Legal Alert

Welcome Back IRE: The Legislature Responds to the Supreme Court’s Ruling in Protz

On June 20, 2017 the Pennsylvania Supreme Court, in Protz v. WCAB (Derry Area School District) No. 6 WAP 2016 and No. 7 WAP 2017, effectively threw out the Impairment Rating Examination (“IRE”) scheme of Act 57 which had been in place since June 24, 1996. The IRE process partially brought Pennsylvania Workers’ Compensation claims out of the cave by attempting to curtail the “cradle to grave” course that had pervaded practice under The Act since its inception. The original legislation regarding the IRE process was passed when the 4th Edition of the AMA Guides was in place and it instructed that future examinations be completed pursuant to the most recent Guidelines in place. Protz involved a challenge as to whether the “most recent addition” could be used or whether all examinations had to be completed pursuant to the 4th Edition which was in place.

The Legislature’s response to Protz was introduced in October of 2017 in House Bill 1840 (HB1840). HB 1840 passed both the House and Senate and it was signed into law by Governor Wolf on October 24, 2018. Unlike its predecessor this Bill mandates use of the 6th Edition of the AMA’s Guides. Also unlike it’s predecessor this Bill indicates that the threshold for total disability is now 35% or more as opposed to 50% or more. This was obviously a concession to guarantee passage of the Bill. Following the passage of HB 1840 The Bureau of Workers’ Compensation has announced the IRE function is active immediately. The introduction and passage of this Bill was a direct response to the reverse course of workers’ compensation premiums, which had been declining since the 1996 enactment. The impact of Protz forced the PA Compensation Rating Bureau to file for an increase of loss costs of 6.06% in the middle of a policy year.

This Bill is without question good news to employers and insurers, but it only addressed the subsection invalidated by the court. Claimants will still need to be on benefits for 104 weeks and the 60 day window to schedule the exam. Additionally, per the 2017 Supreme Court ruling in Duffy v. WCAB, an IRE opinion may be invalidated if it does not take into account “fairly attributable” injuries despite their not being accepted or recognized by employer. Nothing is perfect but this is certainly a step in the right direction as the prospect of setting lifetime reserves without doubt saddles employers with extreme financial burdens.

For further information about this matter, please contact Kyle F. Colin at 267-702-1790, or kcolin@kentmcbride.com

PA Supreme Court to address Failure to Warn Jury Instruction in Asbestos Cases

The Pennsylvania Supreme Court has granted allocatur in two asbestos cases, Amato v. Crane Co.and Vinciguerra v. Crane Co., to answer the question of whether a jury should decide if a product is unreasonably dangerous. The question as framed by the PA Supreme Court is whether under the recent Pennsylvania decision of Tincher, a Defendant in a strict liability claim based on failure to warn has a right to have the jury determine whether its product was unreasonably dangerous. The Tincher matter, which was decided by the Court in 2014, announced a new standard of proof for strict liability claims. The Court in that matter held that the issue of whether a product is unreasonably dangerous is one for the fact finder. Plaintiffs’ counsel have continually argued that Tincher decision is only applicable to design defect claims, not failure to warn claims. The Tincher decision has changed the landscape in product liability actions. We are hopeful the Court will provide clarity and a framework for jury instructions in a failure to warn case with its ruling in these cases.

We will continue to monitor this appeal and provide an update once the Court renders its decision. If you would like additional information concerning this matter, please contact Theresa M. Mullaney at tmullaney@kentmcbride.com.

PA House Contemplating Raise in Minimum Limits for Auto Policies

The Pennsylvania House of Representatives is presently considering a Senate Bill (SB 928) which was passed this summer which would raise the minimum liability limits of PA motor auto insurance policies from $15,000.00/30,000.00/5,000.00 (one person/aggregate/Property Damage) to $25,000.00/50,000.00/15,000.00.

The Senate Bill is presently in the Insurance subcommittee, and there is no known timeline on when the bill will be presented to Governor Wolf for signature. It is anticipated the change will be made, however.

For further information concerning this, or other issues having to do with auto insurance in PA, please contact Jay Branderbit at 267-702-1713, or Jbranderbit@kentmcbride.com

Pennsylvania Workers’ Compensation – Use of Notice of Ability to Return to Work Form

On May 26, 2015 the Pennsylvania Supreme Court in School District of Philadelphia v. WCAB (Hilton) clarified when an employer must use a Notice of Ability to Return to Work form (LIBC-757) by holding that it is not required in the claim petition setting where no liability has been acknowledged for the injury alleged. This is in contrast to other settings where an injury has been acknowledged and the employer seeks to modify or change the status of benefits. Previously the Commonwealth Court had suggested that the use of the notice was mandatory in Allegis Group v. WCAB (Henry) and Hoover v. WCAB (Harris Masonry, Inc.). Claimant’s attorneys had often used the absence of the Notice of Ability to Return to Work form to defeat employer’s efforts to limit wage loss exposure in the claim petition setting.

