Toxic Tort Litigation Trends and Developments

Transcription

1 Trends and Developments PRESENTED BY Jeffrey S. Moller, Blank Rome LLP Earl M. Forte, Blank Rome LLP Terry M. Henry, Blank Rome LLP 143 Developments in : Recovery in Excess of Actual Past Medical Costs PRESENTED BY Jeffrey S. Moller, Blank Rome LLP 144 1

2 Past Medical Costs as Damages An important element of consequential damages. Potentially large due to diseases and illness (cancer, asbestosis) which may require costly and lengthy treatment. 145 The Actual Payor Injured plaintiffs rarely pay out of pocket. Most are insured or are Medicare/Medicaid beneficiaries. Insurance benefits procured by the plaintiff are not a credit for the tortfeasortf per the Collateral l Source rule

3 Healthcare Market Forces The amount actually paid is often far less than the amount initially charged by the medical provider. In most cases, the medical provider cannot (as a contractual matter) seek to recover the differential from the patient. 147 Which of the two alternative amounts should a plaintiff be entitled to recover as past medical damages from a tortfeasor: tf the full charged amount or the amount that is actually paid? Should the jury see the amounts charged if only the amounts paid are relevant? 148 3

4 Past Medical Damages Drastically Cut The difference between the amount charged and the amount actually paid can be quite substantial and can result in a huge reduction of the billed amount. 149 Ripple Effect Pain and Suffering Traditional (mythical?) multiplier li formula The total amount of medical expenses seen by juries as indicator Punitive Damages Multiple or cap per statute or decision 150 4

5 Collateral Source Rule: Does limiting a plaintiff s recovery of medical damages to those amounts that are actually paid, whether by plaintiff or insurance, violate the Collateral l Source Rule? 151 The Collateral Source Rule A plaintiff s right to damages for past medical expenses cannot be diminished merely because a collateral l source paid for claimant's medical expenses. A tortfeasor cannot benefit from a plaintiff s foresight in purchasing insurance. The question is whether or not the reduction in the charged amount negotiated t with and given by the medical provider is considered a benefit procured by the Plaintiff

6 Opinions/Interpretations: 3 Schools of Thought 153 School #1 A function of statute or evidentiary rule: Only those amounts that t are actually paid (either by plaintiff or insurance) are recoverable. Evidence of amounts billed is irrelevant and inadmissible

7 Tex. Civ. Prac & Rem Code Evidence Relating to Amount of Economic Damages. In 2003, the Texas state legislature passed House Bill 4, comprehensive tort reform Section : In addition to any other limitation under law, recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant. 155 At what stage of the proceeding should this apply? Does this rule limit the admissible evidence or merely create a limit it on recovery to be applied by the judge by molding a verdict? Haygood v. Escabedo, 356 S.W.3d 390 (Tex. 2011). Held: Since a claimant is not entitled to recover medical charges that a provider is not entitled to be paid, evidence of such charges is irrelevant to the issue of damages any relevance of such evidence is substantially outweighed by the confusion it is likely to generate, and therefore the evidence must be excluded

8 School #2 Limits recovery to amounts paid based upon rule of fairness under common law. Collateral l Source Rule arguments unavailling. 157 Pennsylvania Moorhead v. Crozer Chester Medical Center, 564 Pa. 156 (Pa. 2001) Reasonable Value Common law allows a plaintiff to recover the reasonable value of medical services. But the definition iti of reasonable value should not permit an injured party to recover an amount greater than the amount actually paid or for which he/she incurred liability. Reliance upon Restatement (Second) of Torts, 911 Comment h (1977): [N]ormally the amount recovered is the reasonable value of the services rather than the amount paid or charged. If, however, the injured person paid less than the exchange rate, he can recover no more than the amount paid, except when the low rate was intended as a gift to him

9 Pennsylvania Moorhead v. Crozer Chester Medical Center, 564 Pa. 156 (Pa. 2001) Reasonable Value Collateral source rule is inapplicable. The amount paid by the collateral sources (Medicare and Blue Cross) must be paid by the tortfeasor. The collateral source rule does not apply to the illusory charge of $96, since that amount was not paid by any collateral source. Allowing the plaintiff to recover would be a windfall to the plaintiff and would violate fundamental tenets of just compensation : remedies seek to put injured person in pre-tort position injured party cannot recover twice for same injury unjust enrichment injured person should be fairly compensated with the least burden to the wrongdoer 159 California - Howell v. Hamilton, 52 Ca.4th 541 (Ca. 2011) Recovery limited to those charges that are paid - an injured plaintiff whose medical expenses are paid through h private insurance may recover as economic damages no more than the amounts paid by the plaintiff or his or her insurer for the medical services received or still owing at the time of trial. No recovery for written-off charges because no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount. Citing Civ. Code 3281, 3282 defining compensatory relief 160 9

