Learn more about Peltz-Steele v. UMass Faculty Federation at Court Listener (complaint) and the Liberty Justice Center. The case is now on appeal in the First Circuit as no. 22-1466 (PACER paywall). Please direct media inquiries to Kristen Williamson.
Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts

Tuesday, July 26, 2022

To channel cases into ordinary negligence or medmal, look to implications for medmal insurance, court says

Paul Brennan via PublicDomainPictures.net
A Massachusetts court sometimes might have difficulty distinguishing between claims of ordinary negligence and claims of medical malpractice, only the latter of which must be filed first with a special tribunal. If a case implicates medmal insurance, it's more likely the latter, a court reasoned in May.

The Appeals Court had little difficulty, though, finding that a complaint over life-threatening allergic reaction to a drug administered in the emergency room sounds in medical malpractice. The plaintiff therefore erred by failing to file with the commonwealth medmal tribunal and post the necessary bond before proceeding in the Superior Court.

The court demarcated the boundary between ordinary negligence and medmal claims with reference to the legislative purpose in creating the tribunal: "to guarantee the continued availability of medical malpractice insurance." A court may be guided also by factors derived from case law: "(1) whether medical or professional judgment or competence was exercised, ...  (2) whether the claim is 'treatment-related,' even if not a traditional malpractice claim, ... and (3) whether 'the same set of facts supports both' the medical malpractice and allegedly non-medical claims...."

The instant plaintiff's "claims centered on her arriving at the emergency room suffering from an asthma attack, and the hospital's failure to provide a proper medication to her, which resulted in a severe allergic reaction. More specifically, the hospital was alleged to have deviated from the 'standard of care' by administering a medication containing lactose to [plaintiff,] who had a lactose allergy known to the hospital." The implication of medical judgment plainly positioned the case in medmal.

The case is Lane v. Winchester Hospital, No. 21-P-476 (Mass. App. Ct. May 17, 2022). Justice William J. Meade wrote the opinion of the unanimous panel.

Wednesday, July 6, 2022

Court: Even upon liability for mere negligence, insurer may refuse to cover statutory attorney-fee award

Gerd Altmann licensed by Pixabay
An insurer is not obliged to reimburse an insured for attorney fees awarded in a quasi-tort action under Massachusetts statute, the commonwealth high court held today.

The insured was a cleaning business operating under the "Servpro" banner. In the dispute underlying the instant case, the insured cleaned up a sewage spill and was held liable to a client who suffered respiratory injury from exposure to disinfectant chemicals.

The personal-injury complainant sued under the unusually broad unfair commercial practices statute, Massachusetts chapter 93A. Chapter 93A affords prevailing parties attorney fees, as well as double or treble damages for complainants able to prove "willful or knowing" violation.

Those powerful incentives tend to cause plaintiffs to abandon common law tort claims when the 93A claim is viable. So here, the plaintiff declined to prosecute her common law negligence claim and was awarded attorney fees on a prevailing 93A theory, an implied warranty of merchantability.

Subsequently, Vermont Mutual Insurance Co. declined to pay the full sum of the award, asserting that the policy did not cover the attorney-fee award.

The Supreme Judicial Court agreed, finding the plain meaning of the insurance contract controlling. The policy covered liability for "bodily injury" and "costs," the court acknowledged. But attorney fees are not "costs 'taxed' against the insured in the suit," the court held; rather, "costs" refers to "the narrower, technical meaning of court-related or nominal costs recoverable as a matter of course to prevailing parties."

The outcome is potentially devastating to small businesses that believe themselves to be insured against negligence liability. An attorney-fee award is enough to put a small business into bankruptcy, yet personal-injury liability insurance typically excludes coverage for fees. 

That exclusion arises, I posit, upon the logic that fees typically are awarded in the states, if at all under "the American rule," only in cases of intentional or reckless wrongdoing, for which insurers also exclude liability. Chapter 93A makes fees much more readily accessible to prevailing plaintiffs and thereby burdens business with an unanticipated transaction cost, while affording multi-state insurers with a windfall.

