Posted on November 04, 2013 in Personal Injury

STSW is currently investigating potential criminal and civil claims arising out of the massacre of 13 Navy Yard employees on behalf of several of the victims’ families.

Aaron Alexis was employed by The Experts, a subcontractor of Hewlett-Packard Enterprise Services (HP), and was granted access to secure Navy Yard facilities in that capacity. Based on the widespread media reports of Alexis’ increasingly bizarre behavior, The Experts was potentially on notice of a dangerous mental illness. Alexis was living in a hotel with fellow employees who apparently witnessed his declining mental state, as did members of the hotel staff. Alexis was also involved in several encounters with police which either were or could have been discovered by The Experts. The Experts may be liable for, among other things, wrongful death, negligent hiring, negligent supervision and negligent retention. Depending on the precise relationship between The Experts and HP, HP faces potential liability.

Continue Reading ››

 Posted on November 01, 2013 in Victim's Rights

Today, lawyers for victims of former Johns Hopkins obstetrician and gynecologist Dr. Nikita Levy announced that a class action has been conditionally certified to resolve the victims’ claims. As many will recall, this past February, patients of Dr. Nikita Levy learned through the media that Dr. Levy had admitted to filming patients during examinations. A subsequent search of his home by police revealed "computer servers" that contained photographs and videos of his patients. Within days, before he could be brought to justice, Dr. Levy took his own life.

Shortly after the news reports broke regarding Dr. Levy’s misconduct, patients of Dr. Levy began contacting attorneys to learn about their legal rights. When interviewed, patients also disclosed various sexual boundary violations that Dr. Levy had committed.

A total of approximately 3,800 women eventually retained attorneys. This firm represents more than a hundred of these women.

Today, attorneys for victims of Dr. Levy, including this firm, announced that a judge of the Circuit Court for Baltimore City has cleared the way for settlement discussions to begin between attorneys for victims of Dr. Levy and Johns Hopkins Hospital. Specifically, the judge certified a Mandatory Conditional Settlement Class consisting of all of Dr. Levy’s patients. The class allows members of a Steering Committee, which this firm is a part of, to begin settlement negotiations with Johns Hopkins in an effort to timely obtain a settlement on behalf of all claimants in a reasonable time.

Continue Reading ››

 Posted on October 31, 2013 in Medical Malpractice

Patients expect that their doctors will take good care of them and do whatever necessary to stabilize or treat their condition. However, one doctor – an orthopedic surgeon – recently was found guilty of medical malpractice when his actions led to his patient becoming a paraplegic; the jury awarded the patient and his wife $2.85 million.

The patient presented to the emergency room in the spring of 2004 after he suffered numerous and severe injuries in an automobile accident. While being prepped for surgery to stop the bleeding in his forearm, the treating orthopedic surgeon ordered a CT scan of the patient’s knee, which he also injured in the accident. According to the trial testimony, when the physician ordered the CT scan, the patient’s blood pressure was at a dangerously low level. The CT scan caused a nearly 30-minute delay in the patient’s surgery. During this delay, the patient went into cardiac arrest and respiratory arrest. Although two physicians nearby – an emergency room doctor and an anesthesiologist – fortunately resuscitated the patient, the delay and resulting injuries led to the death of a portion of his spinal cord, also known as a spinal cord stroke. Tragically, he suffered permanent paralysis from just above the waist down.

Continue Reading ››

 Posted on October 25, 2013 in Business Counseling, Litigation & Transactions

In its early years, malpractice insurance coverage was often provided through "occurrence"-based policies that provide coverage for specific events, or "occurrences," that happened during the policy’s effective period. When a professional malpractice claim was made under one of these policies, however, it was often difficult to define the boundaries of the "occurrence" of the negligent act, particularly when services were provided to the client long in the past or were part of a years-long relationship. If the "occurrence" extended over multiple policy periods, then multiple insurers were arguably responsible for covering the occurrence, unless a single insurer was unlucky enough to have issued multiple policies whose separate limits were arguably triggered by the single, years-long, occurrence. In order to minimize their exposure, exercise greater control over their exposure, and for other reasons, malpractice insurers have more recently begun issuing more "claims made" policies.
In contrast to "occurrence"-based policies, which typically cover insureds for any occurrence which takes place during the effective period regardless of when the claim is filed, "claims made" coverage protects the insured from claims made against it only during the effective period of the contract; in effect, the filing of the claim during the policy period is itself the coverage trigger.

