Toxic Tort Litigation Trends
PRESENTED BY
Toxic Tort Litigation Trends
and Developments
Jeffrey S. Moller, Blank Rome LLP
Earl M. Forte, Blank Rome LLP
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M H
Bl
k R
LLP
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Terry M. Henry, Blank Rome LLP
Developments in Toxic Tort Litigation:
Recovery in Excess of
PRESENTED BY
Recovery in Excess of
Actual Past Medical Costs
Jeffrey S. Moller, Blank Rome LLP
Past Medical Costs as Damages
•
An important element of consequential damages.
•
Potentially large due to diseases and illness
(cancer, asbestosis) which may require costly and
lengthy treatment.
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The Actual Payor
•
Injured plaintiffs rarely pay out
of pocket.
•
Most are insured or are
Medicare/Medicaid
beneficiaries.
•
Insurance benefits procured by
the plaintiff are not a credit for
th t tf
th C ll t
l
the tortfeasor per the Collateral
Source rule.
Healthcare Market Forces
•
The amount actually paid is often far less than the
amount initially charged by the medical provider.
•
In most cases, the medical provider cannot (as a
contractual matter) seek to recover the differential
from the patient.
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•
Which of the two alternative amounts should a
plaintiff be entitled to recover as past medical
d
f
t tf
th f ll “ h
d”
t
damages from a tortfeasor: the full “charged” amount
or the amount that is actually paid?
•
Should the jury see the amounts charged if only the
amounts paid are relevant?
Past Medical Damages Drastically Cut
•
The difference between the amount charged and the
amount actually paid can be quite substantial and
lt i
h
d
ti
f th bill d
t
can result in a huge reduction of the billed amount.
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Ripple Effect
•
Pain and Suffering
– Traditional (mythical?) “ lti li ” f l “multiplier” formula
– The total amount of medical expenses seen by juries as indicator
•
Punitive Damages
Punitive Damages
– Multiple or cap per statute or decision
Does limiting a plaintiff’s
recovery of medical damages
Collateral Source Rule:
recovery of medical damages
to those amounts
that are actually paid,
whether by plaintiff or insurance,
i l t th C ll t
l S
R l ?
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violate the Collateral Source Rule?
•
A plaintiff’s right to damages for past medical
expenses cannot be diminished merely because a
ll t
l
id f
l i
t'
di
l
The Collateral Source Rule
collateral source paid for claimant's medical
expenses. A tortfeasor cannot benefit from a
plaintiff’s foresight in purchasing insurance.
•
The question is whether or not the reduction in the
h
d
t
ti t d
ith
d i
b th
charged amount negotiated with and given by the
medical provider is considered a “benefit” procured
by the Plaintiff.
Opinions/Interpretations:
3 Schools of Thought
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School #1
•
A function of statute or evidentiary rule:
Only those amounts
th t
t
ll
id
that are actually paid
(either by plaintiff or
insurance) are recoverable.
Evidence of amounts billed
is irrelevant and
inadmissible
inadmissible.
•
Tex. Civ. Prac & Rem Code § 41.0105 - “Evidence
Relating to Amount of Economic Damages.”
– In 2003, the Texas state legislature passed House Bill 4, comprehensive tort reform
– Section 41.015: “In addition to any other limitation under law, recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.”
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•
At what stage of the proceeding should this apply?
– Does this rule limit the admissible evidence or merely t li it t b li d b th j d b create a limit on recovery to be applied by the judge by molding a verdict?
• Haygood v. Escabedo, 356 S.W.3d 390 (Tex. 2011).
– Held:“Since a claimant is not entitled to recover medical charges that a provider is not entitled to be paid, evidence of such charges is irrelevant to the issue of damages … any relevance of such evidence is substantially outweighed by the confusion it is likely to generate, and therefore the evidence must be excluded.”
School #2
•
Limits recovery to amounts paid based upon rule of
fairness under common law.
C ll t
l S
R l
Collateral Source Rule
arguments unavailling.
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•
Common law allows a plaintiff to recover the
“reasonable value” of medical services. But the
d fi iti
f
bl
l
h
ld
t
it
Pennsylvania – Moorhead v. Crozer Chester Medical Center, 564 Pa. 156 (Pa. 2001) – “Reasonable Value”
definition of reasonable value should not permit an
injured party to recover an amount greater than the
amount actually paid or for which he/she incurred
liability.
