It Had to Stop Somewhere

The relentless parade of defendants seeking to take advantage of the Massachusetts Recreational Use Statute, G.L. c.21 s.17C  (RUS), hit another road block last week, as the Supreme Judicial Court held in Wilkins v. Haverhill that the negligence claim of a parent who was injured at a public school while attending a parent-teacher conference was not barred by the immunity statute.

Mrs. Wilkins brought suit against the City of Haverhill after she  slipped on an icy walkway outside the school.   The school district moved for summary judgment, claiming immunity from liability for ordinary negligence under the RUS on the grounds that Mrs. Wilkins had entered the school building free of charge as a member of the public engaged in an educational activity.  The Superior Court agreed with the City, and the plaintiff appealed.

The SJC noted that the school was open only to parents who were there to attend scheduled conferences, and not to the general public.  In fact, the Court noted, the city admitted that the building was closed to other members of the public.  Relying on the language of the RUS, along with a dictionary definition or two, the Court held that, in order to take advantage of the protection of the RUS, a landowner must make the property available to the entire public, and not just a discrete group.  While the landowner may limit the use of the property, it may not exclude any portion of the public.

Interestingly, the Court seemed to suggest that the mother’s attendance at the conference was not truly for her own “educational” purpose, as required by the statute.  While there was some benefit to the mother, and her attendance was indirectly related to the education of her child, the SJC did not feel that this use was the type of “educational” use contemplated by the RUS.  The Court also noted that the stated purpose of the RUS–to encourage landowners to make private land available for public use–would not be furthered by a grant of immunity in this case, as there is ample public policy and statutory basis to “encourage” schools to involve parents in their children’s education.

While the language of the Wilkins decision still leave room for plenty of mischief in the application of the RUS, it does stand for the important point that, in order to entitle a landowner to immunity, the land must be open to all members of the public.  The theoretical right of the public–or even the right of a significant number of its members–to access a public building is not sufficient.  Further, the Court seems to be looking behind the precise language of the RUS to the legislative purpose–an analysis that has been missing from some other recent RUS decisions.

Read the decision in Wilkins v. Haverhill here.

Insurers Behaving Badly

A Superior Court judge last week made quite a statement about his disgust for the claims handling tactics of AIG’s subsidiaries, slamming the insurance giant with treble damages for its prolonged crusade to avoid paying damages to a lawyer who suffered severe injuries when he was struck by a Partners Health Care bus

Local lawyer Odin Anderson was crossing Staniford Street in Boston on September 2, 1998, when he was struck by a Partners shuttle bus, which was making a left turn from Cardinal O’Connor Way onto Staniford Street. Although Anderson was returning from an extended lunch, which involved alcohol consumption, the sole independent witness described him as walking “briskly” and “with no apparent difficulty.”   Anderson was severely injured, and eventually brought suit against Partners.  The case was tried in June 2003, and Anderson and his family were awarded more than $2.2 million in damages.

Immediately after the accident, the Partners’ insurer, and AIG subsidiary, began an investigation, which included interviewing Norman Rice, the shuttle bus driver.  Rice’s original statement said that he had not seen Anderson before the impact, had no idea which direction he had come or where he was going, and that the impact occurred when Anderson was three-quarters of the way across the left-hand travel lane, “about three feet” from the traffic island.  Rice further stated that, at the time of the accident, he was not looking in the direction the bus was traveling, but rather was looking to his right back up Staniford Street.  Rice’s original version of events, however, didn’t last long.

AIG’s files originally reflected that the company viewed the claim as indefensible, but the tenor of the claims, like Rice’s story, soon began to change.  The claims handlers began to discuss a possible defense based on an assumption–unsupported by any evidence–that Anderson had darted out from between parked cars, and had been struck in the middle of Staniford Street.  By the time the case was tried, Rice testified that he was looking down (not up) Staniford Street in the direction he was turning, that he had seen Anderson walking across the street shortly before the impact, and that he thought Anderson had come from between two parked cars.  A defense expert further testified that, because of the “geometry of the intersection,” it would have been impossible for the bus to turn tightly enough to strike Anderson close to the median strip–an assertion later proved by the plaintiffs to be patently false.  The jury returned a verdict assessing 53% liability against Partners and 47% against Anderson.

