PA Supreme Court Overturned Superior Court and Unanimously Found that in an Asbestos Action

On May 23, 2012, the Pennsylvania Supreme Court overturned the decision of the Superior Court and unanimously found that in an asbestos action, Plaintiffs can not rely upon the theory that each and every breath or fiber is a substantial contributing factor in causing an asbestos- related disease. Diana K. Betz, Executrix of the Estate of Charles Simikian v. Pneumo Abex, LLC, et al.

In the underlying case, Appellees sought to preclude Plaintiffs from relying upon expert opinions that each and every exposure to asbestos, no matter how small, substantially contributed to the development of the asbestos-related disease. The Honorable Robert Colville directed the parties to designate test cases and conducted a Frye hearing. Plaintiffs argued that their experts’ exposure opinions were in no way novel and therefore a Frye hearing was inappropriate. Judge Colville noted that he was concerned with how the every exposure opinion translated to the substantial factor necessary for causation. Following a hearing, Judge Colville sustained the Frye challenge and precluded the plaintiffs from offering evidence that any exposure caused Plaintiff’s disease. Plaintiffs appealed and the Superior Court reserved the decision and found that Plaintiff’s expert opinion with respect to every breath or fiber was not novel and Judge Colville abused his discretion in conducting a Frye hearing.

Upon review, the Pennsylvania Supreme Court found that Judge Colville did not abuse his discretion when he conducted a Frye hearing concerning the any exposure opinion. The Pennsylvania Supreme Court found that Plaintiff’s expert, Dr. Maddox’s any exposure opinion was fundamentally at conflict with itself. The Court noted that “one cannot simultaneously maintain that a single fiber among millions is substantially causative, while also conceding that a disease is dose responsive.” Dr. Maddox admitted that individual exposures differ in the potency of the fiber, the concentration or intensity of the fibers and the duration of exposure. The Court correctly noted that despite this testimony, Dr. Maddox’s any exposure opinion does not consider these factors in determining the relative effects of different exposures.

The Court concluded that Dr. Maddox’s any exposure opinion is inconsistent with both science and the governing standard for legal causation. The Court concluded that the any exposure opinion ignores the substantial cause principles of Pennsylvania law.

This decision will change the face of asbestos litigation in this Commonwealth. Plaintiffs may no longer rely upon the every breath/every exposure/cumulative exposure opinions advanced by their experts. Arguably, Plaintiff must establish that each product was a substantial factor in their disease.

For further details regarding this matter, please feel free to contact Theresa Mullaney at 267-702-1718 or tmullaney@kentmcbride.com.

Medicare Update

In the last several weeks, The Centers for Medicare and Medicaid Services (CMS) has issued guidance as to two (2) issues of concern relative to third party liability matters, whether they involve insured or self-insured entities.

The first piece of guidance relates to Set Asides. In CMS’s 9/29/2011 memorandum, CMS states that in situations where a beneficiary’s “treating physician certifies in writing that treatment for the alleged injury related to the liability insurance (including self-insurance) ‘settlement’ has been completed as of the date of the ‘settlement,’ and that future medical items and/or services for that injury will not be required, Medicare considers its interest, with respect to future medicals for that particular ‘settlement’, satisfied.” As a result of this, we can expect to see plaintiffs’ counsel, who to date have not been able to readily get any guidance as to whether a set aside is necessary, seeking to get their clients’ physicians to certify that treatment for their accident-related injuries is over and not expected to recommence. It is not required that these certifications be submitted to the MSPRC at issue, but, rather, the plaintiff and attorney are urged to maintain these documents in the event that an issue arises in the future, almost akin to a “get out of jail free” card regarding set asides.

The significance of this move is twofold: First, the uncertainty of whether any monies need to be put in escrow to satisfy a potential Medicare claim can effectively be removed, making the Settlement Agreement and Release a less sticky issue to negotiate. Secondarily, particularly in UIM cases where there is a settlement prior to the prosecution of the secondary claim, treating physicians’ records may now contain letters or certifications that will be useful in cutting off damages making it more imperative to obtain these records promptly and prior to a full case evaluation.

