguistic gymnastics in order to defeat a motion to dismiss.”

Based on these things, the Eleventh Circuit reversed the district court's dismissal of Franza's apparent agency claim.

Conclusion

By rejecting the Barbetta Rule, the Eleventh Circuit's well-reasoned Franza decision may well alter the way that shipboard medical malpractice claims are treated in other U.S. jurisdictions. Perhaps it's about time, because as the court noted in Franza , “Much has changed in the quarter-century since Barbetta,” including, “the evolution of legal norms, the rise of a complex cruise industry, and the progression of modern technology [which] have erased whatever utility the Barbetta rule once may have had.”

Janice G. Inman is Editor-in-Chief of this newsletter.

The U.S. Court of Appeals for the Eleventh Circuit was faced with some controversial questions in Franza v. Royal Caribbean Cruises, LTD, 2014 U.S. App. LEXIS 21375 (11th Cir., 11/10/14), a case in which an injured ship's passenger received allegedly negligent treatment in the ship's medical clinic by contractor medical providers. The passenger soon died.

First, the appellate court had to decide if it should follow the so-called “ Barbetta Rule,” enunciated by the Fifth Circuit in Barbetta v. S/S Bermuda Star , 848 F.2d 1364 (5th Cir. 1988), which says that under no circumstances may a ship's passenger hold a ship operator liable under agency theory for the negligence of onboard medical personnel, no matter how much control the ship's owner exercises over its medical staff. As we discussed in Part One of this article, the Eleventh Circuit determined that the Barbetta Rule was not relevant to today's world, where principals are often compelled to answer for the acts of their agents, and where ship owners are no longer cut off from communication with their ships when they have gone out to sea. Quoting Oliver Wendell Holmes (The Path of the Law, 10 Harv. L. Rev., 469 (1897)), the court declared that, ultimately, it “should not follow a rule of law simply because 'it was laid down in the time of Henry IV,' particularly where the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past.”

Having determined that the Franza case's ship operator could conceivably be held financially responsible for its medical staff's negligence, the court had to next determine if the facts alleged by the plaintiff were adequate to keep her claim alive in the face of the operator's motion to dismiss. Therefore, the court had to decide whether plaintiff Patricia Franza, the deceased ship passenger's daughter, had properly alleged either that the ship's medical personnel were the cruise operator's 1) actual agents; or 2) apparent agents.

Actual Agency

The elements required to show actual agency are that: 1) the principal acknowledged that the agent would act for it; 2) the agent showed an acceptance of the undertaking; and 3) the principal exercised control over the agent's actions. Whetstone Candy Co. v. Kraft Foods Inc. , 351 F.3d 1067, 1077 (11th Cir. 2003). As to the first two of these, the court found that the plaintiff's allegations were adequate. “Most importantly,” stated the court, “Franza specifically asserted that both medical professionals were 'employed by' Royal Caribbean, were 'its employees or agents,' and were 'at all times material acting within the scope and course of [their] employment.'”

Franza's arguments for the third element ' that the cruise line employed and exercised control over the doctor and nurse ' were particularly strong. Among other relevant allegations, the plaintiff had claimed that the shipowner:

• Directly paid the doctor and nurse salaries, and did not pay them piecemeal for services provided;
• Created, owned and operated the on-board medical facility;
• Stated in its promotional materials that the ship had its own medical center;
• Provided uniforms to the doctor and nurse bearing the Royal Caribbean name and logo (and the medical professionals knowingly wore those uniforms);
• Told immigration authorities that the doctor and nurse were “members of the ship's crew”;
• Purchased all medical supplies for the ship's medical center; and
• Billed on-board patients directly, so that money paid for medical services flowed to the liner's operator, not to the medical professionals.

Taking these things into account, the Eleventh Circuit appeals panel determined that the plaintiff's complaint “unambiguously” established an agency relationship between the employer cruise line and the nurse and doctor. “Thus,” stated the court, “applying the standard principles of agency, we are compelled to hold that Franza' s complaint sets out a plausible basis for imputing to Royal Caribbean the allegedly negligent conduct of its onboard medical employees.”

