Day On Torts

Major Changes to Tennessee Wrongful Death Law - Death of a Spouse

John Day — Thu, 23 May 2013 04:18:41 -0600

Under the law of wrongful death in Tennessee, the spouse of the decedent typically has the principle right to pursue a wrongful death claim.

However, from time to time cases have arisen where the marriage effectively but not legally ended before the death of one spouse, and squabbles arose over who controlled the wrongful death action and whether wrongful death proceeds were recoverable.

The Tennessee General Assembly has weighed in on the controversy. First, Tenn. Code. Ann. Sec. 20-5-110 has been amended to provide that the right to bring a wrongful death case or collect any proceeds is waived if the surviving spouse abandoned the deceased spouse as described in Tenn. Code Ann. Sec. 36-4-101(a)(13) or otherwise willfully withdrawn from the decedent for a period of two (2) years. Section (c) of the statute sets forth more details on the issue, and includes a mechanism for bringing the issue to a head.

Section 20-5-107 (e) also addresses the issue, and provides inter alia that if the spouse who files the wrongful action is later disqualified from so serving or from receiving proceeds the filing date of the action by the disqualified spouse is preserved for statute of limitations purposes.

Section 20-5-106 (c) requires children who bring a wrongful death case to put the surviving spouse on formal notice of the filing, presumably so that his or her rights can be determined in the proceeding.

The new provisions have not yet been interpreted by Tennessee appellate courts. However, the changes to the law represent a responsible effort to clarify and simplify the process of the progression of wrongful death cases in these difficult circumstances and the distribution of wrongful death proceeds.

Tennessee Medical Malpractice Lawsuits Against Governmental Entities and Their Employees and the Notice Statute

John Day — Sat, 18 May 2013 04:05:25 -0600

Tennessee law has a one year statute of limitation in a medical malpractice (now called a health care liability) case. Formal legal notice must be given to health care providers who are going to be sued in the case and this notice must be given before the expiration of the statute of limitations. Notice must be given at least 60 days before suit is filed. If notice is given as required by law, the statute of limitations is extended for 120 days. All of this is spelled out in detail in T.C. A. Sec. 29-26-121..

Thus, if a patient is hurt as a result of a medical error on Day 1, and notice is given on Day 364, plaintiff cannot file suit until Day 425 (60 days after suit was filed) but must file before Day 485 (120 days after the statute of limitations expired), right?

Yes, unless the case is against a health care provider employed by a local government or against the local government itself. The Tennessee Supreme Court has released its opinion in Cunningham v. Williamson Cty. Hosp. District, No. M2011-00554-SC-S09-CV (Tenn. May 9, 2013) and has ruled that the notice statute (T.C.A. Sec. 29-2-121) does not extend the statute of limitations applicable to claims against governmental entities and its employees. Why? Because the Court has ruled that changes in statutes of general application that specifically conflict with the GTLA do not apply to claims against governmental entities unless the General Assembly specifically says they do.

The practical effect of this ruling is that a person who brings a health care liability action against a local government or a nurse or doctor employed by a local government must give notice of the claim more than 60 days before the expiration of the one year statute of limitations. Why? Because the notice statute requires that a plaintiff must wait sixty days after giving notice to file suit. Failure to comply with this provision will result in dismissal of the case.

Going back to the example used above, if an incident occurs on Day 1 and there is a claim against a local governmental entity or one of its doctors or nurses, notice must be given by no later than Day 304 so that suit can be filed on Day 365. (Note: the statute says that notice must be given "at least sixty days" before suit can be filed. I don't know for sure if suit can be filed on the 60th day after notice is given or if suit can be filed no sooner than 61 days after notice is given. I will let someone else make that law and thus recommend waiting 61 days if possible.)

Two other points must be made. First, the Tennessee Supreme Court notes that

[n]either party has addressed the issue of the applicability of the sixty-day notice requirement in cases governed by the GTLA. Although we have previously held that failure to comply with the sixty-day pre-suit notice requirement of section 29-26 121(a) may result in dismissal of the medical malpractice claim absent a showing of extraordinary cause, we have not previously addressed whether the sixty-day pre-suit notice is required in GTLA cases. Tenn. Code Ann. § 29-26-121(b); Myers v. AMISUB (SFH), Inc., 382 S.W.3d 300, 311-12 (Tenn. 2012).

FN. 3.

Therefore, it is possible that the Court is signaling that it is receptive to an argument that notice is not required in cases against local governments.

However, such an argument could be advanced in only a very small number of cases. Why? Because when the Legislature changed the entire Tennessee Code to eliminate reference to medical malpractice cases and substitute the phrase "health care liability action" it expressly stated that e definition of “health care liability action” included “claims against the state or a political subdivision thereof.” Act of May 20, 2011, ch. 510, § 8, 2011 Tenn. Pub. Acts. 510, 1506 (codified as amended at Tenn. Code Ann. § 29-26-101(a) (2012)). The 2011 amendment became effective on October 1, 2011, after Mr. and Mrs.Cunningham filed their claim. Thus, there is no longer any doubt that notice must be given in cases health care liability cases against local government entities and its nurses and doctors.

All of this means that the argument left open by the Court in footnote 3 can only be advanced by those still in litigation over claims that arose after the notice statute first came into effect (October 1, 2008) and the definition change referenced above on October 1, 2011.

All of which gives rise to the second point: does the inclusion of governmental entities under the definition of those covered by health care liability law mean that the Legislature intended to change the law and extend the statute of limitations by 120 days in health care liability cases against local governmental entities and their doctors and nurses if proper notice is given? The Court said that it would "await a more appropriate case in which to determine whether the language of the 2011 amendment clearly expresses a legislative intent to extend the statute of limitations in GTLA cases." FN. 2.

Should lawyers assume that the Court will rule that definition change means that a plaintiff will get the benefit of the 120 day extension of the statute of limitations in every health care liability action under the GTLA arising after October 1, 2011? No. I suggest that it is prudent to assume the 120 extension does not apply. Thus, I suggest that if possible notice be given at least 61 days before filing suit and that suit before filed no later than the end of the one year period. In the event a case comes to the lawyer at a day that makes it extremely difficult or impossible to give the mandated notice, wait the 60 days, and then file suit within the one year period, the lawyer will have to make the decision whether the strength of the case merits a "test case" on this issue.