The latest guidance from CMS is effective 11/7/11 and relates to a Fixed Percentage Option that the beneficiary can select to resolve lien payments. In cases involving settlements of $5,000.00 or less, a beneficiary can opt, as of 11/7/11, to remit payment of 25% of their liability settlement in full and final settlement of any conditional payments made by Medicare. The benefit is one of speed since the beneficiary can now determine what is owed to Medicare prior to going through the formal process which now can take several months to complete.

This Fixed Percentage Option is only available for settlements of claims involving physical trauma (i.e., NOT for food poisoning or other ingestion claims, toxic or mass tort claims or medical implant claims), and cannot be taken if a demand letter from Medicare has already been issued. Also, if there is receipt of, or expectation that there may be, additional setttlement(s), the Fixed Percentage Option is not available.

In the event that you are dealing with a claim that is small in nature, and there is a Medicare issue that is complicating matters, it would be beneficial to determine whether the claimant’s attorney has considered availing himself or herself of this option on behalf of their client as a method of expediting the settlement process.

For further details regarding either of these issues, please feel free to contact Jay Branderbit at 267-702-1713 or jbranderbit@kentmcbride.com or Theresa Mullaney at 267-702-1718 or tmullaney@kentmcbride.com.

Federal Judge Rules That Insurer Must Cover Delay Damages in UIM Case

A Judge in the U.S. District Court for the Eastern District of PA has ruled that an insurance company must cover delay damages by having it added to the compensatory damages award in an Underinsured Motorist case, but that the carrier would not be liable for bad faith conduct as a result of refusing to initially pay the delay damages award. In so finding, the federal court relied on the PA Supreme Court's 1981 decision in Laudenberger v. Port Authority of Allegheny County which held that delay damages were an extension of compensatory costs. The court’s holding was based on this PA decision as well as the fact that the carrier at issue in the federal case did not specifically exclude coverage for delay damages in the policy. This decision could impact those carriers whose policies do not specifically exclude coverage for delay damages. For further information about this case, or about related issues, please contact Jay Branderbit at 267-702-1713 or jbranderbit@kentmcbride.com

Judge Refuses to Force Expert to Reveal Income

In a recent decision, a Federal Judge would not allow questioning of an expert as to how much money he made as a result of his litigation work. In the case Young vs. Pleasant Valley School District, a history teacher, Bruce H. Smith, was accused of creating a sexually hostile environment for his high school students by showing them naked murdered bodies and having them read his own book that contained detailed descriptions of his personal sexual experiences. During the trial, expert witness for the defense, Edward Dragon, testified on behalf of Smith, stating that what the teacher showed the students in class was significant to the curriculum.

Before the trial, plaintiff’s attorney asked Dragon what his income was for his expert testimonies. The defense claimed this was an irrelevant question that Dragon did not have to answer. Chief U.S. District Judge Yvette Kane of the United States District Court for the Middle District of PA was forced to review whether or not the question was relevant. Upon further review, Kane found that since Dragon gives testimony equally for plaintiffs and defendants, there would be no incentive for him to bias his testimony one way or the other. The Court, therefore, ruled that the question was not permissible because Pollick could not show how Dragon's income would show his bias or any other relevance to the case.

The issue of whether an expert must disclose financial information arises frequently during trial, and videotaped trial, testimony. Thus, this holding will be useful, at least in cases venued in the Middle District, to foreclose an area of inquiry often times relied upon by opposing counsel. For further information regarding this case, please contact Jay Branderbit at 267-702-1713 or Jbranderbit@kentmcbride.com

Fair Share Act Passes – The End of the 1% Rule in PA

This week the Pennsylvania legislature passed HB1/SB1131, or the Fair Share Act, into law. On June 28, 2011, Governor Corbett signed this important legislation, making it effective immediately, however it only applies to causes of actions that accrue on or after June 28, 2011 and not to pending cases. After several years of debate and revision, the state’s joint and several liability law is finally reformed.

