In the United States v. Isthmian Steamship Co., 1958, the U.S Supreme Court ruled in favor of the government, allowing it to recover damages from a private shipping company for injuries sustained by an enlisted man while performing his duties aboard one of their vessels during World War II. The case arose when a seaman was injured due to negligence on part of Isthmian Steamship Company's employees and sued them for compensation. However, since he had already received medical care and disability benefits from the Navy (which is funded by taxpayers), there was a question whether these costs could be recovered from Isthmian or if they were solely governmental responsibility. The court held that under common law principles, any party who incurs expenses as result of another's tortious conduct can seek reimbursement - this includes the government too.

In the dissenting opinion for United States v. Isthmian Steamship Co., Justice Brennan, joined by Chief Justice Warren and Justices Black and Douglas, disagreed with the majority's interpretation of Section 5(b) of the Federal Tort Claims Act (FTCA). They argued that this section should not be read to bar a suit against a government contractor when an employee is injured due to negligence in maintaining equipment. The dissenters believed that such an interpretation was contrary to Congress' intent when it enacted FTCA - which was designed to provide compensation for those injured as a result of governmental negligence. They also pointed out that under this ruling, employees who are hurt on ships owned by private companies can sue their employers while those working on government-owned vessels cannot – creating an unfair double standard.