The notice statute creates yet another hurdle for patients (and their lawyers) to jump in these very difficult cases. Lawyers are advised to stay current on this ever-changing area of the law.

Important Medicare Subrogation Decision From the 9th Circuit Court of Appeals

John Day — Sat, 27 Apr 2013 11:15:34 -0600

The 9th Circuit Court of Appeals has ruled that a private Medicare Advantage Organization plan cannot sue a plan participant’s survivors for reimbursement of medical payments out of the proceeds of an automobile insurance policy.

The case is Parra v. PacificCare of Arizona, No. 11-16069 (9th Cir. April 19, 2013), Parra was struck by car and was seriously injured. His medical expenses were paid by Defendant, a Medicare Advantage Organization ("MAO"). Parra died from his injuries, and his survivors brought a claim under Arizona's wrongful death law. The MAO also asserted a claim for monies it paid for medical expenses. GEICO, the tortfeasor's insurer, issued a joint check to the parties for the full amount of the MAO's claimed interest, to be held in trust pending the outcome of the dispute between the survivors and the MAO.

The survivors sued PacificCare, saying that it had no right to seek recovery of monies from the wrongful death settlement.

The 9th Circuit affirmed dismissal of the MAO's claims, holding that it did not have a right to pursue its claim under the statutes that creates MAOs. The Court also ruled that a private right of action did not exist under the facts. The decision includes an extensive discussion about Medicare subrogation generally and the rights of MAOs in particular.

Neither the district court nor the appellate court reached the issue of whether the contract between Parra and the MAO gave MAO a right in the recovery. (Note: Arizona law has a provision similar to that in Tennessee that provides that wrongful death proceeds are free from claims of the decedent's creditors.) Presumably, that issue will be hashed out in state court.

Claims That Trucking Companies May Have Against Pilot Flying J

John Day — Mon, 22 Apr 2013 14:02:09 -0600

The news that Pilot Flying J, a company largely if not exclusively owned by Governor's Haslam's family and run by his brother, is the subject of a criminal investigation has made a lot of news in the last week. Headquartered in Knoxville, Tennessee, Pilot Flying J has over 600 retail locations and is the largest operator of travel centers and travel plazas in North America. The company is one of the largest privately owned companies in the United States.

The FBI has searched corporate headquarters in Knoxville as well as the homes of several employees of the company. It has been reported that FBI Special Agent Robert H. Root alleged in an affidavit that a “conspiracy and scheme to defraud executed by various Pilot employees to deceptively withhold diesel fuel price rebates and discounts from Pilot customers … for the dual purposes of increasing the profitability of Pilot and increasing the diesel sales commissions of the Pilot employees participating in the fraud.”

Here is the company's latest press release on the matter. Here is the affidavit in support of the search warrant served on Pilot Flying J.

Obviously, both the company and some number of its employees could face criminal charges in the case, but the company will also face civil lawsuits over these charges. Here are some potential claims:

1. Breach of contract. If the applicable contract call for a certain level of rebates and the rebates were not provided at the required amount there will be a claim for breach of contract. There may or may not be a claim for attorney's fees and related litigation expenses; that will depend on the contract.

2. Consumer protection act claims. the law of some states will permit a consumer protection act claim for unfair or deceptive practices. Tennessee law recognized this right until October 1, 2011, when Governor Haslam's tort reform legislative took away a private cause of action for unfair or deceptive acts unless the acts were specifically enumerated in the statute. However, the pre-October 1, 2011 claims still could be filed under the TCPA for Tennessee companies and perhaps even companies from other states. If a TCPA claim exists under Tennessee law, Pilot Flying J would face treble damages and responsibility for attorneys' fees if its conduct was found to be "unfair or deceptive."

3. Fraud. The alleged acts rise to the level of fraud. Fraud can give rise to punitive damages in Tennessee and in many other states. Under Governor Haslam's tort reform statute punitive damages are capped for fraud that occurred on or after October 1, 2011. The caps are two times the amount of the compensatory damages or $500,000, whichever is greater. There is no cap on punitive damages for pre-October 1, 2011 conduct except for restrictions that would otherwise exist under the Constitution.

4. RICO: The Racketeer Influenced and Corrupt Organizations Act will be employed against Pilot Flying J and, if the allegations have merit RICO may well be triggered because of the probable use of the mail or wire in connection with the alleged scheme.

Finally, if the allegations are true the business will suffer a huge blow to its reputation, and the family members involved in the business will be hurt as well. It will be interesting to see how many companies pull their business from Pilot Flying J in the coming weeks and months.

SVMIC - A Prediction on the Future of Defense of Medical Malpractice Cases

John Day — Wed, 17 Apr 2013 06:07:21 -0600

My last two posts (here and here) have discussed financial and related information about Tennessee's largest insurer of physicians that I hope is of interest to Tennessee medical malpractice lawyers and patients. Now I am taking out my crystal ball and looking in the future of SVMIC's defense of medical malpractice cases.

Before I get there, let's think about Business 101. Businesses exist to produce profit. Profit is the difference between revenue and expense. If revenues exceed expenses, there is profit. If expenses exceed revenues there is a loss. Losses are bad, profits are good. (OK, I told you it was Business 101.)

There are basically two ways that any going concern can increase profit. First, it can increase revenue. Second, it can decrease expenses.

SVMIC is very profitable. Last year (2012) its earned premiums (think of this as revenue) was $153.6 million and its after-tax, after dividend profit was $26 million. This means that the company has a net income of % of revenue. Compare this number with WalMart, Exxon, and Goldman Sachs

You get the point.

But, it is the nature of most businesses in this country to always seek out more profit. SVMIC will have trouble increasing revenues - the market for professional liability coverage for doctors is "soft," i.e. rates are getting downward pressure as other companies fight for market share.

The other source of revenue for insurers is investment income, and that comes from a few different sources. First, insurers earn interest and dividends on investments. Second, insurers receive capital gains from investments sold during the course of a year. These sources of income added $43.8 million to SVMIC's revenue last year. So, SVMIC can continue to manage its portfolio to increase revenue from its investments.

But another way to increase profits is to cut expenses, and with a more than 50% increase in defense costs in the last five years (when the number of claims has decreased) one has to believe that sooner or later the insurance company will take a hard look at defense costs.

