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.

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 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.

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 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).

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 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.

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 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.

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 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.

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 Posted on October 09, 2013 in Medical Malpractice

Recently, in a medical malpractice wrongful death case in Harford County, Maryland, a jury awarded more than $958,000 to the family of a woman who died after receiving "excessive amounts" of pain medication during a hospital stay. According to the lawsuit, the woman’s death resulted from the hospital providing hospice care rather than standard treatment for her infected ulcers.

In February 2010, the decedent, Beverly Ann Gargiulo, was admitted to Upper Chesapeake Health Center seeking treatment for ulcers that reportedly had become infected. The hospital allegedly told Mrs. Gargiulo she would need hospice care but never communicated that information to her family. During her treatment, Mrs. Gargiulo reportedly received large amounts of narcotics, including morphine and oxycodone, in increasing amounts and with increasing frequency. The family claimed in their medical malpractice and wrongful lawsuit that this pain relief medication was more appropriate for a patient about to die than for a person who was expected to be discharged from the hospital. Gargiulo’s family filed suit against the hospital asserting multiple causes of action for medical malpractice. In August, a jury awarded the family $958,258 after it found that the hospital committed medical negligence in its treatment of Gargiulo, and that this negligence resulted in a wrongful death.

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 Posted on October 08, 2013 in Driving Under the Influence

Maryland DUI/DWI Attorneys with decades of experience often find and successfully pursue defenses that less experienced attorneys find or even bother looking for. Unfortunately, many inexperienced DUI attorneys or attorneys who really specialize in areas of the law other than criminal defense, never look beyond the breathalyzer result, particularly in first offense cases that don’t involve an accident or any injuries. The thinking is that the first offender will in most cases receive probation before judgment (PBJ) anyway so why bother? The person won’t go to jail and will not get points on his or her license so a PBJ is really as good as a not guilty or a dismissal. I beg to differ.

Aggressive and Experienced DUI Attorneys know that there is a world of difference between a PBJ and a not guilty verdict. First of all, even if the client does receive PBJ, he or she will almost certainly be required to pay fines, attend alcohol counseling and serve a period of supervised probation. There may be other time consuming and costly requirements placed upon the client as well such as community work service, AA meetings and shock trauma visits to name just a few. Moreover, the PBJ can NEVER be expunged from the person’s record so even though the defendant will not have points assessed by the MVA, a record of the PBJ will always be kept which means that if the person ever gets charged with DUI again – even many years later- the stakes will be much higher as he will be a repeat offender.

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 Posted on October 07, 2013 in Medical Malpractice

In 1999, the Institute of Medicine estimated that each year 98,000 Americans die as a result of medical malpractice. A recent study published in the Journal of Patient Safety says that number now is estimated to be between 210,000 and 440,000 patients. The new estimates, developed by John T. James, a toxicologist at NASA’s space center in Houston and leader of an advocacy organization called Patient Safety America, were based on the findings of four recent studies which examined records of more than 4,200 patients hospitalized between 2002 and 2008. A copy of the article can be found here.

What makes those numbers particularly appalling is that the causes of wrongful death were preventable medical mistakes, such as errors of commission and omission, errors of communication and context, and diagnostic errors. And, even more disheartening, this number would make medical malpractice errors the third-leading cause of death in America, behind heart disease and cancer, respectively.

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 Posted on October 01, 2013 in Real Estate

STSW lawyer Bill Sinclair recently convinced a Maryland state judge that he should strike an amended complaint that contained a RESPA claim against STSW’s client, Lakeview Title. The plaintiffs were home purchasers who originally brought suit in 2010 against Long & Foster, Creig Northrop, and various related entities and individuals for alleged fraud in the sale and purchase of their homes.

In February 2012, plaintiffs subpoenaed certain information from Lakeview Title, which provided settlement services to the purchasers. However, plaintiffs waited until March 2013, after the Court had already dismissed the other claims, to amend their complaint and add a RESPA claim against Lakeview and others. On behalf of Lakeview, STSW argued that the Court should strike the amended complaint because it violated the scheduling order in place and because plaintiffs were on notice of the RESPA claims in February 2012 but waited until March 2013 to file suit in violation of RESPA’s one year statute of limitations.

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