Vegas Personal Injury Law Blog

A few weeks ago, I was preparing jury voir dire questions for a short trial. Some of the questions that I prepared involved various issues of tort “reform” and other items currently in the media that dealt with negative events involving personal injury lawyers. One area that always has to be covered is the McDonald’s hot coffee case, because most potential jurors have been indoctrinated to believe that this case sets the standard for a frivolous lawsuit.

Recently, I viewed the HBO special- “Hot Coffee”.  This special starts off  by reviewing the details of the McDonald’s case.  If you have the impression that this was as frivolous suit, you should watch this one and one-half  hour special.  Stella Liebeck’s legs were scalded by coffee that was about the temperature of  the water in a car radiator (180-190 degrees).  This temperature is capable of causing third degree burns requiring skin grafting.  Ms.  Liebeck wasn’t the only one that was injured by this McDonald’s coffee. There were over 700 burn cases reported, because their holding temperature for coffee was so high.

The unanimous  jury found Ms. Liebeck to be 20% at fault and McDonald’s 80% at fault for the burns she sustained to her legs from the hot coffee.  The jury awarded Ms Liebeck $160,000.00 in compensatory damages and $2.7 million in punitive damages.  The purpose of punitive damages is to change behavior brought about by egregious conduct. The presiding judge reduced the total punitive damage award to $480,000.00.

The media picked up on the hot coffee case and made it the flashpoint for tort “reform”, which is an attempt to block civil lawsuits and the public’s right to get into court. The media never mentions that there are legal procedures in place that block any frivolous case from ever getting to trial. Nor do they attempt to provide the actual facts of the case.

After this case, big business, insurance companies, pharmaceutical companies, asbestos companies, oil companies, tobacco companies, health insurance companies and companies that insure doctors, tried to pass federal tort “reform” legislation. They banded together under an organization known as the U.S. Chamber of Commerce, which has its headquarters in Washington, DC.  This appears to be an agency of our federal government. It is not. Obviously, the U.S. Chamber of Commerce has  strong financial backing.  Carl Love and George Bush Jr. became the proponents of tort “reform.”  They advocated caps on compensatory, special, and punitive damages.  They preached  that frivolous malpractice suits were going to put our doctors out of business.

Bill Clinton vetoed federal tort “reform” legislation.

One of the purposes of tort law is to promote safety.  In order to do that, you have to hold entities that sell products and services accountable.  If we don’t, then those injured by the negligence of these companies must  look to state programs such as Medicaid to pay for support and medical care necessitated by their injuries.

Once the Chamber of Commerce was blocked from passing national tort “reform”, they centered their campaign  on providing financial support to elect candidates for the state courts that would be pro business and pro tort “reform.”  As a result of this state by state campaign, judges were put into place who were in favor of placing caps on punitive damages as well as caps on non-economic damages for pain and suffering, and even limitations on the recovery of medical expenses paid by insurance (Collateral source rule).

All of this was accomplished by taking snippets of information from cases where people were injured and using these negative aspects of these cases to make them look bad in the eyes of the public. All cases have some negative aspects.  In our state of  Nevada the aftermath of this tort “reform” campaign resulted in a $250,000.00 cap on non-economic damages on medical malpractice cases, a one-year statute of limitations, and restrictions on recovery of damages for medical bills that were  paid by insurance, obviating the collateral source rule on med-mal cases.  Some states have adopted caps on punitive damage, and other states have caps on the non-economic and/or entire amount of damages that a jury can award.

The bottom line is that our civil justice system needs tort law to maintain a civilized society and to pass the cost of damages caused by profitable injury producing products back to the manufacturers and companies that cause injuries to our friends and family.  This promotes safety in our society and protects the public from dangerous services and products.  The criminal justice system, to a certain extent, makes for a more civilized society, but it can’t control non-criminal conduct.  That’s where the civil justice system picks up.  Without access to the courts on tort cases, the public would be picking up the tab for damages caused by entities that should be held accountable for their actions.

Recently, I received a telephone call from a woman who was involved in an accident in her boyfriend’s garage. Her boyfriend had recently purchased a new home.  The girlfriend lived with the boyfriend about 75% of the time.  While the boyfriend was hospitalized, the girlfriend went into the garage to put some kitchen appliances in a cabinet that was hung on the wall.  As she was doing so the cabinet fell and landed on her foot causing an injury requiring surgery.

