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1/3/2011
Hans G. Poppe
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The Truth About the "Litigation Crisis"

As a Kentucky trial lawyer, I work hard to explain to people why there really isn't a litigation crisis and there simply aren't that many frivolous lawsuits. The insurance industry has done a great job convincing people of things that simply are not true. Here is a great article giving some facts about the "litigation crisis."

Category: Keyword Search: bad faith

8/13/2009
Hans G. Poppe
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In a short, but very sweet, 2 page opinion, the Fifth Circuit Court of Appeals upheld a $21 million dollar verdict against United Fire and Casualty for its claims hanling following Hurricane Katrina.  A portion of the verdict was for bad faith in the handling of the claim.

The Plainitff was Robert Fresh Markets, a Louisiana grocer whose business had been destroyed during the storm.  The Plaintiff's first witness was an insurance adjustor who initially reported to United Fire & Casualty that storm damage to the roofs of Robért's grocery stores allowed in rain and wind, destroying merchandise and forcing stores to close for repairs. Franco said the adjustor testified that United Fire & Casualty pressured him to change his report in a way that favored the company and then terminated him after he did.

Churchill Downs Flooded    Following the recent flooding in Louisville, Kentucky I suspect many insurers will wrongfully deny policy holders claims here as well. 

If they do, claimants may be able to hire a Kentucky Bad Faith Lawyer and use Kentucky's bad faith laws (Unfair Claims Settlement Practices Act) to recover damages from their insurer for wrongful claims handling.

Hans

Category: Keyword Search: bad faith

6/4/2009
Hans G. Poppe
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Yesterday, a Jefferson County jury awarded my client $3.9 million in an insurance bad faith case against AP Assurance for violating the Kentucky Unfair Claims Settlement Practices Act.  I was pleased to be involved with this case along with Ken and Rick Friedman.   Here is the verdict.   You can read the Courier Journal article here
hp

Category: Keyword Search: bad faith

5/21/2009
Hans G. Poppe
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My friend, and fellow Kentucky bad faith trial attorney, Austin Mehr obtained a $2.5 million dollar verdict last night in a third-party bad faith claim against the Medical Protective Insurance Company.  In short, Austin's client  sued her doctor for causing significant injury to her inner ear.  The doctor admitted he made a mistake, but his insurance company refused to settle the claim.  The case was litigated and ultimately resulted in an arbitration award of $1.6 million.  Austin's client then sued then doctor's insurance company, MedPro, for violating Kentucky's Unfair Claims Settlement Practices Act (aka the Bad Faith Statute) alleging, among other things, that MedPro failed to promptly settle the claim when liability became reasonably clear.  After a two-week trial, a Kenton County Kentucky jury agreed and awarded Austin's client $350,000 for the mental stress caused by the delay in settlement and awarded $2.2 million in punitive damages to punish the medical malpractice insurance company for its behavior.

I have a very similar bad faith case going to trial on Tuesday in Jefferson County Kentucky against American Physicians Assurance.

Below is the "Fact Section" from one of Austin's briefs and here is the jury's verdict.

Medical Protective insured Dr. Del Burchell and his physicians' group Internal Medicine Associates of Northern Kentucky, P.S.C for medical malpractice.  On July 3, 2000, Dr. Burchell attempted to clear earwax out of Aurelia Wiles' ear using an ear lavage procedure by which a syringe injects water into the ear.  The syringe was not properly attached, and when Dr. Burchell pressed on the plunger, the syringe exploded into Mrs. Wiles' inner ear. Liability on the part of Dr. Burchell and his clinic was unquestionably clear. Mrs. Wiles had emergency surgery on July 6, 2000, to attempt repair of the injured ear.  On August 17, 2000, Mrs. Wiles' attorney Terry Moore wrote Dr. Burchell and asked that he have his insurance carrier contact him.   Moore wrote Medical Protective's adjuster Gary Duechle on September 15, 2000, to advise of the severity of Mrs. Wiles' injuries, including nausea, ringing in the ears, imbalance, sleep difficulties, and that it was taking her about two hours just to wash her hair because of the nausea and dizziness. Moore wrote again on November 28, 2000, advising Duechle that Mrs. Wiles had a second surgery and based on the poor prognosis was likely totally disabled. On January 12, 2001, after Mrs. Wiles' condition continued to worsen, Moore specifically demanded the two million dollar policy limits from Medical Protective, which had on December 11, 2000, revealed those limits to Moore. As the one-year statute of limitations approached, Moore had written to Medical Protective to discuss his willingness to extend the statute of limitations so that suit did not have to be initiated against Dr. Burchell, but on March 9, 2001, before suit was filed, Duechle wrote to Moore and instructed him to direct all future correspondence through MedPro's defense attorney Mark Arnzen.         Instead of reviewing and giving credence to the opinions of Mrs. Wiles treating physicians, who were documenting the severity and worsening of her medical condition, Medical Protective consulted a neurologist, Dr. Greg Smith, on February 2, 2001.  Dr. Smith developed the opinion that Mrs. Wiles' traumatic injuries were not the result of the syringe projectile but that they were caused by a coincidental onset of Meniere's Disease around the same time in July 2000.