Notwithstanding my principled objection to deviations from the American rule as an incoherent remedy to our problem of runaway transaction costs, I see no meaningful distinction between a personal injury award and an accompanying fee award when both are predicated on conduct indistinguishable from common law negligence. Vermont Mutual was let off the hook on a technicality, to my mind, and insureds should be entitled to the coverage they reasonably believe they bargained for. 

At minimum, going forward, the commonwealth insurance regulator should compel clear articulation of the risk to insureds of such a coverage limitation specially under chapter 93A. I won't hold my breath.

The case is Vermont Mutual Insurance Co. v. Poirier (Mass. July 6, 2022). Justice Scott L. Kafker wrote the unanimous opinion.

Tuesday, December 28, 2021

Police officer delivering lunch was on the job for worker comp but not for statutory immunity, court rules

Pixabay by Ronald Plett (license)
A personal injury claim against a police officer's automobile insurer highlights the different scope of what it means to be "on the job" for purposes of statutory immunity and worker compensation.

In a case the Massachusetts Supreme Judicial Court (SJC) decided in late October, Raynham, Mass., police officers on mandatory firearms training on public property in 2017 organized takeout for lunch for a paid break.  Returning to the training site in his personal truck with the takeout, one officer drove the gravel path "faster than [he] should have," braked, and slid into and injured another officer seated at a picnic table.

The plaintiff-officer was permitted to claim state worker compensation, because he was injured on the job.  The defendant-driver's insurer meanwhile claimed immunity under the Massachusetts Tort Claims Act, because the insured acted "within the scope of his ... employment."  The SJC denied the insurer of the defense.

The common law test for "vicarious liability, respondeat superior, and agency," the court explained, is "whether the act was in furtherance of the employer's work," and the same test informs the invocation of statutory immunity.  That analysis comprises three factors in Massachusetts law: "(1) 'whether the conduct in question is of the kind the employee is hired to perform'; (2) 'whether it occurs within authorized time and space limits'; and (3) 'whether it is motivated, at least in part, by a purpose to serve the employer.'"

Only the middle factor favored the insurer, the court opined, so the analysis on balance disfavored immunity.

Worker compensation and common law master-servant doctrine are indistinguishable as a practical matter in many cases, when an employee suffers injury doing the employer's bidding.  Doctrines in both veins rely on "scope" or "course of employment" tests.

But even when the language is the same, the tests differ, and in some cases, the difference matters.  Worker compensation tests only loosely for a causal connection between employment injury, thus famously allowing a traveling salesman to recover when his overnight motel was destroyed by a tornado.  Vicarious liability, and thus, Massachusetts immunity, requires a closer causal nexus between the employee's specific pursuit and the injury that results.

In this analysis, the defendant-driver's lunchtime carelessness, for which he was suspended for five days, was not a "frolic" as escapes worker compensation coverage, but, at the same time, was not in furtherance of the employer's work, so qualified for neither vicarious liability nor statutory immunity.

The case is Berry v. Commerce Insurance Co., No. SJC-13089 (Mass. Oct. 25, 2021).  Justice Dalila Wendlandt wrote the unanimous court opinion.

Sunday, October 11, 2020

Oops. We accidentally linked healthcare to your job.

mohamed_hassan (pixabay.com)

I stand with the rest of the world in awestruck horror of America's stubborn insistence that access to healthcare should be a function of both one's wealth and the largesse of one's employer.

Critics of the free market are quick to conclude that it has failed the American worker.  Economic libertarians are just as quick to tout the essentiality of free contract.  Before we make any decisions about the free labor market, maybe we should try it out.  A market in which a worker can't change jobs for fear of a recurring cancer or a bankrupting accident is not a free labor market.

For the NPR podcast Throughline, Lawrence Wu set out recently to explain how we arrived at the problem of employer-dependent healthcare.  The description of the episode, "The Everlasting Problem" (Oct. 1, 2020), reads:

Health insurance for millions of Americans is dependent on their jobs. But it's not like that everywhere. So, how did the U.S. end up with such a fragile system that leaves so many vulnerable or with no health insurance at all? On this episode, how a temporary solution created an everlasting problem.

For This American Life and Planet Money, Alex Blumberg and Adam Davidson also addressed this subject back in 2009.  Their bit ran only 11 minutes, but I have never forgotten the shocking fact that "four accidental steps led to enacting the very questionable system of employers paying for health care."


