Posts Tagged ‘lawsuits’

News roundup: Risk Roundup, Wal-Mart Class Action, WCRI Report, Massey Probe Widens & more

Wednesday, November 28th, 2012

Risk Roundup – Emily Holbrook hosts Cavalcade of Risk #171 at Risk Management Monitor – be sure to check it out.
One to watch: Wal-Mart Class action & WC – In Business Insurance, Roberto Ceniceros writes about a Wal-Mart class action settlement that raises big workers comp questions. Josephine Gianzero et al. v. Wal-Mart Stores Inc. resulted in a settlement for 13,521 plaintiffs. It raises several issues of concern related to workers comp: the case was a breach of the exclusive remedy provision – an issue that is always of some concern to employers – and it raises questions about medical claims management.
According to Ceniceros: “The settlement involving Wal-Mart’s claims administration unit and Concentra Health Services Inc. in Colorado also is troubling since it is believed to be the first payout resulting from recent suits alleging that employers’ and workers comp service providers’ claims management practices violated the Racketeer Influenced and Corrupt Organizations Act, several observers say.”
This is quite the hot potato and of concern to TPAs, several of whom declined comment on the case. As Ceniceros reports, “The issue is sensitive because the lawsuit raises the question of how far claims administrators can pursue management of questionable medical treatments found through common practices, such as utilization reviews, without violating the law, the source said.”
(Here’s a summary of the case when the class action was certified in 2010.
How to keep injured workers from turning to lawyers – In the current issue of CFO, Richard Victor writes about a recent Workers Compensation Research Institute (WCRI) study that sheds light on why injured workers feel the need to hire an attorney: How to Keep Unneeded Lawyers Out of Workers’ Comp . It’s a good article and worth the read – here’s a snippet:

“Not surprisingly, the study found that workers are more likely to seek attorneys when they feel threatened. Sources of perceived threats can take different forms. The character of the employment relationship, for example, was a factor for the 23% who strongly agreed that they hired attorneys because they feared being fired or laid off. Fifteen percent also strongly agreed that they needed attorneys because their employer could perceive their claims as illegitimate.

Miscommunication in the claims process was another significant factor. In fact, 46% said they hired attorneys because they felt the claim had been denied when, in fact, it had not yet been accepted into the process. Attorney involvement among workers with the most severe injuries were 15 percentage points higher than those with mostly minor injuries.”

Related: We refer you to one of our favorite articles on the topic by plaintiff attorney Alan S. Pierce: Top Ten List as to Why Injured Workers Retain Attorneys
More Charges; Big Branch Probe Widens – Ken Ward reports that today, federal prosecutors have charged a longtime Massey Energy mine manager with being part of a decade-long conspiracy to defy safety laws and dupe government inspectors. Expect more to come:

But in new court documents, Goodwin and Assistant U.S. Attorney Steve Ruby allege a broader conspiracy by as-yet unnamed “directors, officers, and agents” of Massey operating companies to put coal production ahead of worker safety and health at “other coal mines owned by Massey.”

It is the first time in their probe of the Upper Big Branch Mine Disaster that prosecutors have filed charges alleging Massey officials engaged in a scheme that went beyond the Raleigh County mine where 29 workers died in an April 2010 explosion.

Follow the ongoing story and find links to other coverage at Ward’s Coal Tattoo blog.
Pharma Costs – Joe Paduda links to and comments on a recent Express Scripts drug trends report. The long and short of it? Pharmacy price increases are driven by brands.
Fighting Fraud – Southern California has 65 billboards warning about work comp fraud. To raise public awareness or criminal penalties associated with fraud, the boards will be placed on billboards and transit shelter posters placed across San Diego County.
Strange Risks – Can you insure against acne attacks or hair loss? Lori Widmer has an entertaining read in this month’s Risk Management Magazine: The Stranger Side of Risk.
Other noteworthy items

