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Issuance of this periodical approved in accordance with Department of the Navy Publications and Printing Regulations, NAVEXOS P-35.

REAR ADMIRAL WILLIAM C. MOTT, USN Judge Advocate General of the Navy

The JAG JOURNAL is published by the Office of the Judge Advocate General of the Navy as an informal forum for legal matters of current interest to the naval service. The objective of the JAG JOURNAL is to acquaint naval personnel with matters related to the law and to bring to notice recent developments in this field.

The JAG JOURNAL publishes material which it considers will assist in achieving this objective, but views expressed in the various articles must be considered as the views of the individual authors, not necessarily bearing the endorsement or approval of the Department of the Navy, or the Judge Advocate General, or any other Agency or Department of Government.

Invitations to submit articles are extended to all persons, whether lawyers or laymen. Articles submitted should adopt an objective rather than an argumentative approach and should be written in a manner readily understandable by the lay reader. The JOURNAL will return unpublished manuscripts if so requested, but responsibility for safe return cannot be assumed. No compensation can be paid for articles accepted and published.

REAR ADMIRAL ROBERT D. POWERS, JR., USN

Deputy and Assistant
Judge Advocate General of the Navy

COMMANDER RICHARD E. BLAIR, USN COMMANDER HARLAND B. COPE, USN

Editors

For sale by the Superintendent of Documents U.S. Government Printing Office, Washington, D.C., 20402 (Monthly) Price 15 cents (single copy). Subscription price $1.25 per year;

50 cents additional for foreign mailing.

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THIRD PARTY TORT LIABILITY

CAPT EUGENE J. HARMON, USNR*

N FEBRUARY OF 1944, a soldier named Etzell, while crossing a street intersection in Los Angeles, was struck and injured by a truck owned by Standard Oil Co. of California and driven by a Mr. Boone. Etzell was taken to an Army hospital, treated at Government expense, and received his Army pay during the period he was incapacitated. The cost to the Government was $123.45 for hospitalization and $69.31 for pay. Etzell accepted $300 ($107.24 above Government costs) from the driver and Standard Oil, whereupon he executed a release “... from any and all claims and demands which I now have or may hereafter have on account of or arising out of the accident."

The United States brought suit in District Court to recover the cost of hospitalization and pay which was the result of the negligence of Standard Oil and its driver. The District Court gave judgment in favor of the United States. Upon appeal, the Circuit Court of Appeals reversed, and the Supreme Court of the United States granted certiorari.1

The theory of the Government case was not one of subrogation in view of the release signed by Etzell. It was based upon Standard Oil's liability for tortious interference with the relationship between the Government and a soldier which resulted in loss to the United States. Before the Supreme Court there were two questions in issue:

(1) Was the case to be decided by Federal or State laws, and (2) Is the relationship between the United States and a soldier one that will support a cause of action against a tort-feasor who interferes with this relationship resulting in loss to the United States.

With regard to the question as to whether State or Federal law applied, the Supreme Court distinguished Erie Railroad Co. v. Tompkins 2 by pointing out that the object of the Erie case was to secure in federal courts the application of the same substantive law as would control *Captain Eugene J. Harmon, USNR, is currently Director, Naval Reserve Division, in the Office of the Judge Advocate General. He holds the A.B. degree from Holy Cross College and the LL.B. degree from Boston College School of Law. A member of the Massachusetts Bar, Captain Harmon holds membership in the Massachusetts, Worcester County, Federal and American Bar

Associations. 1. United States v. Standard Oil Co. of California, 329 US 696

(1946). 2. Erie R. R. Co. v. Tompkins, 304 US 64 (1938).

if the suit were brought in a state where the Federal court was sitting. The Erie rule was designed primarily for diversity of citizenship cases, “to bring federal judicial power under subjection to state authority in matters essentially of local interest and state control.” 8 The Court felt that the relationship between the United States Government and its soldiers was exclusively a federal matter, and laws governing this relationship should be uniform throughout the several states. Hence, it held that federal rather than state law should be applicable. The Court further recognized what it designated as the "law of independent Federal judicial decision," untouched by the Erie Decision yet exemplified by what the Court did in Erie by, in fact, creating new Federal law. In other words, the Court indicated that it had the power to create new substantive federal legal liability in the absence of affirmative Congressional action on a specific question.