Friday, May 8, 2020

Shielding business from coronavirus torts neglects deep-seated dysfunction in litigation, health insurance

Amid reopening and the controversy over reopening, American private business is seeking legislative protection against coronavirus-related tort litigation.

To oversimplify, businesses are worried about being sued if a worker or customer contracts the virus in the workplace or in a retail space.  Tuesday morning, U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley told National Public Radio that the Chamber is not asking for blanket immunity, but "a safe harbor ... against frivolous lawsuits."

"No one wants to protect bad actors here," Bradley said.  He suggested that liability could be predicated on gross negligence or "willfully forcing workers to work in unsafe conditions," which, legally speaking, is recklessness.

Protecting business from litigation is the Chamber's bread and butter, and that doesn't make it the Big Bad Wolf.  Businesses, especially small businesses, represent real people, owners and workers, who, in the absence of any extended public safety net, need to work to make ends meet.  Facing bankruptcy because of prolonged closure or because of the inevitability of a contagious disease surmounting all precaution is a heck of a catch-22 to put a business in.  From that perspective, the Chamber's position seems a fair ask.

At the same time, the Chamber's advocacy highlights two enormous socio-legal problems in America: transaction costs in tort litigation and employment-based health insurance.  A safe harbor would brush both these problems back under the rug.

It isn't tort litigation per se that business fears; it's the cost of that litigation.  Corporate defense—that's the kind of law I practiced a million years ago—wins in litigation with an enviable record.  The burden of proof rests with the plaintiff, which means that even meritorious causes may fail upon the vagaries of evidence.  What's more, the usually superior resources of the corporate defense bar warp the playing field of an adversarial contest predicated on the fallacy that the truth will out.  But the defense's advantages don't change the fact, for many reasons I won't here explore, that litigation costs a fortune.

As a result of runaway transaction costs, everyone loses.  Plaintiffs and would-be plaintiffs with meritorious complaints wind up not suing, winning nothing, or winning far less than will make them whole.  Plaintiffs without meritorious complaints may nevertheless win in settlement.  Meanwhile the cost of defense in every scenario, from insurance in anticipation of litigation to fees in its management, is visited on American business and passed on to the American consumer.  And the mere risk of those costs results in over-deterrence that burdens the American marketplace, distorting economic behavior.  This dysfunction renders the U.S. personal injury system a laughingstock elsewhere in the world.

So if the deck is so stacked against plaintiffs, why do they sue anyway, courting an invariably unfulfilling outcome and burdening even prevailing defendants?  That leads us to the second problem, our dysfunctional health insurance system.

An injured person might wish not to sue, yet become a plaintiff anyway; if the person is insured in any measure, the insurer will make the choice.  And notwithstanding the intervention of insurance, our healthcare system usually leaves an injured, would-be plaintiff holding a bag of devastating, bankruptcy-inducing invoices.   (I asked, rhetorically, earlier this week, what perversion of American values causes a working person diagnosed with terminal cancer to have to spend his precious last year of life carving out time from family and chemotherapy to do fundraising.)  In the American litigation and health insurance systems, a plaintiff sues against all odds because the plaintiff has no other choice.  And in a perverse feedback loop, plaintiff and plaintiff's insurer are permitted to pin their hopes on the likelihood that the threat of excessive transaction costs will shake loose a settlement upon even the weakest of claims.

The problem of healthcare costs is compounded by America's stubborn insistence on employer-based health insurance.  Focused on the bottom line, employers effectively make advance healthcare decisions for workers, which, naturally, increases incurred costs for the workers who become patients.  With precious little control over their healthcare choices, but afraid of wholly losing coverage, risking food and shelter for themselves and their families in a country that eschews social safety nets for people while bailing out corporations, workers make irrational market choices, such as working for less than a living wage, accepting a salary to obviate overtime, going to work in unsafe conditions, and going in sick.  We got into this mess entirely by accident, as Planet Money reported in 2009, and we seem helpless to get out of it.  Ironically, now, the Chamber seeks to protect business against a litigation problem that results in large part from employers' own choices, however economically rational, to leave workers unprotected from catastrophe and trapped in a job by an unlevel labor market.