A prolonged appellate process followed, eventually resulting in an order affirming the judgment, which by this time had reached $3.2 million with the addition of post-judgment interest.  Anderson then brought bad faith claims against AIG pursuant to G.L. c.93A and  c.176D.  Discovery in that case revealed that AIG had been both aware of and involved in the evolution of Rice’s testimony.  Central to the case was a DVD of Rice’s deposition preparation sessions.

In an extensive opinion, Superior Court Judge Brian Davis held that AIG had engaged in unfair and deceptive acts in its handling of the Anderson claim.  Characterizing the defense as one based on “fictitious evidence and wishful thinking,” the judge noted that AIG had suppressed the original statements of Rice and another Partners shuttle driver who was following directly behind Rice’s bus, created an unsupported scenario that had Anderson “ran” or “rushed” into the street from “between parked cars,” and induced Rice to alter his testimony.  The judge further noted that AIG’s handling of the appeals was based on a decision to “grind down” the plaintiffs, rather than on any realistic likelihood that a second trial would yield a better result for the defense.

Judge Davis held that the AIG claims practices were “egregious,” and not mere oversight.  He awarded the maximum penalty of treble damages under Chapter 93A, then crediting AIG for the single damage award already paid.  Thus, the total damages to Anderson and his family will approach $10 million.

The Anderson decision, although certainly likely to be challenged on appeal, sends an important message to insurers and defense counsel about investigation and trial tactics that are probably more common than those outside the system realize.  While the facts certainly are egregious, and well-detailed in the lengthy opinion, the underlying principles  are worth noting for all defense lawyers and claims personnel.

Building Code Violations May Result in Strict Liability

The Supreme Judicial Court yesterday issued an important decision for victims who suffer personal injuries in public buildings, holding that building code violations that cause injury will automatically result in liability for the owner or controller of the property. The SJC’s decision in Sheehan v. Weaver (4/10/2014) overruled a 1999 case, McAllister v. Boston Housing Authority, 429 Mass. 300 (1999), which had limited the owner’s liability to violations relating to fire safety. The Court concluded that there was no statutory or logical basis for that restricted interpretation, which had been carried over from a previous version of the statute.

Sheehan arose out of an accident that occurred at a three-story, mixed-use building in Beverly, where the ground floor was occupied by a chiropractor’s office and the top two floors contained residential units. The plaintiff was injured when, en route to his third-floor apartment by way of an exterior staircase, he leaned against a railing which broke and sent him tumbling to the ground below. The evidence at trial established multiple building code violations involving the strength, height and condition of the railing, which the jury determined caused the plaintiff’s injuries.

In addition to ordinary negligence claims, the plaintiff also alleged that the building code violations imposed strict liability on the defendants under G.L. c.143 §51, the theory of statutory liability assuming great significance when the jury found the plaintiff 40% comparatively negligent—a reduction which presumably would not apply to the statutory claim. The defendants contended, based on McAllister, that because the violations did not involve fire safety, they were not liable under the statute.

After carefully analyzing the history of the statute and its various amendments, as well as the evolution of the decisional law, the SJC concluded that there was no basis to limit the application of c.143 §51 to fire safety violations. Thus, the Court ruled, ANY building code violation that causes injury will serve as a basis for imposition of strict liability on the owner.

Unfortunately, for the plaintiff, however, he won that battle but then lost the war. The Court went on to examine the precise language of the statute, and to hold that the statutory liability under §51 applies only to buildings in which large numbers of people could be expected to gather. This interpretation would have applied to the chiropractor’s office on the first floor of the building, but not to the landing from which the plaintiff fell, which served only the three apartments and was used only by the tenants and their guests. Even though the defendant landlord derived economic benefit from renting the residential units, that financial gain was insufficient to bring the property within the ambit of the statute, because of the mostly private use of the building.

Nevertheless, the decision has important consequences for owners and managers of commercial, educational, recreational or business properties which serve significant numbers of people. In those cases, the Court reasoned, members of the public would have little opportunity to inspect the property or become aware of code violations. Thus, it is reasonable to impose responsibility on the owner to maintain the property in compliance with the codes, and to be liable for injuries resulting from violations.

Read the SJC’s opinion in Sheehan v. Weaver here.