"Claims made" policies permit insurers to exercise greater control over their risk exposure because a "claims made" insurer knows, if it has not received notice of a claim during the effective period of a policy, or typically for a month or two after expiration, the risk of a claim under that policy has likely passed. By contrast, an insurer who has issued an "occurrence"-based policy may learn that it has liability to cover an "occurrence" which happened during its long-expired policy period years after the "occurrence" allegedly took place.
The notice provisions in "claims made" policies set a time limit by which the insured has to give the insurer heads-up about claims filed against it. As with some other states, however, Maryland has a statute limiting insurers’ reliance on such provisions to deny claims. Section §19-110 in Maryland’s insurance statutes prohibits an insurer from denying coverage based on a failure to timely notify unless the insurer proves that it was prejudiced by the delay. While courts in other jurisdictions have opted not to apply such "notice-prejudice" laws to claims-made policies, in McDowell Bldg. v. Zurich Am. Ins. Co., 2013 WL 5234250 (D.Md. Sept. 17, 2013), Judge Bennett recently went in the other direction, at least in the motion to dismiss stage.
Zurich Insurance Company sold the malpractice liability policy at issue in McDowell to an architectural firm. The Zurich policy’s notice provision required that notice of all claims be given to Zurich no later than 60 days after the expiration or termination of the policy. A potentially covered malpractice claim was made during the effective period of the policy, but the architectural firm waited more than three years – well past the expiration of the policy – to tell Zurich about it. Zurich denied coverage based on late notice, and McDowell marched into court, asserting that Zurich hadn’t proved it was prejudiced under § 19-110.
Zurich argued that Section 19-110 does not apply to malpractice cases. McDowell maintained that Section 19-110 applies to all types of policies, and that in the few cases where courts refused to apply § 19-110, the claim or lawsuit itself, and not just the notice of the claim, occurred after expiration of the subject insurance policy.
Judge Bennett took a close look at a recent decisions to determine how Section 19-110 should be applied. These decisions were only moderately helpful, however, as "the state of § 19-110 jurisprudence in the Fourth Circuit is still very much in flux." McDowell, 2013 WL 5234250, at *8. Judge Bennett also distinguished two prior opinions of Maryland’s federal district court on the basis that they found § 19-110 to be inapplicable in the summary judgment context, whereas McDowell concerns a motion to dismiss.
Judge Bennett noted that the application of this statute is intrinsically bound up with the facts of each case, and the precise language of the subject policy. Based on the language of the notice provision, Judge Bennett treated the notice provision as a covenant, rather than a condition precedent to coverage under Maryland law. The failure to provide timely notice of a claim was thus found to be a breach of the insurance policy, not the failure to satisfy a condition precedent to coverage. The alleged breach of the policy was held to trigger application of § 19-110, and require that Zurich prove prejudice to support its denial of coverage (whereas a failure to satisfy a condition precedent would presumably have defeated coverage altogether). Zurich’s motion to dismiss the breach of contract claims for failure to provide timely notice was denied. Given the McDowell court’s heavy reliance on the specific facts of the case, the opinion is likely only one piece of a § 19-110 puzzle that is still very much under construction.
If this post is the "occurrence" that triggers your concerns or questions about claims-made policies and notice-prejudice statutes, contact Bill Sinclair, head of STSW’s commercial litigation group, at 410-385-9116 or bsinclair@silvermanthompson.com.

Continue Reading ››

 Posted on October 23, 2013 in Medical Malpractice

A New York jury in a medical malpractice recently found that a pediatric endocrinologist was guilty of medical negligence that caused the wrongful death of a six-year-old girl, and awarded the mother an $8 million verdict. Sadly, the girl died shortly after a non-board certified pediatric endocrinologist misdiagnosed her diabetes.

This defendant doctor was recommended by the girl’s pediatrician, who thought she may have had diabetes. After administering a blood test, the specialist jumped to the conclusion that the girl had pre-Type 2 diabetes; she prescribed a regimen of weight loss and exercise. Following this initial misdiagnosis, the specialist failed to order a blood test at a second visit, and the girl became gravely ill about a month later. When the girl’s blood sugar eventually was tested at the ER, it was found to be five times higher than the normal limits. Unfortunately, all she really needed was insulin, but because her doctor misdiagnosed her with Type 2 diabetes, instead of Type 1 diabetes, she ended up not getting the insulin she needed and died.

