Vested Interest - Tort Briefs - January/February 2001 Issue

WHITE HOUSE UNVEILS MEDICAL PRIVACY RULES

The Clinton administration issued broad new regulations to safeguard the confidentiality of Americans’ medical records, establishing the first federal protections aimed at limiting what information doctors, hospitals and health plans can divulge without patients’ consent. The rules, which take full effect within two years, guarantee patients access to their health files, restrict the release of their personal information without their approval and give them greater say about how the files are used. For more information contact the ITLA office at 800-252-8501. (Chicago Sun-Times - December 20, 2000)

CLIMATE MAY WARM FOR TORT REFORM

The Bush administration is likely to bring a warmer climate for tort reform. President George W. Bush has proposed the kind of incremental tort reforms that have been able to win support from some Democrats in past Congresses. He has said he would strengthen Rule 11 of the Federal Rules of Civil Procedure to require stiffer penalties for frivolous lawsuits, impose a “three strikes, you’re out” rule on attorneys who repeatedly file frivolous claims and raise the standard for admission of scientific testimony - all of which would make it tougher for consumers. Bush also proposes amending discovery rules to limit ‘fishing expeditions’ and passing a “Teacher Protection Act” to shield teachers who try to enforce classroom discipline. The President also wants to eliminate the private right of action under the RICO Act, impose costs on plaintiffs who reject a settlement offer and don’t do better at trial, make it easier to remove cases from state to federal courts and enact a “Client’s Bill of Rights” under which attorneys would have to disclose the potential range of their fees and those fees could be challenged in federal court. During his presidential campaign, Bush made a point of saying he would deliver on his promises and pointed out he did so in Texas: after making tort reform one of four central themes of his first gubernatorial campaign in 1994. (Liability & Insurance Week – January 1, 2001)

BUSINESS GOALS: KILL OSHA RULE AND PASS TORT REFORM

Overturning the new Occupational Health and Safety Administration ergonomics rule and passing tort reform legislation emerged as top priorities of powerful business lobbying groups. Meeting separately in Washington, D.C., to unveil their legislative agendas, both the U.S. Chamber of Commerce and National Association of Manufacturer’s said their highest legislative priority will be overturning the new OSHA rule, which took effect Jan. l6. Each also listed legal reform as a top priority, and former Attorney General Richard Thornburgh predicted Jan. 9 that tort reform will be a top legislative priority of President George W. Bush. “Now that the trial lawyers won’t have the ear of the president,” there is an excellent chance for enactment of legislation similar to a product liability bill passed by Congress in 1996 but vetoed by President Clinton, Thornburgh said at a briefing by the pro-business Washington Legal Foundation. For more than two decades, business groups sought federal product legislation that would limit liability for defective products. They reached their high water mark in 1996 when they finally won the 60 Senate votes needed to end a filibuster. Congress went on to pass the measure, but President Clinton vetoed it. (Liability & Insurance Week – January 16, 2001)

DEPARTMENT OF JUSTICE STUDY DISPROVING TORT “REFORM” MYTHS

According to an August 2000 Department of Justice report entitled, “Tort Trials and Verdicts in Large Counties,” punitive damages are only awarded in 3.3% of the tort trials won by plaintiffs. The study also shows that punitive damages are decreasing over time in frequency and amounts awarded. The study disproves the “Runaway Jury” myth by showing that judges are more likely than juries to decide in favor of the plaintiff. Moreover, judges are more likely to award punitive damages than are juries. Other relevant findings in the report include: awards are much smaller than is commonly perceived, whether they are handed out by judges or juries; product liability and medical malpractice suits represent only a small portion of tort suits; and most lawsuits involve individuals suing one another, not individuals suing businesses. (Public Citizen Civil Justice Update – January 10, 2001)

STATE AGENCY TO LIST ATTORNEYS DISCIPLINE CASES ON WEB

The Attorney Registration and Disciplinary Commission plans to make the complete roll of attorneys and decisions in disciplinary cases available on the Web. Both the attorney list and the decisions will be in searchable form on the ARDC’s upcoming Web site – www.iardc.org – which is expected to be up and running by the end of March. (Chicago Daily Law Bulletin – December 9, 2000)

NEW JERSEY SEATBELT SUIT SETTLED AFTER $5.5 MILLION VERDICT

General Motors Corp., has settled a lawsuit over an allegedly defective seatbelt after a New Jersey jury reached a verdict of $5.5 million in compensatory damages but before it decided on punitive damages. The amount of the settlement wasn’t disclosed. The eight person jury in Camden, NJ, found GM liable for injuries to Harold Tucker, 69, who was paralyzed when his 1989 Buick Regal crashed into another car in November 1995. The verdict included $2.5 million for future medical care and $3 million for the pain and suffering. Plaintiff’s attorney Andrew Rossetti argued Tucker was wearing the seatbelt but it operated defectively, leaving about one foot of slack after he leaned forward to retrieve a cigarette lighter. (Liability & Insurance Week – November 20, 2000)