Recreational Use Statute Applied Even When Money’s Being Made

The Massachusetts Appeals Court yesterday issued yet another decision applying G.L. c.21 s.17C, the Recreational Use Statute (RUS), to a situation that, while technically within the law’s purview, seems to be far beyond what the legislature intended when it enacted the RUS.  Like other decisions before it, the court’s opinion in Patterson v. Christ Church is likely to encourage more landowners–even commercial enterprises–to seek the protection of the RUS.

The RUS was originally intended to encourage landowners to allow the public to use land for recreational purposes.  When a landowner allows the public on his land without charging a fee for the use, the owner is relieved of liability for injuries resulting from simple negligence.  Only if the owner is grossly negligent can the injured visit recover.  As the legislative history makes clear, the aim of this statute was to give landowners an incident, in the form of limited liability, to allow the use of land for outdoor activities such as hunting, fishing, riding, snowmobiling, and the like.  Especially with large, unoccupied tracts of land, the reasoning goes, it would be difficult and expensive for a landowner to maintain and inspect the property on a regular basis.  While fear of liability might ordinarily cause landowners to forbid the use of such land, the RUS sought to alleviate that fear as long as the landowner received no financial benefit from the use.

Yet creative defense lawyers have begun to seek expanded applications of the RUS far beyond what the legislature could ever have imagined.  Yesterday’s opinion in Patterson involved a tourist who tripped on a poorly marked and poorly illuminated step in Christ Church.  Admittedly, she had not been required to pay an admission fee to enter the church, nor had any fee been paid on her behalf.

At first blush, this might seem an appropriate application for the RUS.  After all, it could be argued that the church, a structure with historic and architectural interest, was doing a public service by allowing tourists free entry to its building.  Yet, while its motives may have been at least in part altruistic and admirable, the church also derives a significant financial benefit from its stream of visitors, operating a popular and profitable gift shop, and offering “behind-the-scenes” tours for a fee.

As I’ve noted before, recent interpretations of the RUS are leading in a concerning direction.  Other states have been quicker than Massachusetts to find that recreational use statutes do not apply where the landowner derives an economic benefit from the land or uses it for commercial purposes–even if a direct admission fee is not charge.  The defendant in the Patterson case, Christ Church, is a sympathetic and charitable defendant.  Yet the reasoning of the Appeals Court’s decision would apply equally to a commercial enterprise like McDonald’s, which could use this interpretation of the RUS to avoid liability for a child injured at one of its play areas.

It’s good policy to relieve landowners of some liability when they’re acting for the public benefit.  But once they use their land for money-making purposes, it’s equally good policy to impose liability when people are injured as a result.  Patterson undermines the longstanding theory that business owners should be responsible to make reasonable efforts for their patrons’ safety.

Read the Patterson decision here.

No Way Around Worker’s Compensation

The Supreme Judicial Court last week blocked a plaintiff’s attempt to circumvent the exclusivity provision of the Massachusetts workers’ compensation statute, General Laws c.152 s.24, holding that a corporate employer’s directors were entitled to the benefit of immunity from suit.  In Moulton v. Puopolo, the Court ordered the entry of summary judgment against the estate of a woman who was killed by a violent resident while working as a mental health counselor.

As most tort lawyers know, the workers’ compensation statute creates a trade-off for employees.  Unless the right to bring a tort suit is preserved at the time of hiring, the employee gives up the right to sue the employer if injured on the job, in exchange for the right to receive worker’s compensation payments without proving that the employer was at fault in causing the injury.  With the exception of a brief time when there was a loophole for consortium claims by family members, see, e.g., Ferriter. Daniel O’Connell’s Sons, Inc., 381 Mass. 507 (1980), this provision has consistently been applied to claims–including those for wrongful death–dependent on the employee’s injury.

The plaintiff in Moulton tried a novel way to avoid the workers’ compensation bar by suing the directors of the non-profit corporation that operated the residential treatment facility, claiming that they were negligent in failing to adopt policies that would have prevented the placement of the attacker at the facility, and thereby prevented the decedent’s death.  In an opinion, review of several basic principles of corporation law, the SJC held that the corporation can act only through its directors, and that, because they were acting as Moulton’s employer, they shared the corporate employer’s immunity under the statute.

