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Litigation in Brief
Summer 2008
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DeCaro, Doran, Siciliano,
Gallagher & DeBlasis, LLP
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NEW LAWS AFFECT INSURANCE LAW AND CIVIL LITIGATION
By James S. Liskow
On April 7, 2008, the 425th Session of the Maryland General Assembly adjourned. This article will discuss some of the important new legislation affecting insurance litigation:
Insurance Law
House Bill 404: All insurance applications and claim forms in the State of Maryland must contain the following language:
Any person who knowingly and willfully presents a false or fraudulent claim for payment of a loss or benefit or who knowingly and willfully presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison.
House Bill 405: Requires homeowner’s insurers to offer coverage for losses resulting from the non-negligent back-up of water through sewers. Such coverage must be offered within seven (7) days of application or renewal.
House Bill 750: Requires personal property casualty insurance polices to be subject to a 45-day underwriting period beginning on the effective date of coverage. During this period, the insurer can cancel an insurance binder if the risk does not meet the insurer’s underwriting standards. The insured must be given written notice of the underwriting period. In order to cancel a binder, an insurer must send written notice of such cancellation to the insured by certified mail. Such cancellation can only take effect 15 days after the notice is mailed and must state the reason for cancellation. In addition, a notice sent to an insured for non-payment of premium must have an effective date of not less than ten (10) days from the date such notice was mailed, state that nonpayment is the reason for cancellation, and be sent by certified mail.
House Bill 859: Homeowner’s, fire, farmowner’s, and dwelling insurance policies that provide coverage for additional living expenses may not be issued, sold, or delivered in the State of Maryland if such coverage is limited to twelve (12) months. The Maryland Insurance Commissioner has the authority to require an insurer to provide coverage for additional living expenses for up to twenty-four (24) months if the property remains uninhabitable if such condition was caused by the insurer or beyond the control of the insured.
House Bill 1581: Insurers or producers of automobile insurance policies cannot cancel or refuse to underwrite or renew insurance risk based wholly or in part on race, color, creed, sex, or blindness or for any arbitrary, capricious, or unfairly discriminatory reason.
Further, the transfer of automobile and homeowner’s policies between insurers within the same insurance holding company is a renewal if the policyholder’s premium does not increase and the coverage does not decrease. Such a transfer must be disclosed to the policyholder. The issuance of a new policy to replace an expiring policy issued by the same insurer is also a renewal, as is the issuance of a replacement policy.
If the insurer fails to provide notice and the policyholder subsequently fails to make timely premium payments, the insurer must provide coverage for all claims which arise within 45 days after the insured discovers or should have discovered the policy was not renewed, and must renew such policy upon tender of payment within 30 days after the policyholder discovers or should have discovered the policy was not renewed.
House Bill 1589: Allows the insurance commissioner authority to waive licensing for insurance producers who have been conferred designations or maintain certain memberships.
Litigation
House Bill 88: Maryland Uniform Interstate Depositions and Discovery Act. This Act allows out of state litigants to depose persons within the State of Maryland by sending a foreign subpoena to the clerk of the circuit court for the county in which a deposition is to be taken. The clerk is then to issue a Maryland subpoena which can be served upon the deponent. The issuance and service of such a subpoena does not constitute an appearance, meaning that an attorney who is not licensed in the State of Maryland may effectuate service of a subpoena and take a deposition.
Senate Bill 413: This bill has not yet been signed by the governor, but has passed both houses of the General Assembly and is unlikely to be vetoed. This bill will allow Plaintiffs to perfect service of process on out of state motor vehicle operators by serving the Maryland Motor Vehicle Administration. The MVA will then attempt to serve the Defendant. Unlike the process for serving a corporation through the State Department of Assessment and Taxation, a Plaintiff need not make any attempts at personal service.