           Soon after, Arnzen wrote to Duechle on April 4, 2001, and stated, "With respect to the injury itself, Dr. Burchell admitted that there was no product failure and no excuse for the injury which occurred.  He stated that he failed to insure that the top of the syringe was properly secured to the body of the syringe."Even though it knew its insureds were at fault, Medical Protective still made absolutely no attempt to settle the Wiles' claim. Medical Protective, likewise, never responded to Moore's offer to extend the Statute of limitation and suit was filed on May 14, 2001, against Dr. Burchell and his physicians' group, as well as against Medical Protective for violations of the Unfair Claims Settlement Practices Act. ("UCSPA")  

In addition to creating a defense with Dr. Smith, surveillance was conducted on Mrs. Wiles.   In December 2001, video footage showed that because of Mrs. Wiles' condition, she had to be dropped off at her door by her next-door neighbors, who subsequently backed out of her driveway and pulled into their own (about 40 feet away). This verification of the severity of her condition garnered no offer of settlement or negotiation from Medical Protective.  

In January 2002, Mrs. Wiles endured a third surgery, this time a brain surgery that lasted seven hours.  Still Medical Protective made no offer of settlement.  On April 8, 2002, Moore wrote to Storm reiterating his willingness to accept the policy limits on behalf of the Wiles even though there had not been any offer made or even a discussion of an offer from Medical Protective. A letter from Arnzen to Duechle on June 25, 2002, urged Duechle to contact him about the settlement demand.  Soon after, more surveillance was conducted on July 27, 2002. This time the video showed approximately twenty minutes of Mrs. Wiles struggling to slowly work in her garden.  She had to sit on her buttocks because of her imbalance and when she attempted to walk just a short distance, she had to hold a bag and bucket in each arm to balance herself as she battled to stay on her feet. Again, these facts still did not conjure settlement discussions from Medical Protective.

On October 7, 2002, Arnzen wrote to Duechle suggesting that Medical Protective stipulate to liability. Internal correspondence from Duechle to Robert Ignasiak of Medical Protective shows that it "always viewed the case as one of liability…" but that no offer had been extended to settle the case.  Finally, after never discussing an offer of settlement with the Wiles for twenty-seven months, Medical Protective offered $500,000.00 on October 7, 2002.  During this time, Medical Protective had Mrs. Wiles submit to a medical examination with Dr. Smith, who maintained that there was a simultaneous chance occurrence of Meniere's Disease and that Mrs. Wiles was magnifying her symptoms, even though Medical Protective knew that surveillance footage indicated otherwise.

In the meantime, Dr. Burchell and his physicians' group grew nervous about MedPro's claims adjusting, had hired their own counsel to urge Medical Protective to settle for the policy limits.  Attorney Andre Busald wrote to Duechle on November 22, 2002, informing him that Dr. Burchell and his physicians' group were "extremely concerned about the chances of a verdict being rendered against them in excess of the $2,000,000 policy limits – especially where liability is not an issue."Busald followed up again on December 2, 2002, and chided Medical Protective for refusing to attempt to settle the case before trial for the policy limits.  Throughout the years of correspondence, there was never a question as to liability.

Finally, after agreeing to a high-low arbitration agreement, the parties put the claim before an arbitration panel in April 2003, and the panel awarded $1,650,000 on May 15, 2003.  This settlement process was not without detriment to the Wiles, who had incurred substantial medical bills, legal bills, and litigation expenses while suffering from a sizeable loss of income and emotional suffering during the period of time the claim was active.  