10 California - Howell v. Hamilton, 52 Ca.4th 541 (Ca. 2011) Collateral source rule not violated - The negotiated rate differential is not a collateral payment or benefit subject to the collateral l source rule. Evidentiary loophole [E]vidence of that full billed amount is not itself relevant on the issue of past medical expenses. We express no opinion as to its relevance or admissibility on other issues, such as noneconomic damages or future medical expenses. Several California appellate court opinions since Howell have allowed the full amount charged into evidence. 161 School #3 Benefit of the bargain Award the full value of the medical expenses, including any contractual t adjustments t or write-off amounts, where the plaintiff has paid some consideration for the benefit of the contractual adjustment

11 Louisiana Bozeman v. Louisiana, 879 So.2d 692 (La. 2004) [T]o the extent that the write-offs were procured through the payment of the premiums, they cannot properly be considered a windfall. Rather, the writeoff amount was viewed as a benefit to plaintiff's contractual bargain with her insurance provider. Not allowing the recovery would violate the collateral source rule. However, Medicaid recipients are unable to recover any amounts adjusted or written-off. [W]here the plaintiff pays no enrollment fee, has no wages deducted, and otherwise provides no consideration for the collateral source benefits he receives, we hold that the plaintiff is unable to recover the "write-off" amount. 163 Arizona - Lopez v. Safeway Stores, Inc., 129 P.3d 487 (Ariz. Ct. App. 2006) We hold that Lopez was entitled to claim and recover the full amount of her reasonable medical expenses for which she was charged, without any reduction for the amounts apparently written off by her healthcare providers pursuant to contractually agreed-upon rates with her medical insurance carriers. Legislature s job to abandon the collateral source rule in this area absent any such limiting statute or supreme court authority suggesting that the collateral source rule does not control in a situation such as that presented here, we join with the majority of courts in finding it applicable

12 Practical Considerations Arguments should be made even in those states which have historically allowed recovery of the full billed amount. Urge a change in the law. Look for statutes which may affect this type of recovery. More state legislatures are addressing these issues as tort reform. Motion in Limine - to prevent Plaintiff putting into evidence his medical or health care provider bills that reflect charges that have been either contractually adjusted or written-off. Do not be satisfied with molded verdict solution. 165 Environmental Claims Issues in Bankruptcy PRESENTED BY Earl M. Forte, Blank Rome LLP

13 I. Two Areas Addressed (1) When a company files for bankruptcy reorganization, do pre-bankruptcy environmental claims asserted against the company by governmental agencies become discharged or do they continue after the reorganization? (2) If a company in bankruptcy is faced with substantial environmental lawsuits, do those lawsuits get resolved in the bankruptcy court or in the court where the lawsuits were originally filed? 167 II. Only claims are dischargeable Only claims are discharged in bankruptcy. In re Quigley Co., 383 B.R. 19, 25 (Bankr. S.D.N.Y U.S.C. 101(5) defines a claim as: (A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or (B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured

14 Are environmental cleanup obligations dischargeable claims under 101(5)(B)? Usually not, unless the agency has a right to seek payment for money damages under the statute it used to obtain the cleanup order. Mark IV Industries, Inc. v. New Mexico Environmental Department, etc., 11 Civ. 648 (SAS) (S.D.N.Y. September 28, 2011). 169 In Mark IV, the Debtor asked SDNY bankruptcy court to determine that New Mexico s cleanup injunction against it for ground water pollution obtained under the state s Clean Water Act, was a dischargeable claim because NM had the option to seek money damages under the Hazardous Waste Act and CERCLA

15 The district court in Mark IV rejected this argument by the Debtor and affirmed the bankruptcy court: Citing In re Chateaugay Corporation, 944 F. 2d 997 (2 nd Cir. 1991) and other case law, the SDNY ruled in Mark IV that the fact NM had proceeded under the state Clean Water Act and not under another statute that allowed money damages, was irrelevant to whether or not the cleanup order was a dischargeable claim and to hold otherwise would make all environmental claims dischargeable, which is not what the law intended, especially with ongoing pollution. 171 The district court in Marks IV that the correct focus is on the statute the agency actually used, not on what it could have used. Marks IV at 29. The court in Marks IV also noted that In In re Chateaugay, the 2d Circuit had established a rule that most environmental claims are non-dischargeable. Id. Ongoing pollution at the site was a further reason for nondischargeability. Ongoing pollution can be caused by prebankruptcy or post-bankruptcy activities. Mark IV involved a moving plume of ground pollution created pre-bankruptcy

