Vested Interest - Tort Briefs - November/December 2000 Issue

State Loses Round in Fight over Tobacco Fees

The state attorney general’s office has lost another attempt to block the outside counsel it hired to handle Illinois’ tobacco settlement from taking their fee from the state’s expected $9 billion recovery. The Illinois Supreme court denied the state’s motion to stay discovery and proceedings in the Cook County Circuit Court, where the outside counsel are trying to enforce a lien action against the tobacco settlement under their contract with Attorney General Jim E. Ryan. (Chicago Daily Law Bulletin – November 6, 2000)

New Rules Give Workers Job-injury Protection

Workers who spend their day typing on a computer or repeatedly lifting heavy boxes are among the more than 100 million Americans to receive new protections from job-related injuries under standards being issued by the Clinton administration. Organized labor had pushed for the regulations, which could force companies to alter work stations, redesign facilities or change tools once employees are found to suffer work-related injuries. OSHA hopes the standards will prevent 460,000 workers from getting hurt on the job each year. According to OSHA, the rules would cost businesses some $4.5 billion to implement but would reap $9 billion a year in savings from medical expenses and workers’ compensation. For a copy of the OSHA standards, please contact the ITLA office. (AP – November 13, 2000)

Illinois Consumer Fraud Suit Draws Wide Interest

An Illinois Supreme Court case concerning the reach of the state’s consumer fraud law has attracted the interest of lawyers, car dealer, insurance companies and various corporate industries from Illinois and around the nation. The high court permitted the groups, in four separate amicus curie briefs, to join the case and argue whether a plaintiff can plead a violation of the law under a theory of indirect causation and whether the law applies to consumers in other states. The case involves whether a gasoline customer who did not see, hear, or consider an allegedly false advertisement for Amoco Oil Co.’s premium gasolines can nevertheless sue for damages under the consumer fraud law. It also involves whether the Illinois Consumer Fraud and Deceptive Practice Act applies to non-Illinois consumers and whether they can bring a nationwide class-action lawsuit for a violation of the act. (Chicago Daily Law Bulletin – October 30, 2000)

Trade Association Liable for Negligent Standards, Washington State Court Rules

A trade association that voluntarily sets safety standards and fails to revise them or issue warnings as needed has a duty to act with due care, a Washington state appeals court recently ruled in a case of first impression for the state. The duty is triggered after the association becomes aware of a risk posed by the standards. (Meneely v. S. R. Smith, Inc., 5 P.3d 49 (Wash. Ct. App. 2000).) The court upheld a jury verdict that found the National Spa & Pool Institute (NSPI), a trade association that issues standards for swimming pools and equipment, 60 percent liable for injuries Shawn Meneely suffered in 1991 after he dove into a swimming pool. Meneely broke his neck when his head struck the pool’s transition slope, which runs between the floor of the deep end of the pool and the beginning of the pool’s shallow end. The fracture paralyzed the 16-year-old from the neck down. Meneely sued NSPI, claiming that it negligently caused his injuries. The lawsuit alleged that while the association’s safety standards permitted use of a certain jump board manufactured by S.R. Smith, Inc., with pools the size of the one Meneely dived into, NSPI knew no later than 1971 that the diving board and pool combination was dangerous. On appeal, a unanimous three-judge panel held that “by promulgating industry wide safety standards that pool and board manufacturers relied upon, NSPI voluntarily assumed the duty to warn Meneely and other divers of the risk posed by this type of board (and)...pool. It failed to exercise reasonable care in performing that duty when it did not change the standard after it knew that studies showed the pool and board combination was dangerous.” The case is currently on appeal to the Washington Supreme Court. (Trial - November 2000)

Corboy Honored with Justice John Paul Stevens Award

On September 13, Philip H. Corboy, Sr. received the United States Supreme Court Justice John Paul Stevens Award. He was one of eight in this first class of recipients who were honored. This award is “given to an attorney who best exemplifies Justice Stevens’ commitment to public service and integrity while practicing law.”

