Is There A Doctor in the House?

Posted on March 7, 2014 03:41 by Patrick J. Kearns

The Patient Protection and Affordable Care Act, often referred to as the “Affordable Care Act” (ACA), or perhaps more commonly “Obama Care,” has had no shortage of media coverage and controversy since it was signed into law nearly four years ago (Yes, it has been 4 years! President Obama signed the Act into law on March 23, 2010).  Several aspects of the ACA have been, for better or worse, more “visible” than others; such as the heavy focus on the “individual mandate,” i.e. the requirement that uninsured citizens obtain health insurance or pay a penalty; the impact on employers and small businesses; and the more recent website debacle where many people seeking to sign up for health insurance on the newly created exchanges were unable to do so due to technical issues with the ACA’s www.healthcare.gov website. 

One of the less discussed issues with the ACA however, is the potential for a massive provider shortage.  At its basic level, one of the primary purposes of the ACA is to increase the number of insured Americans. Indeed, according to various estimates, the implementation of the ACA is anticipated to provide insurance to 25-30 million additional individuals who would otherwise not be insured: “[T]he Affordable Care Act will also ensure that every American can access high-quality, affordable coverage, providing health insurance to nearly 30 million Americans who would otherwise be uninsured.” (Quoted from 2014 Funding Highlights bulletin published on www.whitehouse.gov). Coupled with provisions providing for free or reduced cost annual exams; greater Medicare coverage; increased coverage for younger adults; and increased coverage for preventative care and testing such as mammograms and colonoscopies; that means more insured people utilizing more health care services. Consequently, the question arises of whether we have enough physicians and providers to administer the increased health care demands?  

The Obama administration has acknowledged this potential and recently proposed a Fiscal Year 2015 Budget for the Department of Health and Human Services which attempts to address this contingency, at least in part. According to the HHS’s “Fiscal Year 2015 Budget in Brief” “[t]he Budget makes new and strategic investments in our nation’s health care workforce to ensure rural communities and other underserved populations have access to doctors and other providers. In total, $14.6 billion will be invested in three key initiatives: $4 billion in expanded funding for the National Health Service Corps, $5.2 billion for a new Targeted Support for Graduate Medical Education program, and $5.4 billion for enhanced Medicaid reimbursements for primary care. (U.S. Dept. of HHS “Fiscal Year 2015 Budget in Brief”; http://www.hhs.gov/budget/fy2015/fy-2015-budget-in-brief.pdf).

While the long-term idea behind the ACA may be to reduce health care costs and the need for excessive or increasing health care services (i.e. an insured population is presumably healthier and will therefore require less health care), will we have enough physicians, nurses, and other providers necessary to get us healthier in the short term? 

The full impact of the Affordable Care Act, positive or negative, remains to be seen. You can learn a great deal more about the Affordable Care Act, the difficulties with its implementation, and its impact on you and your practice, at DRI’s 2014 Medical Liability & Health Care Law Seminar, taking place in Las Vegas on March 20–21, 2014 at the Cosmopolitan Hotel.  Among many top-notch presentations at this year’s seminar you will not want to miss Kimber Lantry, Executive Vice President for AXIS Insurance’s Health Care Unit, give a fascinating presentation on “The Unintended Consequences of the Affordable Care Act.”

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If a nurse discloses confidential patient information to a third party without authorization, and for reasons unrelated to the patient’s treatment, can the medical company that employs the nurse be held strictly liable for breach of fiduciary duty to maintain the confidentiality of personal health information?  New York’s highest court has said no.

In Doe v. Guthrie Clinic, the plaintiff was treated at the Guthrie Clinic Steuben (the “Clinic”) for a sexually transmitted disease (“STD”).  A nurse at the Clinic recognized plaintiff as the boyfriend of her sister-in-law, which apparently prompted the nurse to access plaintiff’s medical records. During plaintiff’s treatment, the nurse sent six text messages to her sister in law discussing the details of plaintiff’s medical condition, i.e., his STD.  Within five days of his treatment, plaintiff learned of these text messages and called the Clinic to complain about the nurse’s behavior. The Clinic fired the nurse.  It also sent plaintiff a letter confirming that his confidential information had been improperly accessed and disclosed, and stating that appropriate disciplinary measures had been taken.

