Chronicling the high cost of our legal system
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“Calling someone a ‘douche’ may be bad manners but it does not give an insurance company grounds to disavow a policy protecting against defamation claims, a state judge has ruled.” The owner of a public relations firm was sued by a rival after he purchased a domain containing the rival’s name and posted as content on the resulting page a picture of the sanitary product “Summer’s Eve”. [Daniel Wise, NYLJ]
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That clause means what it says, 
an Illinois appeals court decides in an insurance claim against Enterprise car rental [Madison County Record]
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Charlotte Allen of the Manhattan Institute on the EEOC’s crackdown on a traditionalist Catholic college for not including contraceptives in its health plan. [Weekly Standard]
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“Houston lawyer Warren Todd Hoeffner is accused of paying $3 million in cash, BMWs, trips, even spa treatments and ‘gentleman’s entertainment’” in a scheme to obtain $34 million in settlements in silicosis litigation. Things began to unravel when Hartford Insurance, which had cut settlements on behalf of a number of defendants, noticed the arrival of a check for $6,000 from Hoeffner to one of its former claims personnel. Hoeffner’s lawyers are arguing that the insurance company employees extorted money and goods from their client by threatening not to approve fair settlements otherwise. [Houston Chronicle, Southeast Texas Record]
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Press coverage has been rather hostile toward AIG, which insures USAir, for its reluctance to cut large checks for therapy and the like to passengers aboard the miracle flight. (One major reason for it to balk may be the lack of any showing that the airline was negligent; also, passengers got $5,000 checks right after the rescue.)
Given the insurer’s status as public relations pariah, it’s interesting to note that at least one voice has been raised in its defense from a perhaps unexpected quarter: Ron Miller of Maryland Injury Lawyer. His “plea to every lawyer in the United States: please don’t file a lawsuit in these cases to get your name in the paper.” Earlier here and here.
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Brian Shean, Sr., 37, of Derry Township, Pennsylvania, was killed by a falling tree in February, as he, his father Terry, and a third man attempted to keep it from toppling. Shean family lawyer Jason Hines “said Monday that the lawsuit was only a means to ensure the future of the Sheans’ son, Brian Jr.” [Pittsburgh Tribune-Review]
“An insurance company with a potential $25 million liability from a fatal 2007 Houston office fire announced [Jan. 21] that it will drop its legal argument” that it shouldn’t have to pay for smoke inhalation deaths because they supposedly resulted from “pollution”, a risk excluded under the policy, as opposed to the actual flames. [Houston Chronicle; earlier].
Did the fabulous pink diamond actually exist? That was one of the issues in the legal fight — which in places reads more like a spy thriller than like a conventional business dispute — between plaintiff John Stafford, a jeweler in Miami Township, Ohio, and defendant Julius Klein Diamonds of New York. A federal jury sided with Stafford, who said he had paid $8,000 in cash for the gem from a mysterious seller in Las Vegas; the eventual verdict came in at more than 400 times that sum. (OnPoint News; Dayton Business Journal; Diamonds.net)
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“An insurance company with a potential $25 million liability from a 2007 Houston office fire is claiming smoke that killed three people was ‘pollution’ and surviving families shouldn’t be compensated for their losses since the deaths were not caused directly by the actual flames. Great American Insurance Company is arguing in a Houston federal court that the section of the insurance policy that excludes payments for pollution — like discharges or seepage that require cleanup — would also exclude payouts for damages, including deaths, caused by smoke, or pollution, that results from a fire.” (Mary Flood, “Insurance loophole claimed in fire deaths”, Houston Chronicle, Dec. 17).
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This was the week that Congress passed and the President signed a new law requiring that most health insurers (if they cover mental health treatment at all) pay for lots and lots of talk therapy and addiction rehab the same way they pay for lots of angioplasties or appendectomies, in the name of “parity” and “nondiscrimination”. Very optimistically — it won’t be Congress writing the checks — the ten-year cost is projected at only $3.4 billion. (Judith Graham, “Triage”/Chicago Tribune, Oct. 3). Next week lawmakers will go back to complaining that health insurance has become prohibitively expensive and that much of the population is priced out of buying it altogether. Mickey Kaus remembers where we’ve seen this sort of feel-good short-circuiting of underwriting standards before (Oct. 2).
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Janiece Lacross, a drunk-driving defense lawyer in Washington state, has lately run into her own trouble with the law: “Last November she drove drunk with her three young children in the backseat. She hit a boy on his bike in Kitsap County, breaking his leg and sending him into the bushes. But the vehicular assault charge against her was dropped and reduced to just a DUI, which brought Mothers Against Drunk Driving to court to find out why.” Lacross entered rehab and will accept home monitoring and attend victim impact events as part of her plea in Tacoma to DUI and three counts of reckless endangerment; her repentant statements in court even made a relatively favorable impression on MADD, not the easiest thing to do. The passing bit of the story that induced a momentary double take: as part of her penitence, it is said that Lacross “even helped the young victim, Joseph Griffith, with his civil suit for personal injuries”. Against herself? (Keith Eldridge, KOMO, Oct. 1).
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“A Coney Island businessman is suing the city for damaging the Bentley he was driving when he killed a Brooklyn dad in a hit-and-run accident. Harry Shasho, who pleaded guilty to leaving the scene of an accident, says the NYPD failed to safeguard the battered black 2005 Bentley GT luxury sedan that was impounded as evidence of the fatal crash. He’s asking for at least $190,000.” However, Shasho “denied filing a lawsuit” when contacted by a Daily News reporter. (John Marzulli, New York Daily News, Aug. 24).
I’m going to take a wild guess here and speculate that Shasho’s auto insurer will turn out to have been a force in the decision to sue. Under most property insurance policies, after paying a loss the insurer reserves the right to go after third parties it thinks it can be blamed, and the policyholder must up to a reasonable point cooperate in such lawsuits (which may be filed in the policyholder’s name). The insurer needn’t and probably won’t take into its calculations the effect of such a suit on its policyholder’s reputation, which in this case for Shasho include being called “shameless” and worse in the comments section at Gothamist. Such insurer-prompted suits on behalf of wrongdoers are fairly common, and should be kept analytically distinct from the (also fairly common) situations where the wrongdoer himself decides to sue and is the one to pocket any proceeds.
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Wayne Davis, Jr., had a .203 blood-alcohol level, when he drove his pickup across the center line of a Camden County, Missouri, highway on March 24, 2000, and crashed head on into the compact car of Edward and Virginia Johnson.
You’ll be happy to hear that the Johnsons didn’t try to blame the beer company or the auto manufacturer, and simply sued Davis. Davis’s insurer, Allstate, contacted the Johnsons’ attorney, David Sexton, in April, and asked for access to the Johnsons’ medical record. Sexton responded by demanding the policy limits. Allstate requested the medical records three more times, and finally got the records on December 20. (A Dan Margolies Kansas City Star article (via Childs) incorrectly says Allstate did not respond, but the court’s opinion says otherwise.) Allstate immediately agreed to pay the settlement limits, but now Sexton refused, saying his April offer had expired, and he now wanted $3 million from Allstate. We’ll let the Missouri Court of Appeals explain what happened next:
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Point of Law Volokh