You’re a boat owner. You employ crewmembers. You’re minding your business - say you’re sitting at the dock - when some other boat comes by and runs into you, or its wheel wash swamps you, say, or anyway somehow or another, your crewmember gets hurt, or says he gets hurt.
You start paying maintenance and cure, because of course you do - it’s the right thing to do, and if you don’t you face a punitive damages claim.
A year, and $150k in M&C later, your crewmember files suit against the malefactor, and you join in to get your money back. “But wait” says the tortfeasor, a year into litigation: "this whole thing is rotten, and this crewmember had an undisclosed, untreated back for a decade and now he’s trying to pawn it off on me.” And wouldn’t you know it - it’s right. The judge even says so. No recovery. You’re out $150k - or maybe more now - even though you didn’t do anything wrong. Who should pay that? You or the third-party tortfeasor?
You, says the Fifth Circuit just recently. Which . . . mostly makes sense. If you’re a tortfeasor, you only owe the damages you cause. If somebody else is perpetrating an elaborate fraud, it doesn’t follow that you should have to pay it. After all, if it were health insurance with a subrogation claim instead of an M&C reimbursement claim, the health insurer couldn’t get money back if there wasn’t an accident or an injury. M&C should be no different.