New developments in the UCLA lab death of Sheri Sangji

Wednesday, August 1st, 2012

We’ve previously posted about the death of chemical research assistant Sheri Sangji, who was killed as a result of a 2008 UCLA laboratory fire. She was working with a dangerous chemical that ignited when exposed to air. Her terrible burns proved fatal some 18 days after the accident.
After numerous investigations, UCLA chemistry professor Patrick Harran (her supervisor) and the UC Board of Regents faced felony charges for three counts each of willfully violating occupational health and safety standards. These charges sent shock waves through university labs throughout the country since this was the first time that a U.S. professor ever faced a felony charge in relation to the death of a lab worker.
Last week, felony charges were dropped against UC regents after a plea deal in which the University agreed to implement a comprehensive safety program and to establish a $500,000 scholarship in Sangji’s name. The University will provide enhanced safety training and protective equipment across all its campuses.
Professor Patrick Harran’s case was continued until September to allow his defense to prepare a challenge to the credibility of the chief California OSH investigator. As the LA Times puts it, “Proceedings against a UCLA chemistry professor in the death of a lab worker take a strange turn when the defense alleges state investigator committed murder as a teen.” It’s a pretty bizarre development, one that is under much discussion in the scientific community. See Facing felony charges in lab death of Sheri Sangji, UCLA settles, Harran stretches credulity.
For ongoing developments in this case, we point you to the ongoing blog postings — 42 as of today — of Chemjobber on the Sheri Sangji case. Not only does Chemjobber provide excellent informed commentary and links to a variety of sources, his postings also include interesting comments from others in the scientific community, from both private industry and university labs.
In the wake of this tragic accident which has had widespread coverage, safety in university labs had really been under scrutiny. Despite the vast scope of academic research, it has largely been unregulated. This case may be the turning point in ushering in a new era of a “culture of safety.”
Below, a good video that the Chemical Safety Board issued in response to this and other two other tragic accidents that occurred in university labs.

CSB Key lab safety lessons and recommendations

  • Ensure that research specific hazards are evaluated and then controlled by developing specific written protocols and training
  • Expand existing laboratory safety plans to address physical hazards of chemicals
  • Ensure that safety personnel report to a university official who has the authority to oversee research laboratories and implement safety improvements
  • Document and communicate all laboratory near-misses and incidents

FedEx Sued: Mooning in Moon Township?

Tuesday, October 27th, 2009

Labor officials of three states have written to FedEx, announcing their intention to file suit for “widespread, long-term, and unlawful employment practices.” We have blogged this employment law conundrum many times (search “independent contractors” in the box to the right). There are at least two mysteries in this action: why only three states are participating (FedEx has lost court cases in at least six states and doomed to lose in many others) and why the states chose to sue at this particular time.
FedEx has until today to file objections to the suit. The complaint was filed from the office of the attorney general in New York and included the signatures of officials from Montana and New Jersey (a somewhat odd triumvirate). Their letter is addressed to William Conley, Esq., managing director of the FedEx Legal Department. With an office in Moon Township PA, Conley may end up mooning the AGs in response – after all, FedEx thus far has shown little interest in conventional employment standards. Mr. Conley runs what must be a very busy office, as there have been numerous court challenges to the FedEx business model. FedEx calls their delivery drivers “independent contractors,” even though the drivers must wear FedEx uniforms (no white sox!), drive FedEx trucks, adhere to FedEx timetables, use FedEx scanners and meet detailed FedEx standards. Drivers they are; independent they are not.
The AGs are seeking restitution, damages, civil penalties and other unspecified types of relief.
Is It Legal, Or Is It FedEx?
In some instances, individuals take over FedEx routes and hire others to do the driving. Even though these subcontractor drivers must meet the explicit FedEx standards, the entrepreneurs managing the routes can run the businesses with at least some degree of independence. But where the driver has no employees and simply covers the route for FedEx, there is no credible case to be made for independence.
The FedEx business model has been languishing in state courts for years. Meanwhile, thousands of drivers have labored without a safety net. They work without benefits. If injured, they are completely on their own. It is not difficult to imagine the sense of frustration and outrage that led to this legal action. As for the timing, the three states are filing suit just a few days before Halloween, when ghosts and goblins will prowl dark streets in search of a candy fix. It’s as good a time as any to bury this bogus incarnation of the “independent contractor” concept once and for all.

