Alaska Injury Law BlogOn January 5, 2008, a Servant Air Piper Navajo Chieftain with 10 people aboard crashed shortly after take off from Kodiak, Alaska. The pilot and five passengers tragically died in the crash. Surviving passengers reported that a baggage door popped open shortly after takeoff and the pilot was attempting to return to the airport. The National Transportation Safety Bureau (NTSB) is investigating the crash. Based on recent NTSB investigations in Alaska, that may take awhile. I represented a family who lost a loved one in the crash of a PenAir Cessna Caravan 208 shortly after takeoff from the Dillingham airport on October 10, 2001. The pilot and nine passengers died in that crash. The NTSB did not release its probable cause determination until January 23, 2003 — 15 months after the crash. I am presently representing a family who lost a loved one in the crash of a PenAir Piper Saratoga PA-32 shortly after takeoff from the Pt. Heiden airport on December 14, 2006. The NTSB recently released its “factual report” on that accident just over one year after the crash. The NTSB has yet to make its probable cause determination. This illustrates why it is important for families to promptly hire counsel to independently investigate an accident and not to wait a year or more to see what the NTSB concludes about the accident. The families who have lost a loved one will typically not know what the NTSB has been up to for a year or more. In the meantime, important evidence may be lost and important witnesses may have disappeared.
Alaska Supreme Court Issues New Ruling on Underinsured Motorist (UIM) Coverage for Personal Injuries.
The insured received serious personal injuries while riding in a car that was struck by another motor vehicle. She settled with Safeco, the insurance company of the negligent driver, for the facial policy limits of $50,000, without payment of any add-ons for interest or attorney fees. She then made a claim for her uncompensated damages under the underinsured motorist (UIM) coverage of her own policies with Allstate. After hearing all the evidence, the arbitrators found her damages to be $118,432.
A primary issue on appeal was whether Allstate was entitled to an offset of the $50,000 paid by Safeco. The Supreme Court ruled that Allstate was entitled to such an offset even though Allstate had not pled or otherwise asserted the right to an offset to the arbitrators. The offset was deemed proper based on the language of the Alaska statutes, the purpose of UIM coverage, and the terms of the Allstate policy.
A second issue was whether Allstate had to pay interest and attorney fees on the entire $118, 432, which included $50,000 of the insured’s damages that had been paid by Safeco. The Court ruled that Allstate did not; because these amounts could have been recovered under the Safeco policy, the insured was not “underinsured” as to those amounts. The Court thus created a crucial distinction in underinsured motorist claims. It reaffirmed the rule of the earlier Coughlin case that if a person obtains the policy limits of the adverse driver, they have exhausted that policy for purposes of qualifying to bring a claim for underinsured motorist coverage against their own insurance company, even though they did not obtain the add-ons available under that policy. But because they could have pursued the add-ons under the first policy, their claim for add-ons to the amount paid under the first policy is not a proper element of the subsequent UIM claim. Sidney v. Allstate Insurance Company, Opinion 6220, January 11, 2008.
Alaska “Tort Reform” Damage Limits Become More Restrictive With Each Passing Year
The “tort reform” statute passed by the Alaska Legislature in 1997 continues to whittle away, automatically, year after year, at the real damages available to Alaska families who have lost a loved one due to a defendant’s negligent or reckless conduct. The 1997 legislation limited the amount of “non-economic damages” that can be recovered in a wrongful death action to $400,000, or $8,000 times the person’s life expectancy, whichever is greater. AS 09.17.010 These amounts have not changed since 1997. The United States Bureau of Labor Statistics states that someone would need $520,712 in today’s dollars to equal the purchasing power of $400,000 in 1997. Even when “tort reform” was passed in 1997, $400,000 was a modest amount for the death of a loved one. In real terms, the available damages decrease every year with the march of inflation. The $400,000 limit is also particularly harsh when the deceased did not have substantial economic earnings, such as a homemaker. Even assuming $400,000 was an appropriate limit when it was adopted in 1997, that amount should in fairness be updated by the current legislature to account for inflation and then indexed to the rate of future inflation. This limit also remains ripe for a constitutional challenge in court.
