Maryland Injury Lawyer Blog

I saw today an interesting blog post by a Massachusetts law firm advocating that Massachusetts ban finance companies who offer loans to people using their personal injury cases as collateral. The post (and a comment to the post) argues that by making the loans non-recourse loans contingent on the settlement, these companies get around existing usury laws. Particularly in cases where liability is not at issue and payment is a near certainty, using non-recourse does seem like a backdoor around the law.

I have no idea of what my opinion is on these personal injury loans. It seems like the interest rate and the fees these companies charge is beyond ridiculous. But I'm sure these are risky loans from people who cannot otherwise obtain a conventional loan or even a credit card. As a personal injury lawyer, the loans are difficult because they make resolving the case and getting the client a good outcome all the more difficult. I had a case this year where the client took out a $23,000 loan that morphed into a $75,000 loan in three years. What ended up being a great settlement offer we received in mediation did not look nearly as good to the client who owed $150,000 in medical bills, legal fees, and the repayment of that loan. In this case, we did call the finance company which agreed to substantially reduce their loan from a preposterous return on investment to a mere obscene return on investment. The guy who I spoke to was a lawyer who owned the company and he was pretty reasonable. In the course of my negotiating the lien, I obviously contended that I thought the interest and fees were simply unconscionable. His response was that you cannot possibly know how many of these loans go bad.

Between unconscionable and reasonable, the answer probably lies somewhere in the middle. But obviously, in our free market economy, if there was that much money to be made making these loans, more companies would have entered the market, which would have decreased the overall cost of the loans. This reminds me of personal injury lawyers who complain about the obscene profits insurance companies make. If this were really true, wouldn't we all buy a ton of Allstate stock today? But take a look at their stock over the last three years.

It is worth mentioning that most of these personal injury loan companies have some clause in the agreement with the client that their personal injury lawyer cannot attempt to negotiate the loan. (I hope I am not giving an idea to the companies that don't have that clause.) We take the position that this agreement does not bind us from negotiating the lien and no one has ever suggested that our lawyers are obligated to honor that clause.

Back in January, I wrote about Allstate’s on going war with the state of Florida (and Missouri) in which it arrogantly racked up more than $4 million in fines for refusing to turn over documents that they had been ordered to produce and which had been requested by the insurance commission in Florida. On Friday, Allstate not only produced 150,000 pages of responsive documents it had protected as proprietary, but it made the documents available on Allstate's website.

In defending some of the documents, a company spokesperson said that many lawyers misinterpreted the documents that refer to how Allstate deals with claims from other parties, not from policyholders. The Allstate spokesperson said many of the documents, which had been picked apart by plaintiff’s personal injury lawyers, refer to claims-handling practices for car accident claims that have been incorrectly assumed to be applied to homeowners’ policies as well.

If this is true, I see Allstate’s point. Accident lawyers whine about Allstate’s bad offers in third party cases. In car accident cases in Maryland, I don’t think GEICO, Progressive, Nationwide, MAIF, or State Farm are making offers that are any different than Allstate’s. But that is not my point. The insurance companies have no obligation in third party cases to make fair offers. Insurance companies can do whatever they want. This is why we have lawsuits.

Moreover, the reason why insurance companies will not pay fair value on my accident claims is because two things have to happen before a bad offer turns into a lawsuit: (1) the accident lawyer has to be willing to file the claim, and (2) the plaintiff has to be willing to file a lawsuit and wait for their recovery. With respect to the former point, accident lawyers who fear filing suit rarely tell their clients they will not file suit. Instead, the lawyer tells the client that it is a great offer and they should accept it. The main reason insurance companies make bad offers is because lawyers let them. The idea that insurance companies – again in third party case – have an obligation to be fair is as absurd as the notion that personal injury lawyers should have the goal of being fair. In the adversary system, if your goal is to be fair, you are doing your client a disservice. This is not to say that you should not recommend fair settlements, but it certainly should not be a plaintiffs’ lawyer’s goal.

First party insurance cases where the insurer has a duty to their insureds to fairly provide compensation for their injuries or losses are a different matter altogether. In these cases, I think there is ample evidence that Allstate has failed to meet their obligations and I would not be surprised if these documents intentionally blur the lines between smart strategies in third party cases where the insurance company has a legitimate objective to pay less than fair value on claims and first party cases where the insurance company has a legal and ethical obligation to pay their insureds fair value for their claims.