Plaintiff filed a diversity action in New York federal court against various affiliated entities that allegedly “owned, possessed, operated, staffed and/or controlled” the Clinic.  The District Court dismissed plaintiff’s eight causes of action, most of which were based on respondeat superior, and plaintiff appealed.  The United States Court of Appeals for the Second Circuit affirmed the dismissal of most of the claims.  It held that because the nurse sent the text messages purely for personal reasons that had nothing to do with plaintiff’s treatment, the nurse’s actions “cannot be imputed to the defendants on the basis of respondeat superior.”  Doe v. Guthrie Clinic, Ltd., 710 F.2d 492, 495-96 (2nd Cir. 2013). However, plaintiff argued that “medical corporations” should be held “separately and strictly liable under New York law for breaching their fiduciary duty to keep personal health information confidential.”  Id. at 496.  With minimal case law on this important issue, the Second Circuit certified the following question to the New York Court of Appeals (New York’s highest state court):

Whether, under New York law, the common law right of action for breach of the fiduciary duty of confidentiality for the unauthorized disclosure of medical information may run directly against medical corporations, even when the employee responsible for the breach is not a physician and acts outside the scope of her employment?

The New York Court of Appeals ruled that liability does not extend to a medical corporation under these circumstances.  It held that “a medical corporation’s duty of safekeeping a patient’s confidential medical information is limited to those risks that are reasonably foreseeable and to actions within the scope of employment.”  Doe v. Guthrie Clinic, No. 224, 2014 WL 66644 (N.Y. January 9, 2014).  The Court noted, however, that where an employee discloses confidential patient information outside the scope of his or her employment, the plaintiff is not without a remedy against the medical corporation.  The plaintiff can still assert direct claims against the medical corporation for negligent hiring, training, and supervision, and for failure to establish adequate policies and procedures for safeguarding confidential patient information.  

This is an important case for medical corporations as it firmly restricts their fiduciary liability for an employee’s unauthorized disclosure of confidential patient information.  At the same time, with several direct causes of action still available to plaintiffs, there is sufficient incentive for medical corporations to diligently establish and enforce policies that protect patients’ personal health information.


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Affordable Care Act—Pros and Cons

Posted on December 17, 2013 08:28 by Kenneth M. Battle

Aside from the political propaganda that has permeated our collective consciousness since its inception, what do we really understand about the Affordable Care Act?  The overall theme and purpose for the Act is making health care affordable for the masses, hence the name.  Does the Act accomplish its set purpose and goals?  Will the Act have side effects that forever change the landscape of health care?  How will the Act impact medical liability and health care law, if at all?

Some of the major pros, if you will, include: 1) access to affordable, quality health insurance for tens of millions of people; 2) prevention of dropping people from health coverage when they get sick or make an honest mistake on their application for coverage; 3) prevention of denying coverage to those we are already sick; and 4) young adults are allowed to stay on their parents health care plan until they reach the age of 26.  There are numerous others, but for the sake of discussion I picked a few to list here.

Some of the major cons include: 1) higher taxes for the wealthy, in order to help pay for implementation of the Act; 2) insurance companies are forced to provide coverage for sick people, which likely increases health care costs for everyone else; 3) there’s a mandate that forces individuals to obtain health care coverage or potential pay a fee for failure to do so; and 4) while the Affordable Care Act focuses heavily on providing coverage for all, the by-product is an increase in the cost of care.

What are your thoughts on ways in which the Act will affect our profession, and our practice areas?  