• Reliance upon Restatement (Second) of Torts, §911 Comment h (1977): “[N]ormally the amount recovered is the reasonable h (1977): [N]ormally the amount recovered is the reasonable value of the services rather than the amount paid or charged. If, however, the injured person paid less than the exchange rate, he can recover no more than the amount paid, except when the low rate was intended as a gift to him.”
• Collateral source rule is inapplicable. The amount paid by the collateral sources (Medicare and Blue Cross) must be paid by the tortfeasor. “The collateral source rule does
Pennsylvania – Moorhead v. Crozer Chester Medical Center, 564 Pa. 156 (Pa. 2001) – “Reasonable Value”
be paid by the tortfeasor. The collateral source rule does not apply to the illusory charge of $96,500.01 since that amount was not paid by any collateral source.”
• Allowing the plaintiff to recover would be a windfall to the
plaintiff “and would violate fundamental tenets of just compensation”:
– remedies seek to put injured person in pre-tort position
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p j p p p
– injured party cannot recover twice for same injury
– unjust enrichment
– injured person should be fairly compensated with the least burden to the wrongdoer
•
Recovery limited to those charges that are paid - “an
injured plaintiff whose medical expenses are paid
th
h
i
t i
i
California - Howell v. Hamilton,
52 Ca.4th 541 (Ca. 2011)
through private insurance may recover as economic
damages no more than the amounts paid by the
plaintiff or his or her insurer for the medical services
received or still owing at the time of trial.”
•
No recovery for written-off charges because “no such
recovery is allowed for the simple reason that the
recovery is allowed, for the simple reason that the
injured plaintiff did not suffer any economic loss in
that amount.” Citing Civ. Code §§ 3281, 3282 –
defining compensatory relief
•
Collateral source rule not violated - “The negotiated
rate differential is not a collateral payment or benefit
bj
t t th
ll t
l
l ”
California - Howell v. Hamilton,
52 Ca.4th 541 (Ca. 2011)
subject to the collateral source rule.”
•
Evidentiary loophole – “[E]vidence of that full billed
amount is not itself relevant on the issue of past
medical expenses. We express no opinion as to its
relevance or admissibility on other issues, such as
noneconomic damages or future medical expenses ”
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noneconomic damages or future medical expenses.
•
Several California appellate court opinions since
Howell have allowed the full amount charged into
evidence.
School #3
•
“Benefit of the bargain” – Award the full value of the
medical expenses, including
t
t
l dj
t
t
any contractual adjustments
or write-off amounts, where
the plaintiff has paid some
consideration for the benefit
of the contractual adjustment.
•
“[T]o the extent that the write-offs were procured
through the payment of the premiums, they cannot
properly be considered a windfall Rather the
write-Louisiana – Bozeman v. write-Louisiana,
879 So.2d 692 (La. 2004)
properly be considered a windfall. Rather, the
write-off amount was viewed as a benefit to plaintiff's
contractual bargain with her insurance provider.”
•
Not allowing the recovery would violate the collateral
source rule.
•
However, Medicaid recipients are unable to recover
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any amounts adjusted or written-off.
– “[W]here the plaintiff pays no enrollment fee, has no wages deducted, and otherwise provides no consideration for the collateral source benefits he receives, we hold that the plaintiff is unable to recover the "write-off" amount.
• “We hold that Lopez was entitled to claim and recover the
full amount of her reasonable medical expenses for which she was charged without any reduction for the
Arizona - Lopez v. Safeway Stores, Inc., 129
P.3d 487 (Ariz. Ct. App. 2006)
which she was charged, without any reduction for the amounts apparently written off by her healthcare providers pursuant to contractually agreed-upon rates with her medical insurance carriers.”
• Legislature’s job to abandon the collateral source rule in
this area – “absent any such limiting statute or supreme court authority suggesting that the collateral source rule does not control in a situation such as that presented here, we join with the majority of courts in finding it applicable.”
Practical Considerations
• Arguments should be made even in those states which have historically allowed recovery of the full billed y amount. Urge a change in the law.
• Look for statutes which may affect this type of recovery. More state legislatures are addressing these issues as tort reform.