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Recent Developments -
District of Columbia
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Medical Malpractice - Joint Tortfeasor Contribution
Elena Paul brought a medical malpractice action against Dr. Charles Bier and The George Washington University (GWU), as employer of another doctor. The case proceeded to trial but after Ms. Paul’s case-in-chief, she settled with GWU for $2,000,000.00. Trial resumed against Dr. Bier and the jury returned a verdict awarding Ms. Paul $2,000,000.00. Dr. Bier was given a pro tanto credit for the amount of the settlement between GWU and Ms. Paul thereby reducing his responsibility to zero. Three months after its settlement, GWU sought leave to file a claim for contribution against Dr. Bier for $1,000,000.00 but the trial court denied this request as it was untimely. The Court of Appeals affirmed. Three years after the settlement GWU filed a separate action for contribution against Dr. Bier based on the same underlying facts asserted in its earlier claim. The trial court granted Dr. Bier’s motion for summary judgment and the Court of Appeals affirmed. The Court held that the right of contribution does not arise without a finding that the parties are joint tortfeasors, which can be judicially established or stipulated to by all parties. Although liability was not determined GWU insisted it was a joint tortfeasor and was therefore entitled to contribution. The Court opined that GWU perhaps could have asked to remain in the case so that joint liability could be determined or GWU might have negotiated a settlement that extinguished the liability of all defendants, but ultimately the Court reserved on the issue of whether a settling defendant has a right to contribution. Instead the Court decided this case based on the finding that GWU’s current claim is the same as the one presented in their original cross claim. In its prior decision with regard to the cross claim, the Court held that allowing GWU’s untimely claim for contribution would prejudice Dr. Bier and did not permit the action. George Washington University v. Bier
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Civil Procedure - Long-Arm Jurisdiction - Advertising
Plaintiff was injured when her seat broke at a movie theater in Tyson’s Corner, Virginia. She purchased a movie ticket after having read an advertisement in a D.C. newspaper. Plaintiff filed suit against the theater in D.C. Superior Court based on D.C.’s Long-Arm Statute which provides that by “transacting business” in D.C., a foreign corporation is subject to the jurisdiction of the D.C. courts. The trial court granted the theater’s motion for summary judgment asserting that the court lacked personal jurisdiction and the Court of Appeals affirmed. Although the advertising of the movies in the D.C. newspaper did constitute “transacting business” in the District, the Court held that there was not a sufficient relationship between the claim and the business transacted. Jackson v. Loew’s Washington Cinemas, Inc.
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Tort Law - Sovereign Immunity
Plaintiff’s four year old child fell on broken glass at a bus shelter and was injured. Plaintiff sued the District and the Washington Metropolitan Area Transit Authority (WMATA) alleging violations of the 5th and 8th Amendments and the Civil Rights Act. The U.S. District Court for D.C. granted WMATA’s motion finding that WMATA is a quasi-governmental agency and enjoys sovereign immunity for performance of government functions. The Civil Rights claim was also dismissed against WMATA because WMATA is not a “person” under the Act. The Court did not grant the District’s motion to dismiss finding that Plaintiff did comply with the formal notice requirements under the statute. The Court held that the police report generated as a result of the incident provided the District with actual notice. Recognizing that this was a close call, the Court opined that in such situations the courts should resolve doubts in favor of finding compliance with the statute. Plater v. Dep’t of Transportation
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| Recent Developments - Virginia |
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Intentional Torts - Vicarious Liability - Injuries Caused by Fellow Employees
Attacks on employees by fellow employees that do not arise out of employment do not fall within Virginia’s worker’s compensation regime, and an employer may therefore be held vicariously liable in tort. The case involved emergency medical technicians traveling in an ambulance. The plaintiff employee’s co-worker activated the defibrillator on the ambulance and, while her back was turned, touched the paddles to her shoulder, killing her. The employee’s estate brought suit against the defendant ambulance company. The ambulance company filed a plea in bar asserting that it was immune from suit as the plaintiff’s suit was barred as the injury arose during the course of her employment. The Supreme Court reiterated that an injury directed at an employee, which is personal to that employee, does not arise out of the employment and does not fall within the workers’ compensation statute. Unauthorized use of the defibrillation machine was not probative to determining whether the attack was directed at the employee personally or as a result of her status as an employee. Hilton v. Martin.
