Alaska Injury Law Blog

January 25, 2008

Insurance Commissioner Says Allstate Willfully Violated Insurance Code

Will Allstate finally have to make public its own internal documents about claim handling practices and procedures that many insureds allege are bad faith programs that cheat them of the insurance coverage they paid for? Attorneys of the Alaska Personal Injury Law Group are watching closely as insurance regulators try to obtain these documents. Many of these documents are the very same ones our lawyers have been trying to get from Allstate in Alaska cases alleging bad faith and fraud by Allstate against its own Alaska insureds when they made a claim for the coverage benefits they paid for.

As I reported in an earlier article, the Florida Office of Insurance Regulation (FLOIR) subpoenaed from Allstate documents about its bad faith program for systematically low-balling and underpaying claims. This program, instituted in Alaska and the rest of the country in 1995, was created with the help of the McKinsey Company. The Office of Insurance Regulation states in a brief to the court that the insurance statutes required Allstate to provide these documents in response to its subpoena. More importantly, the regulators state that Allstate purposefully failed to provide the documents and willfully violated the insurance code by withholding them.

FLOIR also states that Allstate made misrepresentations to the court about documents it did produce. As Allstate typically does in bad faith insurance claims against it in Alaska and elsewhere, Allstate pointed to the thousands of documents it had produced. Allstate’s trick, of course, is to produce documents the opponent already has or that are meaningless, while sparing no effort to hide the important documents. FLOIR also stated to the court that many of the documents Allstate did produce were public documents it already had.

FLOIR also told the court that Allstate “falsely marked” as “Trade Secret” many documents that were publicly available, many even available on the internet. This “trade secret” ploy is a favorite of Allstate and other insurers in bad faith cases. Evidence harmful to the insurer is a “trade secret,” even if it is on the internet or otherwise publicly available. In our Alaska bad faith cases, Allstate has repeatedly claimed “trade secret” protection for documents we were able to find by investigating public sources.
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January 24, 2008

Traumatic Brain Injury Is A Cause Of Depression

by Richard E. Vollertsen

Depression is often one of the difficult conditions clients of the Alaska Personal Injury Law Group face following traumatic brain injury (TBI). Depression is suffered by about 5% of the general population, but over 40% of those recoverying from head trauma can suffer from depression. Until now, it has been difficult to understand how depression and TBI are linked, although that association has long been known.

Studying athletes who suffered concussions, the researchers at the Montreal Neurological Institute of McGill University have shown the neurological basis for depression in a study published this week in the Archives of General Psychiatry. They studied 40 concussion victims against healthy subjects and found through the use of functional magnetic resonance imaging (fMRI) that the same areas of the brain were affected in both the athletes and those patients with major depression. Abnormal neural activity was found in the dorsolateral prefrontal cortex and striatum, as well as attenuated deactivation in the medial and temporal regions. Gray matter loss was also confirmed using Voxel based morphometry (VBM), a neuroimaging analysis technique that analyzes focal differences in brain volume.

This type of medical advance in imaging will help clients and care providers better understand why depressed mood is occurring after someone has had a traumatic brain injury. Ultimately, it is hoped that such imaging will lead to better diagnosis and treatment for those who suffer the devastating consequences of traumatic brain injury.

January 23, 2008

Alaska Personal Injury Law Group Attorneys Selected As Alaska Super Lawyers

by Richard E. Vollertsen

Two attorneys with the Alaska Personal Injury Law Group, W. Michael Moody and Richard E. Vollertsen, were recently selected to be listed in Alaska Super Lawyers 2007, a publication of Washington Law & Politics magazine.

Mr. Moody received his law degree from the University of Arizona in 1972 where he served as Editor-in-Chief of the Law Review and received the academic award of Order of the Coif. He served as a law clerk to Judges Thomas Stewart and Victor Carlson in Juneau before moving to Anchorage. Mr. Moody has practiced law in Alaska since 1975 specializing in representing those injured by negligence or defective products, and claims against insurance companies for fraud and bad faith conduct against their policyholders.