In the theoretical American tort system, the way it works when I teach its rules and policies to law students in America and Europe, the businesses represented by the U.S. Chamber should not be worried about tort lawsuits.  The test for negligence-based liability in American tort law is simply unreasonableness.  A business that takes reasonable measures to protect workers and customers against infection would suffer no liability, even given the inevitability that contagion will still happen in the face of reasonable precautions.

The truth of the matter is quite different from the theory, and Bradley's statement to NPR demonstrates the divergence.  On the one hand, Bradley said that business must be protected against "frivolous lawsuits."  The problem with that rationale is that the legal system already provides for potentially hefty penalties and sanctions against any plaintiff or plaintiff's lawyer who would try to prosecute a truly frivolous lawsuit.

On the other hand, Bradley said that businesses should be liable only upon a heightened culpability standard, gross negligence or recklessness.  "No one wants to protect bad actors here," he said.  Someone who is grossly negligent or reckless is not necessarily bad; bad is a normative judgment and not a workable legal standard.  Colloquially, he is equating bad with culpability, and that's fair.  But if the equation holds, why is a negligent business not also bad?  Is every negligence lawsuit necessarily a frivolous lawsuit?

Bradley made a strategic semantic choice.  Mention of the "frivolous" is calculated to evoke a gut reaction of displeasure in Americans who have been conditioned by the heavy media messaging of tort reform advocacy.

But let's for the moment cut Bradley and the Chamber some slack.  From where they sit, frivolous cases and negligence claims are equally problematic.  That's because plaintiffs are compelled by the circumstances of our dysfunctional systems to sue in negligence even when the merits might not bear out the claim.  In other words, the brokenness of our litigation and healthcare systems over-incentivizes injured persons to litigate.  A plaintiff decides to sue because of desperate need for compensation, not because of the strength of the claim that the defendant is blameworthy.

Negligence isn't the thing that's broken.  For my money, negligence, meaning the reasonableness test, applied by a Seventh Amendment jury, remains one of the greatest innovations in law in the last two centuries and has proved a worthy American example for the world.

Our litigation system is broken.  And our health insurance system is broken.  Adoption of a safe harbor for defendants within those systems as they exist now will just mean that when a business is negligent, and a person gets sick as a result, the sick person will bear the cost of the illness and of the business's negligence.  That's not how American civil justice is supposed to work.  That's not how it was ever supposed to work.

So many pundits, so many of us, Americans and people around the world, have wondered aloud whether this crisis might at last precipitate real and meaningful change, change that might bring people's standard of living into correlation with our fantastic global wealth and technology.  We've wondered whether, and we've dared hope that, we stand at the threshold of the Great Realization, from which humankind will never turn back.

In that frame of reference, the safe harbor proposed by the Chamber, or moreover statutory immunity from tort liability, would be a profoundly disappointing portent of business as usual.

My thanks to Professor Rebecca Crootof at Richmond Law for an email that got me thinking about this.  Thanks also to any loyal reader who made it this far without pictures.  My "Report from a Social Distance Week 7" is delayed but not forgotten; look for it this weekend.

Wednesday, May 6, 2020

In memoriam: Sam Lloyd, TV lawyer 'Ted Buckland'

Sam Lloyd in 2009
(BrokenSphere
CC BY-SA 3.0)
Sam Lloyd played Ted Buckland on Scrubs. Lloyd died one week ago, on April 30.

Ted definitely makes my short list of favorite TV lawyers.  I'd say he's neck-and-neck with Jackie Chiles for number one in the sitcom genre, edging out Lionel Hutz.  Lloyd as Ted also appeared in three episodes of Cougar Town and in three episodes of the short-lived web series, Scrubs: Interns.  Lloyd's extensive filmography in other roles dates back to Night Court in 1988 and includes Ricky in Seinfeld.  Lloyd talked TV with the AV Club in 2011.

YouTube user nitemare91191 created a "Best of Ted" Scrubs compilation in 2007.


The a cappella comedy included in these clips was not just for laughs.  Lloyd and his "The Blanks" (YouTube channel: check out this A-ha cover) were a talented quartet in real life.  Lloyd was a nephew of actor Christopher Lloyd.