Although the girlfriend  had health insurance, her personal responsibility on her medical bills is in excess of $50,000.00, and her treatment is ongoing; and, she is still experiencing persistent pain and will require future medical treatment.   An inspection made after the girlfriend’s  accident showed that the cabinets were improperly secured to the wall.  The couple that sold the house to the boyfriend are elderly and now reside in a remote state.
The initial question that had to be answered was whether the boyfriend’s homeowners policy would provide any coverage for the girlfriend? There are two types of coverage on a homeowners policy that could possibly provide coverage for the girlfriend.  These two types of coverage are premises med pay and liability coverage. Premises med pay coverage (usually between $1,000.00 and $10,000.00 on a homeowner’s policy) will pay for the medical bills of a visitor that is injured while on your property, regardless of fault.  However, this coverage excludes resident relatives and non-relatives who live at the residence on a regular basis. Therefore, the girlfriend was not eligible for premises med pay coverage.

Liability homeowner’s coverage provides recovery for persons who are injured on your property. This coverage is fault-based.  So, for this coverage to apply the owner must be negligent in causing an accident.  Since the boyfriend did not hang the cabinets and did not know about  the defect that caused the cabinet to fall, liability coverage from the boyfriend’s policy was not available to the girlfriend for her accident on the boyfriend’s homeowner’s policy.

The second question that had to be answered was whether or not the sellers’ homeowner’s policy would provide liability coverage for the girlfriend?

Virtually all homeowner’s coverages and automobile coverages are “occurrence policies.”  With this type of coverage, the occurrence (negligent act and accident) must occur within the policy coverage period or term of the policy.  The girlfriend’s accident occurred the after the house was sold. The seller’s homeowners policy was not in effect at the time of the occurrence and the girlfriend’s accident  did not happen  within the coverage term.  So, the sellers’ homeowner’s carrier will deny liability coverage for the girlfriend’s accident.

If the same negligent act occurred within the coverage period, lets say during the walk-through, prior to the closing of the sale, then the negligent act and the girlfriend’s accident would have occurred within the coverage term or period, and there would have been liability coverage from the seller’s policy for the girlfriend’s loss.

With an occurrence policy, if the occurrence happens within the coverage period, and the policy then terminates, even if the a claim or lawsuit is made years later, the occurrence policy provides coverage.  For example, if you are in an injury producing  automobile accident today and you don’t like the way that your carrier is handling the accident, and you cancel your policy tomorrow, and the injured party sues you one year later, you will still have liability coverage for this accident. Your liability coverage will cover the costs of your legal defense and damages up to the limits of your liability coverage.

Therefore, occurrence coverage will cover incidents arising during the coverage period, regardless of when those claims are reported, so long as they are made within the applicable statute of limitations, which can range from one year to three years for  negligence, depending on which state the accident occurs.

So occurrence coverage has a tail coverage period which makes it more expensive than “claims-made” coverage which has no tail.  For that reason, claims-made coverage is cheaper than occurrence coverage.  We see claims-made policies on professional liability coverage, such as malpractice policies or business liability policies.  Claims-made policies cover incidents arising during the policy period which are also reported during the term of the policy.  You can purchase an endorsement on a claims-made policy that responds to incidents which occurred before the policy start date (also known as retroactive date).  You can also purchase a tail coverage on a claims-made policy which covers incidents that occur during the policy term, that have not been reported to your carrier during the policy term. So, if there are no prior acts or retroactive endorsements or tail endorsements on a claims-made policy, it will be  cheaper than occurrence coverage.

For example, many hospitals will purchase claims-made coverage for their doctors malpractice insurance.  On a claims-made basis, if the doctor leaves the hospital to enter private practice,  he should purchase tail coverage to cover occurrences that happened while he was working for the hospital that are reported after his employment with the hospital ends.

Getting back to the girlfriend’s accident, her only remedy is to file suit against the uninsured elderly sellers who reside out of state. If she could  afford to pay an attorney to obtain  a judgment against the sellers, she may never be able to collect on it.  So, before a suit is filed against the sellers, an asset check should be done to determine if the sellers are candidates for filing bankruptcy to avoid the judgement.  Remember, the sellers can liquidate all their assets and use them pay down their mortgage.  If the seller’s state has homestead laws; or, if the sellers file for bankruptcy, the girlfriend may not be able to execute on any judgment against the sellers.

Recently, I have had a number clients who have been involved in auto accidents where they have been partially at fault for an accident and have not been treated fairly by their own insurance company.

NRS 687B.385 states: “An insurer shall not cancel, refuse to renew, or increase the premium for renewal of a policy of motor vehicle insurance covering private passenger cars of commercial vehicles as a result of any claims made under the policy with respect to which the insured was not at fault.”

What is an “at-fault accident”?