Continue Reading ››

 Posted on October 15, 2013 in Business Counseling, Litigation & Transactions

Maryland law requires that property and casualty insurers who are investigating an insurance claim must send the insureds a written update on the status of the claim every forty-five (45) days. COMAR 31.15.07.04. Specifically, the Maryland regulation provides that if an insurer has not completed its investigation of a first-party claim (this generally means that you made the claim under your own policy) within 45 days of notification, the insurer must promptly notify the first-party claimant, in writing, of the actual reason that additional time is necessary to complete the investigation.

Notice must also be sent to the first-party claimant after each additional 45-day period until the insurer either affirms or denies coverage and damages.

If you have made a "first-party" home, auto, or liability insurance claim, and you think your insurance company has not kept you updated in accordance with Maryland law, please contact Bill Sinclair, head of STSW’s commercial litigation group, at 410-385-9116 or bsinclair@silvermanthompson.com, to discuss. Statutes of limitations may apply, so do not delay.

Continue Reading ››

 Posted on October 15, 2013 in Business Counseling, Litigation & Transactions

When the relationship between an insurance company and a managing general agent terminates in Maryland, it is typically the agent that owns the "expirations" (or "book of business") – i.e., the policyholders’ contact information that may be used to solicit further business upon expiration of those policies. Maryland’s rule is consistent with the general weight of authority in the country that under the "American agency system," the agent is the owner of expirations upon termination of the insurance agency relationship, particularly when such ownership is provided for by contract.

As for Maryland, Md. Code, Ins. Art. § 27-503 prevents insurance purchasers from losing their insurance when their agency relationship is terminated between their agents and the insurers. Upon the termination of that relationship, the statute grants ownership of expirations to the insurer, but requires the insurer to renew the agent’s policies through the agent for at least two years or until the policies are placed elsewhere. See Md. Code, Ins. Art. ("IN") §27-503(b)(3). This is known as the "renewal rule."

As to the larger question of, in the absence of a statute, whether the agent or the insurer owns expirations, expirations are generally "owned" by the insurance agent that wrote the policy (provided that the agent is not in default in remitting premiums to the insurer). See Charles Maggard Agency, Inc. v. Mo. Pub. Entity Risk Mgmt. Fund, 974 S.W.2d 671 (Mo. St. App. W.D. 1998); Spier v. Home Ins. Co., 404 F.2d 896 (7th Cir. 1968); Heyl v. Emery & Kaufman, Ltd., 204 F.2d 137 (5th Cir. 1953); F.B. Miller Agency, Inc. v. Home Ins. Co., 276 Ill. App. 418 (1934) (where ownership of expirations not provided in contract and insufficient evidence of industry custom, ownership granted to agent); Nat’l Fire Ins. Co. v. Sullard, 97 N.Y. App. Div. 233 (1904); Stein v. Nat’l Life Ass’n, 105 Ga. 821 (1898) (business owned by agent and was not a trade secret produced through a confidential relationship with insurer). There appears to be at least a few cases to the contrary, see State Farm Mut. Ins. Co. v. Dempster, 174 Cal. App. 2d 418 (1959) (expirations are owned by insurer as trade secrets); Fid. & Cas. Co. v. Downing & Downing, 88 Pa. Super. 133 (1926); Arrant v. Ga. Cas. Co., 212 Ala. 309 (1924) (agent not entitled to ownership of expirations under general principles of agency law), particularly where contractual provisions between the insurers and agents are construed to grant ownership of expirations to the insurers, see Arrant, 212 Ala. 309; Liberty Mut. Ins. Co. v. Outerbridge, 249 N.Y.S.2d 147 (1963). Some courts have also held that agents of mutual insurance companies or direct writing companies, as opposed to stock insurance companies, do not own their expirations. See State Farm Mut. Auto Ins. Co. v. Hedburg, 236 F. Supp. 797 (D. Minn. 1964) (mutual insurance companies); Hardin Cnty. Farm Bureau v. Farm Bureau Mut. Ins. Co., 341 S.W.2d 62 (Ky. 1960) (direct writing company). However, where the terms of a contract expressly assign expiration rights to the agent, courts have (where the agent has fully accounted for premiums owed to the insurer) enforced those rights. See, e.g., Nelson v. Farmers Mut. Auto Ins. Co., 4 Wis. 2d 36 (1958) (upholding jury finding that contract between insurer and agent granted expirations to agent).

