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Practice Pointers Winter 2010-11

By T. Joseph Crumley

Rental Car Vicarious Liability Not Quite Dead? We all know that the Graves Amendment, enacted by the U.S. Congress in 2005 , purported to abolish the vicarious liability of rental and leasing owners based on the actions of their renters. This statute swept aside years of efforts by Plaintiff advocates to preserve some protection for people injured by these rental vehicles. However, even prior to the Graves Amendment enactment, the Minnesota legislature slowly but surely cut into this vicarious liability by capping the exposure. By 2005, the rental liability cap was $100,000 per person and $300,000 per incident.

The Minnesota Supreme Court has agreed with the vast majority of courts saying that state laws preserving vicarious liability are now preempted by the Graves Amendment.

The Graves Amendment is limited to situations where “there is no negligence or criminal wrongdoing on the part of the owner.” This leaves an opening for the smart advocate. What if the vehicle was negligently maintained? What if the vehicle was negligently entrusted to a habitual drunk by the rental or leasing company? Unfortunately, at least one federal judge has ruled that somehow negligent entrustment claims against a rental company are barred by the amendment.

However, the Eighth Circuit Court of Appeals has recently ruled that negligence means negligence, and specifically provided that a negligent entrustment claim could be brought. Presumably, if the plaintiff can show any negligence on the part of the rental or leasing company that resulted in the injury, the claim against the rental company will go forward.

Municipal Cap Malpractice! We were recently contacted by a seriously injured person who was already represented. In fact, the case was going into a mediation or pretrial. The plaintiff was looking for a second opinion and questioning the lawyer’s repeated assertion of “$300,000 state liability cap.” The person clearly related that his attorneys had repeatedly told him that Minnesota law limits liability of the state and municipalities at $300,000 per occurrence. Importantly, this injury occurred in late 2010. His lawyers had indicated they were going to do everything possible to try to get him “the full $300,000 available.”

If the client was correct (and it certainly seemed that he had all his facts straight) his lawyer was probably permitting malpractice.

State and municipal liability limits have been adjusted legislatively a number of times since the original enactment in the early 1960s. The most recent amendment provided a series of gradual increases for caps on:

Claims against the State:

  • $300,000 per claim before August 1, 2007.
  • $400,000 per claim from August 1, 2007 through June 30, 2009.
  • $500,000 per claim on or after July 1, 2009.

The lawyers going into negotiations thinking they were capped at $300,000 may have been leaving $200,000 on the table!

Incidentally, there is a slightly different set of dates capping total claims out of a single occurrence (e.g., capping total payout when multiple people are injured or killed out of the same incident).

  • $750,000 maximum for all claimants from January 1, 1998 to January 1, 2000.
  • $1 million for all claims between January 1, 2000 and January 1, 2008.
  • $1.2 million for all claims between January 1, 2008 and July 1, 2009.
  • $1.5 million for all claims arising on or after July 1, 2009.

Municipalities have the same steps, but again somewhat different dates:

  • $300,000 for claims before January 1, 2008.
  • $400,000 for claims between January 1, 2008 and June 30, 2009.
  • $500,000 for claims on or after July 1, 2009.

The dates for aggregate limits are the same for municipalities and the state. Of course, the municipal limits, both single and aggregate, are doubled when “the claim arises out of the release or threatened release of a hazardous substance . . .”

Devious EUO Tactic? Your editor attended an examination under oath prosecuted by a well-known defense firm recently. The defense had not provided responses to a list of document requests we had made in advance. Our indignation was undercut by an amiable defense attorney, who not only provided an inch-thick packet of documents, he was even happy to allow me time to review it with my client.

At issue was whether the client had disclosed various details about driving record and household members at the time of application. They clearly had spent a lot of time with the packet of documents, as various things throughout had been painstakingly blacked out and marked REDACTED.

The client’s story was that he had disclosed everything to the agent, but the agent apparently didn’t enter the most prejudicial information into the computer, perhaps in hope that the application would be accepted. Indeed there was a detailed computerized application printout with no redactions, but lots of omissions, but nothing showing my client had ever seen it. The file l harmless, and did not contradict my client in any way.

Fortunately, when asked if he had signed anything, the client had honestly answered “I don’t remember.” The EUO was very short, and I saw no impeachment concerns at all.

Several hours later, an e-mail from the defense attorney arrived, stating “Sorry, I forgot to include the signed copy of the application for insurance in your document packet, which I have attached.” There was the self-same application, but this copy had initials, handwritten corrections, and the client’s signature embellishing the defective document.

I’m not sure if the defense attorney was being tricky, killing us with kindness but omitting the smoking gun from the disclosure. I wonder if he was hoping the client would review the file and conform his story to the file? Maybe it was an honest omission, but be forewarned. The defense provided a lot of detailed documents, but the omission of the one that actually matters seemed more than a trifle suspicious.

USAA Drop-Releases. Our office has noticed that USAA adjusters have been calling and talking about making no-fault offers (which I almost never recommend) and regardless of whether we express any interest, they don't send just an offer but they actually send a filled-out release.