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Statute of Limitations - Statute Not Tolled by Filing Motion for Leave to Amend
The filing of a motion for leave to amend does not toll the statute of limitations as to defendants not yet added to a lawsuit. In this case, an estate brought suit against the Commonwealth and a county. The administrator was granted leave to amend to add Department of Transportation (hereinafter “DOT”) employees as defendants. The county was voluntarily dismissed and the Commonwealth was dismissed as it was immune. The statute of limitations had not run against the DOT employees on the date the plaintiff moved for leave to amend, but had run prior to the trial court granting such leave. After the trial court granted the plaintiff leave to amend, the DOT employees moved to dismiss the amended complaint on statute of limitation grounds. The Supreme Court held that the statute of limitations against the employees continued to run until the trial court granted leave to amend and was not tolled on the date a plaintiff moved for such leave. Ahari v. Morrison
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Medical Malpractice - Expert testimony
A neurologist is not qualified to offer expert testimony as to the standard of care as it relates to intraoperative negligence by an orthopaedist unless a sufficient overlap in the standard of care can be shown. This medical malpractice case arose out of spinal surgery in which the defendant orthopaedist sliced through part of the plaintiff’s spinal cord. The plaintiff’s expert witness, a neurologist, had last performed the same surgery four years prior to the trial and did not maintain an active neurology practice, nor was he licensed in Virginia. In order for a trial court to allow a physician to testify as an expert witness, he must be licensed in Virginia, meet the educational and examination requirements of a Virginia physician, or show “sufficient knowledge, skill or experience.” As the neurologist was not certified as a neurologist, the plaintiff had to present evidence of an overlap in both specialties. Lloyd v. Kime
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Recent Developments - Maryland
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Negligence- Proximate Cause of Injury
Plaintiff brought a malpractice suit against several of his deceased wife’s healthcare providers alleging that by failing to provide appropriate cancer treatment, when it was necessary, his wife’s chance of survival was reduced from 80 percent to 50 to 60 percent. In order to recover under the Wrongful Death Act, a Plaintiff must prove that the negligence of the Defendant caused the wrongful death. The court ruled that expert testimony that the delay in providing appropriate cancer treatment caused a 20 to 30 percent reduction in the decedent’s chance of survival was not proof that the Defendant’s negligence was the proximate cause of death. Marcantonio v. Moen
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Workers’ Compensation - Federal Employer’s Liability Act
The Plaintiff brought an action under the Federal Employer’s Liability Act alleging that his employer’s failure to provide a safe workplace allowed an accident to occur, the injuries from which rendered him totally disabled and unable to work. The employer sought to introduce evidence that Plaintiff would have been able to collect retirement and pension benefits at age 60, even though the Plaintiff testified that he intended to work into his mid-60s. Plaintiff filed a motion seeking to exclude any such testimony as prejudicial. The trial Court granted the motion and the Defendants appealed. The Court of Special Appeals ruled that such testimony would violate the collateral source rule which states that an injured person can recover the full amount of his damages regardless of the amount of compensation the person receives from a separate source. The Court noted that Maryland Law has long held that it would be prejudicial to any injured person to allow the tortfeasor to receive a windfall because the Plaintiff receives a benefit from an independent source. As such, the Court ruled that evidence of future retirement or pension benefits is not admissible on the issue of when an employee could be expected to stop working had the injury not occurred. Such evidence is more likely than not to be misused by a jury. Norfolk Southern Railway Corp. v. Tiller
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Employment Law - New Employment Terms and Implied Consent
An employee accepted a job with a monthly housing allowance due to the fact that the employee maintained two residences, one near his work and another in New Jersey for his wife and family. After four years and the employee’s divorce, the employer eliminated the monthly housing allowance. Three years later, within the statute of limitations, the employee sued for breach of contract.