My prediction: within the next five years SVMIC will follow the lead of automobile insurers and begin to take a portion of their defense work and give it to a law firm that it owns. These lawyers will work for the company and handle "routine" claims - claims with a dollar value of $1,000,000 dollars or less that involve only one SVMIC insured as a defendant or only one insured and his or her practice.

I predict that that the new SVMIC law firm will be tested first in Middle Tennessee, where it can be closely monitored from SVMIC headquarters in Brentwood. The firm may be headquartered in the SVMIC building, as a decreased number of claims will reduce the need for claims personnel and office space will become available.

The new law firm will also be staffed with highly trained nurses that will function as paralegals, doing all medical research, contacting experts, etc.

SVMIC assumes little additional liability by making this move because damage caps permit it predict with certainty its maximum exposure many types of claims.

This new model would permit SVMIC to save hundreds of thousands per year in defense costs.

There will still be "outhouse" lawyers in cases with multiple SVMIC defendants, cases involving high economic losses, past or future, or unusual situations. I predict the company will eventually go to specialty teams of lawyers, call them "super lawyers," who handle birth trauma cases or other cases or other specialized cases.

I am sure that it goes without saying that I have no inside information from SVMIC that leads me to this conclusion.

SCOTUS Releases Opinion in ERISA Subrogation Case

John Day — Tue, 16 Apr 2013 19:36:14 -0600

The United States Supreme Court has released its opinion in U.S. Airways v. McCutchen, No. 11-1285 (USSC April 16, 2013), a case that raised the issue of whether "equitable doctrines and defenses," such as the "common fund" doctrine and the "made whole" doctrine applied to subrogation interests governed by the Employees Retirement Income and Security Act of 1974 ("ERISA").

McCutchen was injured in a car accident and received $110,000 in a personal injury settlement - $10,000 from the defendant's liability insurer and $100,000 from his underinsured motorist insurance carrier. His attorneys' fees were 40% of the recovery, leaving McCutchen with $66,000. U.S. Airways had paid the medical bills incurred to treat the injuries in the accident, and demanded repayment of 100% of the monies it paid - $66,866. When McCuthen refused to do so, U. S. Airways filed suit in federal court.

The USSC ruled that U.S. Airways had the right to enforce what it called an "equitable lien by agreement." and thus had a right to recover its money notwithstanding any argument that McCutchen was not made whole.

The issue of whether the U.S.Airways recovery should be reduced by the amount of money paid in attorney's fees to secure the recovery was a different story. The Court found that the U.S. Airways plan was silent on whether the common fund doctrine applied and therefore the common fund doctrine applied. The Court made it clear that a properly draft Plan could trump the common fund doctrine. Here is a summary of the Court's language on this point:

The rationale for the common-fund rule reinforces that conclusion. Third-party recoveries do not often come free: To get one, an insured must incur lawyer’s fees and expenses. Without cost sharing, the insurer free rides on its beneficiary’s efforts—taking the fruits while contributing nothing to the labor. Odder still, in some cases—indeed, in this case—the beneficiary is made worse off by pursuing a third party. Recall that McCutchen spent $44,000 (representing a 40% contingency fee) to get $110,000, leaving him with a real recovery of $66,000. But US Airways claimed $66,866 in medical expenses. That would put McCutchen $866 in the hole; in effect, he would pay for the privilege of serving as US Airways’ collection agent. We think McCutchen would not have foreseen that result when he signed on to the plan. And we doubt if even US Airways should want it. When the next McCutchen comes along, he is not likely to relieve US Airways of the costs of recovery. See Blackburn v. Sundstrand Corp., 115 F. 3d 493, 496 (CA7 1997) (Easterbrook, J.) (“[I]f . . . injured persons could not charge legal costs against recoveries, people like [McCutchen] would in the future have every reason” to make different judgments about bringing suit, “throwing on plans the burden and expense of collection”). The prospect of generating those strange results again militates against reading a general reimbursement provision—like the one here—for more than it is worth. Only if US Airways’ plan expressly addressed the costs of recovery would it alter the common-fund doctrine.

Opinion, Page 16.

Thus, lawyers representing plaintiffs now will need to scour the relevant documents to determine whether the common fund doctrine has been adequately trumped by the language of the Plan. To be sure, there will be a rush by many Plans to re-write Plans with this decision in mind.

As a lawyer who represents plaintiffs in personal injury and wrongful death litigation, we see more and more greed by those with subrogation interests. That those insurers are permitted to receive money from another policy that the insured paid for - like an uninsured motorist insurance policy - is particularly offensive.

I happen to believe that a health insurer should be reimbursed the expenses it incurs that are later recovered as part of a recovery by the insured in a third-party claim. And I believe that that the insured should not be able to structure a settlement in such a way that can defeat that interest. But the common fund doctrine should apply in all cases, and the health insurer's recovery should be reduced to reflect a reduced recovery of the insured because of collectability issues, liability issues, etc. Current law wrongfully favors the economic interests of employers and their health insurers at the expense of employees and their families. The USSC has made it clear that it has deferred to Congress on the issue and the chances are virtually nil that Congress will modify ERISA to actually benefit an employee.

State Volunteer Mutual Insurance Company - 2012 Financial and Claims Data- A Follow-Up Post

John Day — Sat, 13 Apr 2013 15:44:00 -0600

Last week I wrote a post titled " State Volunteer Mutual Insurance Company -2012 Financial and Claims Data" that resulted in an unusual number of emails and phone calls. To those that took the time to reach out and thank me for the information, thank you - I appreciate your efforts.

One caller brought up an excellent point that needs to be shared. I mentioned that I thought SVMIC was seeing an increase in the number of insureds because of increased competition and expanding group practices (if a physician joins an existing group that does not do business with SVMIC the insurer loses an insured). The caller pointed out that another reason for the decline in the number of SVMIC insureds is the fact that more and more doctors are being employed by hospitals. These doctors then fall within the insurance package carried by the hospital, and have no individual need to buy coverage (except perhaps for tail coverage for their prior work history). This phenomena impacts other professional liability insurers as well, but certainly impacts SVMIC given its dominating percentage of the professional liability market for Tennessee physicians.