Zach Braff and Donald Faison also remembered Sam Lloyd at the top of their podcast, Fake Doctors, Real Friends, on Tuesday (cue to 1m30s, duration about 5 minutes).


Lloyd died at age 56 from an inoperable brain tumor diagnosed only a year ago.  He leaves behind his wife, Vanessa, and their one-year-old son, Weston.  A moving tribute is posted on the family's GoFundMe page, which was started last year to help pay for Lloyd's healthcare.

Rest in peace, Sam Lloyd, and thanks for the comic relief.

Let's take a pause, too, to think about why working people with cancer in the world's 12th richest country need GoFundMe pages to pay for healthcare, and why no one still running for President has a plan to change that.

Maybe it's time for the Great Realization.



Wednesday, September 12, 2018

Despite IP exclusion, insurer bound to defend in right-of-publicity case over running shoes, Mass. high court holds

Upon an underlying case involving the right of publicity coupled with consumer protection and equity claims, the Massachusetts Supreme Judicial Court (SJC) today held insurers duty-bound to defend an insured running-shoe maker, despite the exclusion of intellectual property claims from coverage.

Abebe Bikila in Rome, 1960
Massachusetts-based Vibram USA, through its affiliate Vibram FiveFingers, named a line of "minimalist" running shoes after Ethiopian Olympic athlete Abebe Bikila, who ran barefoot when he set a marathon world record in Rome in 1960.  (See clips from 1960 and Bikila's 1964 marathon win in Tokyo on the Olympic Channel).  Seriously injured in a car accident in 1969, Bikila died of a cerebral hemorrhage in 1973.  Since then, the family has made commercial use of the Bikila name in enterprises including a Spanish retail sporting goods chain, a Bikila biography, a Japanese commercial, and a biographical feature film.  The family objected to Vibram's association of its shoe with Bikila without permission.

The complaint comprised four counts: (1) right of publicity under the Washington Personality Rights Act, (2) violation of the Washington Consumer Protection Act, (3) unfair competition under the Lanham Act, 15 U.S.C. § 1125(a), and (4) unjust enrichment.  Vibram's general insurance and liability policies with two providers, Salem-based Holyoke Mutual and Maryland Casualty, covered "personal and advertising injury liability," without defining "advertising injury"; however, the coverage excluded intellectual property liability.  The insurers sought, and the superior court granted, declaratory relief from coverage.  The SJC reversed.

To trigger an insurer's duty to defend, the insured need show only "a possibility that the liability claim falls within the insurance coverage."  The duty to defend is broader than the duty to indemnify.  The Bikila complaint alleged that Vibram used Bikila as "an advertising idea."  Bikila family members alleged that they had "intentionally and specifically connected the name to running-related ventures, and the name itself conveys a 'barefoot dedication to succeed under any circumstances,' a desirable quality for any of these ventures."  The insurers were mistaken in arguing that the claim was limited to the right of publicity, or was synonymous with trademark infringement, both IP theories excluded from coverage.  Rather, the essence of the Bikila claim was that Vibram sought to profit from Bikila-associated ideas.

Vibram FiveFingers Bikila Running Shoes (by Fuzzy Gerdes, CC BY 2.0)
From the court's opinion, it is not clear to me which or what combination of claims ensures that a complaint such as this one rises beyond the coverage exclusion.  Count 1 right of publicity by itself would not have been covered by the policy, and it is informative to see that the privacy tort now resides firmly in the IP household.  I suspect that count 3 under the Lanham Act also constitutes an excluded IP claim.  So perhaps statutory consumer protection and equitable quasi-contract each could do the trick.  Yet those theories, in any given case, could overlap wholly with IP claims.  The court's opinion suggests that there is something special about the misappropriation of an "advertising idea" that sets this case apart qualitatively from IP claims.  I'm not sure I see it.