As to the second question relating to whether or not the relationship between the United States and its soldiers was sufficient to give rise to a cause of action for tortious injuries, the Court was presented with a thorough discussion of the historical origins and foundations of relationships considered analogous to governmentsoldier relationship and which gave rise to well recognized liabilities. Under these views, liabilities, created by common law and arising from tortious injuries inflicted upon persons standing in various special legal relationships, the harm was considered going not only to the injured person but also to the person to whom he is bound by the relationship tie. Classic examples of such relationships mentioned were the master's right to recovery for the 'oss of services of his servant or apprentice; the husband's similar action for interference with his marital relationship, including the loss of consortium as well as the wife's services; and the parent's right to indemnity for loss of a child's services, including action for a daughter's seduction.

The Government argued that the governmentsoldier relation was strongly analogous to the already recognized relationships in law mentioned above. However, admittedly it is not 3. United States v. Standard Oil Co. of Cal., 332 US 301, 307 (1947).

identical to the relationship giving rise to a father's action for a daughter's seduction or a husband's action for loss of consortium. A further argument was advanced, and adopted by the dissenting opinion, to the effect that the courts of England will permit Her Majesty to recover an outlay for the cure of a British soldier from injury by a negligent tort as well as the wages he was paid during his disability.

The Court recognized that there very definitely was a unique relationship between the Government and its soldiers and that the Government has a duty to hospitalize, treat, and pay injured military personnel. It felt, however, that this case was not simply a question of creating a new liability in the nature of a tort where one previously did not exist, but it further involved the fiscal policy of the United States and the appropriateness of the means to be used in executing that policy. In other words, it appeared to the Court to be an attempt by the Government's executive arm to establish federal fiscal and regulatory policies in a situation not covered by traditionally established liabilities. The Court pointed out that irrespective of the merits of the fiscal policy of collecting medical expenses and salary from tort-feasors, it is congress, not the Court, that is the custodian of the national purse and the arbiter of federal fiscal affairs.

Further, Congress is without doubt aware that throughout the history of the Government losses have been constantly sustained through tortious interference with the relationship between the Government and its military personnel. Congress, as the legislative branch of the government, has the power by legislation to create the liability sought by the executive branch in bringing this suit. It could have done so in the past and may do so, if or when, it wishes.

Accordingly, the Court was reluctant to use its judicial power to establish the new liability for the reason that it did not wish to intrude in a field which properly belonged to Congress. It further felt that making liability effective in this case would involve an element of surprise because of the settled contrary practice of no liability on the part of third party tort-feasors, affecting not only this case but many others. Congressional action would avoid the surprise that a decision in favor of the Government in this case would create.

The Court indicated that the only real question remaining for decision was which organ of the United States Government should make the determination that liability exists in the tortious

interference with the government-soldier relationship. This question was resolved by holding that in this instance the decision as to whether liability exists rests with Congress, not the courts, thus denying recovery to the United States.

It has long been established law that a wrongdoer who commits a tort against a civilian is liable for all of the elements of cost resulting from his wrongdoing, including cost of care by doctors, hospitals, nurses, as well as earnings lost during the period of disability. If the victim bore the cost himself it would be a part of his own damages. If the civilian were a wife and the expenses fell upon her husband, the husband would be entitled to recovery. If the civilian were a child, the damages would be recoverable by the parent. As a result of the holding in the Standard Oil case, the Government, which has the affirmative duty of supplying medical and hospital care to its military personnel who have been the victims of a tort-feasor, is precluded from recovering those costs in a court action.

In a situation where a military person is injured and brings an action in a State court in his own name to recover damages, there are two rules of law governing the element of damages regarding medical expenses and loss of earnings. In the majority of states the injured serviceman would be able to establish the medical costs and loss of earnings as elements of his damages, collect, and pocket them, even though they were supplied at no cost to him by the Government.

In the minority of states, a serviceman would be unable to collect medical expenses and loss of earnings unless they were paid out of his own pocket. Thus, under one rule the injured serviceman could affirmatively collect the Government costs, and under the other rule the tortfeasor gains the advantage in that he is not liable for the costs incurred by the Government. Following the decision in the Standard Oil Co. case the subject of third party liability, so far as government reimbursement is concerned, faded into the background and became somewhat of a closed subject.

