It's so annoying to have to search every time I want to use the DCRA's Corporations Division CorpOnline Portal. Why does the DCRA make this so hard to find? This is where to go for online search of all registered District of Columbia entities with expanded entity information. This is the DC equivalent to Maryland's State Department of Assessments and Taxation website.
The Time magazine article, "Bitter Pill - Why Medical Bills Are Killing Us", by Steven Brill, contains important insights about medical billing practices that are relevant to personal injury litigation, and medical debt litigation. This article not only should be read, but it should be kept on file for training purposes.
On the defense side, it is commonplace for medicals to be the foundation for the evaluation of worst case exposure of a claim, and of a reasonable settlement range. Therefore if the medical bills are grossly inflated, the amount paid on the claim will be too. It's common knowledge that health care providers charge extra to cover the cost of care provided to the uninsured, but Brill's article is shocking because it shows that medical bills are inflated many times beyond that.
On the plaintiff's side, the incentive to question the gross amount of medical bills arises with a vengeance after a settlement is reached, and negotiation of the medical liens begins.
In Interstate Fire and Casualty Co. v. Washington Hospital Center Corp., No. 10-1193 (D.D.C. March 28, 2012), the Court was faced with a dispute between two insurers as to the proper allocation of the cost of a multi-million dollar settlement of a medical malpractice action. The Court awarded summary judgment to Interstate, thus requiring the Washington Hospital Center's insurer to reimburse Interstate for a settlement of $3,055,000, plus fees and expenses.
To understand the dispute, a brief discussion of the underlying claim is required.
The underlying action was a medical malpractice claim brought in Superior Court by a patient against the Washington Hospital Center and two doctors. The Washington Hospital Center filed a third-party complaint against a temporary nurse staffing agency, Progressive Nursing Staffers of Virginia, Inc., and a temporary nurse involved in the plaintiff's post-op care. The third-party complaint was based, in part, on a contractual indemnification clause in Progressive's contract with WHC (the "Temporary Staffing Agreement"). The Washington Hospital Center was insured by Greenspring Financial Insurance Limited ("GFIL"). The nursing staff agency and the temporary nurse were insured by Interstate Fire and Casualty Company ("Interstate"). The medical malpractice action was settled for a total of $4,105,000, of which Interstate paid $3,055,000 and GFIL paid the remainder. The settlement agreement, however, was drafted to as to preserve Interstate's rights to seek reallocation of the settlement.
Following the settlement, Interstate filed a declaratory judgment action in D.C. federal court to pursue reallocation of the settlement. Interstate's arguments, in essence, were that the temporary nurse it supplied to WHC was, for purposes of GFIL's insurance, an employee of WHC, and that under the "other insurance" clauses of the GFIL policy and the Interstate policy, GFIL was primary and Interstate was excess. After some discovery, the parties filed cross motions for summary judgment.
The District Court awarded summary judgment to Interstate, finding that the temporary nurse was an employee within the meaning of the GFIL policy. This finding was based on the fact that it was undisputed that WHC had the right to control the temporary staffing nurse's conduct while working at WHC. This included the right to determine and ascertain what the assignment of the individual nurse would be, and what kind of medical care or attention to give to a particular patient. Although Court did not find all the relevant factors governing the employee/employer relationship weighed against WHC, the power to control the servant's conduct is the most important factor, and along with the weight of some other factors, was enough to lead the Court to find that the temporary nurse and WHC had an employee/employer relationship.
Interestingly, the Court noted that the Temporary Staffing Agreement specified that Progressive nurses remain Progressive employees. The Court found that that was parol evidence that it could not consider when interpreting the insurance contract between WHC and GFIL, and secondly, that nothing in D.C. law would prohibit the finding that the temporary nurse was en employee of both Progressive and WHC at the time of her alleged negligence.
The District Court also found that under the competing "other insurance" clauses, Interstate was clearly in an excess position.
The District Court did not find it necessary to reach the question whether the responsibility for covering the temporary nurse's liability was determined by the indemnification agreement in the Temporary Staffing Agreement, because the Court found that WHC had given Progressive a complete general release of any liability under the Temporary Staffing Agreement.
The Temporary Staffing Agreement included an indemnification clause under which Progressive was required to "indemnify WHC for claims arising from the negligence of Progressive or its registered nurse employees who were provided to WHC", and the indemnification clause served as the basis for the third-party complaint filed by WHC in the underlying action. The District Court found that "the indemnification clause was waived by the broad language of the Settlement Agreement . . . [in the medical malpractice action]."