Learn more about the Affordable Care Act at DRI’s 2014 Medical and Health Care Liability Seminar, March 20-21, at the Cosmopolitan Hotel in Las Vegas. With two days of cutting edge instruction on medical and legal topics, the seminar will include a presentation focused on “The Unintended Consequences of the Affordable Care Act”. Register today

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The American Psychiatric Association's recent changes to the Diagnostic and Statistical Manual of Mental Disorders (DSM-5) provide another arrow in the quiver for plaintiffs seeking recovery for psychological injury. These changes are especially relevant to insurers and businesses defending against personal injury claims where post traumatic psychological disorders are at issue. Defending against claims for psychological injury can be a daunting task considering the subjective nature of these injuries. Unlike physical injuries or deformities, the fact that a plaintiff is depressed, anxious, fearful or withdrawn is usually not overtly recognizable during the course of a two or three day trial.  That leaves plenty of room for jurors to speculate on the extent of the plaintiff's psychological injury.  

The DSM-5 manual will likely ease the task of proving the existence of a psychological injury by broadening the diagnostic criteria for many psychological disorders, such as acute stress disorder and posttraumatic stress disorder (PTSD).  For example, persons allegedly suffering from PTSD are no longer required to prove that they experienced or witnessed a traumatic event first-hand. Now, plaintiffs could potentially use DSM-5 to support their claims of PTSD even if they experienced a traumatic event indirectly, such as through a phone call or watching a breaking news story about a loved one's death or injury.  In addition, PTSD is now considered "developmentally sensitive," which means the diagnostic thresholds for diagnosing PTSD are lowered for children and adolescents.  

In short, the revamped DSM-5 will likely provide plaintiff attorneys with more ammunition to prove that their clients have suffered an array of psychological injuries as a result of a traumatic event.  To adequately defend against these claims, defense attorneys must familiarize themselves with the revised diagnostic criteria and try to use it to their advantage.  This will require a more fact-intensive approach to defending against these claims by digging deeper into plaintiffs' therapy records to prove that they are not suffering from any number of symptoms listed under a given psychological disorder.  Although the revised DSM-5 will make psychological disorders easier to prove, the defense bar must use DSM-5's improved clarity to its advantage.
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About the Author:

This article was written on August 14 by Ian Lambeets, Esq. of Sands Anderson PC's Coverage & Casualty Litigation Group, a law firm specializing advising and representing corporations, individuals, insurance companies, and self-insured entities in litigation involving personal injury, wrongful death, policy coverage, product liability, ERISA, aviation and transportation liability, premises liability, professional liability, toxic waste, environmental claim defense and many other areas of significant liability exposure.  If you have questions about this post do not hesitate to the author at ilambeets@sandsanderson.com or any lawyer at the firm at (804) 648-1636.  


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On Monday, July, 8 2013 a Pennsylvania federal judge ordered a mass of NFL concussion cases to mediation.  The cases were brought by more than 4,000 former National Football League (NFL) players accusing the league of negligence and concealing the dangers of concussions.  The players say the league has known for years, or even decades about the long-term dangers of concussions.  The league responded that it released warnings based on the medical research available at the time.

The NFL filed motions to dismiss the cases in which it denied wrongdoing and stated that player safety is governed by the collective bargaining agreement.  The league contends the parties negotiated those terms and the issue is to be resolved in a confidential arbitration.  The players argue that the concealment was fraud and was not contemplated by the collective bargaining agreement.

U.S. District Judge Anita Brody originally planned to rule on the motion to dismiss on July 22, 2013.  However, she now says she will not rule on the motion until at least early September.  The judge says this will give the mediator time to bring the sides closer together.  Layn Phillips, a retired federal judge, has been appointed as the mediator.  Phillips cannot make a binding decision, and any side can choose to stop whenever it wants; however, the judge hopes the continued negotiations will result in a settlement.  

First, Phillips will meet with both sides’ counsel to hear the arguments on each side.  Then he will go back and forth with each side individually to try and strike a deal that works for both parties.  When Phillips reports back to the judge on September 3, 2013, he can recommend going back to court or ask for more time to negotiate.

Neither side commented on the decision.  The judge ordered the sides to refrain from publically discussing the mediation.  

Some commentators think the order to mediate is a signal that the case has a chance to settle.  Settling could prevent the NFL from turning over records that may harm its public image.  Additionally, it would save a lot of time and expensive litigation because the suit could drag on for years.