You may want to warn your staff about this practice so that a no-fault release doesn't get accidentally sent to the client for signature because someone wasn't paying attention.

State Farm Evasive Letter. Your editor recently had a case that involved a wrongful death where the at-fault driver and the decedent were in the same vehicle. The insurer that covered the vehicle (Progressive) was very helpful, and disclosed the limits on the vehicle.

Since the driver apparently owned another insured vehicle, we contacted State Farm, his liability insurer, looking for excess coverage. The adjuster did not respond with a disclosure of his policy or the limits but instead simply sent a letter saying “please be advised that there was no policy in effect on the (vehicle involved in the crash) with State Farm on the above-captioned date.” While that was certainly a truthful statement, it was non-responsive since we had requested disclosure of all liability coverage.

Ultimately, after questioning the adjuster, we determined that there was indeed a policy on another vehicle although State Farm felt that they had a valid exclusion. However, it was interesting that none of that came out in their initial letter. I was willing to give the adjuster the benefit of the doubt.

When we discovered there was another attorney representing the other passenger in the vehicle, lo and behold, she had received almost the exact same evasive treatment.

The lesson to be learned is that there is at least one State Farm adjuster out there who is either intentionally or ignorantly ignoring the dictates of Minn. Stat. § 72A.201, Subd. 11 (2010), the Fair Claims Practices Act which mandates disclosure of liability coverage and limits upon written request. And is writing cleverly crafted letters that don’t necessarily answer the question.

Injection Without the Needle? Iontophoresis is a technique that uses an electrical charge to deliver a medicine or chemical through the skin. It is basically an injection without the needle. The medication is placed into a chamber or patch and delivered through the skin with the assistance of an electrical charge. This reduces the possibility of infection through a needle and of course helps with patients who have aversion to needles. It is essentially exactly the opposite of the reverse iontophoresis used in no-needle blood glucose testing used by diabetics, such as the “Gluco Watch.”

Apparently some health insurers have concluded that iontopheresis procedure is experimental when used to treat musculoskeletal problems, and presumably are denying payments.

This seems rather short-sighted, considering the non-intrusive nature of the treatment as well as the ability of physical therapists to administer ongoing treatments after it has been prescribed, presumably at a lower cost than having an M.D. or a nurse practitioner do expensive and intrusive injections.

Retroactive Denials and Insurer Good Faith. We received a cutoff letter from Progressive on a client based on an adverse by Dr. Bushara. Interestingly enough our treating neurologist was Dr. Daniel Randa, one of the most well known defense medical examiners out there. Our client had almost $14,000 of unpaid benefits, most of which preceded the exam. All the unpaid benefits had been medically supervised and found to be reasonable and necessary by the treating physicians, including some of Dr. Randa’s treatment.

Your editor prepared a strident letter to Progressive pointing all this out and stating:

It is patently clear that these bills should be paid and that Dr. Bushara’s opinion will be ignored by any fair and neutral fact finder. I believe your denial is in bad faith. I believe the denial violates Minn. Stat. §604.481, which governs an insurer’s standard of conduct. As you may be aware, Subd. 2 of that statute requires a reasonable basis for denying the benefits. We do not believe Dr. Bushara’s paid opinions constitute a reasonable basis for denying all these benefits. It is our belief that if we proceed to a jury trial, a jury will award all these benefits plus statutory interest under the Minnesota No-Fault statute at a rate of 15%.

In addition, a judge will be asked to award taxable costs including half of the excess under Subd. 3 as well as the reasonable attorney’s fees that we incur establishing this violation. We have already begun separately accounting for our fees and my hourly rate is $300.00 per hour for matters such as these.

I will provide you a window of opportunity of 30 days to reconsider your denial of the claim. I would expect that each and every outstanding bill be examined by Progressive to determine if there is a reasonable basis for denial. If these bills remain denied, we will place this case into suit and any efforts to pay the benefits after that point will be seen as an attempt to subvert the good faith statute. You have 30 days.

18 days later, Progressive’s supervisor contacted us and attempted to make a full and final settlement. We did not respond. Within 20 days of the letter all of the retroactive denials were paid along with 15% interest. It’s fairly clear that the Good Faith statute is working for us if we use it. The only thing I regret about this letter is I did not demand that they send the checks to me. It turns out that health insurance had paid a number of these bills and so the helath insurer will get refunds and will probably be the one that benefits from our hard work, rather than our client.

Oldies but Goodies? Your editor, well past deadline, feels occasionally recycling old Practice Pointers may be of value. In addition, your editor has been concerned for quite some time with the lack of feedback on these articles. Is there anyone out there?

So if you have read this far, and care to express an opinion, please call Editor Crumley at (320) 259-5414 or send an e-mail to joe@minnesotapersonalinjury.com expressing whether you think rehashing ten or twenty year old Practice Pointers is useful or not. Also, any suggestions as to future columns directions or topics are always appreciated. If you have not read this far, you are under no obligation to respond.

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