Dietary Supplement Company Faces Fraud Charges
The federal government has brought fraud charges against a dietary supplement company, Berkeley Premium Nutraceuticals, claiming the company bilked consumers out of $100 million using unauthorized credit card charges. Berkeley Nutraceuticals marketed a number of products it said would help in weight control, memory loss and clear skin, but its main business was sexual enhancement products such as Enzyte “male enhancement” pills. According to the indictment, consumers were put into an automatic shipping program, through which their credit cards were billed without authorization. The company also offered full refunds, “double your money back,” and “triple your money back” guarantees that were false. It also is accused of referring complaints to a director of customer care who did not exist. Defendants include Berkeley, its president Steve Warshak, his mother, an in-house lawyer, a computer expert and a warehouse manager. They are accused of fraud, conspiracy to commit money laundering, and of obstructing two federal agencies in their investigations. Last year, Berkeley agreed to pay $2.5 million to settle allegations by attorneys general in Ohio and other states that the company engaged in deceptive practices in the sale of its products. The safety and efficacy of the products were not on trial.
Source: AP Wire, January 9, 2008.
Alaska Personal Injury Law Group Obtains Important Ninth Circuit Ruling — Unmanned Barges Must Have Safety Railings
While cargo barges may be “unmanned” while under tow, longshoremen and seamen often go aboard “unmanned” barges for loading, unloading and other purposes. Federal regulation 46 C.R.F. § 92.25-5 requires that cargo barges have a three-course perimeter safety railing. The Coast Guard, however, has failed to enforce that regulation, stating without explanation in its Marine Safety Manual that such barges are totally exempt from the railing requirement. In a lawsuit I am handling, a longshoreman working on a cargo barge equipped with only a two-course safety railing fell between the two courses (exactly where the third course should have been) and was crushed and badly injured when the barge surged back against the dock. In an important recent decision, the Ninth Circuit agreed with us that the Coast Guard’s manual is inconsistent with the regulation; that the express terms of the regulation controls; and that the barge was in violation of the regulation. Abruska v. Northland Vessel Leasing Co., 2007 WL 4328834. This is an important ruling, not only for my client, but for everyone who has to work aboard cargo barges, often in dark, rough or inclement conditions.
PTSD and Returning Veterans: A Cause of Murder?
One of the unfortunate consequences of the current conflicts in Iraq and Afghanistan is that veterans are returning with traumatic brain injuries and psychological injuries in such numbers that it is forcing the military and America to learn more about the devastating consequences of these injuries.
The New York Times today reported that PTSD has been linked to more than 120 murders committed by returning veterans. The study was conducted based on examining news reports, and is not a study based on scientific data. The New York Times’ study showed an 89% increase in such episodes, from 184 cases to 349 cases, since the conflict in Afghanistan began in 2001. While the Pentagon questioned the methodology of the study, the newspaper said its study was conservative. “This reporting most likely uncovered only the minimum number of such cases, given that not all killings, especially in big cities and on military bases, are reported publicly or in detail.” The Pentagon does not track this type of data regarding its veterans.
The victims were mostly known to the veterans involved, including spouses, girlfiiends, children and family members, but their victims were also strangers. Unfortunately, the soldiers themselves became victims. Thirteen of the veterans took their own lives after the killings, and two more were fatally shot by the police. Several more attempted suicide or expressed a death wish.
Glenn Highway Crash Kills Native Leaders
On Saturday, January 12, 2008, two Alaska Native leaders and their 16-year-old granddaughter were killed in a three-car collision on the Glenn Highway. Allan and Sophia Chase, and Melissa Pike were struck when a Chevrolet truck crossed the center line and sideswiped their vehicle, which caused their vehicle to hit a third vehicle driven by John Lavarnway. Lavarnway and his wife, Mary, were injured in the crash. The driver of the pickup, Joshua Swigart, and his passenger, Erin Guhl, were not injured. Troopers are investigating why the pickup crossed the center line, and no charges have yet been filed.