The other point that people mentioned was the issue of the increasing amount of money spent on defense costs in Tennessee medical malpractice cases. I noted that the company indicated defense costs had increased over fifty percent in the last five years. Remember, this has occurred even though the number of lawsuits filed against the company's insureds has decreased significantly over the last five years. I cannot share that percentage decline in the number of lawsuits filed against SVMIC insureds in the last five years - I don't think that information is publicly available. But, in the fiscal year ending June 30, 2012, there were 374 medical malpractice (now called health care liability) cases filed in Tennessee's circuit courts. Five years earlier, in the fiscal year ending June 30, 2008, there were 537 medical malpractice cases filed in our circuit courts. That is a decrease of 153 cases, a 30 percent decline.

Thus, assuming that SVMIC insures the same percentage of defendants actually sued across the state in medical malpractice cases as of June 30, 2012 as it did as of July 1, 2007, the companies defense costs have increased more than fifty percent while the number of claims has decreased thirty percent.

You see the significance of that, I am sure. Assume that five years ago the company had 10 lawsuits and spent an average of $100,000 each defending each case, for a total expenditure of $1,000,000. Now, fast forward five years, drop the number of lawsuits to 7 but increase the defense costs by 50% to $1,500,000. What is the new average defense cost per claim? $214,000+.

So, if overall defense costs increase by more than 50% at the same time the number of cases being defended decreases by 30% the defense cost per case increases more than 100%.

Now, there are only a couple of explanations for this. First, the hourly rates of defense counsel and experts, etc. could be increasing. Second, the amount of time worked on the filed cases is increasing. And third, there is some combination of the first two factors at work.

As I indicated in the original post, I do not know if my brothers and sisters who defend SVMIC insureds have received a rate increase in the last five years, but I can say with a high degree of certainty that they have not received a rate increase that would explain a more than 50% increase in defense costs when the number of lawsuits has dropped 30%. No, my guess is that conventional wisdom in correct, and defense lawyers with less to do are working the cases they do have harder in an effort to increase revenue. One defense lawyer told me that SVMIC is the only insurer who has never challenged him/ her (I will protect my source) on his / her requests to spent money on the case or his ; her actual bills.

SVMIC knows that if cases are worked harder by their lawyers it costs them money in the short run but it increases the costs for the lawyers for patients, thus decreasing the profitability of the cases and impacting future case selection by plaintiff's lawyers. That helps drive down future filings by plaintiff's lawyers, which decreases future costs for the company. Through in damage caps, and profitability really shoots up.

One last point. Some might read these words and think that if SVMIC paid 99 claims last year and there were only 374 medical malpractice cases filed last year in the entire state against all health care providers that SVMIC pays indemnity dollars to a large percentage of claimants. That is wrong. There is a difference between a claim and a lawsuit. A claim is a opened by SVMIC when an insured fears or gets notice of a potential lawsuit. Lots and lots of claims never result in lawsuits, and while some claims result in an indemnity payment even though no lawsuit is not filed, most claims result in no lawsuit and no indemnity payment.

Also, although it is true that SVMIC paid 99 claims in 2012, those 99 claims include (a) pre-suit settlements and (b) settlement of cases which could involve claims against two or more insureds. Stating (b) a little differently, a single lawsuit may count on SVMIC's books as multiple claims, depending on the number of its insureds have been named in the case.) Thus, don't undertake the investigation of a medical malpractice case under the assumption that it will be settled if you rattle your saber loud enough. Nope, it doesn't work that way.

State Volunteer Mutual Insurance Company - 2012 Financial and Claims Data

John Day — Mon, 08 Apr 2013 18:04:43 -0600

State Volunteer Mutual Insurance Company (SVMIC), Tennessee's bedpan mutual, has been around almost forty years. Started by doctors for doctors, it writes more medical malpractice insurance coverage for doctors and their extenders than any other professional liability insurer in Tennessee.

The company is insuring a decreasing number of doctors in Tennessee, in part (my guess) because of aggressive marketing and rating-setting by other insurers and an increasing number of doctors joining groups. The number of SVMiC-insured doctors in 2012 was 14,268, down from 15,501 five years ago.

The company now has $1.169 billion in assets, having broken the billion dollar barrier in 2009. The company has reserved $560 million to pay claims and claim expenses. What does this mean? It means that if the company was able to settle or resolve every case for the reserved amount, and pay predicted expenses for defense counsel and such, the company would have $464 million to return to its policyholders. In fact, the surplus is probably much greater than that. History has demonstrated that the company tends to over-estimate its future loss payments and claim expenses, a conservative approach and one which I do not suggest is inappropriate in any way.

SVMIC had $157 million in premium income last year, down about $90 million from five years earlier. What's going on? Several things. First, the number of insureds has dropped about 8%. More importantly, premiums have dropped substantially in the last five years and in fact held flat in 2012.

Another reason for the decline in premiums - dividends. In a mutual company, dividends to the owners of the company (the policyholders) are returned in the form of premium credits. In the last five years, premiums have been reduced a total of $65 million because of these dividends.

Therefore, notwithstanding the fact that premium income is down 40% in the last five years, net income has staying the same - about $26 million.

A couple more points. First, SVMIC paid only 99 claims in Tennessee in 2012. Just 99. The total payments on these 99 claims was $33.8 million, for an average of $338,000 per claim. SVMIC had 1,134 claims pending in Tennessee as of the end of 2012, and has reversed $228.5 million to pay these claims.

Note that the average payment on paid claims is just that - an average payment on paid claims. It does not take into account the total number of claims closed - a calculation that would include lots of zero payments. Rather, the number tells us that of all the payments made on behalf of all the paid claims in 2012, the average payment is about $338,000.

The number of paid claims is dropping and the average value of each settlement is staying remarkably similar, despite a huge increase in the cost of medical care (a significant component of medical malpractice damage awards). In 2007 the company paid a total of 152 claims in the entire state of Tennessee. The payments totaled 62,833,000. The average payment per claim was $413, 375. In 2006, the company paid out money to plaintiffs in 158 cases. The total amount paid was $56,660,652. The average payment per claim that year was $358,611.

One last point. Many of us who represent plaintiffs in Tennessee medical malpractice cases have "felt" that medical malpractice insurers are fighting cases harder than ever. More depositions. Longer depositions. More stupid deposition questions that have little to do with the case. More motions. More experts. More experts that say the same thing as other experts. And on and on.