Last week, I received a call from an insurance company (Progressive) asking how many occupants were in our clients’ vehicle in a car accident case our lawyers are handling. Sadly, it appears someone saw our clients get in what was a pretty serious accident, noted the vehicle information, and then pretended that they had been involved in the accident. Progressive called me and asked if I can get an affidavit from my clients stating that this person was not in the vehicle. I appreciated where the adjuster/investigator was coming from because he wanted to close his file, but I did not see how it helped my client to provide an affidavit, and I could conjure up scenarios where it would not be helpful to me to help them.

I felt knocked off balance for a second after denying Progressive’s request, losing my moral high ground. But then I quickly asked the adjuster if Progressive was willing to accept service in a few cases I was getting ready to file or if they were going to require me to spend needless money and jump through the hoops of hiring a process server to serve the defendants individually. Instantly, the order of the moral universe was restored. Wherever you are at this moment, you probably felt a jolt of unknown origin. The lesson, as always: if your game plan is never give a quarter, don't ask for one.

Another needless hoop insurance companies make you jump through in auto accident case in Maryland is obtaining accurate identifying information for the defendant driver. Once settlement negotiations have failed, the next step is to file a Complaint. But to effectuate service of process, you need the defendant’s address. It is not uncommon for our only information regarding the defendant driver to be a name and insurance information. If his name is Joe Brown or Steve Smith, it can be difficult in car accidents where no police report is filed, the defendant has moved since the accident or the defendant gave a false address.

Of course, this could all be made easier if the insurance companies were willing to cooperate. But they will rarely (read: never in auto accident cases) voluntarily provide their insured’s information for service.

Luckily, in Maryland, the Annotated Code of Maryland provides the Maryland accident lawyer a means to obtain this information fairly quickly and cheaply. Maryland Courts & Judicial Proceedings Code Ann. § 6-311 requires a self-insurer or liability carrier to disclose the defendant driver’s “last known home and business addresses, if known” once the Plaintiff files the proper certification. That section requires a Plaintiff to file a certification with the clerk of the court in which the action is filed and serve it on the insurer or self-insurance plan that provides benefits to the defendant driver. The certification must: 1) state that the defendant had applicable insurance coverage at the time the accident occurred; 2) set forth the reasonable efforts made, in good faith, to locate the defendant; and 3) state that the defendant is evading service, or the whereabouts of the defendant are unknown to the plaintiff.

Once a certification conforming to these requirements is filed and served on the insurer or person that has the self-insurance plan, they must disclose to the plaintiff the last known address information for the defendant driver.

You can find here a sample certification for a Maryland auto accident case. Most other jurisdictions have similar statutes.

There is another good blog post from the Drug and Device Law Blog this time regarding electronic discovery with respect to on-line diaries and the social networking like Facebook and MySpace. I have not had this issue arise with one of our clients but it is only a matter of time. Anything on there inconsistent with plaintiff's complaints is going to be used against them (as it should in most cases).

Speaking of which, you can find my Facebook profile here and my Linkedin profile here. If you are on Facebook or Linkedin, add me to your list of friends.

Last week, we were talking about the hot water Allstate found itself in with the state of Florida. This week, we look to Mississippi where Attorney General Jim Hood has opened a new hurricane Katrina related criminal investigation of State Farm, which he says is different from the earlier “crimes against policyholders” investigation. Hood had agreed to end that earlier investigation as part of a January 2007 settlement in which State Farm paid the attorney general’s office $5 million in costs and reopened policy holder claims from hurricane Katrina.

In response to an August subpoena for records from the grand jury investigation, State Farm filed a declaratory judgment action seeking to stop the investigation, and by September, had obtained a temporary restraining order. Now in mid-January, Hood has asked another federal judge to lift that order. That motion is still pending.

At issue is whether this is a continuation of the “crimes against policyholders” investigation or whether this is a validly new and different claim not covered by the agreement of January 2007. The focus of this new investigation has not been openly identified by the attorney general. There is speculation that it has to do with the handling of National Flood Insurance Program claims.

Homeowner policies cover wind and rain damage. Separate rising water/flood damage insurance is subsidized by the federal government, but sold through insurers. Some politicians and lawyers have accused insurance companies of fraudulently over-billing the federal government for flood damage claims.

Hood is asking the temporary restraining order banning him from investigating the criminal handling of Katrina claims by State Farm be dissolved. Yet attorney Edwin Snyder, a consultant for Hood, said, “The operative phrase is ‘Hurricane Katrina claims.” If it’s unrelated to that and it’s new, it’s available to investigate.”