Allan Chase was a former board member of Cook Inlet Regional, Inc., an Alaska Native corporation based in Anchorage. Sophia Chase was on the board of Southcentral Foundation, a Native health organization affiliated with CIRI.
Source: Anchorage Daily News, January 13, 2008.
FDA Cracks Down on Compounded Hormone Products
On January 9, the FDA warned seven compounding pharmacies to cease marketing estrogen/progestin products containing estriol. The FDA also warned the pharmacies to stop making claims that the compounded products could be used to treat Alzheimer’s disease, breast cancer, depression, and colon cancer. The FDA also demanded that the pharmacies stop using the non-scientific term “bio-identical”, which the FDA concluded made the products “misbranded” drugs.
The seven pharmacies were targeted after an FDA review of their websites revealed that they were marketing products with estriol. Estriol is an estrogen produced during pregnancy that has not been FDA approved for clinical use. The FDA review identified what it considered to be “patently false” claims. The FDA also questioned the manner in which the products were marketed to suggest to the consumer that the products were “natural” and therefore safer than FDA approved hormone replacements.
Source: FDA—http://www.fda.gov/bbs/topics/NEWS/2007/NEW01766.html
Insurer Sanctioned For Fraud On The Court
On January 9, 2008, a Texas judge sanctioned Texas Mutual Insurance Co. $30,000 for committing fraud on the court. In the litigation, a worker had prevailed against Texas Mutual in his claim seeking worker’s compensation coverage for his work-related injury. To defeat the worker’s claim, the court found that Texas Mutual falsified a medical record and intentionally used it throughout the litigation to prevent the worker from receiving his benefits. The trial court ruled inTexas Mutual Insurance Co. v. Juan Narvaez, that the insurer committed “fraud on this court and the defendant by falsifying a critical medical record, and then using that record throughout discovery, depositions and trial. This fraudulent conduct was committed knowingly and intentionally by agents and representatives of Texas Mutual Insurance Company.” In addition to the monetary sanctions, the court ordered the insurer to post the sanctions order on the insurer’s website, www.texasmutual.com, within seven days of the order and keep it up for 180 days. Remarkably, after being caught, the insurer then secretly solicited from a doctor yet another altered document which a hospital official later confirmed under oath was not a genuine record.
Another reason this case is remarkable is that Texas Mutual Insurance is well-known for its efforts lobbying for tort reform and limitations on bad faith claims against insurers. Here, the company’s own conduct makes the case for why insureds should be permitted to assert claims against insurers when acts in bad faith occur. Without the governance that litigation can bring, it would be open season on insureds by insurers willing to commit fraud to avoid paying legitimate claims.
Source: Texas Mutual Insurance Company v. Juan Narvaez (Cause No. 04-06061-C) in the 68th District Court of Dallas County, Texas.
Consumer Federation Reports Excessive Premium Charges By Insurance Industry
A report just released by the Consumer Federation of America estimated that the average family in the U.S. has been overcharged for auto and home insurance over the last four years because companies have been charging excessive premiums and paying out proportionately less in claims.
The insurance industry reaped record profits in 2004 and 2005, and profits in 2006 rose to unprecedented heights. Profits in 2007 may also be recordbreaking. The CFA reported that the average percentage of premium payments paid back to cover losses has dramatically declined over the last 20 years – from a high of 70 percent to 54.6 percent last year – translating into a huge loss in the value of insurance to consumers. Insurers, on the other hand, had net income of $65 billion last year. Insurers thus paid out 34 percent of premiums to cover property losses – a figure that was topped in this decade only by the record low 27.7 percent loss ratio in 2004.
Regardless what type of insurance coverage is being discussed, insurers routinely claim that their losses are mounting because of unscrupulous lawyers, frivolous claims, and unexpected natural disasters. Such claims are then used to foment tort reform and explain away premium increases, neither of which are justified when the true loss experience of the insurer is examined. The critical reader is encouraged when hearing such claims by insurers to go to the data. More than likely it will be the case that the insurer’s decision to increase premiums will not be justified by the loss history. Moreover, the insurer will likely be sitting on extraordinary reserves and profits.