The trial court held for the employer on summary judgment. The D.C. Court of Appeals affirmed, stating that “once an employee learns about a new employer policy limiting benefits but elects to stay on the job and accept compensation, that decision is sufficient to imply an agreement to continue working subject to the new limitation.” Kauffman v. International Brotherhood of Teamsters
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| Insurance- Denial of Claim for Business Loss
Plaintiff filed a claim with his insurance carrier for damages resulting from a broken water pipe in his dental office. The insurance company paid $45,000 on the claim. Plaintiff alleged that the payment was $25,000 short of his actual damages. The insurance company asked Plaintiff to produce documentation of the additional loss by a specific deadline. Prior to the date of the deadline, the insurance company sent the Plaintiff a letter denying the remainder of the claim and indicating that the file would be closed. The Plaintiff notified the insurance company that many documents had already been produced and that more would be produced. Three months later, Plaintiff filed suit alleging breach of the insurance contract. The insurance company filed a motion for summary judgment claiming that the Plaintiff had not complied with the provisions of the policy by not producing the requested documents. The court ruled that because the Plaintiff had complied by sending some of the requested documents, had offered to send more, and felt that the insurance company was “stonewalling” him, he was justified in filing suit against the insurance company and denied the insurance company’s motion. Womer v. Assurance Company of America, T/A Zurich, U.S.
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17251 Melford Boulevard
Suite 200
Bowie, Maryland 20715
(301) 352-4950
Fax - (301) 352-8691
3930 Walnut Street
Suite 250
Fairfax, Virginia 22030
(703) 255-6667
Fax - (703) 299-8548
740 Stagwell Road
Mail: P.O. Box 338
Queenstown, Maryland 21658
(410) 827-5013
Fax - (410) 827-4323
www.decarodoran.com
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About The Firm
DeCaro, Doran is pleased to announce that Jennifer L. Cook, Danielle A. Strait, and Tara L. Williamson have joined the firm as Summer Associates for 2008.
Jennifer Cook is a 2005 graduate of Old Dominion University and attends the University of Maryland School of Law, where she is scheduled to complete her studies in December 2008. Additionally, she is in a joint degree program wherein she will receive her Masters in Business Administration from the University of Maryland Robert H. Smith School of Business in conjunction with her legal degree. During the course of her legal studies, Jennifer has had the opportunity to serve as a judicial intern for the Honorable Alexander Williams, Jr. and the Honorable William Connelly, both with the United States District Court for the District of Maryland, Southern Division.
Danielle Strait is a graduate of Iowa State University where she received her Bachelor of Arts in Performing Arts in 2003. She has completed two years of her legal studies at The Catholic University, Columbus School of Law. During the past academic year, Danielle served as teaching assistant to Professor Victor Williams at the Columbus School of Law. She has also served as a liaison and Housing Coordinator for incoming students at the law school.
Tara Williamson is a 2000 graduate of the University of Maryland, College Park, where she received degrees in Criminology and Criminal Justice, and Psychology, with a minor in Community Health. She currently attends Georgetown University Law Center. During college, Tara served as court appointed Special Advocate at the St. Ann’s Infant and Maternity Home. Additionally, during the summer of 2006, she served as a judicial intern for the Honorable Michael P. Whalen at the Circuit Court for Prince George’s County, Maryland.
We are very pleased to have Jennifer, Danielle, and Tara join us in our Summer Associate program.
Finally, DeCaro, Doran is very pleased to report that our 2008 Defense Litigation Seminar was a huge success. Our attorneys and guest speakers covered a number of topics applicable to litigation defense, including First Party Bad Faith, Maryland UM Issues, and Pharmacy Liability. Toxicologist, Yale H Caplan, Ph.D., spoke on drug and alcohol issues in litigation and Obstetrician, Heather Johnson, M.D., discussed the potential effect of trauma on an unborn child. We appreciate the large response from all who attended and encourage those who were not able to attend to contact our attorneys to secure copies of the materials presented at our seminar.
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