Many proactive employers would quickly act upon restrictions from a panel physician in an attempt to keep employees working. Offers of restricted employment were made the day the restrictions were received. The scenario suggested by the claimant’s bar would require that the Notice of Ability to Return to Work form be issued each time restrictions changed and that any discussions of continued employment would have to wait until it had been confirmed that the notice was received.

This is simply illogical and ignores the fact that the notice came in to being where earning power assessments were involved and were designed to give the employee notice that attempts were being made to modify an existing entitlement.

It is still a good idea to provide as much documentation as possible including job offers even if they are confirmations of direct conversations which had previously taken place and medical reports documenting restrictions. It is best to provide as much detail as possible to the employee in the anticipation of future litigation.

PA Supreme Court Overturns Attorney Fee Recovery Precedent in PIP Cases

In the recently decided case of Herd Chiropractic Clinic, P.C. v. State Farm Mut. Auto. Ins. Co., the Pennsylvania Supreme Court reversed the decision from the lower Pennsylvania appellate court concerning the recovery of attorney’s fees under Section 1797 of the PA Motor Vehicle Financial Responsibility Law (MVFRL) relating to peer reviews.

In Herd, an individual received treatment at a chiropractic clinic for injuries sustained in a car accident. The individual’s automobile insurer thereafter submitted invoices from the provider to a Peer Review Organization (“PRO”) pursuant to Section 1797(b) of the MVFRL. The PRO determined that certain chiropractic treatments were not necessary or reasonable, and the insurer refused to pay the provider for such treatment. The provider filed suit against the insurer for recovery of the unpaid medical bills, and also the recovery of attorney’s fees under Sections 1797(b)(4) and 1797(b)(6).

In interpreting Sections 1797(b)(4) and 1797(b)(6), the Dauphin County Court of Common Pleas determined that an award of attorney’s fees was appropriate against the insurer as long as the Court determined that the treatment at issue was medically necessary, even if the insurer challenged the reasonableness or necessity of treatment before a PRO. On appeal, the Pennsylvania Superior Court affirmed. The Pennsylvania Supreme Court, however, reversed these decisions, holding that Sections 1797(b)(4) and 1797(b)(6) apply only when an insurer has not pursued peer review. In other words, attorney’s fees could only be awarded under Section 1797(b) if the insurer failed to challenge the reasonableness or necessity of treatment before a PRO.

The impact of the Herd Supreme Court decision is substantial. While it is common practice in the industry for insurers to submit disputed invoices for medical treatment to a PRO for peer review, the Herd decision substantially reduces an insurer’s potential exposure if the peer review is ever challenged in Court. Following Herd, a Court determination that the treatment at issue was, in fact, medically necessary will primarily result in the insurer’s reimbursement of the outstanding amount of unpaid medical bills. The insurer will no longer be obligated to reimburse the insured’s attorney’s fees so long as they challenged the reasonableness and necessity of treatment by referral to a PRO. Accordingly, the Herd decision reinforces the importance of submitting all disputed invoices or medical bills to a PRO for peer review.

If you would like additional information concerning the Herd decision, please contact Ernest F. Koschineg at ekoschineg@kentmcbride.com, or Christian J.Fisher at cfisher@kentmcbride.com.

Pennsylvania Fair Share Act

On June 28, 2011, Pennsylvania passed Act 2011-17 (S.B. 1131), otherwise known as the Fair Share Act. By passing the Act, Pennsylvania has abolished joint and several liability in the majority of negligence and strict liability cases. See 42 Pa.C.S. § 7102. Specifically, “where recovery is allowed against more than one person, including actions for strict liability, and where liability is attributed to more than one defendant, each defendant shall be liable for that proportion of the total dollar amount awarded as damages in the ratio of the amount of that defendant’s liability to the amount of liability attributed to all defendants and other persons to whom liability is apportioned under subsection.” See 42 Pa.C.S. § 7102 (a)(1). Further, a “defendant’s liability shall be several and not joint, and the court shall enter a separate and several judgment in favor of the plaintiff and against each defendant for the apportioned amount of that defendant’s liability.” See 42 Pa.C.S. § 7102 (a)(1).