Hans


Category: Keyword Search: bad faith

12/17/2008
Hans G. Poppe
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My friend, Kevin Burke recently summarized the recent Kentucky Court of Appeals Opinion that ruled that a religious medical expense sharing plan isn't insurance and isn't subject to state insurance regulations.  I think this opinion sets a dangerous precedent and, more importantly, means that the people who have this plan have no legal safeguards in place if the plan refuses to pay their medical bills.

"What is insurance? This appeal attempts to answer that question in the context of a quasi-insurance medical payment program known as Medi-Share.

Medi-Share is a faith-based, medical payment sharing product sold by The American Evangelistic Association (AEA) and Christian Care Ministry (CCM). Medi-Share's Chairman and CEO is former insurance executive, John Reinhold. "Subscribers" complete a detailed application (including medical history) and agree to live by specific biblical and religious principles. If accepted, subscribers pay a monthly "donation" which is not tax-deductible as such per IRS regulations. According to Medi-Share's website (medi-share.org), a "donation" for a healthy married couple age 40-59 is $399 per month. Contributions are pooled, administrative costs (salaries, marketing, claims costs) deducted, and subscribers' medical expenses paid from the remainder. Claims adjusters review claims, negotiate payment to medical providers, and keep subscribers within the preferred provider network. Medi-Share asserts a right of subrogation and reimbursement for payments made. If a subscriber fails to pay the monthly donation, Medi-Share cancels the subscription or charges a late penalty. If a subscriber violates any condition of acceptance, Medi-Share terminates the subscription. Subscribers agree to arbitrate any disputes. Interestingly, Medi-Share explains in its terms and conditions that it is not insurance because it assumes no legal obligation to pay claims. Medi-Share's multi-million dollar marketing campaign touts Medi-Share as "biblical sharing" and the embodiment of Galatians 6:2: "Carry each other's burden, and in this way you will fulfill the law of Christ." 

The Commonwealth filed suit in Franklin Circuit Court seeking a declaration that Medi-Share is "insurance" subject to regulation under the Kentucky Insurance Code. After a bench trial, the court ruled in favor of Medi-Share. The Court of Appeals affirmed in a 2-1 opinion. Judge Rosenblum found that "insurance" is an arrangement for transferring and distributing risk. Because Medi-Share does not guarantee payment, it never transfers or distributes risk, and therefore is not regulated by the Kentucky Insurance Code. Judge Rosenblum noted in dicta that Medi-Share is also exempt from the Kentucky Insurance Code under KRS 304.1-270(1) even if classified as insurance. 

Judge Nickell concurred in part. He described Medi-Share as a "health care contrivance" which the Kentucky General Assembly should "rein in...before it runs wild, stampedes and tramples the rights and reasonable health care protection Kentuckians expect." However, Judge Nickoll agreed that Medi-Share is not insurance. He disagreed with Judge Rosenblum's dicta exempting Medi-Share under KRS 304.1-270(1). The statute requires a direct donation to a specified recipient. Because Medi-Share acts as an intermediary and takes out a hefty cut for administrative costs, it does not qualify for exemption. 

Judge Thompson dissented. He noted that other states consider Medi-Share to be a form of insurance, and expressed his fear that similar programs "will be sold in Kentucky and remain unregulated in an insurance industry susceptible to unscrupulous tactics." Medi-Share bears all the indicia of insurance yet deliberately evades regulation by using unique terminology. Although Medi-Share does not technically share "risk" like other insurers, its actions and advertisements induce people to participate based on the belief of a shared risk. Judge Thompson noted that Medi-Share is not exempt under KRS 304.1-270(7).

Note: An open question is whether Medi-Share violates the Kentucky Consumer Protection Act. Medi-Share markets itself as a reliable alternative to health insurance and represents that "all eligible needs have been met." It communicates its reciprocal obligation to subscriber's through Galations 6:2 which mandates "carrying each other's burden." Despite the biblical quotation, Medi-Share carries no actual burden (i.e. risk) to evade regulatory protection for its subscribers."  by Kevin Burke


