litigation

Connecticut was hit less hard by Superstorm Sandy than New York and New Jersey, but there are still Connecticut-based legal issues arising out of the most destructive hurricane of the 2012 season, I reported for the Connecticut Law Tribune: 

In the 18 months since Superstorm Sandy swept in from the Atlantic, Connecticut lawyers have been untangling knotty legal issues that have arisen concerning insurance coverage for home and business owners who suffered property damage.

Lawyers are litigating some cases in Connecticut. But because New Jersey and New York were hit harder by the storm, some Connecticut-based firms are litigating cases in those jurisdictions as well.

More than 1,000 Sandy-related cases are pending in the U.S. District Court of the Eastern District of New York, and 949 cases are pending in the District of New Jersey, according to reports made by two U.S. magistrate judges at a conference held earlier this month focusing on Superstorm Sandy insurance litigation.

As of May 2013, 47,002 residential-property claims were reported in Connecticut as a result of the storm. There were also 4,460 commercial-property claims, 2,772 flood claims and 1,212 business-interruption claims, according to the Connecticut departments of banking and insurance.

Stephen Goldman and Gregory Varga, both partners with Robinson & Cole in Hartford who are defending insurers in Sandy cases, said that the litigation will be influenced by decisions related to other major disasters in courts in other parts of the country. A lot of case law concerning insurance coverage for property damage and interruption to business operations comes out of catastrophes "because the losses are so numerous and losses are often so large," Goldman said.

Judges and insurance litigators look to past experience with other catastrophes around the country when dealing with the large number of cases that arise out of a natural disaster, Goldman said.

"What we're always looking at [is] … 'What was the most recent experience that was analogous to our situation?'" Varga said.

Hurricane Katrina-related decisions from the Mississippi Supreme Court, Louisiana Supreme Court and U.S. Court of Appeals for the Fifth Circuit could be influential in Sandy cases, Varga said.

Like Hurricane Katrina, Superstorm Sandy raises questions of how courts will interpret policy clauses that address situations when there are multiple weather-related reasons for property damage. Often, these policies block claims when one type of weather is covered by the insurance but another type isn't, Varga said.

Most insurance companies will not cover flood damages, and so-called anticoncurrent cause provisions prevent insurance payouts if both wind and flood could have caused damage, he said.

Leonard Isaac, an insurance litigator with offices in Waterbury and West Hartford, represents policyholders and said Connecticut had more wind damage than flood damage from Sandy, so there are fewer situations in which claims might be rejected. In contrast, there was more rain-driven damage from 2011's Hurricane Irene, which has led to more coverage disputes, he said.

Theresa Guertin, an associate with Saxe Doernberger & Vita, said the Hamden firm is handling as many as 20 Superstorm Sandy cases with policyholders suing insurance companies, including cases pending in the Eastern District of New York. Their claims range from a case Guertin is handling involving damages to a new condominium complex that was being developed on Long Island to businesses whose operations were interrupted because electric power was off for several days.

In past disasters, insurance companies did not do a good job of getting agents out to inspect sites in a timely manner, Guertin said. In Sandy's aftermath, insurance companies generally responded quickly, she said.

Goldman agreed that insurance companies are far better at addressing claims quickly than they were when Hurricane Andrew hit Connecticut 20 years ago. "They've been to this rodeo before," he said.

But there are exceptions. "Superstorm Sandy cases that are going to go to litigation here in Connecticut are going to involve bad-faith claims," Guertin said. She explained those are often cases where there has been a lot of back-and-forth communication between insurers and policyholders with no results. "That leaves policyholders feeling like they've been mistreated, or, in fact, [and] that legally amounts to bad faith," Guertin said.

Also, insurance companies are in a catastrophe mode because of the number of Sandy claims, Isaac said. "As a result, companies sometimes just don't have the ability to take the same positions [in terms of providing coverage] as they might take on an individual claim," Isaac said.

Business-interruption claims are presenting another legal complication, as policyholders must show that their lost profits or additional expenses are directly related to a covered event. Robert Glasser, director of East Coast claims preparation and valuations for Aon Risk Solutions, a risk management and insurance brokerage firm, said it's difficult to define what actual loss of business income is. "If we knew what 'actual' was, you wouldn't need forensic accountants," he said at the conference.

Another emerging issue is "civil authority" coverage, which provides insurance coverage for loss of income if a business had to shut down because of an order made by governmental authorities. Sometimes, government officials don't explicitly prohibit the public from leaving their homes, but they do advise the public that it's best to stay home. In the latter situation, there is litigation over whether businesses affected by the lack of customers can file claims, Guertin said.

Another issue is the liability of insurance brokers, Varga said. Policyholders often argue they thought they had flood coverage, and then when they find out they didn't, "it's my broker's or my agent's fault," he said. That cause of action didn't used to be viable in New York but has become more attractive, Varga said.

Sandy also may lead to changes in how insurance policies are written in the future. Policies are often changed when courts construe policy language in a way no one ever intended, attorneys said.

