5 Deaths Tied to Weight-Loss Balloon Treatments for Obese Patients

The FDA reports that five patients died unexpectedly from 2016 to the present because of liquid-filled intragastric balloon systems used to treat obesity.

Four reports involve the Orbera Intragastric Balloon System, manufactured by Apollo Endo Surgery, and one report involves the ReShape Integrated Dual Balloon System, manufactured by ReShape Medical Inc.

All five reports show those patient deaths occurred within a month or less of balloon placement. In three reports, death occurred as soon as one to three days after balloon placement.

“At this time, we do not know the root cause or incidence rate of patient death, nor have we been able to definitively attribute the deaths to the devices or the insertion procedures for these devices, e.g., gastric and esophageal perforation, or intestinal obstruction. The agency has also received two additional reports of deaths in the same time period related to potential complications associated with balloon treatment — one gastric perforation with the Orbera Intragastric Balloon System and one esophageal perforation with the ReShape Integrated Dual Balloon System,” the FDA says.

Spontanous over-inflation

The FDA continues to work with Apollo Endo-Surgery and ReShape Medical Inc. to better understand the issue of unanticipated death, and to monitor the potential complications of acute pancreatitis and spontaneous over-inflation. Additionally, as part of the ongoing, FDA-mandated post-approval studies for these devices, the agency will get more information to help assess the continued safety and effectiveness of these approved medical devices.

In February 2017, the FDA first issued a letter to health care providers to recommend close monitoring of patients with liquid-filled intragastric balloon systems for the potential risks of acute pancreatitis and spontaneous over-inflation. Since issuing this letter, both companies have revised their product labeling to address these risks.

The FDA recommends that health care providers closely monitor patients treated with these devices for complications and that you report any adverse events related to intragastric balloon systems through MedWatch, the FDA Safety Information and Adverse Event Reporting Program. Prompt reporting of adverse events can help the FDA identify and better understand the risks associated with medical devices.

Construction Worker Recovers $2.7 Million Settlement in Scaffolding Collapse

A 35-year-old construction worker in California recovered a $2.7 million settlement for a severe brain injury he suffered when a defective scaffold he was working on broke apart, causing him to fall 20 feet.

Rosbil Nunez-Aguirre of Orange County, CA, was handing some wooden planks to his coworker when one of the brackets suddenly broke. He broke his jaw and ankle and lost consciousness when he hit the ground.

He was represented by Roger E. Booth, a member of The National Trial Lawyers Top 100 Attorneys, and Carly L. Sanchez of Booth & Koskoff in Torrance, CA.

The plaintiff suffered a profound frontal lobe traumatic brain injury in the 2013 collapse, causing a personality change that made him have fits of anger and destructive behavior. He did not want to leave the house, had difficulty with memory and concentration and was placed in an outpatient program at a rehab hospital for nine months.

The defendants included the distributor of the defective scaffolding — White Cap Construction Supply, Inc. — and its parent company HD Supply, Inc. This particular bracket scaffolding, called the Whalen-Jack, was designed by a contractor in South Dakota who had no background in engineering. He subsequently sold the design to JD Systems, a company that outsourced the manufacture to a facility in China. The defendants sold the bracket scaffolding nationwide.

Plaintiff’s contentions

The case is Nunez-Aguirre v. White Cap Construction Supply, Inc., Case No. 30-2014-00746710-CU-PL-CJC,
Orange County Superior Court. It settled on March 6, 2017.

Plaintiffs contended that the Whalen-Jack was defectively designed and manufactured.  The brackets were supported by two welds, with no redundancy or backup margin of safety, and the design was such that the welds could not be seen or inspected.  If the welds failed (as they did at the time of the incident), the entire structure would come down.  Moreover, the quality of the welding performed in China was poor.

During discovery, plaintiffs’ counsel uncovered the fact that the design of the Whalen-Jack was changed at some point prior to the subject incident, to provide some redundancy in case the critical welds failed.  Plaintiffs contended that this was done specifically to address the very design problem that led to the incident.  Moreover, discovery showed that, despite the design change, none of the old Whalen-Jacks were recalled, and, in fact, old units that were still sitting in warehouses continued to be sold, including the one involved in the incident.