There are, however, several exceptions under the Act wherein joint and several liability will apply, and “the court shall enter a joint and several judgment in favor of the plaintiff and against the defendant for the total dollar amount awarded as damages.” See 42 Pa.C.S. § 7102 (a)(1). The most notable exception is when the defendant has been held liable for 60% or more of the total liability apportioned to all parties. Other exceptions include: intentional misrepresentations, intentional torts, the release or threatened release of hazardous substances under section 702 of the Hazardous Sites Cleanup Act, and violations of section 497 of the Liquor Code.

The Act also permits the question of liability of any defendant or other person who has settled with the plaintiff and who is no longer a party to reach the trier of fact for consideration. While the Act does not allow judgment to be entered against the settling party, liability may be apportioned to a settling party for purposes of allotting responsibility among the remaining parties. See 42 Pa.C.S. § 7102 (a)(2). The trier of fact may not consider the liability of an employer with immunity under the Pennsylvania Worker’s Compensation Act in apportioning liability.

Finally, the Act only applies to “causes of action which accrue on or after the effective date of this section.” See Section 3 of Act 2011-17 and 42 Pa.C.S. § 7102. The effective date of the Act is June 28, 2011.

If you would like additional information concerning the Pennsylvania Fair Share Act, please contact Christian J. Fisher at cfisher@kentmcbride.com or at (267) 702-1795.

Odors Emitted from Livestock Facility Qualified as “Pollutants” Triggering CGL Policy’s Pollution Exclusion

The Eastern District recently ruled, in a case of first impression, that odors emitted from a large livestock facility constituted a “pollutant” triggering the pollution exclusion in a general liability policy.

In the declaratory judgment action captioned as Travelers Prop. Cas. Co. of America v. Chubb Custom Ins. Co., 864 F.Supp.2d (E.D. Pa. 2012), the court granted general liability insurer’s motion for summary judgment declaring that the carrier had no coverage obligations to the livestock facility for bodily injury and property damage caused by noxious odors as alleged in the underlying action. The complaint alleged that pig excrement was collected in a cement pit beneath the structure where pigs were housed until the excrement was used as fertilizer. The underlying plaintiffs alleged that the operation produced “harmful and ill-smelling odors, hazardous substances and contaminated wastewater” that escaped onto the plaintiffs’ property causing bodily injury and property damage. The plaintiffs allegedly suffered nausea, vomiting, headaches, breathing difficulties, burning and irritated eyes, nose and throats. The fumes also interfered with the plaintiffs’ quiet enjoyment of their property.

The insurer sought the enforcement of the pollution exclusion and argued that the odor allegations qualified as a pollutant. The federal court agreed that the noxious odors produced by the pig excrement qualified as a “waste” within the meaning of the term “pollutant.” The policy defined “pollutant” to include “waste,” which included “materials to be recycled, reconditioned or reclaimed.”

The court also referred to the dictionary’s definition and held that the plain meaning of the term “waste” encompassed pig excrement. The dictionary defined “waste” as “superfluous material produced during or left over from a manufacturing process or industrial operation: material not usable for the ordinary or main purpose of manufacture;” another definition was “refuse from places of human or animal habitation” such as “garbage . . . excrement . . . [or] sewage.” The pig excrement constituted a material left over from a production operation that was to be reused; thus, the facts fell squarely within the definition of “pollutant.”

The livestock facility, in asserting coverage, argued that foul odor allegations were too ambiguous to qualify as a “pollutant.” However, when applied to the facts in the underlying action, the court recognized that the odors were not merely unpleasant smells perhaps common in a rural area. The odors were so noxious that they caused plaintiffs to experience physical ailments and rendered their homes unsuitable.

The court acknowledged that a substance need not be regulated by an environmental law to constitute a pollutant. But, here, the court recognized that large livestock operations, because of the large amount of animal excrement produced, are regulated through the Clean Water Act. Furthermore, underlying action alleged that the “sewage in the deep pit contain[ed] levels of nitrate hydrogen sulfide, ammonia, sulfate, afterbirth remnants and other hazardous substances” which constituted pollutants.

If you would like additional information concerning this insurance coverage case, please contact Taryn Kindred at Tkindred@kentmcbride.com or at (267) 702-1770.

USDC (Eastern District, PA) Judge Finds That Limitations Clock in Common Law Bad-Faith Cases Starts When Plaintiff is Exposed to Damages

A federal judge has interpreted how Pennsylvania law would address the impact of limitations periods in common law bad-faith cases. In the case of Katzenmoyer v. Allstate, Judge Norma Shapiro determined that under Pennsylvania law, the four (4) year statute of limitations period for bad-faith claims does not begin to toll until an insurer has been exposed to damages.