The decision makes sense, both on legal and policy grounds.  In order to be responsible for Moulton’s working conditions and the residents she supervised, the directors would have to control her activities–the hallmark of an employer=employee relationship.  This allegation of control, while necessary to support the plaintiff’s theory of liability, was at the same time fatal to her claims.  And, as the Court noted, the exclusivity provision of G.L. c.152 has always been broadly interpreted, and this interpretation of director immunity is consistent with the purpose of the statute.  The fact that the corporation was a non-profit organization only served to make the public policy of protecting those in an employment relationship more compelling–although the Court noted that the same reasoning would likely apply to for-profit enterprises.

The plaintiff’s attorney in Moulton gets credit for creativity and a game effort.  Unfortunately, as with most recent efforts to attack the exclusivity provision, it was doomed to fail.

Read the SJC’s opinion in Moulton v. Puopolo here.

Medical Liens from Government Payors

I’ve recently been describing the process of resolving medical liens when a personal injury case is settled.  There are some special considerations involved when the lien involves payments made by a federal (Medicare) or state (Medicaid, Mass Health Connector, Kayleigh Mulligan, etc.) program.

Liens asserted by government payors are automatically valid, even without notice to the patient or the attorney.  Because the right to subrogation is “based in … federal law,” see M.G.L. c.231, s.60G, the lien applies even in medical malpractice cases. (The state programs receiving federal funding, a condition of which is that the state seek reimbursement from responsible third parties, thus bringing them within the ambit of the “based in federal law” exception).

Medicare liens require a lot of patience and a long lead time.  Lawyers may submit an authorization to Medicare to receive access to a client’s Medicare account.  This will enable to lawyer to receive information about payments made on behalf of a client. The claim is first opened with a phone call to Medicare to provide identifying information.  Medicare then sends a form to be submitted together an authorization signed by the client, and will provide in itemization of amounts claimed in response to that submission. Updated lien amounts can take a month or more, and thus need to be requested well in advance of a mediation or trial.  The good news is that Medicare deducts its pro rata share of recovery costs (attorney’s fees and case expenses) as a matter of course, and will often make additional compromises.  The bad news is that it can take months to get final payment amounts.

Massachusetts state programs suffer from the opposite set of problems.  The Commonwealth’s Casualty Recovery Unit is readily accessible by phone, and usually quite responsive.  Again, the process begins with the submission of the Unit’s form and a signed client authorization, and ends a few weeks later withth receipt of an itemization of payments made for the beneficiary.  Unfortunately, Massachusetts does not automatically pay its share of costs and attorney’s fees, although the department will often consider a reduction, particularly where the settlement amount is limited by insurance coverage or liability concerns.  Once again, case law gives plaintiffs virtually no leverage in negotiating a compromise, see Whelan v. Division of  Medical Assistance, 44 Mass.App.Ct. 663 (1998) and Pierce v. Christmas Tree Shops, 429 Mass. 91 (1999).  The Unit will give updates by fax or email, often within hours.

Liability insurers are much more concerned about liens asserted by government payors than by private health insurers, because the applicable statutes can impose liability for repayment on insurers and attorneys if the lien is not satisfied at the time of settlement.  Thus, the plaintiff’s lawyer needs to prepare to address these concerns in advance of any settlement, in order to avoid delay in receipt of the client’s funds.


Dealing With Medical Liens

Many clients are surprised to learn that when they receive a personal injury settlement or verdict, they may be required to repay their health insurer for any medical expenses that were caused by the negligence of the defendant. This may seem unfair, because after all, the client has been paying health insurance premiums, sometimes for many years, in order to have that medical coverage available when needed.  This week begins a series of posts explaining the various types of medical liens and how they may affect the settlement of a case.

Unfortunately, there is usually little that can be done to avoid completely the reimbursement obligation—either at the time of settlement or in advance.  The health insurer’s right to be repaid is almost always a matter of contract, an infrequently noticed paragraph in the long document that explains the health insurance coverage and rules.  Usually titled “Third Party Recovery,” “Subrogation,” or something similar, the clause says that when an insured patient receives compensation from a third party for injuries that have required medical treatment, the health insurer must be reimbursed for any treatment costs it has paid.

Most people don’t notice this provision when they get their health insurance policy, so it comes as quite a shock when the proceeds of a lawsuit are being distributed.  The legal reasoning behind these provisions is that the cost of an injury should be borne in full by the person or entity that caused it, and not by the injured person or his health care insurer.  Thus, in theory, the victim recovers his medical costs from the defendant, and in turn, reimburses the health insurer.  Even where the victim has no health insurance, a medical provider may assert a lien against the tort recovery, by following the procedures in G.L. c.111 s.70A.