Plaintiffs contended that White Cap and HD Supply) were liable, under strict liability principles, for having sold a defective product.  Moreover, plaintiffs argued that White Cap was negligent because it failed to perform any meaningful due diligence concerning JD Systems or the Whalen-Jack, but nevertheless represented the product as being “safe” and “rugged.”  The principals of JD had no prior experience manufacturing or selling products of any kind and exercised no control over the manufacturing process in China.  White Cap knew that JD’s methods for shipping Whalen-Jacks from China were shoddy and could result in damage to the product.

Defendants’ contentions

Defendants contended that the subject Whalen-Jack bracket was not defective in design or manufacture, as evidenced by the fact that there was no report of any other Whalen-Jack bracket ever failing.  JD Systems performed testing of the product before beginning to sell it in the early 2000’s, and defendants’ mechanical engineer performed testing of an exemplar bracket.  According to the defendants, this testing showed that the Whalen-Jack could withstand repeated use, under normal conditions, without failing.

Defendants contended that the subject bracket failed because of misuse and abuse by plaintiff’s employer, Circle M Contractors.  Defendants’ metallurgist opined that the failure was the result of Mr. Nunez-Aguirre jumping on to the scaffolding just before the failure.  Defendants’ mechanical engineer opined that the failure happened gradually over time, most likely as a result of Circle M employees hitting the bracket with hammers and/or dropping it to the ground when removing it from buildings.  Defendants asserted that there was visible damage to the bracket before the incident and that Circle M should have noticed this damage and removed the bracket from service.

In addition, defendants argued that, as a distributor, they do not have a duty to test every product that they sell or investigate every manufacturer with whom they do business and that they were not aware that there was a pre-incident change in the design of the Whalen-Jack.

Settled on the brink of trial

Mediations were held before Michael Moorhead at Judicate West in February and November 2016, which did not result in a settlement, but the case subsequently settled on the brink of trial through follow-up discussions with Mr. Moorhead.

Plaintiffs’ Experts were Lawrence Kashar, Ph.D., Los Angeles, metallurgy; Glen Stevick, Ph.D., Berkeley, mechanical engineering; H. Ronald Fisk, M.D., Los Angeles, neurology; Barry Pressman, M.D., Los Angeles, radiology; Marcel Ponton, Ph.D., South Pasadena, neuro-psychology; Richard Anderson, Westminster, vocational rehabilitation; Sharon Kawai, M.D., Fullerton, physical medicine/life care planning; Tamorah Hunt, Ph.D., Santa Ana, economics; Martin Breen, Tustin, toxicology.

Defendants’ Experts were Ramesh Kar, Ph.D., Anaheim, metallurgy; Scott Schroeder, Ph.D., Los Angeles, mechanical engineering; Sam Iler, El Cajon, construction safety; Steven McIntire, M.D., Rancho Cordova, neurology; Michael Brant-Zawadski, M.D., Newport Beach, radiology; Thomas Hedge, M.D., Northridge, physical medicine; Alfredo Sadun, M.D., Pasadena, ophthalmology; James Rosenberg, M.D., Woodland Hills, psychiatry; Ari Kalechstein, Ph.D., Los Angeles, neuro-psychology; Mary Jesko, Los Angeles, vocational rehabilitation/life care planning; Mark Cohen, Walnut Creek, economics.

$2.28M Verdict for Woman Whose Pre-Existing Condition Was Worsened by Trip-and-Fall

“Ms. Harris was seriously injured as a result of falling down the apartment complex’s negligently maintained steps, and it was apparent that no one at the apartment complex took her injuries seriously,” said Attorney Tim Moran. (Stock photo)

A Florida woman recovered a $2,228,679 jury verdict after seriously injuring her back in a trip-and-fall down stairs in a negligent apartment complex.