The Katzenmoyer case stems from an ATV personal injury claim in 2004, where Katzenmoyer was injured on the property of Dronal Drumheller, who was insured by Allstate. Allstate refused to settle for the policy limit of $100,000.00 after the accident in 2004, and a jury verdict of $1.5 million was ultimately rendered in 2009. After all claims against Allstate had been assigned to him, Katzenmoyer brought a bad-faith claim against Allstate for refusing to settle in 2004.

Allstate argued that the four (4) year statute of limitations had run, and therefore the claim could not be heard. Judge Shapiro opined that the clock began to toll in terms of the statute of limitations when the jury returned its verdict, not when Allstate arguably acted in bad faith. The Court reasoned that Drumheller had not yet suffered damages in 2004, and therefore, Allstate did not yet know its status as a litigant in the case. It was unclear until 2009 if Allstate had any duty at all in this case, therefore, the statute of limitations clock should not have started until that duty was clear. Such duty could only be made clear by the jury verdict.

Even though the court sided with Katzenmoyer on the statute of limitations argument, the court ultimately found in Allstate’s favor. The court found that Katzenmoyer did not put forth sufficient evidence to support a common law bad-faith claim. Ultimately, this case makes it clear that plaintiffs must be exposed to an excess verdict before they may file a common law bad-faith claim.

If you would like additional information concerning this matter, or bad faith matters in general, please contact Jay Branderbit at Jbranderbit@kentmcbride.com or at 267-702-1713.

Bus Driver Cannot Collect Underinsured Motorist Benefits From Personal Insurance Carrier

A three judge panel of the PA Superior Court recently disallowed collection of underinsured motorist (“UIM”) coverage against a bus driver’s personal auto insurance; the injuries stemmed from a crash while he was driving a Berks Area Reading Transit Authority (“BARTA”) bus. BARTA did not carry UIM coverage for it’s drivers, but the driver had such coverage under his own personal auto insurance. The Superior Court relied on a Pennsylvania Supreme Court decision which disallowed similar claims by a police officer injured on the job.

In Adamitis v. Erie Insurance Exchange, the three judge panel found that such claims were excluded under the “regular-use” exception in Adamitis’s personal insurance policy. The court also found that such an exclusion was valid under the Motor Vehicle Financial Responsibility Law (“MVFRL”), section 1731. The regular use exclusion bars coverage for accidents in vehicles regularly used by the insured, but not insured under the policy. The reasoning behind disallowing such claims focuses on the goal of the MVFRL, which includes correlating the scope of coverage and setting reasonable premiums for the insured. Allowing such claims, according to the court, would force an insurer to “underwrite unknown risks for which he has paid no premium.” This ruling was handed down even though there was evidence that the insurer did know of the plaintiff’s regular use of the bus, making the use of the bus not necessarily “unknown” to the insurance company.

The regular-use exclusion was added to the plaintiff’s policy in 2004 and his accident occurred in 2005, disproving his argument of insufficient notice of the exclusion. This ruling will ultimately disallow many claims by motorists with UIM protection whose employers do not carry UIM policies for their employees.

For more information about this decision, or about UM/UIM coverage generally, please contact Jay Branderbit at Jbranderbit@kentmcbride.com or 267-702-1713.

Electronic Discovery

Electronically stored information has become the dominant form of discovery in the litigation process. The duty to preserve and produce evidence that is discoverable in pending or anticipated litigation has led to unique problems in electronic discovery. Electronically stored information is more voluminous than paper discovery and can be stored or produced in a variety of formats. These issues have contributed to increased litigation costs. Additionally, electronic discovery has contributed to an increase in the unintentional disclosure of privileged information, which can have significant consequences to litigants.

With seemingly unlimited ways to retrieve data, Congress and the Judiciary have responded to these issues by making changes to both the Federal Rules of Evidence (FRE) and Federal Rules of Civil Procedure (F.R.C.P). These changes addressed the prevalence and scope of electronically stored information and its impact on the discovery process. The Amendments’ design could work to control and allocate costs, address issues unique to electronic data, and protect against accidental waiver of the attorney-client privilege in electronically stored information. The ubiquitous nature of electronically stored information has increased the complexity and cost of compliance.

This article examines the differences between hard copy and electronic discovery and how electronic discovery has complicated the litigation process. It analyzes the issues that surround electronic discovery, including the preservation and production of electronic documents, whether production of metadata is required, ethical issues of metadata, the allocation of discovery costs, privilege, waiver of privilege, and spoliation. Further, this article reviews the history of electronic discovery, leading to the 2006 amendments to the F.R.C.P., and the 2008 amendment to the FRE 502.

http://www.bu.edu/law/central/jd/organizations/journals/scitech/volume181/documents/Ward_web.pdf