And it gets worse.  In most cases, the health insurer is not required to pay any of the attorney’s fees or costs incurred by the client in obtaining the recovery.  Essentially, the insurer gets a free ride, recovering 100% of its expenditures, while the client pays the cost of recovery.  And the Supreme Judicial Court, in Pierce v. Christmas Tree Shops, 429 Mass. 91 (1999), has said this is legal.

But things aren’t always that bleak.  Some insurers do negotiate with plaintiff’s counsel to accept less than the entire amount owed.  The insurer may agree to reduce the lien to take into account the client’s costs, because the defendant has limited funds or insurance coverage to compensate the client, or because liability questions may make it advisable to settle a claim for less than full value.  Figuring that something is better than nothing, many insurers will reduce their lien to make it more attractive for the client to settle a case, rather than risk a loss at trial where both the client and the insurer may get nothing.  And sometimes plaintiff’s counsel may be able to convince the insurer that not all of the claimed payments were related to the negligence.  This argument may be particularly successful where causation of injuries is a disputed issue in the lawsuit.  And if the lien is claimed by a medical provider, rather than an insurer, it must be properly perfected by giving notice as required by G.L. c.111 s.70B.

If a settlement is contemplated, it’s important for the client and the lawyer to discuss what liens might be asserted against the recovery and how they should be handled.  If the repayment obligation is ignored, either the client, the lawyer, or even both, may be liable to the insurer down the road—long after the funds are gone.

Special rules apply to medical payments made by government programs such as Medicare and Medicaid, or for injuries suffered as a result of medical malpractice.  Some of these rules will be explained in the next post.

Appellants, Beware

“The company plans to appeal the verdict.”

Many news stories about jury verdicts end with this statement.  For many clients and lawyers, it’s a face-saving way to end an interview, promising to carry on with the fight, rather than conceding defeat.  Yet, the successful pursuit of an appeal is far more complicated than the statement implies.  Burdened with many procedural requirements, and with a low chance of success, an appellant [the losing party in the trial court] has an uphill battle ahead.  In the vast majority of cases, the appellate courts are empowered only to review legal rulings, and not to change a jury’s decision on the facts.  And a clear legal error usually results in reversal only if it is likely to have changed the outcome of the case.  All told, nearly 80% of appellate decisions affirm–agree with–what happened in the trial court.

But the road to an appellate decision is fraught with peril for the appellant, as demonstrated by a recent decision from the Massachusetts Appeals Court.  The process starts with the filing of a notice of appeal–usually within 30 days of the end of the case–which is required to identify specifically all of the parties involved and the judgment or order appealed from.  But then the real work starts.

The detailed Massachusetts Rules of Appellate Procedure lay out a series of steps the parties must follow in order to insure that the appellate court has everything it needs to decide the case.  These include ordering (and paying for) the transcript, identifying the issues to be raised on appeal, and listing the documents to be included in the appendix.  All of these steps have time limits, and failure to follow the prescribed procedures can result in dismissal of the appeal.  And when it comes time to prepare the brief and appendix, there are many more technical requirements that must be followed.

And that’s exactly what happened to the appellant in Dry Dredge Systems, Inc. v. Jay Cashman, Inc., a 1:28 decision issued by the Appeals Court on January 3, 2014.  The appellant, having properly filed its Notice of Appeal, then apparently neglected to order the transcript or otherwise obtain an approved statement of the evidence for many months.  When no good explanation for the delay surfaced, the court dismissed the appeal.

What became of the Dry Dredge case is what often happens when a losing party, still stinging from a recent defeat, threatens an appeal.  Over the ensuing weeks, months, or years, the reality of the situation, and the expense and unlikely success of an appeal all begin to sink in, and the putative appellant loses the stomach for further battle.  And many of these threatened appeals simply die on the vine, long before they are included in the court statistics that show only a 20% success rate!

The moral of Dry Dredge and similar cases is that a party who truly intends to pursue an appeal to its completion needs to comply fully with the applicable rules.  The basic requirements are available here, but do change, and so counsel should check to make sure that no amendments have occurred.

Second Chances

Good lawyers turn down good cases every day.

