Abell's Kentucky Law Blog

How Long Is Too Long? Settling Injury Claims With Insurance Companies and the Kentucky Unfair Claims Settlement Practices Act

Is three years too long to settle in injury claim for policy limits of $50,000? The Sixth Circuit recently ruled in Phelps v. State Farm, No 10 – 6085 (May 25, 2012), that a three-year delay in settling an injury claim along with other factors raised a fact issue regarding whether State Farm had acted in bad faith and in violation of the Kentucky Unfair Claim Settlement Practices Act in settling the claim.

 The timeline in the case is as follows:

•  July 18, 2003 – claimant Cynthia Phelps is injured in an auto accident
• October 2003 – Phelps undergoes spinal surgery as a result of the injuries sustained in the auto accident
  
  
• October 2, 2003 – the claims file is reassigned by State Farm to a second adjuster; Phelps sends State Farm paid medical records authorization form and it begins collecting her medical records
  
  
•  February 11, 2004 - After months of minimal activity on the file, State Farm notes for the first time that Phelps had a prior back injury in 1999. State Farm decides to gather additional evidence regarding Phelps' 1999 back injury, although it says nothing to her about it
  
  
• April 2, 2004 – Phelps's lawyer, Thomas Carroll, sends State Farm a settlement package documenting her surgery as well as related medical and wage loss costs totaling $22,620.22. Phelps does not make a specific settlement demand, but says she wants to settle and requests information about State Farm's policy limits
  
  
• July 2004 – State Farm substitutes yet another adjuster to handle Phelps's claim
  
  
• September 14, 2004 – State Farm for the first time requests information from Phelps's lawyer about her 1999 back injury
  
  
• October 24, 2004, by the state State Farm and received the relevant medical records to Phelps's 1999 injury. Although State Farm would later claim that it was still missing some pertinent information, it, nonetheless, completed a claim evaluation, the low end being $24,620 and the high-end, $49,620
  
  
• October 28, 2004 – State Farm makes a settlement offer of $25,000, approximately $2300 more than Phelps is documented medical and wage losses as of April 2004
  
  
• March 29, 2005 – Phelps rejects State Farm's $25,000 offer and demands $150,000. State Farm still had not by this date disclose any information about its policy limits
  
  
• May 2005 – Phelps files suit
  
  
• October 25, 2005 – Phelps provides to State Farm would later claims to be new information regarding her medical records and wage loss
  
  
• November 3, 2005 – State Farm again changes the claims adjuster on Phelps's claim
  
  
• March 22, 2006 – Phelps' deposition is taken; "State Farm's attorney determined that Phelps was a credible witness and recommended that State Farm increase if settlement offer."
  
  
• April 11, 2006 – Phelps for the first time demands the policy limits of $50,000
  
  
• April 12, 2006 – State Farm counters with an offer of $40,000
  
  
• April 13, 2006 – State Farm finally offers the policy limits, $50,000, and Phelps settles her injury suit against the other driver.

 

Phelps' injury claim appears very routine.  The negligence of the other driver was not disputed by State Farm, so its liability for Phelps' injury was clear. She obviously suffered significant injuries as she documented over $22,000 of losses based just on medical bills and lost wages within nine months of the auto accident.  The significance that the Sixth Circuit attributed to this timeline will be examined in a further post.

 Robert L. Abell
www.RobertAbellLaw.com 

 

 

Use Goes Down, Prices Go Up: The Spiraling Upward Cost of Healthcare

Although Americans reduced their use of healthcare resources in 2010, hospitals, doctors and drug companies, nonetheless, raised their prices at a rate faster than inflation. Bloomberg News reports:

Doctors, hospitals and drugmakers raised prices faster than inflation in 2010, driving U.S. health costs higher as fewer Americans sought care after the recession.

The Health Care Cost Institute released a report on healthcare costs in 2010.

Robert L. Abell
www.RobertAbellLaw.com

Does the Supreme Court Even Understand the Healthcare Reform Law?

Does the Supreme Court even understand the healthcare reform law? Has the nine-member Court and the lawyers that argued before it failed to grasp a basic point about the law's mandate for individuals to obtain health insurance?  Ricardo Alonso-Zaldivar in an article, Individuals Can Comply With Obama Insurance by Buying Skimpy Insurance; Did Justices Understand?, in the Minneapolis Star-Tribune offers this observation:

A possible misunderstanding about President Barack Obama's health care overhaul could cloud Supreme Court deliberations on its fate, leaving the impression that the law's insurance requirement is more onerous than it actually is.

During the recent oral arguments some of the justices and the lawyers appearing before them seemed to be under the impression that the law does not allow most consumers to buy low-cost, stripped-down insurance to satisfy its controversial coverage requirement.

In fact, the law provides for a cheaper "bronze" plan that is broadly similar to today's so-called catastrophic coverage policies for individuals, several insurance experts said.

Robert L. Abell
www.RobertAbellLaw.com 

 

Did the Fifth Circuit Have a "Hissy Fit"?

Tonight's homework is a three-page assignment explaining the historical significance of judicial review.  The student: the Department of Justice.  The teacher: Judge Jerry Smith of the U.S. Court of Appeals for the Fifth Circuit.  Jeffrey Toobin describes this judicial "hissy fit" on CNN: Court's Obama Order a "Hissy Fit."