The AIG Saga, Revisited: Gang Wars in Three Piece Suits

Tuesday, September 29th, 2009

AIG may have lost a bit of its swagger – that’s what happens when your stock tanks and the government has to bail you out to the tune of $150 billion, give or take a few billion. But tough guys don’t dance, they fight back. AIG is suing NCCI and a host of major workers comp carriers (Travelers, The Hartford, Liberty Mutual, etc.) for under-reporting comp premiums and conspiring to harm AIG. That’s right. All those bullies have been picking on AIG.
AIG’s lawsuit is in direct response to an eerily similar suit filed by NCCI against AIG, accusing the staggering behemoth of under-reporting its share of premiums in nationwide assigned risk pools. This suit, filed in U. S. District Court, was dismissed by Judge Robert Gettlemen, who found that NCCI lacked legal standing to file it. The fallen banner has been quickly retrieved by Liberty Mutual, among others, who intend to refile the complaint. After all, it is AIG’s direct competitors who would have been harmed if, indeed, AIG under-reported premiums.
Badda Bing, Badda Boom
Which leads us to the not-so-lovely, two-can-tango result of AIG counter-suing, alleging a conspiracy to shift costs to AIG. “AIG’s complaint asserts that a number of its competitors under-reported their workers compensation premiums over many years and formed an illegal conspiracy to conceal that fact and to harm AIG,” said company spokesman Mark Herr.
It’s a shame that this colorful gang war has to play out in sedate courtrooms, with immaculately dressed lawyers mouthing lines better suited for Brando, Pacino and Cagney. After all, these are suits filed under anti-racketeering laws. It’s doubtful that the original crafters of the RICO legislation had insurance giants in mind when they fashioned this weapon to attack organized crime.
AIG stock is trading near $46, which sounds pretty good when compared to the under-a-dollar price of just a few weeks back. But appearances can be deceptive. To avoid the humiliation of trading as a penny stock, AIG did a reverse 20 for 1, carving each share into 20 pieces. For long-term shareholders, that $46 is really just two bucks and change. (Go ahead, shareholders, celebrate with a bottle of two buck chuck!)
“You gotta problem with that?” No, sir, no problem at all. I’m just walking down the street with my hands in my pockets, minding my own business. I’m not looking for trouble. What you folks do with all those premium dollars, all that TARP money, all those securitized loans, that’s your business. I wish you the best, I really do. And by the way, that’s a swell suit you’re wearing. A really nice fit. Would you mind my asking how much it cost…?

Initial rulings go against W.R. Grace in Libby suit

Monday, October 1st, 2007

In a case that the Justice Department described as as one of the most serious criminal indictments in U.S. history, the Ninth U.S. Circuit Court of Appeals ruled that criminal charges against W.R. Grace executives for “knowing endangerment” could be reinstated.
We recently blogged about asbestos-related illnesses surfacing in workers of a Texas vermiculite plant that was run by W.R. Grace. The plant processed vermiculite from the company’s infamous mine in Libby, Montana. We noted that seven W.R. Grace executives would be facing a criminal trial in September related to deaths that have occurred in Libby. The charges can lead to 15 years in prison on each count
Executives are being charged with exposing Libby residents to asbestos fibers for more than three decades, despite being aware of the dangers of the ore, as indicated by internal company documents. Workers were never alerted to those dangers.

“From 1963 until the early 1990s, Grace mined and processed a large supply of vermiculite ore on a mountain six miles outside Libby. Clouds of vermiculite, which contained tiny shards of dangerous asbestos, were inhaled by the miners and brought home to their families in their clothes.
The health crisis that followed didn’t become national news until 1999 when the Seattle Post-Intelligencer reported that hundreds of vermiculite miners and their families had died and thousands more had become ill. The U.S. Environmental Protection Agency immediately launched an emergency cleanup.”