• Motion in Limine - to prevent Plaintiff putting into evidence his
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Plaintiff putting into evidence his medical or health care provider bills that reflect charges that have been either contractually adjusted or written-off. Do not be satisfied with “molded verdict” solution.
Environmental Claims Issues
PRESENTED BY
Environmental Claims Issues
in Bankruptcy
• (1) When a company files for bankruptcy reorganization, do pre-bankruptcy environmental claims asserted against the company by governmental agencies become discharged or do
I. Two Areas Addressed
company by governmental agencies become discharged or do they continue after the reorganization?
• (2) If a company in bankruptcy is faced with substantial environmental lawsuits, do those lawsuits get resolved in the bankruptcy court or in the court where the lawsuits were originally filed?
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originally filed?
•
Only “claims” are discharged in bankruptcy. In re
Quigley Co., 383 B.R. 19, 25 (Bankr. S.D.N.Y. 2008.
11 U S C § 101(5) d fi
“ l i ”
II. Only “claims” are dischargeable
11 U.S.C. § 101(5) defines a “claim” as:
– “(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured; or
– (B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment fixed contingent matured equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured”.
•
Are environmental cleanup obligations dischargeable
“claims” under § 101(5)(B)?
– Usually not, unless the agency has a right to seek payment for money damages under the statute it used to obtain the cleanup order. Mark IV Industries, Inc. v. New Mexico Environmental Department, etc., 11 Civ. 648 (SAS) (S.D.N.Y. September 28, 2011).
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•
In Mark IV, the Debtor asked SDNY bankruptcy court
to determine that New Mexico’s cleanup injunction
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t it f
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t
ll ti
bt i
d
d
against it for ground water pollution obtained under
the state’s Clean Water Act, was a dischargeable
“claim” because NM had the option to seek money
damages under the Hazardous Waste Act and
CERCLA.
• The district court in Mark IV rejected this argument by the Debtor and affirmed the bankruptcy court:
Citi I Ch t C ti 944 F 2d 997 (2 dCi
– Citing In re Chateaugay Corporation, 944 F. 2d 997 (2ndCir. 1991) and other case law, the SDNY ruled in Mark IV that the fact NM had proceeded under the state Clean Water Act and not under another statute that allowed money damages, was irrelevant to whether or not the cleanup order was a dischargeable “claim” and to hold otherwise would make all environmental claims dischargeable which
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would make all environmental claims dischargeable, which is not what the law intended, especially with ongoing pollution.
• The district court in Marks IV that the correct focus is on the statute the agency actually used, not on what it could have used Marks IV at 29
used. Marks IV at 29.
• The court in Marks IV also noted that In In re Chateaugay, the 2d Circuit had established a rule that most environmental claims are non-dischargeable. Id.
• “Ongoing” pollution at the site was a further reason for non-dischargeability. “Ongoing” pollution can be caused by pre-bankruptcy or post-pre-bankruptcy activities. Mark IV involved a moving “plume” of ground pollution created pre-bankruptcy.
• In Marks IV, the district court also concluded that was a material issue of fact raised by the parties’ experts about whether there was or was not “ongoing” pollution at the site whether there was or was not ongoing pollution at the site which precluded summary judgment. Mark IV at 38.
• The Debtor in Mark IV appealed to the Second Circuit, Mark IV Industries, Inc. v. The New Mexico Environmental Dept. et al., No. 11-4570 (2d Cir.), but the appeal was withdrawn by agreement of the parties in late 2011, so the district court decision in Marks IV stands
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decision in Marks IV stands.
•
MDL defendant files for bankruptcy. Do claims
against it get decided in the MDL court or in the
b
k
t
t?
IV. What Court Decides Environmental
Claims?
bankruptcy court?
•
11 U.S.C. § 502(c), provides for claims to be
estimated in the bankruptcy court. Or, withdraw
reference/abstain, go to MDL court. Parties can
agree. E.g. In re Pilgrim‘s Pride, etc., 2009 Bankr.
LEXIS 2692 (Bankr N D Tex 2009)
Toxic Tort Litigation:
PRESENTED BY
Toxic Tort Litigation:
Trends and Developments
Terry M. Henry, Blank Rome LLP
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Toxic Tort Litigation
Trends and Developments
The Component Part
The Component Part
Toxic Tort Litigation
Trends and Developments
Can plaintiffs reach beyond the finished product manufacturer to assign liability?