Attorney Tim Moran, assisted by attorney Ashley Winstead of Morgan & Morgan, represented Rosetta Harris of Atlantic Beach, FL, who struggled with a pre-existing medical condition that caused her back pain for over seven years prior to the accident. Her condition was greatly worsened by the painful trip-and-fall down a poorly-maintained set of stairs in the apartment complex, according to the complaint.

Her injuries required a visit to the emergency room, as well as costly long-term medical treatments such as chiropractic care and pain management.

Initial $0 offer

Despite the high cost of her medical treatment, Ms. Harris’s insurance company initially offered her nothing, blaming her serious back injury on her pre-existing condition, rather than the trip-and-fall that only occurred due to the negligent conditions of the apartment complex building’s stairway.

The defense’s highest pre-trial offer — $50,000 — did not even begin to cover Ms. Harris’s prior medical expenses caused by her accident, let alone future treatment. That’s why Moran took the fight to court to get his client the fair verdict she deserved to heal from her injuries.

The jury disagreed with the insurance company’s assessment of Ms. Harris’s injuries and reached a jury verdict of $2.28M to compensate the client for her pain and suffering, past and future medical bills, and other damages.

Furthermore, the jury found the apartment complex where Ms. Harris’s accident took place to be 100 percent at-fault for the injuries she suffered due to negligence on the property.

“Ms. Harris was seriously injured as a result of falling down the apartment complex’s negligently maintained steps, and it was apparent that no one at the apartment complex took her injuries seriously,” said Moran. “I am so glad the jury took her case seriously, and returned a fair and just verdict, which will allow Ms. Harris to obtain the future medical care she will require, as well as compensate her for the effects the injuries from the fall have had on her life.”

The case is Rosetta Harris vs. PBH Mayport, LLC, d/b/a Promenade at Mayport and B H Management Services, LLC, case number 16-2015-CA-2989, in the Circuit Court, Fourth Judicial Circuit, in and for Duval County, Florida.

Florida Jury Awards $1.1 Million in Teen’s Balcony Fall Injury Case

law news, legal news, verdict, settlementA Jacksonville, FL, jury has handed down a $1,105,000 verdict in favor of Amanda Fournier for the broken neck she suffered at age 17 from falling through the faulty railing of a residential balcony

Fournier, now 21, was an incoming freshman at University of North Florida at the time of the fall. She was attending a fraternity party at a rented Jacksonville residence owned by Shahab Derazi. The party included up to 250 people, including up to 70 on the deck.

“Through our investigation and in the subsequent testimony we clearly showed the jury that the railing was not properly affixed to the second-floor balcony according to code or by the manufacturer’s instructions,” said Mark Avera, Partner, Avera & Smith. “The owner also failed to have a professional inspection of the balcony and railing, a structure that presented an extremely dangerous circumstance ultimately causing Amanda’s devastating fall and injury.”

Avera & Smith attorneys Mark Avera and Rod Smith demonstrated to the jury that Derazi hired an unlicensed contractor to repair the balcony and inspect the railing three months before the fall and that the contractor never secured a permit for the job. Avera asserted that an inspection by a building official would have very likely identified the dangerous condition of the balcony railing.

Fournier, who suffered compression fractures to vertebrae in her neck and back, required a two-level fusion of her cervical spine as a result of the fall, followed by extensive physical therapy. It’s probable she will need more surgery in the future.

US Tort Reform Bill Kills Deterrent Effect of Litigation Against Bad Nursing Homes

By Martin P. Schrama

The latest tort reform measure, H.R. 1215, the Protecting Access to Care Act of 2017, would place caps on medical malpractice damages, limit attorney fees, and change statutes of limitations. Among other changes to current law, non-economic damages in medical malpractice lawsuits would be limited to $250,000 – and juries would not be informed of this cap on damages.

Litigation enables residents of nursing homes who suffer adverse outcomes, or their families, to be compensated. The availability of noneconomic damages to nursing home victims, along with the deterrence effect of litigation in improving or maintaining quality of care, should be considered when assessing tort reform.

The bill would apply to health care lawsuits where coverage for the care was provided or subsidized by the federal government, including through subsidies or tax benefits.

