Day on Torts

April 27, 2013

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

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.

April 22, 2013

Claims That Trucking Companies May Have Against Pilot Flying J

by The Law Offices of John Day, P.C.

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.

April 17, 2013

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

by The Law Offices of John Day, P.C.

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.

April 16, 2013

SCOTUS Releases Opinion in ERISA Subrogation Case

by The Law Offices of John Day, P.C.

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.

April 13, 2013

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

by The Law Offices of John Day, P.C.

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.

April 8, 2013

State Volunteer Mutual Insurance Company – 2012 Financial and Claims Data

by The Law Offices of John Day, P.C.

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.

March 21, 2013

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

by The Law Offices of John Day, P.C.

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:

March 1, 2013

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

by The Law Offices of John Day, P.C.

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?"

February 26, 2013

Screw Public Health and Safety – We Need Jobs!

by The Law Offices of John Day, P.C.

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.

February 26, 2013

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

by The Law Offices of John Day, P.C.

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.