Prior to the passage of this law, a defendant who was found at least 1% liable in a civil suit could be held responsible for 100% of the plaintiff’s award in terms of collection of the judgment amount. Under the new law, there will no longer be joint and several liability unless a defendant is more than 60% responsible. According to this new rule, a defendant who is found to be less than 60% liable will only be responsible for their percentage share of the award.

There are also some exceptions where joint liability remains. The new law allows for joint liability in cases involving intentional misrepresentation, intentional torts, and violations of both the Hazardous Sites Cleanup Act and Section 497 of the Liquor Code (The Dram Shop Law).

Anyone who has been following this Act through the state legislature will know that it was not any easy journey, particularly in the state Senate. Over the last few months, there were several attempts to compromise or water down the Fair Share Act, however, in the end, the original House bill was passed.

For further information regarding this decision, or similar decisions, contact Jay Branderbit at jbranderbit@kentmcbride.com or at 267-702-1713.

Wal-Mart Employment Decisions Go Both Ways

On June 20, 2011, the U.S. Supreme Court ruled in favor of Wal-Mart in the case of Wal-Mart Stores, Inc. v. Dukes, resolving the largest civil rights class action lawsuit in national history. At issue in this case was the alleged sexual discrimination practiced by Wal-Mart. The nearly 1.5 million women involved in the class action claimed that Wal-Mart managers disproportionately favored men in both pay and promotions. The Court’s ruling, however, was not based on the presence or lack of sexual discrimination but rather on the failure of the plaintiffs to meet the procedural requirements of class certification. This is an important point since the decision did nothing to substantively eliminate the claims. As a practical matter, pursuit of the claims will be more difficult since each individual will have to pursue the claims on their own, making it less likely that all will do so, or will find attorneys willing to assist them in doing so.

In the majority opinion, Justice Scalia concluded that there was “no significant proof that Wal-Mart operates under a general policy of discrimination,”[1] because each individual store is supervised by a manager who is responsible for implementing corporate policies. As a result any alleged discrimination would be the fault of the local store managers, not Wal-Mart Stores, Inc. Therefore, it was not possible for the class action to be adequately tried in such a way that the evaluation of a random set of claims from the suit would yield sufficient evidence of discrimination to be applied to the remaining untested claims in the suit. Reactions to the outcome of this case have been mixed. Counsel for Wal-Mart sees the Court’s ruling to be a great victory and the end of similar class action suits.

As such, Wal-Mart may be encouraged to appeal the outcome of a less publicized case that it recently lost in Pennsylvania. In the case of Braun v. Wal-Mart Stores, Inc., approximately 187,000 hourly workers sued the company for breach of contract, unjust enrichment, and statutory violations, for which they were awarded $187.6 million.

Counsel for the plaintiffs, however, see this ruling as an opportunity for the many women involved in the case to file individual claims against the company since, as referenced above, there was no ruling as to a lack of discrimination. Again, however, the attractiveness of pursuing these claims in the form of a class action was that a group of attorneys could more cost-effectively get a large recovery for the multitudes. Now, faced with the prospect of representing individuals, the cost of going up against Wal-Mart might not seem so attractive.

The public has similarly expressed mixed reactions to this ruling. Some have seen it as another display of the Court’s bias toward business, while others view it has the reinforcement of the fairness of the legal system.

The widespread publicity of this case has also raised questions regarding its impact on other cases. Some fear that it will enable big companies to move to avoid class certification by adopting policies that delegate broad responsibilities to local managers. Yet, it is also believed that the vast size and geographic scope of the company is unique to Wal-Mart. Therefore, the ruling from this case will be difficult to apply under normal circumstances.

The general consensus forming appears to be that this case will bring an end to mega-class actions, which the Court has determined to be inconsistent with federal law. Instead, class action suits will likely become more regional, rather than national, in scope. Additionally, Wal-Mart v. Dukes has clarified standards for future class action suits. The most powerful precedent that has been established, claim some experts, is the renewed focus on the resolution of each individual claim, even in a class action suit. This case has also altered the standards of evaluation for expert testimony and statistical evidence. However, in this case the Court failed to explicitly state what qualifies as sufficient evidence. Therefore, these questions will still need to be determined by future cases. Given these newly established precedents, however, it is uncertain as to whether or not Wal-Mart could appeal the Braun case and win. The Braun case class is smaller, regionally focused and supported by strong statistical evidence. Only time will tell how class actions will fare in following these two influential Wal-Mart cases.