O’Neil v. Crane Co., 266 P.3d 987 (Cal. Jan. 12, 2012)
Conner v. Alfa Laval, Inc., 842 F.Supp 2d 791 (EDPA Feb. 1, 2012)
Maxton v. Western States Metal, Ct of Appeal, 2d App. Dist. (Feb. 2, 2012
In re: Asbestos Lit Wolfe 2012 Del Super LEXIS 86 (Feb 28 2012)
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In re: Asbestos Lit. Wolfe, 2012 Del. Super LEXIS 86, (Feb. 28, 2012)
In re: Asbestos Lit. Grich, 2012 Del. Super LEXIS 144, (Apr. 2, 2012)
Dummitt v. Chesterton, 2012 NY Mis. LEXIS 4057, (Aug 20, 2012)
The Component Part Doctrine
Toxic Tort Litigation
Trends and Developments
Component parts Finished Product Manufacturer Wholesalers Retailer Distributors Retailer The Component Part Doctrine
Toxic Tort Litigation
Trends and Developments
Theories of Liability in a Product Liability Case: • Design Defect
• Failure to Warn • Manufacturing Defect
The Component Part Doctrine
The manufacturer of a component part is not liable f i j i d b th fi i h d d t i t
179 The Component Part Doctrine
for injuries caused by the finished product into which the component has been incorporated, unless the component itself was defective and caused harm
Toxic Tort Litigation
Trends and Developments
The USS Oriskany
The O’Neil Case
• Launched in 1945 • Launched in 1945 • Asbestos components specified by Navy • No acceptable alternative in 1945 • Pumps/Valves did not require asbestosToxic Tort Litigation
Trends and Developments
Key Facts
The original asbestos
O’Neil’s Theory Pumps and valves containing components in
the Crane valves and Warren pumps had long since been replaced No evidence that Crane or
defectively designed to be used with asbestos
Manufacturers had a duty to warn of the dangers associated with asbestos
181 Warren manufactured any
of the replacement asbestos components
associated with asbestos because the could foresee that their products would be used with asbestos The Component Part Doctrine
Toxic Tort Litigation
Trends and Developments
The Court’s Holding
•No liability outside a defective product’s chain ofNo liability outside a defective product s chain of distribution
•No liability for distinct products that a consumer can be expected to use with a non-defective product (foresee-ability is not enough)
N d t t f d f t i th f t ’
•No duty to warn of defects in another manufacturer’s product
Toxic Tort Litigation
Trends and Developments
In The Matter of NYC Asbestos Litigation:
Ronald Dummitt v. Crane, et al. August 20, 2012
A manufacturer’s liability for third party component parts must be determined by the degree to which injury from
The duty to warn arises where a manufacturer knows or should know that its product would or ought to
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the component part is foreseeable to the manufacturer
p g
be combined with inherently defective material for its intended use
The Component Part Doctrine
Toxic Tort Litigation
T
rends and Developments
• Originally supplied asbestos gaskets with valves
S ld b t k t l t t
Key Findings of Fact
• Sold asbestos gaskets as replacement parts
• Knew that Navy drawings specified asbestos
• Knew asbestos would be used with its valves
• Knew asbestos was routinely used with valves
• Advertised its valves as easier to insulate
• Contributed to a 1946 Navy machinery manual
• Contributed to a 1946 Navy machinery manual specifying asbestos insulation
This evidence reflects a manufacturer who meant for its product to be used with a defective product
Toxic Tort Litigation
Trends and Developments
Factors that impact determination of liability between
component part and finished product manufacturers:p p p
• Knowledge of how the component part will be used
• Knowledge of other products that may or must be used with the product / component part
• Responsibility for design of the component part
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Responsibility for design of the component part
• Responsibility for selection of the component part
• Responsibility for integration of the component part
The Component Part Doctrine
Toxic Tort Litigation
Trends and Developments
Additional Thoughts:
Raw Materials Suppliers:
• Maxton v. Western State Metal, Ct. of App., 2d App.
Dist. (Feb 2, 2012)
Medical Device Suppliers:
• Biomaterials Access Assurance Act of 1998 (21
USC § 1601 et seq.