Illinois HMO to Pay Government $2.9 Million

A Chicago-based HMO has agreed to pay $2.9 million to the federal government to settle allegations that it defrauded Medicare, the U.S. attorney’s office announced this week. United Healthcare of Illinois Inc. denied any wrongdoing but agreed to the settlement to avoid the litigation. The government alleged that the health maintenance organization obtained too much money in payments for beneficiaries who were incorrectly noted as being institutionalized. (Chicago Sun-Times - November 24, 2000)

Rules Expanded Patients’ Health Claim Rights

Millions of Americans in employer-based health lans can demand speedier decisions on their health claims and will have more time to appeal rejected coverage under new Clinton administration rules issued by the Labor Department. The regulations, due to take effect January 2002, are meant to streamline significantly a claims process that can leave frustrated patients waiting months for approval of health procedures. The new rules say health plans must notify patients about their claims within 45 days and render decisions within 60 days on appeals of denied claims. They are the first changes to the appeals process since passage of the 1974 law that oversees employer-based health plans and apply to 130 million employees in the private sector. They could come under attack if Texas Gov. George W. Bush becomes president. (The Associated Press – November 21, 2000)

Idaho Aryan Group Leader Files for Bankruptcy

Faced with a $5.8 million judgment in a civil suit, the leader of a racist organization in Idaho filed for bankruptcy Oct. 30. Richard Butler listed assets of about $300,000, far short of his share of a Sept. 7 jury award of $6.3 million to two persons of American Indian descent who were attacked and beaten outside the Aryan Nations compound by security guards. The jury in Coeur d’Alene found Butler, 82, negligently selected and oversaw the guards. The 22-acre compound was scheduled to be turned over to authorities to satisfy the judgment, but the Chapter 7 filing will delay the action. Two days before the filing, Butler and about two dozen members of his group marched through Coeur d’Alene, with Butler shouting through a bullhorn, “They’ve won the battle, but not the war.” Just behind the marchers were two city trucks noisily sweeping the pavement as onlookers sang hymns and shouted at the marchers. Butler said he would open a new church in the town of Hayden, ID. (Liability & Insurance Week – November 6, 2000)

Missouri Wrongful Death Suit of Wrestler Settled

World Wrestling Federation Entertainment Inc. said Nov. 2 it would take a $7 million charge in its second quarter to settle a lawsuit filed by the family of a wrestler killed during a stunt. Owen Hart died in May 23, 1999 during a live television-wrestling event in Kansas City. He plunged 78 feet when the quick-release mechanism on his harness prematurely opened as he was being lowered into the ring. The fatal plunge was not seen by television viewers but was witnessed by thousands for fans attending the event. The actual terms of the settlement have not been disclosed, but WWF said it would continue pursuing contribution and indemnity from the companies that manufactured or sold the harness system and four riggers who helped set up the stunt. (Liability & Insurance Week – November 6, 2000)

Pennsylvania Gene Therapy Suit Settled

The University of Pennsylvania reached an out-of-court settlement with the family of Jesse Gelsinger, who died four days after undergoing a gene therapy experiment at the university in 1999. Details of the settlement, which grew out of a civil suit filed in state court in Philadelphia, were not disclosed. Gelsinger, who was 18 years old at the time of his death, suffered from a serious liver disorder, ornithine transcarbamylase deficiency, and agreed to participate in an experiment at the university’s Institute for Human Gene Therapy to give corrective genes to persons with the disease. Just before his gene infusion, however, his blood ammonia levels - a measure of liver failure - were determined to be higher than the highest allowable level deemed safe for the experiment. Following Gelsinger’s death, investigations showed four patients who had previously received the gene infusion also had suffered serious reactions to the treatment, but the Institute had failed to notify authorities about the problem and had not halted the study. In January, the Food and Drug Administration suspended all human experiments at the Institute. (Liability & Insurance Week – November 6, 2000)

Judicial Panel Consolidates HMO and Tire Class-Action Suits

The Judicial Panel on Multi-District Litigation has consolidated almost two dozen suits filed by health-plan subscribers and doctors against health maintenance organizations, as well as 67 class action and individual suits filed against Bridgestone/Firestone Inc. and Ford Motor Co. The HMO suits were assigned to U.S. District Judge Federico A. Moreno in Miami. Most were filed on behalf of heath-plan subscribers and allege the HMOs have engaged in fraud and racketeering by using undisclosed financial incentives and controls to limit care; four are class actions filed on behalf of HMO physicians alleging the HMO industry relies on faulty data to reduce reimbursements for medical services. The tire suits were assigned to Chief U.S. District Judge Sarah Evans Barker in southern Indiana. They charge both Firestone and Ford with manufacturing defects causing a high number of injuries and deaths from rollovers connected to tire failure. The cases have been consolidated only for evidence gathering and to resolve pretrial procedural motions and legal questions. (Liability & Insurance Week – October 30, 2000)

California TV Writers Sue Networks for Age Discrimination

A lawsuit seeking $200 million in damages was filed Oct. 23 by older television writers, claiming that Hollywood had blacklisted them because of their age. The suit, filed in U.S. District Court in Los Angeles, listed 28 writers as plaintiffs. Defendants listed were Walt Disney Co., Fox Entertainment Group Inc., Time Warner Inc., Viacom, DreamWorks and Universal Television. (Liability & Insurance Week – October 30, 2000)