Consequently, as a result of the Settlement Agreement, GFIL lost its right to step into WHC's shoes to sue for indemnification. Thus, the Court rejected GFIL's argument against circular litigation, i.e., that if the Court finds it liable, GFIL through subrogation, could file suit against Progressive for indemnification, and Progressive would then seek reimbursement from Interstate, resulting in Interstate being ultimately responsible.
Impact: This decision underscores that in any case where a settlement agreement is drafted so as to "carve out" one side's rights to pursue a coverage reallocation action, the other side must be equally careful to preserve its position in the anticipated coverage action.
Here's a link to a useful page on the Superior Court website (on the Court's new website) that contains links to pdfs of the Court's General Orders, links to the individual Judges' Supplemental Orders, and to Mediation Orders. The Supplemental General Orders vary depending on the individual Judge, so it is important to refer to them regarding motion practice and discovery disputes.
In Allstate Insurance Company v. Warns, No. CCB 11-1846 (D. Md. Feb. 29, 2012), Allstate brought suit against one of its former adjusters who left the company and a short time later was hired by a plaintiffs' law firm with litigation pending against Allstate insureds. This opinion, which denied most of the defendant's dispositive motions, marks the conclusion of an initial skirmish in what promises to be a quite a battle.
The defendant adjuster had worked for Allstate for 33 years, and for at least the last five years of that allegedly had handled only lead paint poisoning cases. About a month after her resignation, she started working for a plaintiffs' law firm which specializes in lead paint cases. Allstate alleged in its lawsuit that the adjuster removed confidential information from the company before she left, and that 68 new lead paint cases had been filed against Allstate's insureds in the year following the adjuster's departure.
Represented by the law firm of SNR Denton, Allstate in its complaint alleged breach of fiduciary duty, and breach of contract based on the language in Allstate's Code of Ethics. Allstate sought compensatory and punitive damages, as well as injunctive relief, including an injunction ordering the adjuster to cease working for the plaintiffs' law firm or any other attorney representing plaintiffs in lead paint litigation.
The adjuster filed a motion to dismiss or for summary judgment, denying all the allegations, and averring that at the plaintiffs' law firm, she only works on cases in which Allstate does not provide insurance coverage for the defendant.
The Court granted the motion for summary judgment on the punitive damages claims, and denied the motion as to all other claims.
Concerning the breach of fiduciary duty claim, the Court stated that although there is no authority which expressly creates an independent cause of action for a breach of the duty not to misappropriate or disclose confidential information after the termination of the employment relationship, the weight of authority in both Maryland and other states suggests that such a cause of action may lie. However, the Court observed that under the leading Maryland precedent, Kann v. Kann, 690 A.2d 509, 521 (Md. 1997), and its progeny, courts have limited independent causes of action for breach of fiduciary duty to those seeking equitable relief. Thus, as a result of a successful common law breach of fiduciary duty, Allstate may be given injunctive relief, but punitive damages are not available, and any claim for compensatory damages will have to be supported by a successful breach of contract action.
The Court recognized, but did not reach, the issue whether the Maryland Uniform Trade Secrets Act (MUTSA) preempts at least some common law claims for breach of fiduciary duty, as it is the exclusive remedy for civil claims based on misappropriation of trade secrets.
The Court found that there were enough factual allegations concerning the Allstate Code of Ethics for the breach of contract claim to survive the defendant's dispositive motion at this stage of the proceedings. However, the Court pointedly observed that there was no allegation that the defendant adjuster had ever signed the Code of Ethics or that the Code of Ethics had been incorporated by reference into a contract of employment.
Finally, the Court denied Allstate's motion for a preliminary injunction, and denied Allstate's motion to place record materials under seal since redaction provides sufficient protection.
Impact: As a result of this lawsuit, Plaintiffs' law firms will likely be a little more cautious about hiring former insurance adjusters. Insurers, for their part, may take a look at their employment contracts to tighten up the restrictive convenants.
A plaintiffs' lawyer, Ron Miller, Esq., has an interesting take on this case on the Maryland Injury Lawyer Blog.