This statute was interpreted by the Nevada Supreme Court in the case of State Division of Ins. vs. State Farm Mut. Auto. Ins. Co., 116 Nev. 290, 995 P.2d 482(2000).  This case interpreted NRS NRS 687B.385 to include accidents in which the insured was 50% at fault or less.  This case put NRS 687B.385 in conformance with NRS 41.141, Nevada’s comparative negligence statute.  This decision means that an insured is at fault for an accident when his liability for a two-vehicle  accident is exactly 50/50, even though he can still recover 50% of his damages from the other driver under NRS 41.141.

Therefore, an assessment of 50% liability (or more) by your insurance company for an accident as an at-fault accident and  will probably result in an increase in your auto insurance rates.  If you are involved in another at-fault accident, your policy will probably be cancelled. Let me give you a real life example.

A vehicle making a lefthand turn going southbound to eastbound at an intersection enters a very wide lane, and stays to the left hand side of that lane.  Another vehicle, at about the same time, traveling northbound makes a right hand turn and enters the same lane but stays to the right hand side of the same lane.  The driver of the vehicle on the right then comes face to face with roadway signs indicating that the roadway lane is narrowing and she must merge to the left.  She does so and collides with the other vehicle traveling on the left hand side of the lane.

Both drivers are insured by the same insurance company. The vehicle on the right was forced to merge left because the lane narrowed into a single lane width. Roadside hazard/warning signs forced the driver on the right to merge to her left. The vehicle on the left was already on the left side of the roadway and did not have to change it’s position within the lane to enter the narrowed portion of the lane.

Anyone reading this fact pattern would automatically assume that the driver on the right hand side of the travel lane is more at fault for this accident than the driver on the left.  However, the insurance carrier, who was the same company for both parties, determined liability at 50/50 and assessed both drivers with an at-fault accident and raised both drivers’ insurance rates.

The insurance company’s assessment of 50/50 liability for this accident is unrealistic because:

1. The driver on the left had no duty to anticipate the fact that the  driver on the right was going to swerve into her vehicle;
2. If the vehicle on the right did use her left hand turn signal, the vehicle on the left, could not see it because the vehicle on the right was not in front of her vehicle; and
3. The accident occurred eighty-six (86) feet east of the intersection where both vehicles entered the same roadway.

According to Nevada case law the adverse effect of a 50/50 assessment of liability will result in the increase of both drivers’ insurance rates for an at-fault accident.  In the event that there was  an assessment of 51/49 liability in favor of the driver on the left and against the driver on the right, the insurance company could not raise the rates for the driver on the left for an at fault accident.

Obviously, there is no exact science to assessment liability for any accident, however based on the facts and circumstances of this accident, a 50/50 liability assessment is completely unrealistic.

So, why did the insurance company raise the rates of both drivers? The only reason is for an economic benefit. Raising the rates of both drivers results in the insurance company recouping its losses for this accident more quickly from the increased insurance premiums from both drivers, as compared to raising the rates for only one driver. And, the insurance company only has to pay 50% of each party’s property damage, thus forcing the insured drivers to pay their own collision deductibles in order to have their vehicles repaired.

After the insurance company was asked to review the facts and circumstances surrounding this accident and to change it’s liability decision by one percent in favor of the vehicle on the left, they refused.

Now, if in the future, liability can be determined by a trier of fact in favor of the vehicle on the left, will the insurance company return the driver on the left’s increased premiums and collision deductible?  Did the insurance company act in bad faith concerning their liability apportionment decision?

Therefore, if you are in an at-fault accident where your insurance company assesses liability against you at 50/50 (or more), you will be assessed with an at fault accident. You should also  be aware of the adverse consequences of increased rates and cancellation of your policy.  You should also consult an attorney for legal advice concerning the insurance company’s decision.

If you or your children are involved with a fender bender accident where you are at fault, or partially at-fault, and  nobody is hurt, and law enforcement isn’t involved;  you should consider working out the property damage with the other driver to avoid increased insurance rates and/or cancellation of your policy.

Beginning July 1, 2009, Medicare Secondary Payor requires insurers to report any settlement, judgment or award to Medicare. Failure to report any settlement, judgment or award will result in a $1,000.00 per day penalty to the insurance company. Medicare Secondary Payor can sue for double damages, plus interest. The suit can be initiated against the insurance company, the Medicare beneficiary and his or her attorney, as well as the physician, if the settlement of the claim or suit does not protect Medicare’s subrogation interests.

Medicare is now contacting auto insurance liability insurance companies notifying them that funds be held for payment of Medicare liens. This may even include funds for payment of future medical services. If this happens, the attorney will probably receive a settlement check with Medicare’s name on it. This will certainly complicate and delay the settlement distribution to the medicare beneficiary.