Continue Reading ››

 Posted on October 14, 2013 in Medical Malpractice

For a parent, one of the greatest fears is that something bad will happen to their child. Mothers take special care when pregnant to ensure that their child is born healthy and will develop correctly. However, one thing that mothers cannot avoid is the risk of complications during the birthing process.

Last month, a Pennsylvania jury awarded $4 million when it found an obstetrician’s medical negligence caused permanent injuries to a child. The child, now four years old, suffers cerebral palsy and neurological injuries as a result of the obstetrician’s negligent failure to perform a cesarean section after the mother’s labor stalled for nearly eight hours. An expert witness testified that the doctor should have recognized that when the child’s labor stopped progressing, a cesarean delivery was safer. Instead, the doctor proceeded with a vaginal delivery and used forceps to assist in the delivery. During the delivery, the baby’s shoulder became stuck in her mother’s pelvis, causing a crucial three-and-a-half minute delay when the baby was deprived of oxygen. As a result, the baby had to be resuscitated by the neonatal intensive care unit at the hospital and later underwent a procedure to cool her brain to minimize damage from the lack of oxygen. The verdict came after a four-day trial and is among the largest medical malpractice awards in the county’s history.

Continue Reading ››

 Posted on October 11, 2013 in Business Counseling, Litigation & Transactions

Most insurance policies provide for "subrogation." Subrogation is triggered whenever an insurance company pays out an amount to a policyholder for harm caused to the policyholder by a third party. If the insurer can prove that the third party was at fault, the insurance company can typically file a "subrogation" lawsuit against the third party to recover the money it paid out to the policyholder. To use a simple example, if a third party sets fire to a business’s office, and the business’s insurance company pays the business the amount of its fire loss, then the insurance company can typically sue the arsonist in a "subrogation" action to recover the amount that it paid to the business.
"Subrogation" is defined by everyone’s favorite legal dictionary as "the substitution of one person in the place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim." Black’s Law Dictionary 1467 (8th ed.2004).