H.R. 1215 would preempt state laws governing health care litigation in several areas, including statutes of limitation, joint and several liability, product liability, and attorney contingency fees.

Proponents of the bill claim that the bill would lower medical liability insurance premiums, and by extension, cut the incidence of so-called “defensive” medical treatments and lower costs associated with federal health care programs such as Medicaid.

Deterrent effect of litigation

Consumer groups and other opponents of the tort reform bill support litigation as a vehicle for compensating victims of substandard care and as a deterrent that encourages facilities to give better quality care.

A recent study addresses the potential deterrent effect of nursing home litigation on the quality of nursing home care. The study assesses whether the threat of litigation serves as a deterrent to substandard care. The issue is whether placing caps on medical malpractice damages would negatively affect nursing home patient care.

The study used claims data to test the market-level effects of changes in the malpractice litigation environment. That data was combined with facility information on quality and an area-based measure of litigation threat to address the relationship between litigation and quality of care.

The quality of care is a function of malpractice claims as resources are diverted to address lawsuits. The deterrence effect results when the expected probability of a lawsuit and associated costs causes facilities to choose higher levels of care quality. The issue is whether facilities actually invest in increased quality in response to increased liability threat.

Tort reform has historically treated nursing home medical malpractice separately from medical malpractice in other types of facilities. Economic damages constitute a smaller proportion of damage awards in nursing home cases because residents are generally older and not employed. The role of non-economic damages in the deterrence effect, therefore, plays an important part of the risk/benefit analysis involving tort reform and nursing home malpractice.

The study concluded that the threat of malpractice litigation may serve as a deterrent to low quality care in nursing homes as measured by increases in RN-to-total staffing ratios in response to rising malpractice threat and by a reduction in pressure sores among highly staffed facilities. The deterrence effect was strongest among for-profit, chain, and large facilities. The deterrence effect may prompt low-staffed facilities to increase the RN ratio.

Martin P. Schrama is a Shareholder in Stark & Stark’s Commercial Litigation, Mass Tort, Intellectual Property and Green Litigation Groups. He has extensive experience litigating on both the trial and appellate levels of the federal and state courts of New Jersey and New York. This experience also extends to regular practice before AAA, JAMS and various other alternate dispute resolution fora.

He can be reached at mschrama@stark-stark.com and 609.895.7334.
Visit www.stark-stark.com.

Walgreens Pays $75,000 for Losing Chicago Family’s VHS Tapes

A Cook County, Illinois arbitrator has awarded a Chicago couple, Jamie and David Schwartz, $75,000 for the loss of 28 VHS tapes the couple took to Walgreens for conversion to DVD.

“Walgreens advertised that its VHS to DVD conversion program would preserve irreplaceable memories forever yet after it negligently destroyed 30 years of memories, it wanted to reimburse the Schwartz family a couple of hundred bucks,” said attorney Francis Patrick Murphy, a partner at Corboy & Demetrio.  

Jamie Schwartz took her family’s VHS tapes for conversion to DVD format to the Walgreens at 2317 N. Clark St. in Chicago on Sept. 26, 2014.  Walgreens advertised this conversion would preserve irreplaceable memories forever. The store was moving to 2500 N. Clark in a couple of weeks. It admitted that all the tapes were destroyed during the move.

Evidence showed that proper identification and tracking procedures for packaging were not followed by the store’s employee when Jamie brought in the tapes. Walgreens searched for the tapes for weeks, but they were never found.

Drugstore offers blank tape value

Walgreens then offered the replacement value of a blank tape – about $9 each or $252 for all the tapes, according to the liability disclaimer that was printed on the back side of the claim check. Walgreens also contended that Jamie Schwartz knew of the limiting terms by clicking the computer kiosk screen, which limited the value for these irreplaceable memories to the cost of a blank tape.  However, evidence at the arbitration showed that the Walgreens employee who processed the order clicked the computer kiosk screen and not Mrs. Schwartz.