"You can't make insurance policies clear" because no one would buy them if the exclusions were written in plain language, Jay Levin, a partner at Reed Smith in Philadelphia who represents policyholders, said at the conference. When language is vague, he said, that leads to litigation.

"Insurance is a method of risk transfer of some risk that can be economically modeled and transferred—but not all risk," Levin said. "Insurance is not government handouts."

An excerpt of my piece for the Connecticut Law Tribune about the legal impacts of Superstorm Sandy:

 Superstorm Sandy struck a less-devastating blow to Connecticut than it did to New Jersey and New York. Still, the Oct. 29, 2012, hurricane cut a wide swath in terms of affecting the state's legal community.

There are expectations of litigation over insurance coverage. Attorneys working for governmental agencies have helped to put into place better disaster planning. And there have been pro bono efforts to assist storm victims.

As of May 2013, 47,002 residential-property claims were reported in Connecticut as a result of the storm. There were also 4,460 commercial-property claims, 2,772 flood claims, and 1,212 business interruption claims, according to the Connecticut Department of Banking & Insurance.

Disaster Litigation

While it's been nearly 14 months since the storm hit, Sandy-inspired litigation will take a while to fully develop, said Ryan Suerth, of Ryan Suerth LLC in Hartford, who represents policyholders. He explained that it often takes more than a year for policyholders to learn that their insurance claims have been denied or that they will get less money than they had hoped.

"Any major weather is going to lead to litigation, just for the reason there is a lot of damage and not all of it gets covered by insurance," Suerth said.

Michael McCormack, a Hinckley Allen attorney who chairs the Connecticut Bar Association's Insurance Law Section, said he has seen few Sandy-related claims being filed in court so far. One reason, he said, is "the insurance companies responded quickly. They worked with policyholders as best as they could." Secondly, he said, many consumers lack flood insurance, meaning that instead of making a claim on their homeowner's policy they must apply to Federal Emergency Management Agency's National Flood Insurance Program.

But Regen O'Malley, an insurance defense lawyer with O'Connell, Attmore & Morris in Hartford, predicted that Sandy will ultimately result in more legal activity than did 2011's Tropical Storm Irene. One insurance issue that often prompts legal disputes is the question of whether property damage was caused by rain or flooding.

"It really depends upon what the policy says [is covered] for those types of claims," O'Malley said. "And with [Hurricane] Katrina and now Sandy, there might be multiple causes. There might be wind, flood, storm surge and something else."

For some policies, coverage is denied if multiple factors caused damage and some of those factors are not listed in the policy.

 Gregory Podolak, of Saxe Doernberger & Vita in Hamden, explained that some homeowner polices cover only "named perils." The most common of these include lightning, fire, rain, windstorms and theft. But exactly how these terms are defined in a specific policy can have a dramatic impact on a consumer's "coverage position," Podolak said. Many policies have specific deductibles and coverage limits related to specific named perils, he added. And Legal issues arise when there are multiple perils that could have caused property damage, he agreed.

Another insurance issue arising from Sandy is business interruptions caused by the loss of electric power. Some parts of the state lost power for a week or more, and businesses filed claims seeking lost revenues for days they could not operate.

"What Sandy and Irene have done is highlight some of the issues that don't come to the forefront as often," Podolak said.

Cases that do go into litigation may involve claims of bad faith by insurers and violations of the Connecticut Unfair Trade Practices Act and the Connecticut Unfair Insurance Practices Act. There also may be litigation against insurance brokers and agents for allegedly not recommending sufficient coverage, attorneys said.

The Pennsylvania Superior Court has upheld a jury's decision to award punitive damages over the death of a nursing-home and hospital patient whose bed sores led to an infection that went septic in his body, the failure of one of his kidneys and his eventual death.

According to the opinion, the jury found nursing home Hillcrest Center and Jeanes Hospital each 50 percent liable for the April 18, 2008, death of Joe Blango. The jury awarded $1 million in compensatory damages against both defendants, $1.5 million in punitive damages against Jeanes Hospital and $3.5 million in punitive damages against Hillcrest Center. Philadelphia Court of Common Pleas Judge George W. Overton reduced Jeanes' punitive damages award to $500,000 and Hillcrest's punitive damages award to $1 million.

The court split on upholding the trial judge's decision to diminish the punitive damages. The majority instructed the trial judge to increase punitive damages by another $500,000 against the hospital. But one dissenting judge on the three-judge panel would have restored the jury's award entirely.

One of the plaintiff's experts testified the development of a bedsore at the top Blango's buttocks was the source of the infection that went septic throughout his body, Judge Kate Ford Elliott said in her unpublished opinion today.

The wound tested positive for both e-coli and MRSA bacteria, according to the opinion. Blango's kidney was infected as a result, and his kidney had to be removed, Ford Elliott said.

There was testimony Blango was not frequently repositioned and did not have his diapers changed habitually during 18 days of treatment by the two healthcare facilities, Ford Elliott said. There also was testimony that Blango was not eating his food, but was not fed by staff nor offered liquid food.