RENTAL FIRM DEFEATS CLAIM FOR INSURANCE

Car rental firms do not have to provide primary liability insurance to their customers, the 1st District Appellate Court ruled. Alamo Rent-A-Car Inc., called the three-judge panel’s finding a “monumental decision” – particularly in light of the 1998 Illinois Supreme Court State Farm case in which the high court ruled that car dealers must provide liability insurance for test-drivers, even if they have their own insurance. “I think an adverse decision would have had wide-ranging implications on the car rental industry” said L. Bradley Schwartz, representing Alamo. If the appeals court had ruled against Alamo “every car rental company in Illinois would have been forced to provide liability insurance to every renter even though the renter chose not to purchase the coverage,” Schwartz surmised. (Chicago Daily Law Bulletin – December 22, 2000)

PUBLIX SUPER MARKETS SETTLES RACE BIAS SUIT FOR $10.1 MILLION

Publix Super Markets Inc., a chain operating some 650 stores in Alabama, Florida, Georgia and South Carolina, agreed Dec. 29 to settle a class action lawsuit by black employees for $10.1 million. The company, which admitted no wrong doing, agreed to pay $7.7 million to some 15,000 current and former employees who claimed they were passed over for promotions, denied jobs or fired because of their race. Subject to approval in U.S. District Court in Tampa, another $2.4 million is to be paid to lawyers for the plaintiffs, who filed the suit in 1997. Publix also agreed to continue programs it said have increased the number of black managers to about 8 percent of the management positions. (Liability & Insurance Week – January 2, 2001)

CALIFORNIA POLICE SHOOTING VICTIM TO RECEIVE $15 MILLION

The Los Angeles City Council voted unanimously to award $15 million to a former gang member left paralyzed from the waist down, allegedly when he was shot by rogue members of the Los Angeles Police Department. The amount going to Javier Francisco Ovando is unprecedented– nearly three times the amount paid to Rodney King after he was beaten by police in 1991. It brings to nearly $30 million the amount Los Angeles has agreed to pay victims of a scandal in which police of an anti-gang unit at the Rampart station allegedly planted evidence to win convictions. About 70 Lawsuits are pending. Police shot Ovando, 23, in the back, but a gun was found on him and he served more than two years in prison for assaulting an officer. His conviction was thrown out last year after policeman Rafael Perez said he and his partner planted the gun after shooting Ovando. City Attorney James K. Hahn told the council liability in Ovando’s case “appears virtually certain.” Plaintiffs lawyer Greg Moreno said Ovando intends to get treatment for his injuries. (Liability & Insurance Week – November 27, 2000)

ILLINOIS WOMEN TO GET $9 MILLION TO SETTLE FORD CASE

U.S. District Judge Elaine Bucklo has approved Ford Motor Company’s offer of $9 million to settle a class-action lawsuit brought by female employees who complained of sexual harassment while working on the auto manufacturer’s Chicago-area assembly lines. About 150 of the 1,000 women eligible to claim part of the settlement have come forward so far, but the remaining women had until mid-January to do so. Judge Bucklo consolidated the cases of the Chicago women, some of whom had filed lawsuits against the company over five years ago, claiming they were harassed with catcalls, swearing and inappropriate physical contact. (Liability & Insurance Week – November 27, 2000)

ILLINOIS MEDICAL PROVIDERS & LAWYERS SUED BY ALLSTATE

Allstate Insurance Co. filed suit Dec. 20 in Cook County Circuit Court, seeking $14.5 million in damages from Chicago-area medical providers for alleged insurance fraud. Based on the results of an investigation conducted by Allstate’s Special Investigative Unit into 1,400 claims dating back to 1992, the insurer claims Chicago medical providers have bilked it out of more than $4.5 million in false or enhanced claims for medical payments and bodily injuries. “This was not a one-time, one-man operation. This was an ongoing effort by a sophisticated ring of medical providers as well as people pretending to be,” said Edward J. Moran, assistant vice president for Allstate’s Special Investigative Unit. “We don’t tolerate insurance fraud and neither should consumers. We are in the business of protecting our customers, and insurance fraud diminishes our resources to do that.” Allstate filed similar lawsuits in California, New Jersey and New York earlier this year. (Liability & Insurance Week – December 26, 2000)