Tennessee Corrections Co. Agrees To $123 Million Settlement

Corrections Corp. of America, the nation’s largest owner and operator of for-profit prisons and detention centers, has agreed to settle eight shareholder lawsuits for about $123 million in cash and stock. The suits alleged among other things that a predecessor of the Nashville-based company, Prison Realty Trust, had concealed large fee increases awarded to a private prison-management company partly owned by top officials of Prison Realty. The agreement calls for plaintiffs to receive about $47.5 million in cash and common stock valued at about $75.4 million. (Liability & Insurance Week – October 30, 2000)

Virginia’s MicroStrategy Settles Class Action for $83.5 Million

MicroStrategy agreed Oct. 24 to settle a class action suit filed in federal court in Alexandria in which shareholders charged the company with defrauding investors by overstating years of revenue and earnings. Under the settlement, the firm would pay the shareholders $80.5 million in five years plus interest payments every six months totaling $3 million. The settlement also includes stock valued at a minimum of $16.5 million and warrants to purchase an additional 1.9 million shares at $50 a share. The Vienna, VA, company also agreed to settle a second lawsuit filed in Delaware. Under that agreement, the company’s three top executives are to contribute stock with a combined value of $10 million for payout under the other settlement. The company said it expects its insurers to pay slightly more than $13 million of the settlement terms. (Liability & Insurance Week – October 30, 2000)

Lloyd’s Didn’t Defraud Investors On Asbestos, British Court Says

A British High Court judge has ruled Lloyd’s of London did not defraud investors by withholding information about rising asbestos claims. Although Justice Peter Cresswell cleared the insurance company of fraud, he wrote, “There was widespread incompetence on the parts of some underwriters/managing agents” and called the investors “innocent victims.” The 216 investors, known as names, claimed Lloyd’s had fraudulently persuaded them to invest because it knew or should have known that its reserves weren’t adequate. Michael Freeman, the attorney for the investors, called the ruling “devastating” and said his clients had not yet decided whether to seek permission to appeal. (Liability & Insurance Week – November 13, 2000)

Iran’s Parliament Revises Law So Iranians Can Sue U.S. For Damages

In reaction to President Clinton’s signing of legislation letting American victims of terrorism collect millions of dollars in compensation for claims against Iran, the Iranian parliament amended its law Nov. 8 to allow Iranian citizens to sue the United States. Under the amendment, Iranians may “file a complaint with an Iranian court against foreign countries supporting terrorist individuals or groups, or allowing them to carry out activities under its sovereignty which have caused physical, financial and mental damage.” Although the amendment applies to all foreign countries, Hassan Qashqavi, a member of Iran’s parliament, said on the radio it was aimed at protecting the rights of Iranian citizens who have fallen victim to hostile American actions.(Liability & Insurance Week – November 13, 2000)

California Bank of America Class Action Settles for $35 Million

A federal court in San Francisco has granted preliminary approval to an agreement between Bank of America and 6,500 plaintiffs for the bank to pay $35 million to settle a lawsuit in which the plaintiffs claimed the bank had overcharged in fees to administer trust accounts. In 1993 and 1994, the bank had tried to resolve the claims by paying the plaintiffs $42 million, of which $24 million was for overcharges and $18 million was for interest. The plaintiffs’ attorney, Robert Mills of San Francisco, then sought punitive damages, a claim which the current settlement is to resolve. (Liability & Insurance Week – November 13, 2000)

Florida Slain Nuns’ Families to Seek Retrial of Military Leaders

The families of four American missionaries who were raped and murdered in El Salvador 20 years ago have decided to appeal a Nov. 3 jury verdict clearing two former Salvadoran military leaders of liability in the four deaths. The 10-member federal jury in West Palm Beach found that former generals Jose Guillermo Garcia, who served as El Salvador’s minister of defense from 1979 to 1983, and Carlos Eugenio Vides Casanova, who headed the country’s National Guard during that time, did not bear “command responsibility” for the actions against the female missionaries. The relatives had filed a civil lawsuit against the generals under the Torture Victim Protection Act, which allows victims and their families to seek damages from those who bear “command responsibility” for the criminal acts of their subordinates. The generals’ lawyer, Kurt Klaus, argued there was no solid evidence showing the men knew about the women’s slayings or could have done anything to prevent them. Bob Kerrigan, who provided pro bono legal counsel for the families, said he would appeal because it was clear the jury was inadequately instructed on the legal concept of command responsibility. At least one of the jurors has said the jury was confused about what was “effective command” over their troops. (Liability & Insurance Week – November 13, 2000)