Mr. Vollertsen was also selected as an Alaska Super Lawyer. Mr. Vollertsen has been a member of the Atkinson, Conway & Gagnon law firm since 1982. His practice includes complex litigation matters primarily involving products liability, wrongful death, and personal injury. He served as Law Clerk to Chief Justice Edmund Burke of the Alaska Supreme Court. Mr. Vollertsen was also editor-in-chief of University of San Francisco Law Review, 1980-81, and contributing editor to Alaska Court Review, 1983-2000.

January 22, 2008

Traumatic Brain Injury Can Occur Even Without Loss of Consciousnss

by Richard E. Vollertsen

The Alaska Personal Injury Law Group often handles cases involving traumatic brain injuries(TBI). With severe brain injuries, the impairments suffered by the client are usually unmistakable to the client’s care providers and neurological experts testifying on their behalf. With “mild” brain injuries-although there is no such thing as a “mild” brain injury when it happens to you-the impairments are more nuanced and difficult to determine with standard neuroimaging or routine neurological and neuropsychological testing. Often clinicians have concluded that no impairments have occurred simply because there was minimal or no loss of consciousness reported when the brain injury was sustained. Now, advances in neurological imaging are establishing what we have already found to be true in our practice-cognitive impairments can occur even with minimal or no loss of consciousness.

In a study published in the October issue of the journal Brain, researchers at the University of Illinois’ Chicago College of Medicine report that diffusion tensor imaging (DTI) can identify structural changes in the brain’s white matter-which is particularly vulnerable to injury-even in patients identified as having minimal or no loss of consciousness. They studied 37 TBI patients with both diffusion tensor imaging and neuropsychological testing to evaluate memory, attention, and executive function. All the patients were at least six months post-injury, and most were highly functioning, i.e., in school or working at the time of evaluation. The structural white matter changes found by DTI correlated to cognitive deficits that were observable.

The researchers were also able to determine axonal damage-a tearing of the axons that allow one neuron to communicate with another-occurring the brain’s white matter. This differs from injury to the myelin, which is the protective sheath around the axons. Injury to the myelin can interrupt the signals between the brain and other parts of the body. The study showed that all severities of brain injury, even those typically viewed as “mild,” caused some degree of axonal damage, while myelin damage was only apparent in moderate to severe TBI.

January 21, 2008

Diet Supplement Company Admits Faked Data Was Used

by Richard E. Vollertsen

Testimony offered in a federal trial in Ohio against Berkeley Nutriceuticals has disclosed that the company faked data regarding the effectiveness of its sexual enhancement product, Enzyte. When I previously wrote about this trial, https://www.alaskainjurylawblog.com/2008/01/dietary_supplement_company_fac.html, I fully expected to hear that such evidence had been uncovered. The diet supplement industry is virtually unregulated, and manufacturers are not required to provide scientific data or obtain pre-market approval for their products before they are placed on the market. Borrowing a page from the playbook of ephedra manufacturers, supplement manufacturers like Berkeley often go even further to make up data to show that their products are safe and supposedly work. Such faked data can be very effective in bilking consumers out of millions. I encountered this unfortunate fact in the litigation the Alaska Injury Law Group brought in Talbert v. E’ola Products, Inc., the first successful jury trial brought against an ephedra manufacturer.

James Teagarden, VP of Operations at Berkeley, testified that the company created fictitious doctors to endorse the pills, faked a customer satisfaction survey, and made up data to back up claims about Enzyte’s effectiveness. He also testified that the company’s president, Steve Warshak, was intimately involved in the fraud.

In addition to the fraudulent data, the company’s first-time customers were automatically enrolled in a “continuity program” that sent them Enzyte every month and charged their credit cards without authorization. If customers complained, employees were instructed to “make it as difficult as possible” for them to get their money back.