Robert L. Abell
www.RobertAbellLaw.com 

Lost Future Earning Capacity; What Is It and How Is It Proved?

Loss of future earnings is a customary injury in personal injury cases. The loss of future earning capacity is similar and related, but there is a difference between the two. The Sixth Circuit recently in Andler v. Clear Channel Broadcasting, Inc., Nos. 10-3264/3266 (February 29, 2012), explain the difference in the mechanics of proving lost future earning capacity.

Brandy Andler, while walking about a campground owned by Clear Channel, stepped into a grass-covered whole 6-8 inches deep and broke several bones in both of her feet. As a result of the fall, she developed arthritis in her feet. Before the injury Andler work part-time as a childcare worker earning $9 – 10,000 per year. her injuries forced her to change jobs; in the two years following the injury she worked full-time as a manicurist and pedicures and increased her annual earnings, making $10,000 in the first year and $25,000 in the second year.

Antler intended to present expert testimony from an accountant, Daniel Selby, who used Bureau Of Labor Statistics figures, to reach the following conclusions: (1) but for her injury antler could have earned approximately $17,600 a year as a full-time childcare worker; (2) her post injury annual earning capacity as a full-time manicurist and pedicures was approximately the same; but, (3) when factoring in the effects of her work disability, such as increased likelihood of missed work or longer-term exit from the workforce, antlers damages for lost earning capacity totaled S232,346. The trial judge, Magistrate Judge Norah McCann King, excluded Selby's testimony, a ruling that caused the Sixth Circuit to order a new trial on Andler's damages. 

The Sixth Circuit, in an opinion written by Judge Karen Nelson Moore, took pains to explain the proven elements of lost future earning capacity as follows:

• Damages for lost future earning capacity "are awarded for loss of earning power, not simply loss of earnings. The proper focus is thus what the injured plaintiff could have earned over the course of her working life without the injury versus what she will now earn, not what she earned her will earn in any given year."
  
  
• A plaintiff who, at the time of trial, is receiving higher wages than those which he or she was earning at the time of the injury, may nevertheless recover for impairment of earning capacity.  2 Stein on Personal Injury Damages 6.9
  
  
• Proof that earnings increased or remained the same between the time of injury and the time of trial does not necessarily bar a recovery for impairment of future earning capacity. 
  
  
• A plaintiff who is unemployed or otherwise earning below her potential at the time of the injury, for example, can recover damages for lost earning capacity, as can an injured child, student, or homemaker. 
  
  
• Expert testimony regarding what an injured plaintiff could have earned should take into account factors such as the plaintiffs age, employment record, training, education, ability to work, and opportunities for advancement. an expert may reasonably depart from historical earning patterns in light of changed circumstances that occurred prior to the injury but were not yet reflected in the plaintiff's actual salary.

Robert L. Abell
www.RobertAbellLaw.com 

Did Dickens Hate Lawyers?

February 7 is the bicentennial of Charles Dickens's birth in England. In his many books and stories, Dickens was unsparing toward lawyers. Here's an interesting take in the New York Times: Dickens v. Lawyers.

Robert L. Abell
www.RobertAbellLaw.com 

Should A Judge Recuse When He Owes Money to One of the Law Firms In A Case?

It would seem obvious that a judge who owes money to one of the law firms representing a party in a lawsuit before that judge should recuse or get off the case. But Justice Michael Gableman of the Wisconsin Supreme Court sees it otherwise as discussed in this New York Times editorial: A Wisconsin Judge's Refusal to Recuse.

Robert L. Abell
www.RobertAbellLaw.com

Sixth Circuit Hears Appeal of Phen-Fen Lawyers, Gallion and Cunningham

The federal Sixth Circuit Court of Appeals today heard argument in the appeals of phen-fen lawyers William Gallion and Shirley Cunningham reports the Lexington Herald-Leader, "Federal Appeals Court Hears Kentucky Diet Drug Pair."

Is An Issue "Almost Too Close to Call" Ripe for Summary Judgment? "No" Rules the Kentucky Court of Appeals

In granting summary judgment and dismissing a case against the University of Kentucky and a number of its agents and employees Fayette Circuit Court Judge Pamela Goodwine observed that an issue was "almost too close to call."  The issue was "too close to call and therefore should not have been dismissed via summary judgment" ruled the Kentucky Court of Appeals in Carter v. University of Kentucky, No. 2010-CA-1621 (November 18, 2011). The Court of Appeals remanded for trial claims of breach of contract and discrimination.

Robert L. Abell
www.RobertAbellLaw.com 

No Link Between Tort Reform and Job Growth

Although shills for tort reform never tire -- after all they are paid and paid well by corporate and insurance interests intent on evading responsibility, accountability and liability for their own conduct -- of repeating the falsehood that tort reform leads to job growth, saying something that is not true does not make it true, something we learned as children but which is absent from public discourse.

The PopTort again explains: "We're Reposting Ourselves: Tort Reform and Jobs - No Link At All."

Robert L. Abell
www.RobertAbellLaw.com