Yet, there are still those that have their doubts.  Gabriel Feldman, the director of the Sports Law Program at Tulane University said, “[i]t will be a great feat for the mediator to settle the case. He might bring them closer, but to what? This is complex litigation.”  He would be “surprised at this earl a stage for the N.F.L. to give a large settlement.”

We will have to wait until September 3 to see what happens.  The case is In re National Football League Players' Concussion Injury Litigation, U.S. District Court for the Eastern District of Pennsylvania, No. 12-2323.

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On March 27, 2013, a jury in federal district court in Bridgeport, Connecticut awarded Cara Munn, a 20-year-old woman who formerly attended the Hotchkiss School  in Lakeville, Connecticut, $41,750,000 in a case styled Orson D. Munn III et al. v. The Hotchkiss School, No. 3:09cv0919 (SRU).  The case raises important issues concerning "duty" and "assumption of risk."

The jury determined that Hotchkiss, a prestigious prep school, was negligent for two reasons: (1) in failing to warn plaintiff before or during a school sponsored trip to China during the summer of 2007 about the risk of insect-borne illness on the trip; and (2) in failing to ensure that plaintiff used protective measures to prevent infection by an insect-borne disease while visiting Mt. Pan in China.

In an article appearing in the Connecticut Law Tribune (Vol. 39, No. 13), titled "Tick Bite Leads To Big Verdict," it was reported that the school was faulted specifically  for not warning plaintiff (and her parents) that she would be traveling in mountainous and forested terrain. As a result, the jury determined that the plaintiff was not aware that she had to protect herself from insects by wearing bug repellent, long sleeve shirts and trousers, and by avoiding brushy undergrowth.

According to Plaintiffs' Amended Complaint, Ms. Munn's parents had Cara flown back to the United States in July '07, where she was hospitalized for several weeks at Weill Cornell Medical Center in the pediatric ICU and later at the Rusk Institute for extensive rehab.  As a result of her severe encephalitis, plaintiff suffered severe neurological and motor injuries, including permanent loss of speech. 

The case, which will almost certainly be appealed, raises significant issues concerning duty and the assumption of personal responsibility by parents who agree to have their child travel abroad for educational purposes. Apart from the obvious differences in food, culture and living conditions, traveling abroad carries many potential risks, some of which are foreseeable and some of which are not. Stepping back from the facts presented by this particularly tragic case, should a high school be held responsible for failing to prevent a student from being bitten by a tick in China? What if the tick had bitten her during a field trip to Central Park?

Assuming that the Second Circuit upholds this verdict, what does this case portend for high schools and colleges that plan educational trips abroad? Is there some bright line test that would provide guidance to a school evaluating the safety concerns of its students? Short of wrapping all of their students in cocoons and keeping them closely monitored in classroom settings, how can any school protect against the kind of unforeseen liability presented by this case?  

Hotchkiss' Answer to Plaintiffs' Amended Complaint states that plaintiffs' claims should be barred by the doctrine of assumption of risk.  The school argues that plaintiffs voluntarily assumed the risk of travel to China as evidenced by their execution of the pre-trip Agreement, Waiver, and Release of Liability.  In this agreement, plaintiffs agreed that Hotchkiss "would not be responsible for any injury to person or property caused by anything other than its sole negligence or willful misconduct" (emphasis added). Would legal weight did the court give to this release? 

Based upon the Verdict Form presented to the jury, it would appear that the trial court gave short shrift to the language in the release.  The jury was asked the following questions: (1) Was one or more of Hotchkiss' negligent acts or omissions a cause-in-fact of Cara Munn's injuries; and (2) Was one or more of Hotchkiss' negligent acts or omissions a substantial factor, that acting alone or in conjunction with other factors, brought about Cara's injuries? 

Those inquiries are a lot different from asking whether the jury finds that Hotchkiss' "sole negligence or willful misconduct" caused the injuries.  Although the jury determined that plaintiff did not contribute to any degree whatsoever in causing her injuries, it was not asked to consider whether other intervening factors played any role in causing Cara's injuries.