The SVMIC report demonstrates that defense is fighting harder than ever. The company's defense costs have doubled in the last five years. Doubled. Even though the number of claims is dropping.

Now, I assume (and hope) that the hourly rate for defense lawyers have gone up some amount in the last five years. But I doubt it has gone up much, mainly because the decreasing number of claims have tended to put downward pressure on rates as defense lawyers compete for a piece for a smaller pie.

No, those of who represent plaintiffs who "feel" that the defense is fighting harder and paying less to resolve valid are probably right. Between efforts to pass anti-patient laws and defend cases more aggressively, SVMIC and others are using their political and economic power to limit the number of claims that are filed and the value and profitability of the claims that find their way to the courthouse.

And it is working.

Those of us who represent plaintiffs in medical malpractice cases must continue to improve our skills and work these cases even more efficiently and effectively than we already do. We must continue to share information with our brother and sister plaintiff's lawyers - a rising tide truly lifts all boats. And we continue the battle in the Legislature - sooner or later, someone will pay attention to the facts and realize that the law has become unfairly anti-patient.

Tennessee Medical Malpractice Report Statistics - Verdicts and Settlements - 2011 - Part 1 of 4

John Day — Thu, 21 Mar 2013 04:42:24 -0600

The Tennessee Department of Commerce and Insurance has released its annual statistical report on filings, verdicts and settlements in medical malpractice (now known as health care liability) cases. The report bears the date "2012" even though the data is from 2011.

The report is helpful to lawyers who represent patients in Tennessee medical malpractice cases because it includes data collected from plaintiff's lawyers, insurers of health care providers, and self-insureds. There is other data about medical malpractice lawsuits, but this data is reported at the claims level.

Here are some of the highlights from the report:

Total number of claims closed in 2011: 2332
Number of claims resolved by judgment: 114
Number of claims resolved by settlement: 289
Number of claims resolved by ADR: 145
Number of claims otherwise resolved: 1784

Note that claims resolved by judgment includes claims in which summary judgment was granted, almost always for a defendant. (It is theoretically possible for a plaintiff to get summary judgment in a health care liability action, but it is rare.)

Now, contrast the 2011 data with 2007 data - 2007 data in bold:

Total number of claims closed : 2332 3043
Number of claims resolved by judgment: 114 313
Number of claims resolved by settlement: 289 492
Number of claims resolved by ADR: 145 N/A
Number of claims otherwise resolved: 1784 2238

Why is the number of claims closed down about 20% in the last 5 years? Because filings are down substantially, mostly as a result of changes to the health care liability laws in 2008 and 2009. Filings will continue to decrease given the Civil Justice Reform Act of 2011, which places artificial caps on damages in all tort cases and makes other anti-patient changes to our law.

Also note that we are not talking about the number of health care liability lawsuits that were filed - we are talking about claims. A claim is a demand for money damages. There can be multiple claims in one lawsuit because there can be multiple defendants. In addition, there are claim files that are opened by an insurer or provider but do not result in a lawsuit. There were only 369 health care liability actions filed in the entire state of Tennessee in the fiscal year ending June 30, 2012. (Read more statistics about Tennessee personal injury and wrongful death lawsuits by clicking on the link,)

The report goes on to explain that that out of the 2332 closed claims in 2011 payments were made to claimants in 18.74% of them or in 437 claims.

There were 3,950 claims that were still open as of December 31, 2011.

I will address other aspects of the Report in later posts.

What Happens If a Minor Dies Before A Court Approves a Settlement of the Minor's Personal Injury Case?

John Day — Fri, 01 Mar 2013 09:13:50 -0600

In most if not all states, the settlement of a minor's personal injury claim must be approved by the Court. This is certainly true in Tennessee - the applicable statute is T.C.A. Section 29-34-105.

The Alabama Supreme Court recently decided a case in which the minor died after a settlement was reached with the defendant's insurer and the plaintiff's uninsured motorist carrier but before state court approval could be obtained. The death occurred as a result of a subsequent unrelated automobile accident . The insurance company then attempted to have the settlement declared void in a declaratory judgment action filed in federal court.

The federal court certified this question to the Alabama Supreme Court: "Under Alabama law, is an insurance company bound to a settlement agreement negotiated on behalf of an injured minor, if that minor dies before the scheduling of a pro ami hearing which was intended by both sides to obtain approval of the settlement?"

Relevant to the consideration of the issue is that under Alabama law an unfiled tort claim does not survive the death of the plaintiff. Malcolm v. King, 686 So.2d 231 (Ala. 1996). Suit had not been filed on the minor's claim, and therefore if the insurers won this declaratory judgment action, they would have have faced no financial responsibility for the minor's personal injury claim.

Nationwide (the liability carrier) and State Farm (the UM carrier) argued that a contract to settle a case with a minor was an executory contract that had no force or effect until a settlement was approved by the court. Alternatively, Nationwide argued that even if the contract was binding a hearing was a condition precedent to the performance of the contract, that the hearing was now impossible given the death of the minor, and therefore the duty of Nationwide to perform under the contract was discharged.

The Alabama Supreme Court had that a valid contract existed (although it was voidable at the election of the minor). The Court also rejected the second argument advanced by the insurance companies, saying that it was not impossible for the state court to hold a hearing to determine whether it or not the settlement should be approved. The Court also held, in footnote 3, that the insurers had a duty to participate in the hearing.

Thus, the Court answered the certified question as follows:

an insurance company is bound to a settlement agreement negotiated on behalf of an injured minor, even if that minor dies before the scheduling of the court hearing that all parties agreed was necessary to obtain approval of the settlement agreement. In accordance with the parties' understanding, such a hearing is still required, and the minor's death does not render that hearing impossible.

The case is Nationwide Mutual Insurance Company v. Wood, No. 1111486 (Ala. Feb. 22, 2013).

Debunking Medical Malpractice Myths: Unraveling the False Premises Behind "Tort Reform"

John Day — Tue, 26 Feb 2013 17:46:11 -0600

The title of this post is the title of a law review article that appears in Vol. 5, Issue 1 of the Yale Journal of Health Policy, Law and Ethics: www.dayontorts.com/uploads/file/Debunking Medical Malpractice Myths(1).pdf.