Category: Keyword Search: bad faith

12/10/2008
Hans G. Poppe
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Anyone that follows sports, and many who don't, will probably remember the Duke University mens' Lacrosse team scandal.  According to a North Carolina newspaper, Duke has now been forced to sue it's own insurance company, National Union Fire Insurance Co., (an AIG affiliate) for refusing to provide insurance coverage and pay the damages that Duke paid to those players to settle the players' lawsuits against the University.  The lawsuit is likely a combination of breach of contract and insurance bad faith.
"Because National Union has not paid, Duke has been forced to bear the full financial impact of its own defense,' Duke attorneys wrote in the lawsuit.
According to The Herald Sun, the insurer has refused to reimburse Duke for legal bills of $11-million because it believes the university’s policy is capped at $5-million. D uke's demands are considerable: it wants National Union to "advance and/or pay all of Duke?s Defense Costs (as defined in the insurance policies) for the Underlying Claims and the full amount of Duke?s settlement with certain claimants," and "a declaratory judgment (i) that National Union is liable to advance the costs for any future defense of Duke in connection with the Underlying Claims, and (ii) that National Union is liable for any reasonable settlement entered into by Duke in the Underlying Claims and/or any judgment entered against Duke in the Underlying Claims."

hans


Category: Keyword Search: bad faith

12/9/2008
Hans G. Poppe
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A federal jury found that Atlantic Mutual "acted despicably and with malice and oppression in wrongfully refusing to settle" a personal injury case involving Harold Leon Bostick in 2002.

Bostick, who served in the Marine Corps from 1991 to 1994, was an amateur weightlifter and bodybuilder prior to his accident. He had earned a master's degree in business administration from Rice University in Texas and was attending law school at Pepperdine University at the time of the injury.

Bostick was doing squat presses when the weights fell on him and broke his neck.  The weight machine Bostick was using didn't have a safety harness that would have prevented the injury.  Bostick sued Flex, the manufacturer of the machine, and Gold's Gym.  Gold's settled for $7.2 million.  Bostick learned that Flex only had a $1 million insurance policy through Atlantic Mutual.  Bostick offered to settle for that amount; however, Atlantic never even responded to the demand.  A jury trial followed, and the award was $16.2 million.  Because Atlantic exposed Flex to a verdict in excess of its insurance policy, Flex assigned its bad faith cause of action to Bostick.

Assignements such as this are not uncommon in cases where the damages are extremely high and the insurance coverages are limited.  The defendant's insurance company has three duties in this situation: (1) provide a defense, (2) evaluate the case and, if possible, resolve the case within the policy limits, (3) advise the insured of the risks of proceeding to trial and the personal exposure that may arise if the verdict exceeds the policy limits, known as an excess verdict.  If the insurance company fails to do any of these things, and a verdict exceeds the policy limits, the insured can sue its carrier for unfair claims handling, also known as bad faith. Following an excess verdict, the insured will usually try to get the inured person to agree to accepting the insured's potential bad faith claim in exchange for an agreement that the injured person will not attempt to collect the judgment from the insured but will instead seek to recover the money from the insurance company.  The original injured party then stands in the shoes of the insured and brings the first party bad faith claim against the insurance company.  Not many of these cases ever reach a jury verdict as most are resolved prior to trial.

To learn more about bad faith, be sure to watch our Bad Faith Video

hans

Category: Keyword Search: bad faith

11/17/2008
Hans G. Poppe
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A california judge has awarded over $9 million in damages to a California women.  Patsy Bates said she had undergone surgery to remove a tumor and had received her first two chemotherapy treatments when doctors stopped treating her because her bills were going unpaid.  Health Net Inc must now pay the $120,000 in unpaid medical bills, $750,000 in emotional distress, and over $8 million in punitive damages.  The case was arbitrated by Sam Cianchetti  and Ms. Bates was represented by California bad faith attorney William Shernoff

Kentucky is lucky in that we have strong bad faith laws to help protect consumers from unfair insurance practices, including unfair claims denial.  However, many times Kentucky's bad faith laws provide no protection becuase most health insurance polices these days are ERISA policies, meaning they are governed by federal law.  If an ERISA insurance company denies a claim they generally are immune from bad faith lawsuits.  Unfair, but reality.

Hans Poppe



Category: Keyword Search: bad faith

11/17/2008
Hans G. Poppe
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I have been invited by the National Business Institute to lecture on "Bad Faith Insurance Claims in Kentucky."  Specifcally, I will be focusing on the following topics: Indentifying the type of Tort, Related Causes of Action and Damages and Gaining a New Perspective on Pre-Trial Practice.  I will be joined by J. Michael Hearon, who will be discussing Emerging issues and current laws; Lee Sitlinger, who will discuss Gathering Information Critical to the Case and Successful Courtroom Strategies; and Nancy Loucks, who will be discussing Ethical Consequences and Avoiding Bad Faith Claims for the Insurance Professional.  You can see the seminar outline here:
Hans


Category: Keyword Search: bad faith

11/17/2008
Hans G. Poppe
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Famed trial lawyer Richard "Dickie" Scruggs has pleaded guilty to attempting to orchestrate a bribe of a judge.  According to news articles Scruggs was attempting to obtain a favorable ruling in a fee dispute with some other lawyers arising out of bad faith insurance lawsuits against State Farm related to the Katrina diaster.  The New York Times wrote an in depth article about the fee dispute issue when Scrugss was first indicted.