16 In Marks IV, the district court also concluded that was a material issue of fact raised by the parties experts about whether there was or was not ongoing pollution at the site which precluded summary judgment. Mark IV at 38. The Debtor in Mark IV appealed to the Second Circuit, Mark IV Industries, Inc. v. The New Mexico Environmental Dept. et al., No (2d Cir.), but the appeal was withdrawn by agreement of the parties in late 2011, so the district court decision in Marks IV stands. 173 IV. What Court Decides Environmental Claims? MDL defendant files for bankruptcy. Do claims against it get decided in the MDL court or in the bankruptcy court? 11 U.S.C. 502(c), provides for claims to be estimated in the bankruptcy court. Or, withdraw reference/abstain, go to MDL court. Parties can agree. E.g. In re Pilgrim s Pride, etc., 2009 Bankr. LEXIS 2692 (Bankr. N.D. Tex. 2009)

17 : PRESENTED BY Terry M. Henry, Blank Rome LLP 175 The Component Part Doctrine

18 Can plaintiffs reach beyond the finished product manufacturer to assign liability? O Neil v. Crane Co., 266 P.3d 987 (Cal. Jan. 12, 2012) Conner v. Alfa Laval, Inc., 842 F.Supp 2d 791 (EDPA Feb. 1, 2012) Maxton v. Western States Metal, Ct of Appeal, 2d App. Dist. (Feb. 2, 2012 In re: Asbestos Lit. Wolfe, 2012 Del. Super LEXIS 86, (Feb. 28, 2012) In re: Asbestos Lit. Grich, 2012 Del. Super LEXIS 144, (Apr. 2, 2012) Dummitt v. Chesterton, 2012 NY Mis. LEXIS 4057, (Aug 20, 2012) 177 Component parts Finished Product Manufacturer Wholesalers Distributors Retailer

19 Theories of Liability in a Product Liability Case: Design Defect Failure to Warn Manufacturing Defect The manufacturer of a component part is not liable for injuries i caused by the finished i product into which the component has been incorporated, unless the component itself was defective and caused harm 179 The O Neil Case The USS Oriskany Launched in 1945 Asbestos components specified by Navy No acceptable alternative in 1945 Pumps/Valves did not require asbestos Navy aware of danger, but did not warn

20 Key Facts The original asbestos containing components in the Crane valves and Warren pumps had long since been replaced No evidence that Crane or Warren manufactured any of the replacement asbestos components O Neil s Theory Pumps and valves defectively designed to be used with asbestos Manufacturers had a duty to warn of the dangers associated with asbestos because the could foresee that their products would be used with asbestos 181 The Court s Holding No liability outside a defective product s chain of distribution No liability for distinct products that a consumer can be expected to use with a non-defective product (foreseeability is not enough) No duty to warn of defects in another manufacturer s product Crane

21 In The Matter of NYC Asbestos Litigation: Ronald Dummitt v. Crane, et al. August 20, 2012 A manufacturer s liability for third party component parts must be determined by the degree to which injury from the component part is foreseeable to the manufacturer The duty to warn arises where a manufacturer knows or should know that its product would or ought to be combined with inherently defective material for its intended use 183 Key Findings of Fact Originally supplied asbestos gaskets with valves Sold asbestos gaskets as replacement parts Knew that Navy drawings specified asbestos Knew asbestos would be used with its valves Knew asbestos was routinely used with valves Advertised its valves as easier to insulate Contributed to a 1946 Navy machinery manual specifying asbestos insulation This evidence reflects a manufacturer who meant for its product to be used with a defective product

22 Factors that impact determination of liability between component part and finished product manufacturers: Knowledge of how the component part will be used Knowledge of other products that may or must be used with the product / component part Responsibility for design of the component part Responsibility for selection of the component part Responsibility for integration of the component part 185 Additional Thoughts: Raw Materials Suppliers: Maxton v. Western State Metal, Ct. of App., 2d App. Dist. (Feb 2, 2012) Medical Device Suppliers: Biomaterials Access Assurance Act of 1998 (21 USC 1601 et seq. The Bare Metal Doctrine

23 Questions Terry M. Henry Questions?