Last year, a federal judge dropped some charges on a statute of limitations basis and excluded some evidence considered vital to prosecuting the government’s case. But on September 20, the federal Appeals Court reinstated conspiracy and environmental charges against the company and its executives. Prosecutors can now present evidence back to 1976. Studies show that the rate of asbestos-related illness in Libby is 40 times higher than the national average.
We will be following this case, which affects many workers, family members, and townspeople. We suspect that workers and family members of the more than 200 plants nationwide that were processing the ore will also be following this case. Those of us in Massachusetts remember another highly publicized environmental case involving W.R. Grace in Woburn, Mass., a case that had widespread attention due to a book and a film called A Civil Action.

Insurer insolvencies, guaranty funds, and joint and several liabilities between temp staffing agencies & contracting employers

Monday, October 25th, 2004

Roberto Ceniceros of Businss Insurance points to a recent interesting decision by California’s 2nd District Court of Appeals in Los Angeles dealing with general and special employers. The case involved a claim by an employee of RemedyTemp, a temporary staffing firm, considered the general employer; the employee was injured while on assignment at Jacuzzi Inc, the contracting or special employer. Normally, Remedy Temp’s insurer would be responsible for the claim, but in this case, the insurer – Reliance – was in liquidation. The court found that Jacuzzi – not the California Insurance Guarantee Association (CIGA) – was responsible for the claim.
There are several interesting issues involved in this case, perhaps more than can be easily addressed in one post, but we’ll give it a try. The whole issue of “general” vs. “special” employers is one facet worth discussing. But by way of laying groundwork, let’s first look at the issue of employee protection when an insurer goes belly up. Sadly, this is not an uncommon scenario in recent times. In the first quarter of 2004, NAIC recorded 20 property casualty insurer insolvencies.
In this case, the original insurer, Reliance National, went into liquidation. While remedies vary state to state, most jurisdictions have an established state guaranty fund as an insurer of last resort to ensure outstanding workers comp claims are paid. A guaranty fund is usually funded through assessments of a state’s licensed insurers. If an insurer fails and a claim is pending, the guaranty fund generally pays the claim and seeks recovery through litigation. Generally, guaranty funds leave no stone unturned in an effort to exhaust any other available insurance .
This is a simplistic summary of a much more complex issue. The Insurance Information Institute (III) has an excellent overview on the issue of insurer insolvencies and state guaranty funds that is well worth a read. Just look at how the Reliance insolvency affected Pennsylvania and the tsunami effect it had on other states:
The Pennsylvania Insurance Department is seeking to recover hundreds of millions of dollars from former executives of the bankrupt Reliance Global Holdings and its insolvent subsidiary Reliance Insurance Company and also from companies that the department says owe the company money. Reliance has only about $5.9 billion in assets, which are being disbursed rapidly because the company has to pay claims as well as the salaries of administrative staff and law firms that keep the firm running until the liquidation process is complete. The company has 144,000 claims amounting to $8.7 billion, almost twice as many claims as expected. Every state has been affected by the insolvency, but those most severely impacted are California, New York and Texas. At the time Reliance was declared insolvent it had 187,000 unsettled claims. In a lawsuit filed in June 2002 in Philadelphia, the insurance commissioner blamed the company’s executives for the failure, charging them with draining cash from the company to support their “lavish lifestyle.” Reliance Insurance Company, established in 1817, is the largest insurance company to be liquidated in U.S. history.
Guaranty funds have been severely challenged by the flood of insolvencies in recent years. For example, III says that in California, where may insolvencies have occurred, the Guaranty Fund faced a more than $750 million shortfall, no small part of the recent crisis.
In the case at hand, Mark Micelli v. Jacuzzi, Inc., Remedy Temp, Inc., American Home Insurance Co., Reliance National Indemnity Co., and California Insurance Guaranty Association (PDF), the court reaffirmed the idea of CIGA as an “insurer of last resort,” and found that joint and several liability existed between Remedy Temp and Jacuzzi, and that Jacuzzi’s workers comp insurer, American Home Assurance, qualifies as “other available insurance.”
The implication for temp staffing agencies remains to be seen. According to Ceniceros’ report:
The appeals court ruling could cause customer dissatisfaction for RemedyTemp and “could affect thousands of companies that, in part, rely on temporary staffing to avoid the costly overhead associated with carrying additional workers compensation insurance,” RemedyTemp said in a statement.