In his first significant case, Scruggs represented shipyard workers who had been exposed to asbestos. Scruggs earned millions from asbestos litigation. But it was his assault on Big Tobacco in the 1990s that made him famous. Scruggs orchestrated one of the largest civil settlements in American history, winning nearly $250 billion from the industry. The fees awarded to the plaintiffs' lawyers came to more than $13 billion. Scruggs' share of the pot was at the very least in the hundreds of millions.

There are cases that make lawyers' careers, but this was something more. It made Scruggs a star in the legal world and a character in "The Insider," a 1999 movie about the tobacco litigation.

The Mississippi bar association has indicated it will immediately suspend Scrugs' license to practice law.  And, while he has yet to be sentenced, prison is certainly a possibility.

This is certainly a disturbing development and, once again, paints a picture of personal injury lawyers as nothing more than money chasing scoundrels.

This event does nothing to change what I know to be true: most lawyers are hard working, honest people that take seriously their oath to place their client's interests ahead of their own. 

Hans Poppe

Category: Keyword Search: bad faith

11/17/2008
Hans G. Poppe
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Louisville Magazine's Top Lawyer's edition is on the newstands and yours truly was one of six lawyers profiled.  The magazine profiled a public defender, a large defense firm lawyer, a medium-sized law firm lawyer, an in-house general counsel, the new assistant attorney general of Kentucky (my friend Tad Thomas), and I was the solo practioner. 
I was very flattered to be included and thought the interview went well.  You can take a look at the article on me by clicking here. You can read the other profiles by going to Louisville Magazine's website
HansPoppe


Category: Keyword Search: bad faith

11/17/2008
Hans G. Poppe
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In what is being reported as the largest verdict in Louisiana or Mississippi for post-Katrina claims handling, a New Orleans jury awarded a grocery store $21 million dollars for damages his stores received in the hurricane aftermath.
The jury heard evidence that United Fire & Casualty Insurance Co. acted in bad faith by delaying paying the claim becuase of the financial stress it was under.  Attorney Phillip Franco represented the store owner and said the jury's decision came after hearing "that this insurance company delayed and refused to make payments because of the financial stress put on that company because they didn't purchase enough reinsurance to cover the extent of the catastrophic losses caused by Katrina."
Hans


Category: Keyword Search: bad faith

11/17/2008
Hans G. Poppe
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Sorry we haven't blogged in a few days, especially considering all of the recent Kentucky legal events, like the bombshells attorney Stan Chesley has been dropping in the Fen Phen trial and the two teenage girls asking to join the suit against Kentucky Kingdom for the tragedy that severed a Louisville girl's legs.
Not to mention the raging dispute at the Kentucky Bar Association's annual convention about whether Kentucky should adopt a "squeal rule" that would require lawyers to report each other to the bar association for suspected unethical behavior (I'm against it by the way, but that's fodder for another post).

But we have been working on our video section.  Let us know what you think of the videos we added on Legal Malpractice and Insurance Bad Faith.  Coming soon are videos on nursing home negligence and automobile and truck wrecks.

Hans


Category: Keyword Search: bad faith

11/17/2008
Hans G. Poppe
Comments (0)
In a lengthy 72-page opinion, Kentucky's Court of Appeals has set aside a $28 million dollar verdict in a bad faith case.  The original verdict was $10,000,000 in compensatory damages and $18,000,000 in punitive damages.  The trial court reduced the punitive damages to $10,000,000 (likely to comport with a 1-1 ratio which is presumed constitutional).  The Court of Appeals didn't think that was enough.  The three justice panel ruled that the entire verdict was given under the influence of "passion or prejudice or both."
I'll give an in-depth analysis later, but here it is http://www.poppelawfirm.com/library/Cincinnati_Insurance.pdf 
Hans 

Category: Keyword Search: bad faith

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