There are circumstances when a school can and should be held responsible when things go wrong on a school outing.  Three examples come quickly to mind: (1) sending kids into a war zone despite State Department warnings; (2) sending kids abroad into an epidemic earlier identified by the CDC; or (3) taking non-swimmers for an ocean swim outing without proper supervision. 

How is Munn different from these scenarios?  Is a random bug bite as foreseeable, if at all, as the kinds of risks discussed in the three scenarios above? According to Hotchkiss' summary judgment memorandum, the CDC reported that plaintiff was the first U.S. traveler ever to have reported TBE after traveling in China. Moreover, no U.S. traveler since plaintiff has developed the disease.  Therefore, how unreasonable was it for Hotchkiss not to take precautions against a risk of harm that arguably had such a slight likelihood of taking place?  Shouldn't plaintiffs have had to prove that the defendant was on prior notice of the existence of circumstances that could give rise to an injury? 

Plaintiffs' expert, Peter Tarlow once led a group of children, including his own son, on a tour of Israel.  If a child on that Israel tour had been unexpectedly assaulted by someone holding anti-Zionist views, would Dr. Tarlow expect to be held responsible for any resultant injury because he was "on notice" of decades of endemic unrest in the region? 

Two strong CT trial lawyers squared off against each for this eight day trial--for the plaintiffs, Antonio Ponvert of Koskoff, Koskoff & Bieder, one of the New England plaintiff bar's preeminent firms, and for the defendant, Penny Q. Seaman of Wiggin & Dana, one of Connecticut's oldest and most accomplished firms.  The bar should expect to see excellent post-trial briefing as events unfold.  

*This was originally posted on April 5 on Toxic Tort Litigation Blog. Read the current post here

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On March 11, 2013, the National Football League and the General Electric Co. announced that they are teaming up to create a Head Health Initiative that will provide $60 million dollars to assist leading neurologists in researching traumatic brain injuries and developing technology able to monitor these ailments.  $40 million will go towards developing imaging technologies, and the remaining $20 million will be available to others who seek to prevent, identify, and develop treatments for brain injuries.  Athletic apparel company Under Armour will also be providing $5 million dollars in support for the cause.

Jeff Immelt, GE Chairman and CEO, indicated that scientific support for the research would be top-notch.  “We’re trying to do this with the best minds anywhere in the world,” he noted in a news conference.  He declared that the funds would utilize GE’s expertise in sophisticated diagnostic imaging technology to increase general scientific knowledge on brain functions, noting “With this initiative, we will advance our research and apply our learning to sports-related concussions, brain injuries suffered by members of the military and neurodegenerative diseases such as Alzheimer’s and Parkinson’s.  Advancing brain science will help families everywhere.”

NFL commissioner Roger Goodell also expressed satisfaction with the initiative, stating: “The NFL has made tremendous progress in making the game safe and more exciting.  But we have more work to do.  Our collaboration with GE and Under Armour . . . puts us on an accelerated path to progress . . that will benefit athletes, the military, and all members of society.”

As orignally published at www.sportslawinsider.com March 13, 2013.
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Plaintiff Susan Early was allegedly injured while a passenger on one of Carnival Corporation’s ships.  A claim was initiated, then (apparently) resolved.  The mediator in the matter filed his report on November 21, 2012.  That report stated that the parties had settled subject to the condition that the Court retain jurisdiction to enforce the terms of the settlement and determine the issue of a possible LMSA if one were needed.  Early motioned the Court for Determination of Whether a Medicare Set Aside is Required.  The terms of the settlement negotiations were:

1) Carnival will pay Early an undisclosed sum;
2) Each party will pay its own attorney’s fees and costs;
3) Early will execute a release for Carnival;
4) Carnival will be responsible for the mediator’s fees; and 
5) The parties DISAGREE on whether an LMSA was required, but agree to submit the issue to the Court and to abide by its determination.

Early’s motion argued that an LMSA was not required under the Medicare Secondary Payer (“MSP”) Act.   Carnival filed its response, urging the Court to conclude that an LMSA was required.