DRI has published an article summarizing a Florida report concerning the decline in jury trials, and the ramifications of that decline. Based on an analysis of statistics done in 2004, "in 1962, 11.5% of 50,320 civil federal court dispositions were by trial. In 2002, there were only 1.8% dispositions by trial, out of 258,876." The negative effects of this decline are at least two-fold: ordinary citizens play less of a role in government, and jury trial experience is harder to come by for lawyers. A panel of the Florida bar expressed concern that the decline in citizen jury experience could cause a deline in confidence in the court system.
A quick look at the statistics of the D.C. Superior Court confirms this trend. The D.C. Superior Court' Civil Division reported the following numbers of judgments from jury trials between 1999 and 2010:
The reasons for this decline include costs and a poor economy of course, but also better and more active management of dockets by the courts. That development has been mirrored, at least on the defense side, by skillful management of litigation by insurers and business litigants.
If you think about it, it scarcely makes a difference whether the dating service is online or not. A brick and mortar dating service will have a networked computer database too; that's usually the whole point of the business. If they have internet access, that database is a rich target for cyber-criminals to hack.
In this case a security guard allegedly had repeatedly confronted an African-American and Muslim family in a shopping mall, ordering the mother to remove her traditional Muslim headgear or be forcefully removed. In the second confrontation, the security guard allegedly pulled a knife while violently yelling, among other things, "Come on . . . come on . . . I have not tasted blood in a long time." (The security guard eventually plead guilty to criminal charges of second degree assault and assault with a dangerous weapon.)
Woods v. AlliedBarton Security Services, LLC, No. 11-2831 (D. Maryland Feb. 9, 2012)(unpublished) is a suit by the terrified family against the security guard, his employer, and the firm that hired them, that started off in the Circuit Court for Baltimore City. After the action was pending for many months and the plaintiffs failed to serve the security guard, the Circuit Court dismissed the security guard as a defendant "without prejudice."
At that point, the remaining two defendants seized their opportunity, and removed the case to federal court based on diversity jurisdiction. By doing so, the remaining defendants would be able to try the case while pointing at an "empty chair" as the truly culpable party, and would also be able to subject the plaintiffs' damages experts to the rigors of a Daubert challenge.
The first thing that the plaintiffs did after removal was to serve the security guard with the Circuit Court summons, and then move to remand the case to State court. The District Court denied that motion, on the grounds that such service was ineffective because the prior removal had deprived the Circuit Court of jurisdiction to re-issue the summons.
Next, the plaintiffs then moved for leave to file an amended complaint to rejoin the security guard as a party defendant. The two other defendants opposed that motion, which gave U.S. District Judge Catherine C. Blake the occasion to review the relevant factors that a federal court will consider in deciding under Section 1447(e) whether to deny joinder, or permit joinder which destroys diversity jurisdiction and remand the action to State court. The Court pointed out that the statute "does not allow a district court to retain jurisdiction once it permits a nondiverse defendant to be jointed in the case."
To make this discretionary decision, the District Court considers four factors: (1) the extent to which the purpose of the amendment is to defeat federal jurisdiction; (2) whether the plaintiff has been dilatory in asking for amendment; (3) whether the plaintiff will be significant injured if amendment is not allowed; and (4) any other factors bearing on the equities. The District Court will also consider the danger of parallel suits in state and federal courts, resulting inconsistent results and judicial inefficiency, and the defendant's interest in a federal forum.
In this analysis, courts take into consideration the strength of the substantive claim against the party to be joined. If it is a weak or frivolous claim, then a court may infer the impermissible purpose of forum shopping.
In this case the claim against the security guard was strong, and in fact was the central claim of the case.
Further, the plaintiffs' actions in State court demonstrated that they had been interested in suing the security guard long before the case was removed to federal court and removal or remand was at issue. The other defendants had been on notice from the outset that the suit could properly be heard in State court.
The District Court noted that the most plausible inference is that the Circuit Court's dismissal of the security guard "without prejudice" lulled plaintiffs' counsel into believing he had time to rectify the situation before trial. "In such a situation, the proper action is the one taken here -- for the plaintiffs to immediately notify this court of the mistake and to attemnpt to rejoin the defendant before taking unnecessary and duplicative measures in federal court."
The District Court concluded that the plaintiffs should be allowed to amend their complaint, that his joinder destroys complete diversity among the parties, and that the case must be remanded to the Circuit Court for Baltimore City.
This case is a good illustration of the counter-moves that a plaintiff can make when the defendants in a State court proceeding remove a case under diversity jurisdiction prior to service of the non-diverse defendant, and the analysis that the District Court will undertake.