January 19, 2008

Diet Supplement Found To Exacerbate Prostate Cancer–Another Spiked Product

by Richard E. Vollertsen

The coming issue of Clinical Cancer Research will publish two case reports concerning the progression of prostate cancer believed to have been caused by a dietary supplement “spiked” with pharmaceutical compounds. “Spiking” is, unfortunately, an all too common practice in that industry. While claiming to sell “all natural” products, and taking advantage of the regulatory limitations imposed on the FDA under the Dietary Supplement Heath and Education Act (DSHEA), www.fda.gov/opacom/laws/dshea.html , diet supplement manufacturers put consumers at risk by “spiking” their products with pharmaceutical compounds they know to work, when the herbal compounds do not. Unlike prescription and over-the-counter drugs, current law does not require nutritional supplements to undergo pre-market testing or approval for safety and efficacy.

This was a key issue in the first jury verdict in the nation against an ephedra manufacturer, a case the Alaska Personal Injury Group brought: Talbert v. E’ola Products, Inc., www.cfsan.fda.gov/~dms/ds-ephed.html . There, the manufacturer, whose product has since been confiscated by the FDA, “spiked” its ephedra product with the pharmaceutical drug, ephedrine hydrochloride. www.fda.gov/bbs/topics/ANSWERS/2001/ANS01114.html . In that instance, it caused a healthy young woman to suffer a cerebellar stroke.

The product analyzed by the researchers at University of Texas Southwestern Medical Center has led to an equally horrific outcome–virulent prostate cancer. The researchers report in the journal that the diet supplement, which they have declined to identify by name, contained the sex hormones testosterone and estradiol. Laboratory tests of the product on human prostate cancer cells found it to be a more potent stimulator of cancer cell growth than testosterone alone. Such compounds cannot be sold except by prescription. The spiked hormones are believed to have caused the two men to develop rapidly advancing prostate cancer within months of using the dietary supplement. Both men, before using the product, had low levels of prostate-specific antigen (PSA), a signal for prostate cancer and then presented with widespread cancer within six months, which is unusual. One of the men has died; the other is in the final stages of the disease and is expected to die within months. Notified of these findings, the FDA sent a warning letter to the manufacturer, and the supplement has now been removed from the market.

In addition to failing to list all the steroid hormones contained in the product, the researchers also found that the product’s label stated ingredients that were not present, and it also misrepresented the concentrations of the ingredients present. These kinds of failings are very common in this industry, and arise because of the lack of regulation over the industry’s manufacturing processes. This type of misrepresentation and mislabeling is not just blatant consumer fraud, it can be dangerous when the concentration of an ingredient is too high.
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January 18, 2008

VA Forced To Release Data About Vets’ PTSD Claims as Class Action Goes Forward

by Richard E. Vollertsen

A federal court in San Francisco has ordered the Department of Veterans Affairs to release documents concerning its denial of care to veterans seeking care for conditions such as PTSD. The order is expected to permit a class action against the VA to go forward. The litigation was brought by several nonprofit groups, Disability Rights Advocates, Veterans for Common Sense and Veterans United for Truth. The complaint alleges that the VA’s system for handling disability claims and appeals is so dysfunctional that it violates the constitutional and statutory rights of veterans. The suit also seeks court orders mandating the VA to provide immediate medical and psychological help to returning troops, and to screen them for suicide risks.

Recent investigations by various news organizations have shown that the VA has a backlog of over 600,000 applications and a claim can take as long as 12 years to be resolved through the appeal process. The McClatchy newspapers reported that veterans wait, on average, 183 days for the VA to initially decide a claim. In 2005, CBS reported that at least 6,256 suicides had occurred among those who served. Last November, it reported that veterans were killing themselves at a rate of 120 per week.

Source: Vets Cleared to Sue US Over PTSD Claims, January 17, 2008, www.commondreams.org.