Here is the last paragraph of the article:

No one denies that there is a broad array of very serious health care
issues facing the United States right now-patient safety, rising costs,
availability and affordability of health insurance, and, in some places,
rapidly rising malpractice premiums (although they are easing as we enter
a soft market). But even with these problems, caps are not a solution.
Lawmakers and regulators should stop the insurance industry from pricegouging
their policyholders, even while the industry's profits rocket
upwards. Moreover, doctors would better serve themselves and their
patients by directing their anger and efforts regarding rising premiums
toward the questionable practices of the insurance industry and the subset
of doctors who repeatedly commit malpractice without facing adequate
discipline. Seeking to take away patients' rights is not the answer.

(Footnote omitted.)

Screw Public Health and Safety - We Need Jobs!

John Day — Tue, 26 Feb 2013 16:59:54 -0600

Alabama just passed a 12-year statute of repose that protects a new corporate citizen - Airbus.

Airbus, not content with $158,000,000 in corporate welfare to put a plant in Alabama, sought and has obtained immunity from suit unless its planes cause harm within twelve years.

The bill only applies to planes with more than 100 seats.

Click on the link to read the story on Yahoo.

2011-12 Damage Awards in Personal Injury and Wrongful Death Cases in Tennessee

John Day — Mon, 25 Feb 2013 05:10:18 -0600

As I mentioned in my February 17, 2013 post about Tennessee personal injury and Tennessee wrongful death court filings, the Tennessee Administrative Office of the Court has released statistics about the Tennessee's justice system. Among the data produced is the amount of money awarded in tort trials for the year ended 2011-12.

The total amount of damages awarded by judges and juries in all personal injury and wrongful death trials in the state in the year ended June 30, 2012 was $128,312,921.

Damages of $1 to $99,999 were awarded in 158 of the 204 cases tried to judges in juries in year in which damages were actually awarded. (There were 520 trials in all - no damages were awarded in 316 of them. Damages of $100,000 to $999,999 were awarded in just 29 cases. Damages of $1,000,000 and more were awarded in 17 cases.

The total damages awarded figure is misleading in several ways. First of all, it is the sum total of all money awarded by judges and juries, and does not take into account jury awarded that are reduced by the trial court. Under Tennessee law, judges have the power to reduce the amount of a jury award. (Judges also have the power to increase a jury award, but it is rarely exercised.) The largest verdict in the state during the period was $20,000,000, and it was substantially reduced by the trial judge.

Second, the statistics do not take into account verdicts that are reduced or reversed by an appeal.

Third, the statistics do not take into account verdicts that are awarded against absent parties or will be extremely difficult to collect. For example, almost twenty years ago I helped a family obtain a verdict of $15,000,000 for the death of their daughter who was murdered by three young men. That murderers were in prison, and the verdict will be difficult to collect. (One man killed himself in prison. One man is still in prison. The third murderer just got out of prison and collection proceedings have begun.) True, we obtained a $15,000,000 verdict. But it can hardly be counted the same as a $15,000,000 verdict in a contested trial against someone who has the ability to pay it (and therefore who would actively defend the case.)

Fourth, the statistics do not take into account verdicts against those who have settled. Under our law, fault can be assessed against non-parties to the lawsuit. The jury can apportion fault (and therefore damages) to people who are not even in the courtroom. This decision by the jury has no financial impact on the person to whom fault is assigned.

Fifth, the statistics do not take into account post-trial settlements.

Therefore, the statistics tell us exactly what they purport to tell us: the gross amount of damages awarded in tort trials in Tennessee in a one year period, broken down into three broad categories. Nothing less. And certainly nothing more.

Statistics on the Number of Personal Injury and Wrongful Death Jury Trials By County - 2011-12 - Part 2 of a Series

John Day — Mon, 18 Feb 2013 06:19:19 -0600

As I mentioned in my February 17, 2013 post about Tennessee personal injury and wrongful death court filings, the Tennessee Administrative Office of the Court has released statistics about the Tennessee's justice system. Among the data produced is information about the number of personal injury and wrongful death jury trials in Tennessee counties for the year ended 2011-12.

Here is the data for Tennessee's counties that actually had jury trials in tort cases:

Washington - 5
Sullivan - 5
Greene - 3
Hamblen - 1
Sevier - 6
Blount - 2
Knox - 28
Anderson - 7
Campbell - 1
Clairborne - 2
Loudon - 1
Meigs - 1
Bradley - 5
McMinn - 1
Monroe - 2
Hamilton - 19
Franklin - 3
Rhea - 2
Cumberland - 3
Putnam - 7
Coffee - 3
Macon - 1
Wilson - 2
Rutherford - 9
Moore - 1
Sumner - 1
Montgomery - 4
Robertson - 1
Davidson - 47
Williamson - 3
Giles - 2
Lawrence - 1
Maury - 3
Cheatham - 1
Humphreys - 1
Benton - 1
Carroll - 1
Henry - 1
Fayette - 2
Tipton - 1
Henderson - 1
Madison - 4
Obion - 1
Weakley - 1
Dyer - 1
Shelby - 47
Warren - 2

There were a total of 249 total jury trials in Tennessee personal injury and wrongful death cases during the year. The other 48 counties in Tennessee did not have a single jury trial in a personal injury or wrongful death case in the year which ended June 30, 2012.

Tennessee Personal Injury and Wrongful Death Statistics, 2011-12 - Part 1

John Day — Sun, 17 Feb 2013 16:27:23 -0600

The Tennessee Supreme Court has released data concerning filings and dispositions on civil and criminal cases for the year ended June 30, 2012, including personal injury and wrongful death cases. The Annual Report of the Tennessee Judiciary is published every year and contains lots of data not readily available from any other source.

To be sure, the Tennessee Jury Verdict Reporter provides detailed information about jury verdicts in Tennessee personal injury and Tennessee wrongful death cases and that publication is of much more assistance to lawyers seeking to find jury verdict information about a particular type of case. However, he Annual Report, provides a view our justice system at the 10,000 foot level.