Analysis.
The Court begins by providing a succinct recitation of the MSP Act. Then, the Court describes how MSA analysis has emerged as means to address the future medicals issue.   After detailing what actually constitutes a settlement in Florida, the Court turns to the question of whether the parties have an agreement to settle the claim.  
The Court concludes that the parties agreed on four out of five essential terms.  The term the parties could not agree upon was the LMSA issue, and asked the Court to fill in the blank on their behalf.  The Court declined the opportunity to do so.  
The Court distinguished this fact pattern from two others which appear routinely in other opinions addressing LMSA issues: 1) cases where the parties have a settlement agreement and agree that an LMSA is required, but cannot obtain review and approval of the LMSA from the Centers for Medicare & Medicaid Services (“CMS”); and 2) cases where the parties have a settlement agreement but disagree as to whether those terms included the creation of an MSA.  Here, the parties did not ask the Court to enforce a settlement agreement; they asked the Court to assist with a critical term of a potential settlement agreement.  While the Court noted the “conscientious and diligent” efforts of counsel to uncover the issue, it was not within the Court’s dominion to gap fill with respect to this essential term of the potential settlement agreement.  

Takeaway.
This case is another example of the LMSA issue derailing what is (otherwise) a perfectly acceptable settlement agreement.  These issues should become much less obtrusive after CMS issues final guidance about liability settlements and future medical expenses under the MSP Act.  That guidance is expected to be released later this year.  Until then, the best approach is to proactively address the issue, and evidence exactly how you have arrived at your conclusion on the future medicals issue.  That approach, coupled with the Court’s conclusion in Guidry v. Chevron , highlights the importance of utilizing a formalized approach to MSP compliance.  When addressing future medicals issues under the MSP Act, a formalized approach will yield complaint results every time.    
Having a formalized settlement process that integrates these core concepts will achieve efficiencies and enhance the effectiveness of settlement programs while ensuring closure on the file.  Such a formalized settlement process should take into account the timing and coordination issues which may hinder successful LMSA analysis.  Thus, screening a case up front to verify entitlement and identifying a claimant as an MSA candidate early on is the proper launching point for any LMSA analysis.  As parties move towards resolution and identify the prospective gross award, they can then determine (consistent with CMS’s basic rules issued in the workers’ compensation settling) if a future medical allocation exists within the gross award, either in the form of a specific carve out or implicitly contained within the one undifferentiated lump sum.  

The DRI MSP Task Force continues to track relevant judicial opinions and guidance from CMS in order to ensure compliance for you and your clients.  We continue to stress the importance of utilizing a formalized approach in addressing the LMSA issue on every single claim, as that process will, in and of itself, ensuring compliance on the LMSA issue. 

[1] Early v. Carnival Corporation, No. 12-20478-CIV-Goodman (S.D. Fla. February 7, 2013).

[2] 42 U.S.C. §1395y(b)(2).

[3] The Court cites to a recent article published by the American Bar Association which was co-authored by John V. Cattie, Jr., DRI MSP Task Force Vice Chair.  See also Medicare Set-Aside Arrangements Under the Medicare Secondary Payer Act, 42 The Brief, n. 10, Fall 2012.

 

[4] Guidry, et al. v. Chevron USA, Inc., Civ. No. 6:10-cv-00868, 2011 U.S. Dist. LEXIS 148942 (W.D. La. December 28, 2011).  

 

 

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Harvard University and the National Football League Players Association (“NFLPA”) are negotiating a deal with the NFL seeking a $100 million grant for the purpose of studying, diagnosing, and treating injuries and ailments suffered by players as a result of their football careers.

Dr. Lee Nadler, the Harvard Medical School Dean for clinical and translational research, attested to the groundbreaking nature of the proposed project, noting “[n]o one has ever studied the players [themselves] before.  There have been postmortem studies looking at the brains of previous players but not the players today.”