Sometimes, however, an insurer doesn’t want to take the time and incur the expense of having to prove third-party fault, especially when the policyholder has received a relatively modest sum under the policy. What’s a reimbursement-seeking yet litigation-averse insurer to do? Well, the policyholder, despite having been paid by the insurance company, can still sue the third party for any additional losses not covered by the policy. An insurer might choose to write a subrogation provision into its policies that permits the insurer to recover all or part of its payout from whatever other money the policyholder might obtain by directly suing the third-party wrongdoer, or as compensation under some other policy that may be triggered by the incident.
From a customer relations view, however, a policyholder that has taken the time to haul a third party into court (or haggle out a settlement) is unlikely to be overly excited about sharing the fruits of their labor. The policyholder might feel that, equitably, his or her insurer doesn’t deserve to sit back, do nothing, and later take a cut of – or even all of – money it didn’t lift a finger to help secure. This is particularly true where, after the policyholder has paid attorneys’ fees, the insurer wants even more money that’s left over from the recovery. Well, too bad. At least in the context of ERISA (that’s the Employee Retirement Income Security Act, the federal law that covers pretty much every work-related benefits plan in the country), the U.S. Supreme Court said this summer that, if an ERISA plan has such a subrogation clause, that language controls and equitable principles just don’t enter into it.
In U.S. Airways, Inc. v. McCutchen, 133 S.Ct. 1537 (2013), the top court unanimously rejected the claims of a U.S. Airways employee that received $66,866 from his company’s health plan for medical expenses resulting from a car accident. That plan allowed U.S. Airways to reimburse itself from any related recovery from a third party. Not content with just having his medical bills paid for, McCutchen lawyered up (on a 40-percent contingency basis) and sought more than a million bucks from the driver at fault.
As is often the case, however, terrible drivers have terrible insurance, and McCutchen only squeezed a measly $10,000 out of her. After his own insurance company paid out under his policy, McCutchen received a total of $110,000, $44,000 of which went to his attorneys. But before he could pocket the remaining $66,000, U.S. Airways stepped in, contending that, under the plan’s subrogation clause, U.S. Airways was owed full reimbursement of its $66,866 payout from the $110,000 recovery, regardless of his payment of attorneys’ fees. In other words, by independently going after the driver at fault, McCutchen would end up $866 in the hole.
Not surprisingly, McCutchen balked at this potential outcome, so U.S. Airways drove straight into the U.S. District Court for the Western District of Pennsylvania under § 502(a)(3) of ERISA, which allows a health-plan administrator (in a self-funded plan, that’s usually the employer) to obtain "equitable relief" to enforce the terms of the plan. McCutchen protested that U.S. Airways’ request for "equitable relief" under § 502 must incorporate equitable doctrines and principles – particularly those doctrines and principles, such as the so-called "double recovery rule," that would prevent U.S. Airways from taking money that wasn’t recovered for medical expenses. Even if U.S. Airways did get to dip into his recovery, McCuthchen complained, the equitable "common fund" rule should require U.S. Airways to at least chip in for the attorneys’ fees.
But the District Court wasn’t buying it, and granted summary judgment on the "clear and unambiguous" language of the plan that provided for reimbursement, regardless of what damages the money was ostensibly recovered for or whether the policyholder incurred legal fees in obtaining it. On appeal, the Third Circuit reversed, finding it a bit unfair that U.S. Airways could claim the fruits of McCutchen’s legal efforts, and actually force him to take a loss on the whole deal. It therefore instructed the District Court to calculate some lesser amount of "equitable relief" that would be appropriate given the size of McCutchen’s recovery and the company’s lack of participation in the action against the third party. This time U.S. Airways disagreed, relying on the plain language of its plan contract, and the U.S. Supreme Court agreed to consider the issue.
Justice Kagan agreed that the equity wasn’t a good reason to ignore the express terms of an ERISA plan. Because McCutchen’s plan plainly stated that the employer could reimburse itself from the entire amount obtained from third parties, the "double recovery" rule wasn’t relevant in determining what U.S. Airways was entitled to – it could seek reimbursement from any recovered sums, whether for medical expenses or otherwise. However, Kagan didn’t totally dish McCutchen a bad break.
Where the plan is silent on certain issues, the majority held (or, more specifically, Justice Kennedy’s moderate swing-vote held), well-established contract defaults, such as the common-fund rule, were incorporated into its terms. McCutchen’s plan didn’t say anything about attorneys’ fees, so the Court assumed the plan operated under the common-fund rule. In other words, McCutchen wasn’t forced to "pay for the privilege of serving as U.S. Airways’ collection agent" and he could reduce the company’s reimbursement by its fair share of his fees. (The Court’s conservative bloc dissented here, holding that this question wasn’t fairly presented in the case.)
The take-away lesson: The precise language of subrogation provisions matter. Plan sponsors, particularly those of self-funded health plans, should review plan documents carefully, making sure they specifically address any issue that might otherwise be controlled by an equitable default rule. Not quite sure that you’re sufficiently protected? Please feel free to contact Bill Sinclair, head of STSW’s commercial litigation group, at 410-385-9116 or bsinclair@silvermanthompson.com, and Chris Mincher, an associate in STSW’s business litigation group.

Continue Reading ››

 Posted on October 11, 2013 in Business Counseling, Litigation & Transactions

According to Silverman, Thompson, Slutkin & White, LLC lawyer Geoff Hengerer, attorneys preparing for litigation against business entities frequently discover former employees who possess potentially relevant information. Before reaching out to these individuals without first informing opposing counsel, however, one must turn to the Maryland Rules of Professional Conduct.

Pursuant to Rule 4.4(b), there is no blanket prohibition against ex parte communications with "third persons," which specifically includes former employees as noted in Comment 6 of Rule 4.2 and Comment 2 of Rule 4.4; see also, e.g., Chang-Williams v. United States, No. DKC 10-783, 2012 WL 253440, at *4 (D. Md. Jan. 25, 2012) (rejecting the government’s request to block all ex parte communications with former employees "merely because their acts or omissions may be imputed to the government"). Attorneys, however, do not have carte blanche when contacting these individuals. In particular, attorneys cannot seek information from a former employee "relating to the matter that the lawyer knows or reasonably should know is protected from disclosure by statute or by an established evidentiary privilege." Md. R. Prof’l Conduct 4.4(b). As discussed further below, this prohibition typically governs situations where the individual has information protected by the attorney-work-product doctrine or attorney-client privilege, but it also extends to individuals with "specific confidentiality protection[s], such as trademark, copyright, or patent law." Md. R. Prof’l Conduct 4.4, cmt. 2.

Continue Reading ››