MAKING PLAINTIFFS PAY FOR THEIR FAILURE TO HAVE MANDATORY AUTO LIABILITY INSURANCE

PayPlay_2THE “NO PAY, NO PLAY” STATUTORY LIMITS WERE INCREASED BY THE LOUISIANA LEGISLATURE EFFECTIVE AUGUST 1, 2014

About 1 of 4 drivers in Louisiana is uninsured. To enforce the compulsory auto insurance law, Louisiana has a “no pay, no play” statute that bars the owner or operator of an uninsured motor vehicle from recovering the first $15,000 of bodily injury damage and the first $25,000 of property damage in a tort claim. Defendants facing automobile liability claims in Louisiana should always confirm that an owner-operator plaintiff has valid, minimum statutory liability insurance in effect for the automobile he owned or operated that was involved in an accident. The owner-operator plaintiff without mandatory auto insurance takes nothing until he has incurred $15,000 in bodily injury and $25,000 in property damages losses.

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THE FALSE CLAIMS ACT & MEDICARE SECONDARY PAYER LIABILITY: A NEW DANGER LIES AHEAD

Image_MSPWe knew this was coming. The Federal False Claims Act (FCA) 31 U.S.C. §§ 3729-3733 has long been discussed as a way for the Justice Department and qui tam plaintiffs to enforce the Medicare Secondary Payer (MSP) 42 U.S.C 1395y(b), et seq. statutes. What we didn’t expect was that the first big FCA suits would be brought against the payers and not plaintiff’s counsel.

Well, we were wrong about that.

In two recently unsealed matters, United States of America, ex rel J. Michael Hayes, v. Allstate Insurance Company, et al, 1:12-cv-01015, USDC WD NY and United States of America, ex rel Dr. Kent Takemoto, 1:11-cv-00613, USDC WD NY, the plaintiffs allege that virtually every major general casualty insurer in the United States engaged in “Fraudulent Avoidance of Remitting Monies Owed to Medicare Under the Medicare Secondary Payer Act” all in purported violation of the FCA (The United States declined to intervene in either case).

The gist of the Hayes complaint is the allegation that the defendants/payers avoided reimbursing Medicare’s conditional payments by paying settlements to the plaintiffs and entering “general releases that shifted the responsibility to the claimants to fully reimburse Medicare, thus completely avoiding their statutory obligations under the Medicare Secondary Payer Act.” That is, by funding settlements and expecting the plaintiffs’ to reimburse Medicare as required by the MSP the defendants somehow intentionally defrauded Medicare.

That same allegation appears in the Takemoto complaint, with a diabolical twist: Relator Takemoto was an MSP/Sec. 111 compliance consultant who systematically offered his services to each of the defendants. He named by his company “COMPsultation”. His complaint alleges that “COMPsultation offered each of the defendants a presentation advising them on the current structure of the MSP program, the potential impact of the MMSEA Sec.111 reporting requirements, and their potential liability under the FCA.” The complaint also alleges that the defendants declined to retain COMPsultation and presumes that, for that reason alone, the defendants did not have MSP compliance programs and, therefore, violated the FCA. In essence, Takemoto leaps to the conclusion that any payer company which did not retain COMPsultation as its MSP compliance consultants was not MSP or Sec. 111 complaint and was actively defrauding Medicare. (Many of us who provide MSP compliance consulting to payers or who work with the very many well trained MSP specialists within the insurance industry know Takemoto is wrong).

The defendants will file motions to dismiss these claims and will, likely, be successful. But, the message is clear: The FCA is a real threat in the MSP world. Failure to comply with the MSP and Sec. 111—and the failure to carefully document compliance—could result in FCA exposure.

Payers can now add potential MSP/FCA claims by qui tam plaintiffs to the risk of exposure to Medicare and the Department of Justice. To be sure, Medicare will enforce the MSP and will be assessing fines for Sec. 111 violations in the near future. So, we continue to counsel our payer clients to do the following simple things:

  1. Have a documented MSP/Sec. 111 compliance program in place and train all of your claims professionals and counsel (inside and outside);
  2. Ensure that EVERY claim is checked for MSP exposure. The Medicare beneficiary status of every plaintiff should always be checked at the start and end of every case and Sec. 111 reports must be timely made;
  3. Make sure that repayment of Medicare’s Final Demand is an enforceable term of every settlement, documented in the release, and that no funds are distributed to any plaintiffs by their counsel until Medicare is reimbursed and proof of claim satisfaction is provided.
  4. Document how the claimant will protect Medicare in the future in the release.

