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.
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.
Alternative fee agreements have received a lot of favorable press in recent years, with the praise usually coming in tandem with criticism of the billable hour.
However, there is a dark side to alternative fee agreements. Because a law firm's obligations to its clients extend beyond mere contractual duties, the law firm which undertakes matters under an alternative fee agreement can be exposed to wildly disproportionate risks.
Some of these risks are illustrated by the recent decision in Cunningham & Associates v. ARAG, LLC, No. 11-1983 (D.D.C. Jan. 31, 2012), in which a law firm brought suit against an insurance company providing pre-paid legal services. As recounted by the District Court, the law firm alleged that under its agreement with ARAG, it undertook the legal representation of four of the defendants' insureds in four different matters which collectively demanded over 900 hours of attorney time, but for which the defendants allegedly only paid $2,300.00 to date. The defendants then terminated their contract with the plaintiff law firm, which termination was in the law firm's view due to defendants refusal to reimburse the firm for reasonable fees and expenses incurred.
The law firm recently filed suit against the defendants, alleging fraud, negligent misrepresentation, breach of the implied contractual duty of good faith and fair dealing, quantum meruit, unjust enrichment, and violations of the D.C. Consumer Protection Act. In its complaint, the law firm sought damages of $140,715.00 in compensatory damages plus interests and costs, $422,145.00 in compensatory and treble damages under the consumer protection statute, attorney's fees, and $500,000 in punitive damages. The attachments to the complaint included the ARAG Attorney Network Application, the ARAG Attorney Agreement, and the ARAG North America, Inc. Attorney Reimbursement Fee Schedule (which are all available through PACER for anyone interested).
In its opinion, the District Court granted the defendants' motion to compel mediation, and stayed the action for 45 days so that mediation could take place. The contract between the parties required four hours of non-binding mediation in Des Moines, Iowa.
The District of Columbia Court of Appeals has again adopted the pleading standards under Rule 8(a) as construed in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). See Potomac Dev. Corp. v. District of Columbia, No. 10-CV-632 (D.C. Sept. 15, 2011), slip op. at 18 & n. 4.
The Court had previously adopted the plausibility standard in Mazza v. HouseCraft, LLC, 18 A.3d 786 (D.C.), which was vacated as moot, 22 A.3d 820 (D.C. 2011) thanks to a settlement between the parties there.
In the Potomac Development decision, the Court noted that "Because of the persuasiveness of the vacated opinion in Mazza, we draw on it here."
Quoting Iqbal, the Court stated that Rule 8 does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.
That trial was a good case study of how to hamstring a professional plaintiff from testifying as an expert on his own behalf. Here, the defense, represented by Richard A. Simpson, Esq., was able to obtain a ruling that Joseph Stiglitz, a nobel prize winning economist, could not testify on his own behalf concerning his own damages, where his damages were among other things his own stream of royalty income and the value of his own time. This turned out not to matter so much, as the jury verdict for the defendant on liability meant that the jury never even had to reach the damages issues.
In his expert witness disclosures, Stiglitz included himself among his designated experts, albeit without much specificity. Rather, his counsel simply incorporated Stiglitz's deposition testimony and discovery responses. However, the expert witness disclosures were vulnerable to attack.
First, the defense moved to strike the testimony of Stiglitz's retained damages expert, Michael Cragg. The main line of argument was that Cragg's Rule 26(a)(2) report was not submitted until a week before the close of discovery, and more than a year after the deadline for such reports. Cragg's untimely report included a discussion of the value of Stiglitz's lost time and the value of his book royalties, among other things. The Court granted the motion to strike Cragg as an expert on January 7, 2008. (In hindsight, given that the trial ultimately took place more than two years later, this ruling seems a bit harsh.)