Apparent Agency

The question whether a passenger could use the alternative theory of apparent agency to hold a cruise line vicariously liable for the onboard medical negligence of its contractors was one of first impression for any U.S. Circuit Court, although some district courts ' including the Franza district court ' had already concluded that this type of liability could be imposed. That is because while respondeat superior responsibility derives from a principal's right to control the conduct of its agent, liability under a theory of apparent agency flows from equitable concerns. Barbetta did not address apparent agency, as that holding was based on the notion of control, and the shipowner's lack thereof. Absent any controlling precedent to the contrary, federal courts at the trial level had, therefore, historically not hesitated to impose liability on ship operators for the medical negligence of their contractors on the theory of apparent agency. The Eleventh Circuit agreed with these courts, stating that because they had “long applied the principles of apparent agency in maritime cases,” it could “discern no sound basis for allowing a special exception for onboard medical negligence, particularly since we have concluded that actual agency principles ought to be applied in this setting as well.”

The appellate court differed with the Franza trial court, however, in finding that Patricia Franza's apparent agency claim was adequately pleaded. It noted that there are three elements of a claim for apparent agency: 1) a representation by the principal to the plaintiff, which 2) causes the plaintiff reasonably to believe that the alleged agent is authorized to act for the principal's benefit, and which 3) induces the plaintiff's to rely on that appearance of agency to his detriment.

Beginning with the representations made by the ship operator to Franza's now-deceased father, the court found that Franza claimed Royal Caribbean: 1) said the ship's medical staff was employed by them in promotional materials; 2) publicly used proprietary language to describe its medical centers; 3) billed passengers directly for medical services; 4) compelled the medical staff to wear uniforms with the cruise line's name and logo, 5) held out the allegedly negligent medical care providers to passengers and immigration officials as “members of the crew”; and 6) introduced the doctor to the ship's passengers as “one of the ship's Officers.”

The second element was met because the court found that all the aforementioned representations might reasonably have induced Franza's father to believe that the doctor and nurse were authorized by Royal Caribbean to act on its behalf.

The final element ' that Franza's father relied on Royal Caribbean's alleged representations to his detriment ' was the element that the district court had found lacking in Franza's allegations. It dismissed Franza's apparent agency claim, stating that her complaint “d[id] not state how [the decedent] relied on, or changed his position in reliance on, his alleged belief that the doctor and/or nurse was Royal Caribbean's agent.” But the Eleventh Circuit found that Franza had indeed made these allegations in her complaint. Specifically, the complaint stated that the decedent “relied to his detriment on his belief that the physician and nurse were direct employees or actual agents of” Royal Caribbean in that he “followed the advice of the nurse and/or physician who did not seek any further medical testing or evaluation while the ship was in Bermuda, that he relied on the ship's nurse and/or physician, [and] that he did not follow-up with the ship's medical staff as he was told that he did not have any serious injury.” Thus, Franza had specifically stated that her father relied on Royal Caribbean's representations, and that because of that reliance, he did not seek alternative or additional medical care ' to his detriment.

“Of course,” stated the Eleventh Circuit, “we recognize that Franza could have taken her allegations one step further. Thus, she could have specifically claimed that [the decedent] would not have followed the advice of the ship's medical personnel had he suspected they were not actually the agents of Royal Caribbean. Effectively, however, that sort of statement would only put Franza's existing message in the negative. We do not require plaintiffs to perform such linguistic gymnastics in order to defeat a motion to dismiss.”

Based on these things, the Eleventh Circuit reversed the district court's dismissal of Franza's apparent agency claim.

Conclusion

By rejecting the Barbetta Rule, the Eleventh Circuit's well-reasoned Franza decision may well alter the way that shipboard medical malpractice claims are treated in other U.S. jurisdictions. Perhaps it's about time, because as the court noted in Franza , “Much has changed in the quarter-century since Barbetta,” including, “the evolution of legal norms, the rise of a complex cruise industry, and the progression of modern technology [which] have erased whatever utility the Barbetta rule once may have had.”

Janice G. Inman is Editor-in-Chief of this newsletter.