Legal Environment


When President Obama pledged to address medical malpractice liability concerns as part of healthcare reform, and directed the Department of Health and Human Services to move forward with incentives for states aimed at curbing lawsuits, insurer and doctor groups welcomed the step but cautioned the devil would be in the details of the plan. The details of House speaker Nancy Pelosi’s 1,990-page healthcare bill that passed Saturday on a 220-215 vote underscores the need for that cautionary note. A provision in the bill does establish an incentive program for states to adopt and implement alternatives to medical liability litigation, BUT a state is not eligible for incentive payments if it puts a law on the books that limits attorney fees or imposes caps on damages. A November 6 OpEd in the Washington Times calls the provision a poison pill:
“Fee limits or damage caps are the two most popular lawsuit reforms […]

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Hope was that the whiff of financial scandal was dying down after fallout from the subprime and credit crisis, Madoff and Stanford Ponzi schemes. Then along came Galleon. Last month billionaire Raj Rajaratnam, founder of the now-defunct hedge fund Galleon Management LP, was arrested by the FBI accused in an insider trading case that allegedly generated more than $25 million in illicit gains. Six others involved in the scheme were also charged including senior executives at major companies including IBM, Intel and McKinsey & Co. Yesterday the Galleon probe widened with the charging of 14 other individuals, including hedge fund traders and managers, lawyers and a former Galleon employee, for their part in the insider trading group. Reports suggest that further arrests can be expected in the coming weeks. The collapse of the Madoff and Stanford schemes fueled litigation on a number of fronts and it is likely that Galleon […]

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An important case before the U.S. Supreme Court will decide whether state legislatures can limit class actions in federal court. It will also decide whether what started as a $500 claim by an individual litigant will become a $5 million class verdict, according to a report by SCOTUSBLOG. Oral arguments in the case were heard Monday and a decision from the justices is expected in late winter. The case – Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co. – stems from an auto accident in which a Maryland woman was hurt. The clinic where she was treated subsequently filed a class action suit in federal court against Allstate, claiming the insurer failed to pay statutory interest penalties on overdue payments of insurance claims owed under no-fault auto insurance policies. Allstate moved to dismiss the case citing a New York law that bars class actions for certain statutory-damages claims. Allstate […]

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A Chinese drywall symposium hosted by the University of Florida College of Engineering will be held in Tampa, Florida on Thursday and Friday (November 5 and 6) of this week. The event will bring together researchers from the primary state and federal agencies to present their findings on technical topics such as materials analysis, emissions testing, exposure assessment and toxicology, remediation and repair. Florida Senator Bill Nelson is scheduled to give the keynote speech on Friday. A preliminary report from the Consumer Product Safety Commission (CPSC) late last week found that while Chinese drywall emits higher levels of sulfur gases and strontium than drywall manufactured in the United States, there is no evidence that the emissions are linked to health problems and metal corrosion. Indoor air testing of 10 homes in Florida and Louisiana was conducted for the study and an analysis of 50 additional homes is underway with the […]

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A few weeks ago we blogged about a decision by the Second U.S. Circuit Court of Appeals in New York that would enable public nuisance claims to proceed against businesses for their contributions to global warming. Two similar cases have now been decided that offer starkly different opinions in the area of climate change litigation. On Friday the Fifth U.S. Circuit Court of Appeals in New Orleans reversed the dismissal of a climate change class action brought by Mississippi property owners who claim that greenhouse gases emitted by oil and gas companies contributed to global warming that added to the ferocity of Hurricane Katrina that caused damage to their properties. Hat tip to the Wall Street Journal Law Blog for its post on the decision which cites J. Russell Jackson, a partner at law firm Skadden Arps saying that at a minimum the ruling will invite more climate change litigation […]

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U.S. companies are seeing a litigation wave that corporate counsel expect to swell next year, according to the Sixth Annual Litigation Trends Survey from international law firm Fulbright & Jaworski. As predicted last year some 42 percent of in-house counsel at U.S. firms expect an increase in the number of legal disputes their companies will face in the next 12 months, up from 34 percent of last year’s respondents, while 83 percent report that lawsuits have already commenced against their companies. Fulbright reports that large-cap companies have the highest expectation of litigation, with 52 percent forecasting an increase in legal disputes, while 47 percent of public company respondents foresee a jump in disputes. The economy was cited as the key reason for the rising litigation. Regulatory investigations and whistleblower allegations are expected to eat up litigation resources in the year ahead. Looking to 2010, 16 percent of all respondents (and […]

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Today’s headlines are full of promise on U.S. healthcare reform after the Senate Finance Committee’s milestone vote in favor of a bill crafted by Senator Max Baucus (D-MT) that would overhaul the healthcare system. It’s worth noting that this bill does not address medical liability reform. Last week the Congressional Budget Office (CBO) estimated that implementing a typical package of medical liability reform proposals nationwide would reduce total U.S. healthcare spending by about 0.5 percent (about $11 billion in 2009). This figure includes some 0.2 percent in savings from lower direct spending on medical liability premiums and an additional 0.3 percent in indirect savings from slightly less utilization of healthcare services. Overall, enacting medical liability reform proposals would reduce federal government budget deficits by roughly $54 billion over the next 10 years, according to CBO’s analysis. This is something to keep in mind as the healthcare reform debate moves to […]

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There have been a number of media stories on the imported drywall (otherwise known as Chinese drywall) issue in recent days. Here’s a quick synopsis. A story in today’s New York Times by Leslie Wayne reports that hundreds of drywall-related lawsuits are piling up in state and federal courts and a consolidated class action is moving forward in Federal District Court in Louisiana that will begin hearing cases in January. Meanwhile, an article in today’s Miami Herald by Beatrice Garcia and Nirvi Shah underscores the point that homeowners are unlikely to find coverage for Chinese drywall issues under homeowners insurance policies because of exclusions for pollution, contamination damage or problems stemming from construction defect. A September 28 article in the Baton Rouge Advocate by Cain Burdeau reported on how Chinese drywall manufacturers may ignore drywall-related lawsuits pending in U.S. courts. A recent report by Swiss Re provides an excellent overview […]

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The U.S. Supreme Court began its new term yesterday and an online article at Insurance Journal notes that questions on securities fraud, Sarbanes-Oxley and financial executives’ compensation are among the high-profile cases the court will take up. A glance at the list reveals that a major case on gun rights will also be heard. The court will take up a challenge to a handgun ban in Chicago to decide whether the Second Amendment’s right to keep and bear arms acts to restrict state and local laws or only federal statutes. Meanwhile, an article in Business Insurance by reporter Mark Hofmann notes that the court will also hear several business cases with potential implications for risk managers. Check out an I.I.I. paper on the tort threat.

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A decision by the 2nd U.S. Circuit Court of Appeals in New York earlier this week would enable public nuisance claims to proceed against businesses for their contributions to global warming. In Connecticut v. American Electric Power, the 2nd Circuit reversed the district court’s decision, effectively giving the green light to a public nuisance lawsuit filed by eight state attorneys general, New York City and three land trusts against six electric power companies based on greenhouse gas emissions. Public nuisance is a common law tort that imposes liability on an individual or entity that interferes with a public right – to health and safety, for example. The 2nd Circuit decision would effectively reverse the judicial trend on the public nuisance theory. We recall that in July 2008, the Rhode Island Supreme Court overturned a landmark case against three former lead paint manufacturers, refusing to allow the expansion of the public nuisance […]

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