Day On Torts : Tennessee Injury Lawyer & Attorney : John Day : Personal Injury, Accidents : Serving Memphis, Nashville, Knoxville

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.

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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.

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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.

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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.   

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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.

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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.

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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.

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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.  

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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).

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