Subsequently, the defense moved to strike Stiglitz as his own damages expert, arguing that the plaintiff would be attempting to circumvent the Court's prior order if he were allowed to testify as his own expert on the very elements of damages that Cragg would have covered, and that in any event, Stiglitz was not qualified to be an expert on the specific damages issues to be considered by the jury, such as royalties.
The Court on August 25, 2010, entered a minute order granting the defense motion in limine to preclude Stiglitz's purported damages evidence.
The Superior Court for the District of Columbia has adopted special tracks for motor vehicle cases, called Track V1, Track V1fast, Track V2, and TrackV2 fast. However, the Court doesn't seem to have posted any differentiated case management order on its website describing the tracks. The best I could find is a description of the various Track V's which is an attachment to Form CA 113.
In Hedgepath v. Whitman Walker Clinic, No. 07-CV-158 (D.C. June 30, 2011), the D.C. Court of Appeals, sitting en banc, held that the plaintiff, who was negligently informed by a doctor at the Whitman Walker Clinic that he was HIV positive, when in fact he was not, could sue for negligent infliction of emotional distress, even though the alleged negligence did not place the plaintiff within a "zone of physical danger." The Court reversed the trial court's summary judgment in favor of the defendants, and remanded the case for further proceedings.
The Court recognized a duty to avoid negligent infliction of serious emotional distress will be recognized only where the defendant has an obligation to care for the plaintiff's emotional well-being or the plaintiff's emotional well-being is necessarily implicated by the nature of the defendant's undertaking to or relationship with the plaintiff, and serious emotional distress is especially likely to be caused by the defendant's negligence.
The Court concluded that in this case, the defendants, in the context of a doctor-patient relationship, undertook to test and treat the plaintiff for HIV, an undertaking that would necessarily implicate the patient's emotional well-being and entailed a specially likely risk of serious emotional distress. The plaintiff did not find out that he was misdiagnosed as being HIV positive for five years, and presented evidence of serious emotional distress as a result of the misdiagnosis.
The new rule does not replace the prior "zone of danger" rule, but is a supplement to it. The Court quoted Restatement (Third) of Torts, sec. 46, with approval:
§ 46 Negligent Conduct Directly Inflicting Emotional Disturbance on Another An actor whose negligent conduct causes serious emotional disturbance to another is subject to liability to the other if the conduct:
(a) places the other in immediate danger of bodily harm and the emotional disturbance results from the danger; or
(b) occurs in the course of specified categories of activities, undertakings, or relationships in which negligent conduct is especially likely to cause serious emotional disturbance.
To sum up, emotional distress damages can be recovered in a variety of cases.
District of Columbia courts routinely allow recovery for pain and suffering as parasitic damages when the plaintiff's emotional distress is caused by the defendant's invasion of a legally-protected interest, such as freedom from physical injury.
Damages for emotion distress are also awarded as part of compensation for violation of statutory and common law rights that result in foreseeable emotional distress.
A plaintiff may recover for loss of consortium that results from negligent conduct toward his or her spouse, even where the spouse was not physically injured and the plaintiff's injuries are purely emotional.
The "zone of physical danger" rule allows a plaintiff to recover for mental distress if the defendant's actions caused the plaintiff to be "in danger of physical injury", and if, as a result, the plaintiff "feared for his own safety."
Under the new rule, a plaintiff can recover for emotional distress from a defendant who has breached a duty to avoid negligent infliction of serious emotional distress based on an obligation to care for the plaintiff's emotional well-being or where the plaintiff's emotional well-being is necessarily implicated by the nature of the defendant's undertaking to or relationship with the plaintiff, and serious emotional distress is likely to be caused by the defendant's negligence.
A plaintiff can also recover damages for emotional distress that results from a defendant's intentional or reckless conduct that is "extreme and outrageous."
The adverse impact of this decision will fall most directly on physicians who diagnose dread diseases, on psychiatrists and psychologists, and on funeral homes. However, the ramifications of this decision will not end there, and it can be expected that the limits of this decision will be tested in the courts for the next decade.