“This suit was about the principle that if a corporation accepts your product in good condition and it destroys it, it cannot limit the value of the product without telling the customer up front about the conditions.  Hiding the conditions on the back of the claim check is unacceptable,” concluded Murphy.  “If Walgreens had told Jamie it would pay only the replacement value of a blank tape if it negligently destroyed the tapes, do you think she would have gone through with the deal? Of course not!” Murphy added.

Walgreens claimed it was only responsible for the replacement cost of a blank tape and not the actual value of the content of the tapes including sentimental damages suffered by the Schwartz family.  The arbitrator disagreed.  The size of the award was the highest amount the arbitrator could award.

“No amount of money will replace 30 years of memories,” Murphy stated.  “But if this suit prevents another family from losing their family treasures, then Jamie and David have accomplished what they wanted to do,” Murphy added.

Corboy & Demetrio is one of the nation’s premier personal injury law firms. It represents individuals and their families in serious personal injury and wrongful death cases and is renowned for its achievements in the courtroom and for its contributions to the community.

Widower of Smoker Recovers $1.65M Verdict, Scores Major Victory Against Big Tobacco

big tobaccoA man who lost his wife 14 years ago to lung cancer as a result of her lifelong addiction to tobacco recovered a $1,650,000 verdict in a landmark victory against tobacco company R.J. Reynolds this week, ending an eight-year battle for justice.

Plaintiff attorneys Craig Stevens and John Dill of Morgan & Morgan represented John Maloney in the case on behalf of his late wife, Carolyn. Ever since she died Maloney has fought to hold the tobacco giant liable for her death.

50-year conspiracy

The jury found that R.J. Reynolds, committed negligence, sold a defective and inherently dangerous product along with fraud and conspiracy to commit fraud and was part of a 50-year conspiracy that put consumers’ health at grave risk. Jurors also found that the company’s actions ultimately were the cause of Carolyn Maloney’s addiction and death, and awarded the client a $1.65 million jury verdict as a result.

Additionally, because Stevens and Dill beat the expired Proposal for Settlement, R.J. Reynolds will have to pay attorney fees and costs — which could add up to over $1 million.

This case has special significance because it is part of the “Engle Progeny” litigation. After the Florida Supreme Court decertified a class action lawsuit filed by pediatrician Howard Engle for injuries suffered due to smoking, thousands of former class members were able to file individual lawsuits against cigarette manufacturers for their injuries and losses.

Mrs. Maloney was one of those former class members and this suit was the first of the “Engle” cases to be won in the jurisdiction.

“This verdict is a satisfying conclusion to the long fight for justice against the tobacco giant,” Stevens said. Despite the setback of a mistrial in 2016, Morgan & Morgan’s attorneys kept up the fight and retried the case this year, because they knew Mr. Maloney deserved better.

8 years and 2 trials

“I spent 8 years fighting this case for Mr. Maloney,” said Stevens. “We went through two jury trials to finally get justice.”

“We are very pleased that the jury did the right thing,” said Dill. “It was a long battle, but worth every second. Our client had the love of his life taken from him because of corporate greed. Justice is sweet.”

The case is John Maloney, as PR of the Estate of Carolyn Maloney vs. R.J. Reynolds Tobacco Co., case number 07-CA-015578, in the Circuit Court of the 20th Judicial Circuit of the State of Florida.

Jury Awards $115 Million to Families of Flight Crew Killed in Cargo Plane Crash

Cook County, Illinois, jury has returned a verdict in favor of the families of three of seven crew members who perished in the dramatic crash of a National Airlines 747 cargo airplane in Bagram, Afghanistan on April 29, 2013.

The crash itself was captured on a dashcam video that went viral over the internet shortly after the accident occurred.

The plaintiffs sued National Air Cargo, Inc., an affiliated company of National Airlines, which through the employees of its regional office in the Middle East, planned, loaded and restrained five Mine Resistant Armor Protected (“MRAP”) trucks for transport on a Boeing 747-400 converted freighter from Camp Bastion, Afghanistan to Bagram.