When a lawyer decides not to take a case, it doesn’t mean that the case doesn’t have merit.  When a lawyer obtains a successful result on a case that another firm had declined, it doesn’t mean that the first firm was wrong.  The decision about whether or not to represent a client is highly personal for most contingent fee lawyers, just as many clients may prefer one lawyer over another based on a feeling of comfort or confidence that’s difficult to articulate.

It’s well known that if you ask several different people who all witnessed an event to describe what they saw, they’ll all remember the event slightly differently.  Some will remember details that others missed.  Others will have different reactions to certain conduct, often based on their own life experiences.  And, in essence, lawyers evaluating cases are like observers to an event.  They will give varying weight to different factors, and the end result may be that one lawyer is very excited about pursuing a case that another lawyer turned down.

When we look at a case, we look at basic legal and economic elements: Was someone negligent? Did negligence cause an injury? Is there a reasonable likelihood that the claim will be successful, and that the recovery will be sufficient to cover the cost of bringing the case?  As sympathetic as we may feel for a potential client’s situation, if we don’t feel we can achieve a significant benefit for the client, it doesn’t make sense to take the case.

But a firm’s experience with a particular type of case may allow it to understand potential areas of liability that may not be obvious to other firms.  Particularly in medical malpractice cases, important information may be found in sources that aren’t part of the paper medical records: radiology studies, pathology specimens, videotapes of procedures, and computer documentation.  Many lawyers are unaware that these sources of patient data exist, let alone how to go about finding and interpreting them.  And this lack of knowledge may cause the firm to decline a case that has substantial merit.

The same principles apply to many other types of personal injury cases, where such electronic evidence as security videos, cell phone records, and data recorders may make it possible to prove a case that seems impossible on its face.  And sometimes, it’s just a matter of visiting a scene to understand how an event happened, or talking to multiple witnesses in search of one who may have seen a crucial detail.  Some firms are less apt to take cases that require this type of intensive investigation.

We frequently take cases that other firms have turned down.  And I’m sure that other firms have taken cases we declined.  Getting a second legal opinion, like  second medical opinion, is often well worth the time and effort.

Will the IRS Take My Money?

One of the common concerns our clients have is that they will end up losing a large part of their personal injury settlement to income taxes.  One of the happiest moments is when they first learn that that’s not true.  Most personal injury recoveries are not subject to income taxes.  The Internal Revenue Service considers that money received because of a personal injury is replacement for something that has been lost, and so does not count as income.  If you find that hard to believe, you can read about it here.  Many states, including Massachusetts, follow the same rule.

Compensation for a physical injury, whether it results from a settlement or a jury award, and whether it is paid as a lump sum or as a structured payout, is simply not considered income.  This can make structured settlements advantageous in some cases.   The easiest way to remember this principle is that the money is not taxed when it first comes into the victim’s hands, whether as a lump sum or an annuity payment.  Once the money is received, future investment income from that money is treated the same way as any other investment.

However, there are some exceptions for other types of tort settlements.  If the injury is strictly emotional and not physical, the monies are generally taxable income.  Likewise, the proceeds of an employment discrimination case, where compensation is received for lost wages, is considered income.  If an award includes interest, the amount of interest must be reported as income, because the money it replaces (the amount that might have been earned on the compensatory damages) would have been taxable.  And punitive damages are also taxable, because they are intended to punish a wrongdoer, rather than as direct compensation for a loss to the victim.

The taxation of recoveries for wrongful death cases is more complicated, and depends upon state law and the allocation of the settlement proceeds among different claims.  Some states provide that some or all of the recovery goes directly to beneficiaries or family members, without ever passing through the decedent’s estate, and thus these amounts are not subject to income or estate taxation.  Other portions of the recovery, usually for conscious pain and suffering or for the decedent’s own losses (where permitted by law) become assets of the estate, and may be taxed where the size of the estate is such that it is subject to tax.

Lawyers and clients should take these general rules into account when negotiating settlements.  However, it’s also important that clients consult with their own accountant or tax professionals, to make sure that there is nothing about their individual situations or cases that would create an exception to these general principles.  It’s also important to remember that different rules may apply to family law issues such as alimony or child support issues–so just because the IRS doesn’t consider a settlement taxable income doesn’t meant that its receipt can be completely ignored.