For further information regarding this decision, or similar decisions, contact Jay Branderbit at jbranderbit@kentmcbride.com or at 267-702-1713.

1 Tony Mauro, Justices Hand Wal-Mart Big Win in Class Action, Vol. 243, The Legal Intelligencer.
4. (2011).

PA Federal Court Takes on Skier’s Responsibility Act

Smith v. Demetria is a case currently working its way thought the federal court system in Pennsylvania. In this case, the plaintiff is suing the defendant for injuries sustained on a ski slope when the defendant collided with the plaintiff. A number of precedents on this issue have already been established by the Pennsylvania state courts, which suggest that the defendant cannot be held liable in this case since, according to the Pennsylvania Skier’s Responsibility Act, inherent risks of the sport are given a waiver of liability.

The case involved allegations that a reckless skier collided, mid-slope, with the plaintiff causing severe injuries. A federal judge has already determined that this particular skiing accident qualifies as an “abnormal occurrence.” Therefore, the defendant may be liable for “intentional or gross negligence” which does not constitute an inherent risk and is not protected under the applicable state law. It is unlikely that the ski resort could be held liable in this case because it could not foresee that the defendant would act recklessly on the slopes and create a dangerous situation. Additionally, after the collision occurred, the resort sanctioned the individual defendant by revoking his ski privileges for a week. It will now be left to a jury to decide whether or not Demetria’s collision with Smith was the result of negligence or recklessness or simply an unintended consequence of participating in a risky sport. Regardless of the outcome of this case, the verdict will have a significant impact on the interpretation of liability law as it relates to skiing, snowboarding, and similarly risky activities, however, we believe that even if the skier is found to be liable, the precedential value of this decision will be limited to claims against individual skiers. Additionally, while federal court decisions have some value in the analysis that a PA court judge would perform, it is not binding precedent on the state court judges. It should be noted, however, that an argument could be made so as to inculpate ski resort defendants if there were evidence that the resort knew of the reckless tendencies of an individual defendant since the Smith court judge has deemed collision with a skier acting recklessly is not an “inherent risk” of the sport. This distinction appears to be novel within the State and Federal courts in Pennsylvania, so it will interesting to follow this matter to determine whether an appeal is taken.

For further information regarding this decision, or similar decisions, contact Jay Branderbit at jbranderbit@kentmcbride.com or at 267-702-1713.

PA Legislature Considering Modification of Joint & Several Liability Law (Again)

The PA House of Representatives has passed the “Fair Share Act” which, if ultimately passed by the Senate and signed into law by the Governor, would repeal the current “1% rule” regarding joint and several liability. Under the House bill, only defendants that were apportioned more than 60% liability would be jointly and severally liable. All other defendants would only be responsible for their proportionate share of an award or verdict. The House bill is similar to an effort made several years ago, during the Rendell Administration, to repeal the joint and several liability law, an effort which was initially successful, yet overturned due to procedural deficiencies in how the law was passed. After that defeat, the Legislature had given up efforts to reform joint and several law until this year.

House passage does not ensure that this will become the law in PA. There are two (2) PA Senate bills, one of which essentially mirrors the House bill that was passed, and another that is less of a radical change. This latter bill, which is tagged as Senate Bill 500, would only eliminate joint and several liability to the extent that a defendant was less culpable than a plaintiff. Thus, if a defendant was 1% negligent, and plaintiff was free of negligence, joint and several liability would still attach.

From the defense perspective, the flaw Senate Bill 500 is apparent: while comparative shares of negligence on the plaintiff are not uncommon, there will still be far too many situations where a minor player with deep pockets will be on the hook for more than their fair share of liability.

Pennsylvania’s Governor, Tom Corbett, will likely sign the reform into law, regardless of which version might make it through the Legislature.

Please contact Jay Branderbit at 267-702-1713 or jbranderbit@kentmcbride.com with any questions regarding this issue.