There were five MRAPs loaded on the accident airplane: two 12-ton M-ATVs and three 18-ton Cougars. The MRAPs were owned by the U.S. Marine Corps and were ultimately destined for Yermo, California.

The evidence showed there were an insufficient number of restraints or tie down points to restrain these vehicles, and the most that could be safely transported on the plane was one M-ATV and no Cougars. Plaintiffs introduced evidence that the straps used to restrain the cargo were in poor condition, with some past their expiration dates, and that an insufficient number of straps were used to restrain the vehicles.

Airplane quickly pitched nose-up

National Air Cargo Middle East provided for use of 24 straps with the M-ATVs and 26 straps for the Cougars.  Boeing determined that a minimum of 60 straps were needed just for the smaller M-ATVs.

National Air Cargo Middle East provided for use of 24 straps with the M-ATVs and 26 straps for the Cougars.  Boeing determined that a minimum of 60 straps were needed just for the smaller M-ATVs.

Upon takeoff from the stopover in Bagram, the restraining devices for one or more of the MRAPs failed, and the rear-most MRAP went through the aft bulkhead in the tail of the airplane, damaging flight control systems and hydraulics to the extent that the airplane became unrecoverable.  The airplane quickly pitched nose-up and entered an aerodynamic stall causing it to fall and hit the ground.

  • The jury awarded the estate of Captain Brad Hasler a total of $47.25 million in damages.
  • The estate of First Officer Jamie Brokaw was awarded $43 million
  • The estate of Captain Jeremy Lipka, an off-duty pilot in the cockpit, was awarded $25.5 million.

Shock and fright

Each of these awards included $5 million for the shock and fright each of the men experienced from the time of takeoff until the time of the airplane’s impact with the ground.

“The jury’s verdict sent a message that our society still values human life and safety over the pursuit of increased corporate profit,” said Donald Nolan, who along with Thomas Routh of Nolan Law Group represented the estates of Jamie Brokaw and Jeremy Lipka. The estate of Brad Hasler was represented by David Katzman and Bruce Lampert of Katzman, Lampert & McClune in Troy, Michigan.

Trials in the cases for the remaining four crew members are expected to be set shortly.

Adult Supervision is the #1 Way to Prevent Playground Injuries

John Romano of The Romano Law Group in Lake Worth, FL.

John Romano of The Romano Law Group in Lake Worth, FL

By John Romano, a member of The National Trial Lawyers Top 100 Lawyers.

According to the Centers for Disease Control (CDC), at least 200,000 children age 14 or younger are treated in emergency rooms each year for playground-related injuries. More than 10 percent of these are traumatic brain injuries (TBIs), and the rate of TBIs is rising.

Because public playgrounds are numerous and easily accessible, most kids spend their time on these rather than private playgrounds. Thus, the largest percentage of playground injuries take place on public facilities. Monkey bars and climbing equipment are responsible for the highest number of injuries.

But despite the risks, we know kids love playgrounds and benefit from the exercise and social interaction. The good news: Adults can play a key role in keeping kids safe on their favorite playgrounds with these tips and resources:

Keep Your Kids Safe With These Tips

Here are four top risks that cause playground injuries. Click for full size.

  • Areas underneath the equipment, known as fall surfaces, should be made of soft material such as wood chips, mulch, sand or rubber.
  • Inspect equipment for any piece (especially metal) that may be hot from the sun.
  • Watch for hazards or protrusions like bolts, hooks, stumps or rocks that could trip or cut children.
  • Look for neglected maintenance, such as rusty or broken equipment.
  • Make sure kids wear safe clothing. No loose scarves or hoodies with drawstrings, as these can become a strangulation hazard if entangled with equipment. Shoes should be comfortable for play and protect feet, like sneakers. Tie long hair back as well.
  • Make sure there are strong and sturdy guardrails to prevent falls.
  • Your children should be using age-appropriate equipment. Read all playground signs for warnings and instructions.
  • Most importantly, the best way to prevent injuries is parental supervision. Talk to your kids about appropriate playground behavior before you visit the playground and watch them while you’re there.