What follows is certain data about personal injury and wrongful death filings in Tennessee for the year ended June 30, 2012. The second number (in bold) for each category is the same statistic for the prior year, 2010-2011:

Total Medical Malpractice Filings - 369 343
Total Damage / Tort Filings (not including medical malpractice cases) - 9933 10,233
Total Medical Malpractice Cases Resolved - 382 364
Total Damage / Tort Cases Resolved (not including med. mal.) - 10,348 10,118
Total Cases Resolved of Both Types - 10,730 10,482
Total Cases Resolved by Trial - 530 498
Total Jury Trials in those Cases - 247 222
Total Non-Jury Trials in Those Cases - 283 277

Here is the same data for the 2011-12 year, but this time the numbers in bold are ten years earlier (for the fiscal year ending June 30, 2003). (Note: medical malpractice data was not collected for the Annual Report in 2002-03 and thus only the total numbers are given.)

Total Damage / Tort Filings (including medical malpractice cases) - 10,302 12,837
Total Cases Resolved - 10,730 12,040
Total Cases Resolved by Trial - 530 763
Total Jury Trials in those Cases - 247 395
Total Non-Jury Trials in Those Cases - 283 368

So, what preliminary conclusions can we gather from this data?

Tort filings are down by over 20%
Cases continue to be resolved at about the same rate as flings (indeed, we are doing a better job of reducing the number of cases in the judicial pipeline), but 12% fewer cases were resolved in 2011-12 than were resolved in 2002-03.
Trials are down by over 50%.
Jury trials are down 50%.
Non-jury trials now make up a larger percentage of all trials than they did 10 years ago.

Here is a little more data to put the 2011-12 personal injury and wrongful death filings in perspective:

There were almost as many "assault" filings (8764) than there were tort filings.
There were three times more divorce cases (30,000+) than there were tort filings.
Tennessee population has grown over 10% in the last decade. It would be reasonable to assume that tort filings would increase in proportion to population growth. Obviously, they have not.

Of course, one explanation for the decrease in filings is that more cases are being settled before suit is filed. This is certainly possible, although that data is not publicly available.

Continue to watch this site for more information about the Annual Report. A more thorough discussion of the meaning of this data will be in a later post.

Surgical Errors

John Day — Sat, 29 Dec 2012 08:33:41 -0600

It comes as no surprise to those of us who are medical malpractice attorneys in Tennessee or elsewhere around the Nation, but this article, "Surgeons Make Thousands of Errors," (subscription required) does a great job of identifying problems that arise in the operating room.

The article reports that surgeons make such mistakes more than 4,000 times a year in the U.S. The article is based on a study led by Johns Hopkins University School of Medicine, published online in the journal Surgery.

The study, relied on data in the National Practitioner Data Bank, a federal repository of medical-malpractice judgments and out-of-court settlements,and examined cases involving leaving an object inside a patient, wrong-site surgeries, wrong procedures and wrong-patient surgeries.

The study found 9,744 cases of mishaps between 1990 and 2010. How were patients affected by these errors? The study reports that just over 6 percent of patients died, 32.9 percent had permanent injury and 59.2 percent suffered temporary injury, according to the researchers.

The researchers estimate that at least 4,082 mistakes actually occur in the U.S. each year. This estimate was based on the number of paid claims and a prior study that estimated that only 12 percent of surgical adverse events result in indemnity payments,

Martin Makary, a doctor from Johns Hopkins and lead author of the study, said his team's estimates are likely low; previous studies have shown that many patients never file claims after errors.

Unlike some complications in medicine, the surgical mistakes are "totally preventable," according to Makary.

NECC, Compounder Involved in Meningitis Cases, Files Bankruptcy

John Day — Wed, 26 Dec 2012 14:36:50 -0600

As predicted, New England Compounding Pharamcy, Inc., the owner of the New England Compounding Center (NECC), filed for bankruptcy last week. NECC is the company that provided contaminated steriods that killed and hurt hundreds of people, including many in Tennessee and Kentucky.

Click the link to view NECC's bankruptcy filing.

www.dayontorts.com/uploads/file/Bankruptcy Petition.pdf

The bankruptcy filing means that no further lawsuits can be filed against NECC at this time. The filing lists claims that were filed as of the date of the bankruptcy. However, the list is only a partial list of claims. Many firms, including our firm, chose not to file lawsuits against NECC at this time, knowing that a bankruptcy filing would shut down litigation against the company pending further court order.

Sixth Circuit Severely Limits FTCA Claims With Broad Interpretation of Discretionary Function Exception

John Day — Mon, 19 Nov 2012 05:35:11 -0600

I am one of the those personal injury lawyers who doesn't win every case. The loss in Kohl v. United States of America is particularly difficult. First, we have a wonderful client who I truly believe has a valid claim. Second, the opinion in this case makes it very difficult for anyone to establish subject matter jurisdiction in any type of Federal Tort Claims Act (FTCA) case other than those arising from classic motor vehicle crashes.

Debbie Kohl, a member of the Nashville Bomb Squad, received a serious brain injury during a training exercise. While Debbie was partially inside a van looking for explosives, an ATF agent tried to wench open a door on the van, causing the van to shift and hit Debbie on the head.

We brought an FTCA claim on Debbie's behalf, alleging that the ATF agent was negligent in his operation of the wench and in failing to warn her that he was going to use it. The Federal Government denied liability, and argued that the court did not have subject matter jurisdiction in the case because the ATF agent was engaging in a discretionary function.

The federal court in Nashville dismissed our case, and we appealed to the Sixth Circuit. Arguments were in early September; Brandon Bass in our office argued that case and did an excellent job before a court that was very well-prepared.

The Sixth Circuit affirmed the dismissal of the case in a 2-1 decision. The majority concluded as follows:

The key question in this appeal is whether the conduct at issue here was sufficiently based on the purposes that the regulatory regime—here the research
experiment—sought to accomplish. ... Although this is a close case, we conclude that the answer to this question is yes. The decision to use a winch was part of the decision-making involved in deciding how best to conduct the post-blast investigation.

...

The[] cases make clear that the discretionary-function exception protects decisions at the operational level, including choices like the one [the] ATF employee [ ] made in this case about when to use a winch. Because ATF employees had discretion to decide how best to conduct the field test, including which equipment to use, the decision to use a specific piece of equipment in this particular situation, i.e., to use a winch to open the door of the minivan, also falls within the government’s discretionary decisions. This is so even if [the ATF agent] was negligent in using the equipment—the discretionary-function exception protects even abuses of discretion.