Update—6/20/2010:

Since the passage of the “Fair Share Act” by the state House in April, little progress has been made by the state legislature in reforming joint and several liability law. In fact, there are now more proposed alternatives than before. In addition to the HB1/SB2, or the Fair Share Act, the Senate had already proposed SB 500, which would only apply joint liability to cases in which the percentage share of liability for the defendant is greater than the percentage share of liability for the plaintiff. This is the position favored by the Majority Chairman of the Senate Judiciary Committee, Sen. Greenleaf.

However, last week, Greenleaf proposed another alternative bill—SB 1131. Greenleaf hopes that this most recent reform option will be accepted as an adequate compromise and still “ensure that injured victims are substantially compensated for their injuries.”[1] In effect, this bill would still apply joint and several liability to economic damages; however, it would end joint and several liability for non-economic damages. Unsurprisingly, there is both strong support and strong opposition to this proposed compromise. Additionally, there is speculation that Gov. Corbett will not support SB 1131, as it does not place enough limits on joint and several liability. With so many options currently being offered, it is clear that an acceptable compromise has yet to be reached on this issue and the state legislature still has work to do to successfully achieve a much needed reform to joint and several liability law.

[1] Amaris Elliott-Engel, Tort Reform Compromise Gains in State Senate, Vol. 243, The Legal Intelligencer. 1. (2011).

Pennsylvania’s 60 percent proposal gained ground last week when the state Senate amended SB1131 to mirror the previously passed “Fair Share Act” from the state House. The original House bill provided that there would be no joint and several liability unless a defendant was more than 60% responsible. While there are still several steps that need to be taken before this reform measure becomes law, passage appears to be likely as Governor Corbett has previously stated that he would sign the House bill into law, if passed by the Senate. There is no timetable for passage, however, the measure appears to have some momentum.

PA Supreme Court Decides Section 1791 Notice Not Required for Requesting Reduced UM/UIM Limits

In a 5-2 ruling, in the case of Orsag v. Farmers New Century Insurance, the PA Supreme Court decided that selection of reduced UM/UIM limits did not require adherence to the “important notice” form requirement of the PA MVFRL.

Essentially, the Court stated that Section 1734 of the MVFRL required only that there be a “writing” that indicated selection of the lower limits, and that the “important notice” form required by Section 1791 of the MVFRL was only required when an insured was rejecting UM/UIM coverage. The insureds in the Orsag case had filled out their insurance application indicating clearly that specific UM/UIM limits that were lower than BI limits were being selected. The Supreme Court reasoned that this satisfied the requirements of the MVFRL and that no further forms were necessary. This ruling upheld earlier victories by the carrier in the Court of Common Pleas and Superior Court. It should be noted that the Court left undisturbed prior rulings that required the Section 1791 “important notice” form to be completed when rejection of UM/UIM benefits is at issue.

For further information on the decision and its practical impact, please contact Jay Branderbit of K/M’s Philadelphia office at jbranderbit@kentmcbride.com

PENNSYLVANIA SUPREME COURT BROADENS ATTORNEY-CLIENT PRIVILEGE

In Gillard v. AIG, No. 10 EAP 2010, the Pennsylvania Supreme Court held that the attorney-client privilege protects not only communications from the client to their counsel, but also, from counsel to their client.

The litigation involved the bad faith claim arising out of an insurance company’s handling of an uninsured motorist claim. During discovery, the Plaintiff sought production of all documents in the file of the law firm representing the insurance company in the underlying action. The Defendant insurer withheld and redacted documents created by counsel, asserting the attorney-client privilege. In response, the Plaintiff sought to compel production - arguing that the attorney-client privilege in Pennsylvania is very limited. Specifically, the contention was that pursuant to Section 5928 of the Judicial Code, the attorney-client privilege protected only confidential communications initiated by the client.

The Pennsylvania Supreme Court disagreed, stating: “We hold that, in Pennsylvania, the attorney-client privilege operates in a two-way fashion to protect confidential client-to-attorney or attorney-to-client communications made for the purpose of obtaining or providing professional legal advice.” Id.