More Resources for Safe Playgrounds

To ensure your local playground is safe, the National Recreations and Parks Association has a network of Certified Playground Safety Inspectors (CPSI). The CPSI certification program provides comprehensive and up-to-date training on playground safety issues, including hazard identification, equipment specifications, surfacing requirements and risk management methods. To find your local CPSI, click here.

A thorough playground safety checklist and ranking tool, created by the National Program for Playground Safety, can be found here. If you see safety hazards or poorly maintained equipment, reach out to the owner as soon as possible. In most cases, this will be a school or park district.

Keeping our kids safe while out on the playground is an issue we can all get behind, and one that benefits the community as a whole. So let’s all get out there and have some fun!

What You May Be Missing in the Analysis of your Client’s Insurance Policy

“Knowing the policy language and coverage better than the defense attorney is not a high bar to scale,” says Bruce Heffner.

By Bruce P. Heffner, Esq.

As an insurance regulator and as an insurance company general manager, I was often amazed at what I could only discern as an argument by a plaintiff’s attorney concerning an insurance claim. He had never bothered to read the policy or have a true of understanding of insurance.  Not only was it clear that there was not coverage, but the statutes under which an insurance company must operate contradict the very argument being made by the attorney.

Perhaps my favorite example was when working for a “farm mutual” insurance company. Statutorily, a Texas farm mutual is prohibited from writing any third party liability contract as well there is no third party liability coverage in any policy written by this farm mutual. 

A call comes from the plaintiff’s attorney alleging fault of our property insured being responsible for a fire.  I explained to him that the policyholder had no liability coverage and that the company would not be responding to a complaint.

This same attorney later called with ….  “Where is my money?”  I explained again that the policyholder did not have coverage for which the company will be assuming control of the claim or responding to a complaint.

Next argument from him:  “But he is at fault and caused the fire,” and in fact then sends a local rural volunteer fire report that confirmed that there was a fire but it had nothing else.   I explained again that his property insurance company did not cover his liability and in fact the state statutes prohibit it from writing liability coverage. I then provided him the statute chapter citations.  

He calls again, very upset and that he has never heard of such a thing as a homeowners policy without a liability section, (it was not a homeowners policy, it was a dwelling policy covering only property) and he was going to report the company to the insurance department. Needless to say, the insurance department did not chastise the company for not writing what it was prohibited from writing and I do not know if the plaintiff attorney pursued an uninsured claim. I was, however, curious if this attorney ever heard of FRCP 11(b) in his practice?

Read the insurance policy

Besides moving the claim along faster if you understand what the policy says and can articulate coverage for your client’s position, you won’t look like a fool and subject yourself to sanctions for filing a bogus complaint.

 This is a rather long way of saying:

  1. Read the insurance policy.
  2. In fact, read the statutes for which an insurer must operate.

Insurers are notorious for amending their policies to follow dicta in adverse rulings trying to say just what needs to be said in the new policy, in hopes that future rulings go their way.  Many insurance policies are not written by attorneys. If the policy is written by the insurance company itself or a service, you want to know what the law actually says about what the insurance company must write, its flesch (readability) score and if it was approved by the insurance regulatory body itself. 

Think about it this way, if you don’t  think that judges write opinions at the average juror education level and insurance companies rely heavily on judicial dicta opinion in the policies, the chances of it being “readable” by the jurors is somewhat low.  What efforts did the writers take in making the judge written dicta more readable?  Judicial opinions are for the benefit of the courts and dicta is not the law. If you do the research, a plaintiff’s attorney should be able to out think and out argue the insurer if there really is coverage…that is unless you don’t want to settle as soon as possible with the insurance company.

The logic you are facing

It is the position of mutual Insurance companies that “attorneys across the country continue to pursue anti-civil justice initiatives,” chief among them first and third-party bad faith proposals in state capitols. That is, mutual insurance companies specifically oppose any attempt by trial attorneys to enact laws that would benefit the policyholder after they have had a loss, but may “endanger the economic welfare of the mutual insurer company itself.” (https://www.namic.org/issues/badFaith.asp).