Those of us who handle these cases can see that under the test applied by the Sixth Circuit the discretionary function exception will now almost eviscerate liability under the FTCA. The Government will almost always try to reach upstream and try to shield every negligent act by a government agent as part of the regulatory scheme that the Government was attempting to accomplish.

I mean, if the simple act of using a wench falls within the discretionary function exception, what doesn't?

Judge Merritt agrees. After explaining that there would be liability under the facts if they had arose in the private sector, Judge Merritt said that

my colleagues simply say there can be no such liability, despite the statutory
language, if the conduct “involves choice or judgment” because — for some unstated reason — liability for such a choice “amount[s] to a challenge as to the overall execution of the research project.” (Opn., p. 11.) Why? The problem with formulating a standard or principle this way is that almost every act by government or private agent in the scope of employment would “challenge a policy” if it is for the purpose of carrying out some government or private interest, policy or plan. [Footnote omitted.]

Judge Merritt explained that

no complex balancing was required in this case. The challenge facing the agent was how to get the door off the van to recover evidence. The Government points to no statute, regulation, or agency guidance granting the agent discretion to choose among a number of methods to achieve this task. Assuming that the agent had authority to remove the door, the ultimate decision to use the winch required no calculus as to the best use of government resources or the cost of proceeding
otherwise. Indeed, there is no evidence that the agent had any tool but the winch
available, or that he did anything other than grab the instrument nearest at hand. The
decisional process the agent employed is not the sort of judgment characteristic of social, economic, or political policy.

He concluded his dissent with the following words:

We now seem inclined to redistribute the costs of accidents created by government to private individuals who are much less capable of shouldering the burden. Because the agent’s decision to use a winch required no policy judgment, and because the plaintiff’s suit would in no way interfere with government operations, I respectfully dissent.

So, we are weighing our options. Do we attempt en banc review? Or do we bypass that route and ask the United States Supreme Court to hear the case? SCOTUS has not heard a discretionary function case in 20 years, and the law is this area is a mess. We would welcome any input on this subject from other FTCA lawyers around the country. Likewise, if anyone knows of a group that would care to subject an amicus brief on this subject please send me an email at jday@johndaylegal.com or use our Contact form.

The notion that the Government can kill or main a citizen and escape responsibility for it is something that I will never understand. Congress created the discretionary function exception to tort liability but, in my opinion, the federal courts have construed the language in an expansive way that is a disservice to our citizens and promotes no valid federal interest.

Illinois Supreme Court Recognizes Claim For Invasion of Privacy and Holds Employer Responsible For Acts of Non-Employee Private Investigator

John Day — Thu, 15 Nov 2012 05:48:32 -0600

The Illinois Supreme Court has issued an opinion in Lawlor v. North American Corporation of Illinois, Case No. 112530 (Oct. 18, 2012), holding that (a) the tort of intrusion upon seclusion is recognized in Illinois and (b) held that an employer liable for the torts of a non-employee private investigator because the investigator was acting as the employer's agent.

Defendant North American hired a private investigator to determine whether Lawlor, a former employee of North American, had violated a covenant not to compete contained in her employment contract with the company. The private investigator assessed the Lawlor's cell and home telephone records without her permission, causing her emotional distress.

The Court first recognized that existence of a tort that had never been expressly recognized by the High Court in Illinois. The Court adopted Section 652B of the Restatement (Second) of Torts, which provides as follows: “One who intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the intrusion would be highly offensive to a reasonable person.”

The Court also held that under the facts of this case the employer could be held liable for the acts of the private investigator. After discussing the general rules that permit employers to be held liable for the acts of independent contractors, the Court said as follows:

we cannot say when all of the evidence is considered, together with all reasonable inferences from the evidence in the light most favorable to Lawlor, that there was a total failure or lack of evidence to support the jury’s determination that Probe was
acting within its scope of authority as North American’s agent when Probe requested that Discover, as a subagent, obtain Lawlor’s phone records. We recognize that there was no direct evidence that North American knew how the phone records were acquired by investigators. The jury could reasonably infer, however, that North American was aware that Lawlor’s phone records were not publicly available, and that by requesting such records from Probe and providing DiLuigi, Probe’s president, with Lawlor’s personal information, North American was setting into motion a process by which investigators would pose as Lawlor to obtain the material.

The discussion about the liability of independent contractors reminds us that there are lots of ways to hold one who hires an independent contractor liable for the actions of the independent contractor. For those of you who practice in Tennessee, the decision that gives the best overview of the law in this area is Waggoner Motors, Inc. v. Waverly Church of Christ, 159 S.W.3d 42 (Tenn. Ct. App. 2005).

Kidney Transplant Doner Does Not Have Malpractice Claim Against Kidney Donee's Doctor

John Day — Mon, 29 Oct 2012 05:11:38 -0600

The Nebraska Supreme Court has held that the doctor for a kidney donee does not owe a duty to the kidney donor. Thus, when the donee's doctor allegedly committed malpractice when treating the donee, rendering the donor's kidney useless, the donor cannot sue the donor's doctor.

In Olson v. Wren shall, 284 Neb.445 (Oct. 5, 2012), Sean Olson agreed to give a kidney to his dad, Daniel. The initial surgery went fine, but complications later developed. Allegedly, a medical error caused the death of the donor's kidney in the do nee and it had to be removed.

The donor and his wife sued the Donne's doctors, seeking damages for the errors committed on do nee that resulted in the loss of the donor's kidney. The trial court dismissed the case, finding that the Donne's doctors (who did not remove the kidney from donor) did not owe a duty a care to the donor. The trial court also ruled that no legally cognizable damages were suffered by donor and his wife as a result of the alleged malpractice.

The Nebraska Supreme Court agreed with the trial court's ruling on the duty issue, citing opinions in two other states that reached the same result. The Court declined to reach the damages issue.

Plaintiffs were pushing the legal envelope in this case. It is tragic that this young man unselfishly gave a kidney to his father, only to see that kidney destroyed as a result of an alleged medical error. Hopefully, his father will be able to get another kidney and see his life extended.

The case reminds us that duty is the threshold issue in every case. In the run-of-the-mill case, duty is rarely thought about - it is so automatic that it is not on the radar screen. But the fact remains that if defendant does not owe plaintiff a duty there is no case.

For the leading case on duty analysis in Tennessee, read Burroughs v. McGee, 118 S.W.3d 323 (Tenn. 2003).