ILLINOIS BANK AGREES TO SETTLE CREDIT CARD CASES FOR $40 MILLION

Chicago’s Bank One Corp. has agreed to pay $40 million to settle a class action lawsuit alleging its credit customers whose accounts were handled by a third-party vendor were charged improper late fees and finance charges. The settlement plan was outlined in a letter sent last week by First USA – Bank One’s credit unit – to about 18 million customers. Under the proposed settlement, Bank One would set aside $28.7 million for reimbursement of late fees to cardholders whose payments were handled between Jan. 1, 1998, and Aug. 31, 1999, by the third-party vendor, National Processing Company. Cardholders would receive $29 for each late fee they successfully contest. An additional $6.1 million would be set aside for allegedly unwarranted finance charges and $3.8 million would be set aside for customers who were charged an invalid late fee that also increased their finance charge. (Liability & Insurance Week – January 2, 2001)

MISSOURI’S CARNAHAN FAMILY SUES AIRPLANE COMPANIES

The family of the late Gov. Mel Carnahan filed suit Dec. 21 against several airplane companies, claiming faulty equipment contributed to the Oct. 16 crash of a twin-engine Cessna 335 that killed Carnahan, who was running for the Senate; his son Roger, who was flying the plane; and the governor’s longtime aide, Chris Sifford. According to the National Transportation Safety Board, the son told air traffic controllers minutes before the crash he was having problems with his plane’s artificial horizon, used to help maintain level flight. Investigators also have said they are looking at the plane’s vacuum system, the weather and other factors. Named in the action are Cessna Aircraft Co.; Cessna’s parent company, Textron Inc.; Parker Hannifin Corp.; Sigma Tek Inc., and Aeroflite Inc. (Liability & Insurance Week – December 26, 2000)

MICHIGAN: NORTHWEST AIRLINES SETTLES WITH STRANDED PASSENGERS

Northwest Airlines agreed to pay $7.1 million to settle a class action lawsuit covering 7,000 of the 8,000 passengers stranded aboard planes during a blizzard that hit Detroit’s Metro Airport over the New Year’s weekend two years ago. Northwest didn’t admit liability. Passengers were stranded for up to 11 hours, in many cases without food, beverages or working lavatories. Judge Daphne Means Curtis of Wayne County Circuit Court in Detroit gave preliminary approval to the plan and set a final hearing for April. (Liability & Insurance Week – January 16, 2001)

JUDGE APPROVES $1.25 BILLION HOLOCAUST SETTLEMENT

A federal judge has approved a plan to distribute the $1.25 billion legal settlement reached in 1998 between Swiss banks and owners or heirs of Swiss bank accounts seized during the Holocaust. U. S. District Judge Edward R. Korman in Brooklyn, NY, ruled Nov. 21 that the 54,000 owners or heirs of accounts identified as seized probably or possibly because of the Holocaust are to receive the amount in the account at the time it was seized, multiplied by 10 to reflect the passage of time but not to exceed a total of $800 million. About $325 million more is to go to claimants whose assets were not in bank accounts but were looted by Nazis. They are to receive amounts varying from $500 to $2,500. Slave laborers are to receive up to $1,000; refugees detained or mistreated in Switzerland are to receive up to $500 while those turned away in Switzerland are to receive up to $2,500. (Liability & Insurance Week – November 27, 2000)

PROVIDIAN TO PAY $105 MILLION TO SETTLE MARKETING CLASS ACTIONS

Providian Financial Corp., the country’s sixth largest credit card issuer, has agreed to pay $105 million to settle dozens of consumer lawsuits alleging the company violated consumer protection laws in the marketing and sale of add on products to its credit cards, including increased credit protection, lines of credit and other products customers never ordered, and then making it extremely difficult to cancel the orders. The proposed settlement, in which the company admits no wrongdoing, would resolve all lawsuits consolidated into the two major class actions before the California Superior Court in San Francisco and the U.S. District Court in Philadelphia. (Liability & Insurance Week – January 2, 2001)

Dram Shop Liability Limits

From: Comptroller Daniel W. Hynes
RE: Dram Shop Liability Limits

Section 6-21(a) of the Liquor Control Act of 1934 (235 ILCS 5/6-21(a) (West 1998)) imposes liability limits for causes of action brought under that Act. In addition, section 6-21(a) requires the Comptroller to determine adjustments to those limits in accordance with the consumer price index-u (CPI-U) during the preceding 12-month calendar year. By letters dated today, January 22, 2001, I have advised the Chief Judge of each Circuit Court of the adjusted limits.

According to the Bureau of Labor Statistics of the United States Department of Labor, the CPI-U increased 3.39% during the preceding calendar year. Therefore, the new liability limits, based upon prior adjustments, are as follows:

For causes of action involving persons injured, killed, or incurring property damage on or after January 20, 2001, the judgment or recovery under the Liquor Control Act of 1934 for injury to the person or property of any person shall not exceed $48,541.52 for each person incurring damages; and

For causes of action under the Liquor Control Act of 1934 for either loss of means of support or loss of society resulting from the death or injury of any person on or after January 20, 2001, the judgment or recovery shall not exceed $59,328.52.