In the early 1950's, a Naval officer became interested in the subject and wrote an article which was published in the Naval Institute Proceedings. This article came to the attention of many people both in Government and Congress. Under stimulus from the Comptroller General and the Bureau of the Budget, a fresh look was taken at the losses incurred by the Government in third party liability cases. A bill was introduced in the 87th Congress which eventually became Public Law 87-693. House hearings on the bill were held in March of 1962. In these hearings it was emphasized that by Statute or Regulation, the United States could recover hospital and medical services costs in negligent third party cases by action of the Veterans' Administration in cases involving veterans; under the Federal Employees' Compensation Act * in cases involving civilian employees; by the Secretary of Labor under the Railroad Unemployment Insurance Act, which provides that the Railroad Retirement Board is entitled to reimbursement from third persons. A provision in Section 33 of the Longshoremen and Harbor Workers' Compensation Acto provided for third party recovery in cases of injury to seamen.

The Comptroller General at these hearings indicated that in a thirty month period ending June 30, 1959, there were some 5,400 accident cases involving injured military personnel in which third party negligence was involved and that potentially recoverable costs to the United States, resulting from limitations imposed by the Standard Oil case on the Department of Defense, cost the Government millions of dollars. The Department of Defense indicated that it anticipates from 8,000 to 10,000 cases annually for all services, involving injuries to military personnel or their dependents in which recovery from third person tort-feasors is a recognized potential.

the care and treatment so furnished or to be furnished. The head of the department or agency of the United States furnishing such care or treatment may also require the injured or diseased person, his guardian, personal representative, estate, dependents or survivors as appropriate to assign his claim or cause of action against the third person to the extent of that right or claim.

(b) In order to enforce such right, the United States may:

(1) Intervene or join in any action or proceeding brought by the injured or diseased person against the third person who is liable for the injury or disease.

(2) If such action or proceeding is not commenced within six months after the first day in which care and treatment is furnished by the United States in connection with the injury or disease involved, institute and prosecute legal proceedings against the third person who is liable for the injury in a state or federal court, either alone, in its own name, or in the name of the injured person or in conjunction with the injured person.

(c) Excepted from the Act are employers of seamen treated under provisions of Section 322 of the Act of 1 July 1944' and hospital, medical, surgical or dental care and treatment furnished by the Veterans' Administration to an eligible veteran for serviceconnected disability under the provisions of Chapter 17, Title 38 USC. SECTION 2. (a) The President may prescribe regulations to carry out this Act, including a determination of the reasonable value of hospital, medical, surgical, or dental care and treatment furnished or to be furnished.

(b) The head of the department or agency of the United States concerned may:

(1) Compromise or settle and execute a release of any claim which the United States has by virtue of the right established by this Act; or

(2) Waive any such claim in whole or in part for the convenience of the Government or if it would result in undue hardship upon the person who suffered the injury resulting in care or treatment.

(c) No action taken by the United States under this legislation shall operate to deny to the injured person the recovery of that portion of his damage not covered hereunder. SECTION 3. This Act does not limit or repeal any other provision of law providing for recovery by the United States of the cost of care and treatment as described in Section 1. SECTION 1. Makes the effective date of the Act 1 January 1963.

The President, in order to implement the Act in accordance with Section 2, issued Executive Order 11060 in which he directed that the Director of the Bureau of the Budget from time to time determine and establish rates that represent the reasonable value of hospital, medical, 7. 58 Stat. 696, as amended, 42 USCA 8 249.

PUBLIC LAW 87–693

Public Law 87-693 (76 Stat. 593), passed 25 September 1962 and effective 1 January 1963, is an Act to provide for the recovery of the cost of hospital and medical care and treatment furnished by the United States from tortiously liable third persons. It creates a right of recovery by the United States which was denied by the Supreme Court in the Standard Oil case. A section by section look at the act follows:

SECTION 1. (a) In any case in which the United States is authorized or required by law to furnish hospital, medical, surgical or dental care and treatment (including protheses and medical appliances) to a person who is injured or suffers a disease under circumstances creating a tort liability upon some third person to pay damages therefor, the United States shall have a right to recover from said third person the reasonable value of the care and treatment so furnished or to be furnished and shall as to this right be subrogated to any right or claim that the injured or diseased person, his guardian, personal representative, estate, dependent(s) or survivor (s) has against such

third person to the extent of the reasonable value of 4. 5 USCA 88 751, et seq. 5. 52 Stat, 1107, as amended, 45 USCA $ 361(a). 6. 44 Stat. 1424, as amended, 33 USCA $ 933.

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