One has to wonder how generous the NFL will continue to be – after all, the league just donated $30 million to the National Institutes of Health last year to study brain injuries in NFL alumni.  Still, proponents of the Harvard study made sure to stress that this would not be simply another concussion study; instead, it would consider a whole host of health ailments potentially facing former NFL players  including chronic pain, depression, heart problems, and diabetes.  The scope of the proposed research is beyond anything that has been conducted to this point – preliminary estimates called for a nation-wide group of 200 NFL alumni drawn from a 1,000 person study group, with all participants being subject a wide array of medical tests.

Dr. Herman Taylor, one of the non-Harvard medical professionals retained for the study, stated, “Typically, when we do a test or medical study, we’re taking a snapshot.  What we want to do is see the full-length movie of what happens to a player over time.”

On the issue of funding, NFLPA Executive George Atallah noted, “Given the scope of health issues that NFL players are subject to, we are committed to making sure that enough money is allocated to get answers.”  However, because the research will be funded by a portion of league revenues, the actual amount the NFL is willing to put towards the study will likely not be determined until after the Super Bowl.

As originally published at Sportslawinsider.com on January 31, 2013
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A Pennsylvania district court in CAMICO Mutual Insurance Co. v. Heffler, Radetich & Saitta, LLP (E.D. Pa. Jan. 28, 2013), refused to allow an insurer access to its insured’s defense file, holding that that the insurer was not a client of the insured’s defense counsel.  There, CAMICO Mutual Insurance Co. insured Heffler, Radetich & Saitta, L.L.P. (“Heffler”) which was sued for misappropriating class action settlement proceeds.  In response to the suit, Heffler selected its defense counsel, and CAMICO agreed to pay defense counsel’s fees.  

CAMICO filed this declaratory judgment action seeking a finding apparently regarding the available policy limits.  In connection therewith, CAMICO sought production of certain documents related to the underlying lawsuit.  Heffler refused, and CAMICO moved to compel.  CAMICO argued the application of exceptions to the attorney-client privilege, which the parties agreed would have otherwise protected the documents from production.

CAMICO relied on the co-client exception, which concerns where two or more clients share the same attorney.  CAMICO argued that the exception applied because defense counsel represented the joint interests of Heffler and CAMICO with respect to the underlying lawsuit.  The district court disagreed, relying on several authorities for the proposition that the insurer is not automatically a client of defense counsel, even when it funds its insured’s defense.  Further, the district court found that based on the factual record, CAMICO was not a client of defense counsel.  Therefore, the district court denied CAMICO’s motion.

Notably, the district court glossed over three important issues, which merit a brief discussion here:  (1) Heffler’s choice of its own defense counsel, (2) the common interest exception as an exception to the attorney-client privilege, and (3) CAMICO’s providing a defense to Heffler in the underlying lawsuit while seeking to litigate the extent of coverage.  

First, that Heffler chose its own defense counsel made the arguments in favor of the co-client exception peculiar.  If CAMICO had appointed defense counsel for Heffler, there probably would have been a better argument for a co-client exception.  

Second, several courts recognize the common interest doctrine as an exception to the attorney-client privilege.  E.g., Waste Management, Inc. v. Int’l Surplus Lines Ins. Co., 144 Ill. 2d 178, 579 N.E.2d 322 (1991).   Although the district court asserted, without more, that CAMICO’s counsel did not share information with Heffler’s defense counsel, that is the point—CAMICO desired that defense counsel provide its counsel with otherwise privileged information.  This may have been a legitimate exception to the attorney-client privilege.   And, the Third Circuit and the Supreme Court of Pennsylvania have not taken a position on whether they will follow the Illinois Supreme Court’s interpretation of the common interest exception as set forth in Waste Management. 

Third and finally, that CAMICO was not seeking a declaration that it had no duty to defend or indemnify suggests that CAMICO and Heffler could have a common interest with respect to the underlying lawsuit.  Most courts that have criticized the Waste Management reject, in pertinent part, the concept that the insurer can seek to vindicate its disclaimer of coverage in a declaratory judgment action, yet have a common interest with its abandoned insured in the underlying tort action.  While subject to debate, that CAMICO was merely seeking to litigate the available limits suggests that the common interest exception may be available here.

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