Apparently the "advertising injury" language of the insurance coverage here is not without precedent, and the court gave an informative catalog of the "wide variety of concepts, methods, and activities related to calling the public's attention to a business, product, or service [that have] constitute[d] advertising ideas":
  • logo and brand name, Street Surfing, LLC v. Great Am. E&S Ins. Co., 776 F.3d 603, 611-612 (9th Cir. 2014);
  • patented telephone service enabling sale and promotion of products, Dish Network Corp. v. Arch Specialty Ins. Co., 659 F.3d 1010, 1022 (10th Cir. 2011);
  • advertising strategy of "trad[ing] upon a reputation, history, and sales advantage" associated with Native American made products, Native Am. Arts, Inc. v. Hartford Cas. Ins. Co., 435 F.3d 729, 733 (7th Cir. 2006);
  • concept of "Psycho Chihuahua" obsessed with Taco Bell food to advertise business, Taco Bell Corp. v. Continental Cas. Co., 388 F.3d 1069, 1072 (7th Cir. 2004);
  • word "NISSAN" to promote vehicles to public, constituting "quintessential example of trademark functioning to advertise a company's products," State Auto Prop. & Cas. Ins. Co. v. The Travelers Indem. Co. of Am., 343 F.3d 249, 258 (4th Cir. 2003);
  • use of internet domain, CAT Internet Servs., Inc. v. Providence Wash. Ins. Co., 333 F.3d 138, 142 (3d Cir. 2003);
  • artwork and product model numbers designed to promote products (claim for trade dress infringement), Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179, 1189 (11th Cir. 2002);
  • word "fullblood," connoting desirable quality, to advertise Simmental cattle breed, American Simmental Ass'n v. Coregis Ins. Co., 282 F.3d 582, 587 (8th Cir. 2002);
  • agent misrepresenting himself as working for another company for purposes of inducing customers to make purchases, Gustafson v. American Family Mut. Ins. Co., 901 F. Supp. 2d 1289, 1301 (D. Colo. 2012); and
  • patented technology used to market music for online sales, Amazon.com Int’l, Inc. v. American Dynasty Surplus Lines Ins. Co., 120 Wash. App. 610, 616-617, 619 (2004).
 "Advertising injury" is not "injury caused by other activities that are coincidentally advertised" (quoting Couch treatise).  "Otherwise stated, '[i]f the insured took an idea for soliciting business or an idea about advertising, then the claim is covered ... [b]ut if the allegation is that the insured wrongfully took a ... product and tried to sell that product, then coverage is not triggered'" (quoting Washington precedent and offering authorities in accord from other states).  Thus coverage is excluded in cases such as:

  • use related to manufacture and not marketing, Winklevoss Consultants, Inc. v. Fed. Ins. Co., 991 F. Supp. 1024, 1034 (N.D. Ill. 1998);
  • conspiracy to fix egg prices, Rose Acre Farms, Inc. v. Columbia Cas. Co., 662 F.3d 765, 768-769 (7th Cir. 2011);
  • disparagement of competitor's pineapples to undermine their advertising, Del Monte Fresh Produce N.A., Inc. v. Transp. Ins. Co., 500 F.3d 640, 643, 646 (7th Cir. 2007);
  • advertising another's patented method for cutting concrete, Green Mach. Corp., v. Zurich-American Ins. Group, 313 F.3d 837, 839 (3d Cir. 2002);
  • design of product, Ekco Group, Inc. v. Travelers Indemnity Co. of Ill., 273 F.3d 409, 413 (1st Cir. 2001);
  • misappropriation of product design, Frog, Switch & Mfg. Co. v. Travelers Ins. Co.,
    193 F.3d 742, 749-750 (3d Cir. 1999);
  • taking of customer list and solicitation of customers from it, Hameid v. National Fire Ins. of Hartford, 31 Cal. 4th 16, 19-20 (2003);
  • manufacture and sale of patented product, Auto Sox USA Inc. v. Zurich N. Am., 121 Wash. App. 422, 427 (2004).

So memorize those, and let me know when you're ready for the exam.

The case is Holyoke Mutual Insurance Co. in Salem v. Vibram USA, Inc., No. SJC-12401 (Mass. Sept. 12, 2018).  Suffolk Law has the oral argument video of Feb. 6.  The case was heard by the full court upon granting direct appeal, and the unanimous opinion was authored by Associate Justice David A. Lowy, a Boston University law grad and former ADA and Goodwin Proctor litigator.