The effect of this ruling is that, within the context of bad faith litigation, insurance carriers and their counsel are protected from disclosing confidential communications between one another regarding the underlying claim. For more information, contact Jeff McDonnell at jmcdonnell@kentmcbride.com.

RESPONSE TO DISCOVERY AND INSPECTION DOCUMENTS REQUIRES CLIENT CERTIFICATION IN NEW JERSEY

On July 23, 2010, the New Jersey Superior Court amended Rule 4:18-1(c) governing the discovery and inspection of documents. The rule went into effect on September 10, 2010. The rule now requires that the person responding to the request for document production submit with the response a certification or affidavit averring that he/she has done a complete search of the records and that production is complete and accurate. The rule also requires the identity and source of knowledge of those who provided the information if someone other than the person certifying the records provided the information. The rule lays out the language that must be used in the certification. This certification must be attached to a response to document production. For more information, contact Christopher D. Devanny at cdevanny@kentmcbride.com

NEW JERSEY PIP CARRIER SUBROGATION CLAIMS

On January 28, 2011, Gov. Chris Christie signed a bill mandating that when an accident victim and a PIP carrier vie for recovery from an at-fault party’s insurer, the victim must first be made whole. The measure, S-191, amends the Personal Injury Protection Subrogation Statute, N.J.S.A. 39:6A-9.1(b), to provide that recovery from a tortfeasor’s carrier by an insurer, health maintenance organization or governmental agency is “subject to any claim against the insured tortfeasor’s insurer by the injured party and shall be paid only after satisfaction of that claim, up to the limits of the insured tortfeasor’s motor vehicle or other liability insurance policy.” The bill nullifies the State Supreme Court decision of Fernandez v. Nationwide Mutual Fire Ins. Co., 199 N.J. 591(2009). In Fernandez, the court held that giving priority to reimbursing the carrier “advances the stability in the insurance market place by requiring that the ultimate cost of PIP benefits be born by the insurer of the responsible party, not by the insurer of the victim.” Plaintiff Fernandez, was injured when his vehicle was struck by a semi-trailer. His insurer, Nationwide Mutual, paid the maximum $250,000 in PIP benefits, which did not cover all of his injuries. Fernandez sued truck owner Go Pro Waste Services for the deficiency. Soon after, Nationwide filed a subrogation claim against Proformance Insurance Company, Go Pro’s carrier, for the $250,000 paid out. Fernandez and Go Proformance settled for $1,000,000, but the insurer paid him $750,000 and deposited the remainder with the court, pending the outcome of arbitration between Nationwide and Proformance.

Fernandez filed a separate action. Hudson County Superior Court Judge John O’Shaughnessy ruled that Nationwide could only recover after Fernandez was made whole and if excess funds remained. The Appellate Division reversed, and the Supreme Court affirmed in a 3-3 decision with 1 recusal.

Measure S191, was introduced in direct response to the Fernandez ruling. A thorough discussion of the bill can be found in the February 7 and February 14, 2011 edition of the New Jersey Law Journal. For more information, contact Christopher D. Devanny at cdevanny@kentmcbride.com

NEW PA RULE OF CIVIL PROCEDURE REQUIRES INSURANCE ADJUSTERS TO ATTEND PRE-TRIAL CONFERENCES

On January 15, 2011, the Pennsylvania Supreme Court amended several rules of civil procedure, including Pa.R.C.P. 212.3, 215 and 216, pertaining to pre-trial conferences and settlement conferences.

Of particular note is the new provision relating to Pre-Trial Conferences which empowers the trial judge to require various parties to attend, including insurance adjusters or others who have settlement authority. The Rule goes on to state that, if the Pre-Trial Conference is set up without any Court order regarding the attendance of an insurance representative with settlement authority, such a person is nevertheless required by the Rule to attend the conference in person "or be promptly available by phone."

 Here is a link to all of the amendments to the Rules noted as contained in the January 8, 2011 Pennsylvania Bulletin:  http://www.pabulletin.com/secure/data/vol41/41-2/30.html 

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