MARYLAND COURT OF APPEALS RULES: PIP TRUMPS HEALTH INSURANCE
Automobile accident claimants frequently look to two sources for payment of their accident-related medical expenses and lost wages: Personal Injury Protection (PIP) benefits, available under their automotive policies; and health insurance benefits. Many health insurance companies refuse to cover expenses until after PIP benefits have been exhausted, however. A class action filed several years ago in the United States District Court for Maryland sought to force health insurers to cover treatment expenses even before PIP benefits are exhausted, reasoning that this would allow claimants to keep their PIP benefits in replacement of lost wages. The federal court certified the central issue in the case and referred it to the Maryland Court of Appeals, a process which permits the highest authority on state law to rule on an issue of first impression.
The Court of Appeals held that by statute, PIP insurance is primary in Maryland, although health insurance may be secondary. This means that under Maryland law PIP benefits must be exhausted before a health insurer must cover expenses for medical care related to an automobile accident.
The Court of Appeals' ruling likely resolves most of the cases pending in the class. Some of the cases, however, involve health insurance policies that explicitly state that coverage will be provided regardless of whether other coverage is available, such as PIP. The District Court will likely decide those cases based on principals of Maryland insurance law, including the manner in which ambiguities in contracts are to be interpreted.
The case is MAMSI v. Wu, No. 8, Sept. Term, 2008 (reported Oct. 20, 2009).
GLITCH IN MEDICAL MALPRACTICE CAP STATUTE LEADS TO $ 6 MILLION VERDICT
When a forty-seven year old lawyer died of skin cancer some years ago, his family filed a medical malpractice suit against his physician. A jury awarded his family $ 5.8 million. That award should have been reduced to $ 812,500 pursuant to a damages cap in the 2004 Maryland Patient's Access to Quality Healthcare Act. But it wasn't. A Montgomery County Circuit Court judge interpreted language in the statute to limit application of the cap to cases that were voluntarily arbitrated before they were litigated.
Very few medical malpractice cases are submitted to arbitration in Maryland, however. Arbitration is not binding on either party, so whoever loses inevitably gets another shot in court. Panels are generally thought to be industry-friendly, so plaintiffs prefer not to arbitrate. And because a plaintiff must produce a certificate of merit whether she arbitrates or not, she has nothing to gain by arbitrating.
The case is Semsker v. Lockshin, and an appeal of the circuit court's decision is pending. The Maryland General Assembly is expected to revisit the statute this fall in an effort to correct the drafting error.
OSHA WARNING: FRAUDULENT COMPLIANCE SOLICITATION PRACTICES
OSHA has issued a warning to employers about "official looking" announcements, including threatening notices, messages, or telephone calls, from so-called "compliance" companies. These companies issue advertising material claiming that employers must purchase documents from them if they wish to remain in compliance with OSHA rules and regulations. Frequently, they offer the OSHA Workplace Poster for sale, although the Poster is available without charge to anyone through OSHA's website. Employers may order publications, posters, fact sheets and other materials, usually at no cost, at http://www.osha.gov/pls/publications/pubindex.list.
Employers who receive a fraudulent solicitation are asked to contact OSHA at (800) 321-OSHA (6742).
For additional information or to discuss compliance issues, contact Ed Ranier, OSHA counsel to the National Funeral Directors' Association, at (410) 539-5881 or ranier@lordwhip.com.
A RARE BAD FAITH LITIGATION RULING IN MARYLAND
The Maryland Court of Special Appeals has issued a ruling in a case dealing with Rule 1-341 sanctions. The rule permits a court to award attorney's fees and costs where a party has maintained or defended an action in bad faith or without substantial justification.
The parties in Worsham v. Greenfield were an attorney, his neighbor and the neighbor's wife. Worsham, the attorney, and his neighbor, Greenfield, were involved in a physical altercation and both filed misdemeanor charges against the other. Both cases were eventually nolle prossed, meaning that the prosecutor decided against pursuing them. Worsham, however, was not satisfied and filed a civil suit against not only his neighbor but his neighbor's wife. Because Mrs. Greenfield had not been involved in the altercation, however, it seemed there was no good reason to join her as a defendant except perhaps to harass her.
The trial court eventually dismissed Mrs. Greenfield from the case, and her attorney filed a motion to recover her attorney's fees and costs based upon Rule 1-341. But Worsham argued that he should not be required to pay her fees and costs because Mrs. Greenfield had been defended by counsel retained for her by her insurance company, and that because she had not paid out of pocket, she had not "incurred" fees or costs under the Rule.
The Court of Special Appeals refused to accept Worsham's argument. Insurers are involved in so many cases that refusing to apply the rule when insurance is involved would make it virtually irrelevant. Additionally, the Court held, insurers have traditionally been allowed to recover sums paid to their insureds by way of subrogation. Allowing insurers to recover their defense costs by way of the bad faith rule is consistent with that scheme.
The case is Worsham v. Greenfield, No. 1810, Sept. Term, in the Maryland Court of Special Appeals.
SUPREME COURT WATCH: ENHANCEMENT OF ATTORNEY'S FEE AWARDS
The Supreme Court recently heard argument in Perdue v. Kenny A., dealing with the power of a federal court to enhance attorney's fees awarded under a Lodestar analysis.
In Perdue, attorneys were appointed to represent a group of foster children in Georgia in a civil rights case. A settlement decree was eventually entered, but the issue of attorney's fees remained unresolved. Many civil rights statutes permit an award of attorney's fees to the successful party. Courts apply a set of factors - Lodestar factors, named for the case in which they were announced - to determine the amount of the fee.
The Court in Perdue was extremely impressed with the work of the attorneys who represented the foster children, calling it the best legal work it had ever seen. Based on that the Court enhanced, or increased, the fee award to $ 10.5 million, $ 4.5 million more than the Court felt the attorneys had earned under Lodestar.
It's fairly well settled that attorney's fee awards can be adjusted down based on poor quality work. Is it fair to adjust awards upwards when the opposite is true? (Particularly when these awards, as was the case in Perdue, must be paid by taxpayers?) A decision is expected this Spring.
LORD & WHIP WELCOMES TIFFANY A. MAZZULI, ESQUIRE
Ms. Mazzuli, a 2007 graduate of the University of Baltimore School of Law, recently joined the firm as an associate. She formerly clerked for Judges Ruth Jakubowski, Lawrence Daniels, and Kathleen Cox of the Circuit Court for Baltimore County. Additionally, Ms. Mazzuli is a Maryland State Bar certified mediator. She will focus her practice in the area of civil litigation defense.