Frilot LLC provides MSP/Sec. 111 compliance training, protocol development and settlement consulting to payers and defense interests. Our clients include Fortune 500 companies, major insurers and national healthcare systems. Please call Bruce A. Cranner, Esq. to discuss your MSP compliance needs.

 

The End of the “Open and Obvious” Defense in Louisiana

FlamePicWhen a person knowingly puts his hand in a flame or steps in a hole he dug, isn’t the hazard posed by the flame or hole “open and obvious” to the claimant?  According to the Louisiana Supreme Court, a jury always needs to decide what an “open and obvious” hazard is. See Broussard v. State ex rel. Office of State Buildings, 2012-1238 (La. 4/5/13); 113 So. 3d 175, (the issue of whether a hazard is open and obvious is a question of fact for the jury). In moderate to conservative venues in Louisiana, state judges previously granted summary judgments in cases where they found a hazard was “open and obvious.”  There was a fairly well-developed body of law that defined what “open and obvious” conditions were that generally absolved defendants of liability to warn a plaintiff about such a hazard. In the future, summary judgments on the “open and obvious” hazard defense will be very difficult, if not impossible, to obtain in state courts in Louisiana as the Louisiana Supreme Court in Broussard has now defined such a hazard as an issue of fact for resolution by the jury.  As a result, defendants may be paying to settle “open and obvious” hazard cases they used to be dismissed from on summary judgment.

Why Should a Defendant Not Have a Right to a Trial By Jury?

jury-trialFor years, insurers and corporate defendants have claimed they have been victimized by plaintiffs who stipulate that their damages in a BI suit do not exceed $50,000.  With such a stipulation, the defendants are barred from a trial by jury and exposed to judge trials in hostile forums with unsympathetic judges that are reportedly prone to finding liability when proof is very weak and awarding excessive damages―close to $50,000―in these cases.

To address this problem, defense groups proposed tort reform legislation in the 2014 session of the Louisiana Legislature to guarantee a defendant the right to trial by jury in all matters, regardless of the amount of controversy.  On April 15, 2014, the Louisiana House of Representatives narrowly rejected the bill by a vote of 51-49, with five members abstaining.

If the bill had passed, defendants who found themselves in “small claims” court would have had the ability to force the plaintiff to try his case to a jury that may provide a more impartial fact finder on liability and damages in “small” cases―under $50,000.  Therefore, these “small cases” may still add up to a lot of exposure for insurers and corporate defendants in Louisiana who are hit with multiple judgments in these cases.  Unsuspecting defendants should be wary of plaintiffs who do not ask for a jury trial in Louisiana—whether it is for damages for $50,000 or higher.  It is always best to ask for a jury as a defendant in Louisiana state courts and waive a jury trial later if appropriate.

The Louisiana legislature will not revisit the $50,000 jury trial limit until 2016, and it appears there is a good chance it will pass then.

$85,000,000 Judgment Against 18-Wheeler Solely At Fault For Hitting a Car With a Flat Tire Driving 5 m.p.h. on a Rural Interstate

MoneyStackAn Orleans Parish jury recently awarded plaintiffs $85,000,000 in a multiple death and multiple burn case and absolved plaintiffs of any fault in driving a disabled car at 5 m.p.h. in traffic on I-10.

Near midnight on Christmas Eve, a woman and her daughter had a flat tire on I-10 near Laplace, Louisiana.  They drove into a state weigh station and called AAA and some friends to help her with her flat tire.  The driver of the car canceled AAA road service (even though they were 5 minutes away), and had two friends with 2 children meet her in the weigh station to try to fix her flat tire.  The friends did not have the right equipment or spare tire to fix the flat.  The group decided to drive the disabled car on the paved, unobstructed shoulder of the interstate to the nearest exit about a mile away.

While driving on the shoulder, plaintiffs decided to drive in the right lane of traffic on I-10.  The defendant 18-wheeler travelling at the speed limit came upon plaintiffs’ 5-m.p.h. “convoy,” could not stop and slammed into the rear of the two plaintiff vehicles.

The defendants argued that the plaintiff drivers were at least 50% at fault in causing the collision by driving at 5 m.p.h. in the right lane of traffic, even though the shoulder was paved and unobstructed.  Based on Louisiana’s comparative fault principles, such an assessment of fault would have resulted in a 50% reduction of any recovery by the plaintiffs.  The jury found zero comparative fault of the plaintiff drivers.

Damage awards for two severely burned plaintiffs were extraordinary:

• A severely burned adult was awarded $37,000,000;
• A child who was severely burned was awarded $44,000,000.

In Louisiana, a damage award may generally not be overturned on appeal, unless the amount of the awards “shock the conscience” , and the damage awards in the case may well meet the high standard of proof.