I can’t believe I’m saying this but I think the Mississippi Attorney General is looking to take a second bite of the apple when he has already agreed to taking just the one bite. The earlier agreement appears to have resolved any outstanding Hurricane Katrina claims. But this story and the post last week on Allstate’s troubles in Florida underscore that the corporate culture of arrogance is not something that these insurance companies can selectively flash. The same executives that once tried to bully personal injury victims and their lawyers, often with great success, have moved up the food chain. Now, they make corporate policy decisions that no longer impact just individual claims but the entire company. Dealing with politicians requires a certain level of diplomacy and respect. Yet these insurance company executives have embedded in their DNA (at least their professional DNA, a distinction fairness requires) the paradigm of arrogance and obstruction. Why else do you think the state agencies and politicians are getting so riled up?

I’ll admit that I just made up this theory about ten minutes ago, but you have to admit - it makes some sense. Of course, you might also be wondering whether some of these politicians have some other agenda beyond justice in vilifying these insurance companies. But why interrupt a great tale of good versus evil with such nuance?

One question that has remained unanswered is whether Maryland’s new bad faith law is retroactive. On Dec. 17, 2007, U.S. District Court Judge J. Frederick Motz ruled that the Maryland legislature intended Maryland’s new first party bad faith law to be retroactive. In Schwaber v. Hartford, a case involving insurance coverage for a roof leak, Judge Motz had initially dismissed Plaintiff’s bad faith action prior to the effective date of the first party bad faith bill (2007 Md. Laws 150). Plaintiff sought to re-file the claim after the bill passed.

Interestingly, Hartford agreed that the Maryland legislature had intended the new bad faith statute to be retroactive, and instead objected on state and federal constitutional grounds. Judge Motz chose to defer ruling on these objections or certifying the state constitutional questions to the Maryland Court of Appeals, unless or until it becomes clear that resolution of these constitutional issues are necessary to the outcome of the litigation. So while it is not a slam dunk that this new law will pass constitutional muster, the court's finding that the bad faith law was intended to be retroactive is a great step in the right direction.

You can find Judge Motz's opinion here.

Happy New Year to everyone!

In March, I wrote a blog post discussing whether it makes sense for personal injury lawyers to videotape medical exams by the defendant's lawyer's doctor. Last week, the Oklahoma Supreme Court ruled that a plaintiff who is required to submit to an "independent medical examination" (hereinafter the more honest "defense medical exam") may videotape the exam.

In this case, the doctor had refused a plaintiff’s request to videotape the DME because (1) it would invade the privacy of others in the office; (2) it would be “annoying and distracting” to the DME doctor and his staff; and (3) it would interfere with the doctor’s examination.

Actually, these are not the doctor’s objections. These are the defense lawyer’s objections. The doctor was more than happy to allow the DME to be recorded as long as the defendant’s lawyer did not object. Moreover, all of these objections are silly. First, obviously the video should only be permitted to videotape the doctor’s examination of the plaintiff. Second, for $500 an hour, or whatever the doctor is charging, he should be able to bear a little annoyance and distraction. Finally, there is no reason to believe that videotaping at the DME would interfere with the examination.

The Oklahoma Supreme Court followed the wisdom of courts in Kentucky and Indiana, which permitted audio recording of DMEs, and found no reason why the logic did not extend to videotaping an exam.

What I learned from reading this opinion is a little more on the history of compelled medical exams. In the nineteenth century, the U.S. Supreme Court in Union Pacific Ry. Co. v. Botsford, 141 U.S. 250 (1891) affirmed the longstanding common law that compelled medical examinations in personal injury cases were “repugnant to a person's privacy and bodily integrity.” Obviously, that view has changed over time. I agree that the more modern view is the appropriate view because if a personal injury plaintiff puts their health at issue, it is fair game for the defendant to be able to have the ability to evaluate those injuries in the adversarial system. But it underscores that medical exams are not a right to which plaintiffs must blithely acquiesce without fair conditions and limitations.

Again, as I wrote back in March, while I think it should be permissible to videotape a DME, I question whether personal injury lawyers want to go down this path. While I would love to have a library of tapes of a given doctor’s DMEs, the potential harm might outweigh the benefits. I think it would force DME doctors to do more complete examinations than what is often an assembly line examination. Moreover, I think the DME doctor would likely maintain a nice guy persona during the examination. A part of the argument for videotaping is that with a videotape, the jury can see what a jerk the doctor really is. But how many doctors are going to come off poorly when they know they are being videotaped? An even graver concern is that you have not fully prepared your witness for trial testimony at the time of the DME, leaving him/her vulnerable to making poor judgments during the examination, such as overstating the scope of the injuries, or acting defensively or inappropriately with the doctor, who is more likely to be mindful of the impact of the videotape.