11/16/2016

Around the Nation: November 2016

State news and updates from CLM chapters, reps, and committees.

By Bevrlee J. Lips

CALIFORNIA: Proof of Diminished Career Choices and Earning Potential

The court ruled in Licudine v. Cedars-Sinai Medical Center that a plaintiff, to support a damages award for lost earning capacity, must introduce evidence showing that her career choices and the corresponding earning capacity had a reasonable probability of being achieved but for her tortious injury. Following a problematic surgery, the plaintiff sued her surgeon and care facility. At trial, she introduced evidence that (1) most coxswains attend graduate school, (2) her injuries would require medical care for life, and (3) she was accepted into law school, where graduates typically become lawyers who have a median salary of $113,530. The court ruled that because the plaintiff’s evidence was not enough to establish reasonable probability that she could have obtained employment as an attorney or any evidence on the earnings of lawyers, the trial court did not abuse its discretion in determining that the jury’s award for lost earning capacity was not supported by substantial evidence.—From San Diego Chapter Secretary Karen Holmes

MISSISSIPPI: Court Addresses Prior Knowledge in a Legal Malpractice Action

In Imperium Ins. Co. v. Shelton & Assocs. P.A., attorneys obtained summary judgment on behalf of an insurance carrier. The case involved disputes as to insurance coverage under a professional malpractice policy where the underlying claims sought in excess of $3 million in damages. After first noting that neither the Mississippi Supreme Court nor the appellate court had yet addressed a similar exclusion, the court explained that it would apply the subjective/objective two-prong approach adopted by many other jurisdictions. The district court held that the insurance carrier was entitled to rescind the policy in question and that coverage for the claims at issue was otherwise excluded under the terms of the policy. The court further dismissed a claim for bad faith against the carrier.

The district court’s decision marks the first time that a Mississippi court has addressed a “prior knowledge” exclusion in the context of a legal malpractice action. The carrier’s attorneys successfully argued that, where a negative outcome results from an attorney’s failure to comply with a judicially imposed deadline or other requirement, a reasonable attorney should be aware that a malpractice claim by the aggrieved client might result. The district court further agreed with the carrier’s argument that the failure to report a potential claim under such circumstances in an application for malpractice coverage constitutes a material misrepresentation, allowing the policy to be rescinded.—From CLM Member Stuart Robinson Jr.

NORTH CAROLINA: Painted Skylight Panels Equal Big Damages

In summer 2011, a contractor (defendant) applied a coating to the roof of a 50-year-old corrugated metal building with a metal roof and inset skylights. In the process of doing so, the contractor coated over the fiberglass skylight panels. About a year later, the tenant had an HVAC technician (plaintiff) repair a broken air-conditioning unit on the roof. In the course of performing his work, the plaintiff fell through the skylight. The fall resulted in serious and permanent injuries, including a traumatic brain injury. In Camp v. Merit Builders, the plaintiff filed suit against multiple parties in state court, asserting claims for negligence and gross negligence and seeking both compensatory and punitive damages. All parties other than the defendant settled prior to trial. Additionally, the plaintiff and defendant stipulated damages at $1 million, the defendant’s policy limits. Following a two-week trial in August 2016, solely on the issue of liability, the jury returned a defense verdict, finding negligence on the part of the contractor, contributory negligence on the part of the plaintiff, and no gross negligence on the part of the contractor. The plaintiff’s motion for a new trial was denied in October 2016.—From CLM Member David L. Levy

OREGON: Obligation to Pay Despite Identification of When Damage Occurred 

In FountainCourt Homeowners’ Association v. FountainCourt Development, the Oregon Supreme Court held that ongoing and continuous water damage was an “occurrence” under the insured/subcontractor’s insurance policy. Significantly, coverage was triggered despite the fact that damages began prior to the policy period and continued after the policy period. The court held that the homeowners’ association (the garnishor of the subcontractor’s policy) met its burden to prove that some property damage occurred during the policy period because the verdict against the subcontractor was for negligence and property damages. The insurer was not permitted to retry the subcontractor’s liability in the later garnishment proceeding. Further, unless the insurer could prove which damages occurred outside of the policy period, the insurer was obligated to pay the full amount of the judgment against the subcontractor.—From CLM Member Jack Levy

TENNESSEE: Fired Muslim Highway Patrol Not Required to Prove Psychological Harm

A Muslim Tennessee Highway Patrol officer was awarded $100,000 in damages from the state of Tennessee in an Eastern District of Tennessee case. In Dingus v. State of Tennessee, the plaintiff alleged that he was fired for being a potential jihadist. According to the court, the trooper was treated as a threat, subjected to humiliating circumstances, and wrongfully terminated because of his faith. The U.S. District Court for the 6th Circuit had earlier ruled that the case was so egregious that it did not require traditional proof of psychological harm in order to support a damage award.—From CLM Member John Butler 

WASHINGTON, D.C.: CMS Declares Ban on Nursing Homes’ Use of Pre-Dispute Arbitration Clauses  

The Centers for Medicare and Medicaid Services (CMS), an agency within the Department of Health and Human Services, issued new rules Oct. 4 banning nursing homes (long-term care facilities, or LTCs) that receive federal funding from using pre-dispute arbitration clauses. Nearly all LTC facilities receive such funding, meaning millions of patients are impacted by this rule. The agency rule counters U.S. Supreme Court opinions approving the use of arbitration clauses. This would open claims for elder abuse, sexual harassment, medical negligence, and wrongful death or injury to court and jury review. The rule came after several states and the District of Columbia requested CMS cut off funding to any nursing home that used arbitration clauses. The American Health Care Association claims the action exceeds the agency’s authority and was unnecessary to protect patient health and safety. In May, the Consumer Financial Protection Bureau proposed a similar ban on such clauses in consumer contracts.—From CLM Member James C. Wright 



Bevrlee J. Lips was managing editor of Claims Management magazine (now CLM Magazine) from January 2012 until March 2017.

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