The insurance company’s position is:

What they say: Tort reform is good for the policyholder because it supposedly keeps policyholder premiums lower.

What they don’t tell you: If you get injured, you will not be able to collect your full damages; it changes your constitutional right to sue the tortfeasor and is actually contrary to the “civil justice” we say we want.  

What they say: If the insurance company does not have to pay for its bad faith, your premiums might be lower than if we were held accountable for our wrong actions.

What they don’t tell you: If the insurance company does not have to pay for its bad behavior and wrongly handles your claim, too bad, you as the policyholder suffer the consequences, not the company. That is what insurers mean when they talk about “civil justice.”

Buzzword: commoditization

You are dealing with organizations that have sold a bill of goods to their policyholders based on the premise that policyholders will put up with anything if insurer’s promise that it might lead to lower insurance prices.  Because “civil justice” is argued by the insurer and because insurers run quickly to incorporate dicta into their policies, you need to introduce a dose of logic into the recovery equation for your client and not take part in any fantasy world of illogic, and explain to the jury the reality of the Insurer’s position against its insured.  

Insurance companies have so bought into this argument through price alone to increase sales, that little else matters, including the truth. In fact the buzz word in insurance now is commoditization, when a product is differentiated only by price. (Selling the idea by insurance companies that insurance is fungible)  If only price matters, why then is there any advertisement on service? Have you considered that “accident forgiveness” is really nothing more than prepaying in your rates for the accident?

Joining this bandwagon is the insurance regulator himself, who will post the costs charged by the various companies on the regulator website for a policy without differentiating policy language coverages. If the insurance company with the regulators blessing is focused on nothing but price, do you really think the regulator is actually assuring the insurance company’s service to your client?

Therefore, it is really left to the plaintiff counsel to regulate the behavior of insurance companies, because the insurance regulator is in lock step with the insurance companies. When a state regulator does not in fact truly regulate, then the federal exemptions to the antitrust laws do not apply to the insurance company.   See “Time to Revisit State-Based Regulation?”

Insurance companies should want good state oversight. Clearly demonstrated is the non-standardization of the various states to oversee and protect its policyholders. The failure of some states to actually regulate puts the insurers in that state in jeopardy of enforcing the antitrust laws against them, held in abeyance only by true state regulation of Insurance per the McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, passed by Congress in 1945.

The McCarran–Ferguson Act does not regulate insurance, nor does it mandate the state regulation of insurance. Section 2(b) of the Act specifies that the business of insurance is exempt from the antitrust laws only if it is regulated by the states. While I understand the logic by some insurers celebrating the lack of regulatory oversight by its state, perhaps an enterprising lawsuit demonstrating its violation of antitrust law applicable by the states’ failures to truly regulate may change that attitude.

The insurer’s defense attorney is not a coverage attorney. Believing that he has superior knowledge of insurance coverage is a mistake. The defense attorney defending an insurer is no more an insurance expert than an attorney defending a doctor is a medical expert.

Knowing the policy language and coverage better than the defense attorney is not a high bar to scale.  Writing a complaint only in hopes to get insurance coverage within the four corners is an sign that you may be wasting your time.  If their loss is clearly covered, and you need to understand what is and is not covered, articulating a rational argument is your best basis for a quick settlement. All other things being equal, an insurer would prefer to argue coverage than damage amount.  If there is no coverage, then damages really don’t matter to them

Having started my career in insurance and then only later in life attending law school Giving a coverage opinion without first reading the policy is a great way to test your own E&O…all policies are not the same.  A wise attorney once told me that medical malpractice claims will drop once physicians stop malpracticing.   So too bad faith claims will drop once insurance companies stop acting in bad faith.

Bruce P. Heffner, Esq., CPCU, ARM-E, ARe, ASLI, CSRP, AIC, has more than  35 years of experience in the insurance-reinsurance industry, regulatory work as Deputy Commissioner and Counsel, and is a licensed attorney in Texas and Arkansas.