January 17, 2008

NEJM: Another Reason Why Transparency Is Needed In Drug Manufacturers’ Clinical Trials

by Richard E. Vollertsen

On January 17, 2008, the New England Journal of Medicine released a study that put numbers to what we already knew to be true: drug manufacturers have more data, particularly negative findings, that they are not making public. Examining the literature concerning antidepressants, the study showed that 94% of the studies published by drug manufacturers discussed only the positive effects of the medication being studied. Drug manufacturers must report the results of all clinical trials to the FDA. When the entirety of the data submitted to the FDA from the manufacturers’ trials was examined, however, efficacy was shown in only 51% of the studies.

Why would this be the case? One could suppose that journals are more interested in publishing data establishing efficacy, as it may be deemed more “exciting,” perhaps medicine’s version of the newspaper adage, “if it bleeds, it leads.” But the more likely reason is what is found in most drug and products liability litigation: it is not in the corporation’s economic interests to release negative information about a product. This is the prime motivator behind the drug manufacturers’ decisions to focus its publication efforts on only those studies that show efficacy, which would, of course, encourage physicians to prescribe and consumers to use the medications, thereby increasing sales.

The FDA Amendment Act of 2007 passed by Congress last September offers a partial solution to the dilemma. It requires that the data from all the clinical trials performed by the manufacturer and submitted to the FDA be made available to the public. The NIH and FDA will be responsible for maintaining a database of the clinical trials completed by manufacturers. The public will have access, however, only to data on drugs the FDA has approved for sale.

January 17, 2008

Insurance Commissioner Suspends Allstate From Writing New Policies

by W. Michael Moody

Yesterday I wrote an article about Allstate’s failure to provide documents required by a subpoena from the Florida Office of Insurance Regulation. Some of those important documents are the same claim handling documents that members of the Alaska Personal Injury Law Group are trying to get from Allstate in a class action for bad faith and fraud against Alaska insureds.

The documents we are seeking have to do with special programs Allstate implemented in 1995. There have been assertions in bad faith cases across the country that these programs systematically underpay compensation Allstate owes to its own insureds under their Allstate policies.

As noted in my article yesterday, the Florida Commissioner of Insurance suspended what was supposed to have been a two day hearing after only a half day, so he could consider what sanction to impose on Allstate to make them produce the documents. Since a court in Missouri was already fining Allstate $25,000 a day for refusing to produce documents, he concluded a fine would have no effect on Allstate. So he suspended the authority of three Allstate companies to write new insurance in Florida. The companies were Allstate Insurance Company, Allstate Indemnity Company, and Allstate Property and Casualty Company. He later issued a Final Order that expanded the list to include all ten Allstate companies that had been served with the subpoena.

January 16, 2008

Good Hands Turn to Boxing Gloves When Regulators Question Allstate’s Rate Increases

by W. Michael Moody

Have you ever felt like insurance rates hardly ever go down, even when the insurance industry makes record profits? Funny you should feel that way. Two current news items may help explain why. Both involve attempts by Allstate Insurance companies to obtain very large rate increases.

The first occurred in Florida. Allstate submitted proposed rate increases for various Allstate companies that would have increased rates by a whopping 28 to 42 percent. Insurance regulators denied the rate applications and Allstate appealed. At the beginning of the appeal hearing, Allstate withdrew its applications for the huge rate increases. The Office of Insurance Regulation had subpoenaed many documents for the hearing, but Allstate failed to provide them. After half a day, the Insurance Commissioner cancelled the hearing to consider sanctions against Allstate.

Inquiring minds would ask: Why would an insurance company withdraw its request for such huge rate increases if they were truly justified by the actual loss experience? If the loss experience was that bad, wouldn’t the insurance company need those increases to stay in business? Wouldn’t the insurer fight for those necessary rate increases? Some in Florida must have been asking those same questions, as the state Senate immediately announced it would require Allstate to attend hearings and testify.