According to the majority opinion, Blango was first admitted to the hospital for a five-day stay after being found, after a stroke, in a state of not moving or speaking. Then he was transferred to the nursing facility for 10 days, and then he was transferred back to the hospital for another three days. After those 18 days, Blango was transferred to another Philadelphia-area hospital where his family first learned of the bedsore in the area at the top of his buttocks. The bedsore never healed.

There was sufficient evidence for the jury to find that the hospital acted with reckless indifference, Ford Elliott said on behalf of all of the panel, including not communicating the condition of Blango's skin when he was transferred the first time from the hospital to the nursing home.

In another example of reckless indifference, during Blango's readmission to the hospital “there was evidence that the hospital failed to turn and reposition Mr. Blango every two hours as required,” Ford Elliott said. A Jeanes Hospital nurse “testified that the hospital was chronically understaffed. Mrs. Blango testified that nursing staff at the hospital repeatedly ignored her requests to change her husband's diaper, and he was always left on his back. There was no attempt to help Mr. Blango use the bathroom or a bedpan instead of adult diapers.”

Hillcrest settled the case during appellate mediation, Ford Elliott said in a footnote. The court did not undertaken any analysis of Hillcrest's liability.

Plaintiff's trial counsel Churchill H. Huston, of the Maher Law Firm in Philadelphia, said in an interview that the case is a hybrid one because it involved a verdict against a hospital and a nursing home. “It speaks to [that] this kind of neglect--whether it's a nursing home or a hospital--the way you prevent a bedsore doesn't change,” Huston said.

The fact that an injury occurs in a medical setting does not mean that all liability stems from medical decision-making and thus requires expert testimony about the standard of care, Huston said.

Bed sores are an issue of simple neglect, Huston said, while the failure to order the right course of treatment would require expert testimony.

“If it's an issue of professional negligence, then you would need expert testimony to support your claim,” Huston said. “If it's an issue of simple negligence, then the testimony of a lay witness is sufficient to support that claim.”

Huston said his firm may seek to have the opinion published as citable case law.

A two-judge majority, including Ford Elliott and Senior Judge James F. Fitzgerald III, decided that the trial judge did not abuse his discretion in remitting the punitive damages, including because of the testimony of Jeanes Hospital's chief financial officer that the facility is not-for-profit and losing money.

While the trial judge said he reduced the ratio of damages to be 2:1 for Jeanes Hospital, the judge's remittitur actually resulted in a 1:1 ratio, Ford Elliott said, but “it seems clear that the trial court intended to reduce punitive damages to a 2:1 ratio, i.e., from $1.5 million to $1 million. Furthermore, as the trial court stated in its opinion, a 2:1 ratio is a reasonable relationship between punitive and compensatory damages in this case and satisfied due process,” Ford Elliott said.

The majority ordered a punitive damages award of $1 million, instead of $500,000, be entered on remand against Jeanes Hospital.

In dissent, Judge Sallie Updyke Mundy said that she disagreed with the trial court's reduction of the punitive damages award because she discerned “no abuse of discretion or constitutional infirmity in the initial $1.5 million punitive damage award,” she said.

A private lien from Blango's union health insurance was asserted and then resolved out of the settlement with the nursing home, Huston said.

The settlement amount with nursing home is confidential, Huston said.

Stephen Trzcinski, of Wilkes McHugh, was appellate counsel on the briefs, Huston said.

Appellate defense counsel for Jeanes Hospital included Post & Schell and Obermayer Rebmann Maxwell & Hippel, according to the Superior Court docket.

A spokeswoman for Jeanes Hospital did not respond to a request for comment.

The Legal Intelligencer

Amaris Elliott-Engel

(first of two-part series on The Future of Long-Term Care Litigation)

When Rhonda Hill Wilson started representing clients in the field of long-term care litigation, there was not a lot of interest in representing elder Pennsylvanians for the torts they might have been wronged by.

Damages were only thought of in an "economic sense," said Wilson, of the Law Offices of Rhonda Hill Wilson in Philadelphia, and the trial-lawyer bar was more interested in representing clients who were breadwinners.

But in recent years, the understanding has developed that "even a person who is elderly or aged has value in his or her life," Wilson said.

Plaintiffs and defense lawyers told The Legal that litigation against nursing homes and other facilities that provide care to older Pennsylvanians has ticked upward in the last decade, along with increased advertising by plaintiffs firms.

In 2010, 15.4 percent of Pennsylvanians were aged 65 or older, while 13 percent of all Americans were aged 65 or older, according to the last U.S. Census.

'FAVORABLE CLIMATE'

Lawyers prosecuting health professional liability actions traditionally sued doctors and hospitals, but those sort of lawsuits died down with tort reform, said William J. Mundy, a Harrisburg attorney who is co-chair of Burns White's health care and professional liability group and has a longtime practice focusing on long-term health care litigation.

To read the rest of the report I wrote for The Legal Intelligencer: http://www.law.com/jsp/pa/PubArticlePA.jsp?id=1202618550735