Time for a Raise for the Michigan Supreme Court Justices

By: Thomas W. Waun, MAJ President

How would you feel if you worked for the same employer for 15 years and never got a raise?

Unfortunately, for the men and women we elect to serve us on the Michigan Supreme Court, this is their reality. The salary for a justice has been frozen since 2002.

I recently came across a Mackinac Center for Public Policy blog, “State Should Review Supreme Court Pay.” Now, rarely are MAJ and the Mackinac Center on the same side of an issue, but this happens to be the exception.

Prior to 2002, the State Officers Compensation Commission—the public body that recommends salary rates for certain public officials—determined justices’ pay. Voters passed a constitutional amendment that year requiring legislative approval of future salary recommendations for justices made by the compensation commission. For past 15 years, the commission has repeatedly called for pay increases. Each time, the legislature has refused.

The 15-year salary freeze is the longest such freeze in the nation. Over that time, compensation for federal judges has kept pace with inflation and continues to rise with the cost of living. The way the system is set up in Michigan, judges in lower courts may soon make more than Michigan Supreme Court justices.

If this trend continues, it will be increasingly more difficult to encourage qualified candidates to run for the Michigan Supreme Court and keep experienced justices from leaving the bench for more lucrative opportunities elsewhere.

The amount of money a justice makes may sound trivial to some. But put yourself in their robe. Would you accept a job or stick with an employer knowing your salary could stay the same for 15 years or longer?

It’s time for the legislature to do the right thing.  Heed to the recommendation of the commission and give our Michigan Supreme Court justices a long overdue raise.



There is a reason why Texas has the first Ebola case

As we speak, many Americans are panicking over the current Ebola case in Texas.  While Ebola is a horrifying disease and one that should not be taken lightly, we should look at how it got here and why.  For those that work in the medical negligence community it should come as no surprise that Texas would be ground zero for a potential deadly outbreak.  Our friends at The Pop Tort explain why:


Thanks to the state’s severe “cap” on compensation and other restrictions on patients’ legal rights, cases involving medical malpractice in emergency rooms have been knocked out almost completely, making Texas ER’s some of the most dangerous in the country.  “’What Texans don’t know is that their Legislature has mandated a very low standard of care — almost no care,’ says Brant Mittler, a Duke University-educated cardiologist in San Antonio who added malpractice law to his resume in 2001.’”

Read the entire article “Ebola: The Latest Texas Medical Negligence Nightmare,” to get the full case as to why medical malpractice caps and emergency room immunity are significant risks to public health. Before you head over there we’ll leave you with this important statistic:

Let’s begin with this one: “Between 210,000 and 440,000 patients each year who go to the hospital for care suffer some type of preventable harm that contributes to their death.… That would make medical errors the third-leading cause of death in America, behind heart disease, which is the first, and cancer, which is second.”

While Ebola may be scary, bad doctors are much more likely to kill you.



9 Steps to Protect Your Right to Recovery for Basement Flooding Damages

With the recent events that have left many residents in Southeast Michigan dealing with catastrophic damages to their homes due to rain water and sewer backups it is important to know your rights. MAJ member Steve Liddle of Macuga, Liddle & Dubin, P.C in Detroit has put together 9 steps to help deal with basement flooding damage.  Steve Liddle specializes in cases involving sewage backups, air pollution and consumer fraud.

Remember, your homeowners insurance probably doesn’t cover sewer damage, how you handle the next few days will have a big impact on whether you’ll get help paying for the damages or not.

1.    Contact the governmental agency that maintains your sewers. Not only does this alert the government that there is a problem with its sewers, but it also may preserve your ability to seek compensation. Many states require a written notice of the event be filed with the responsible governmental agency in order to preserve the right to recovery.

For example, Michigan basement flooding victims must file a written Notice of Claim with the responsible governments within 45 days from the date the basement flooding was discovered. If you do not file your notice within that time period, you may be barred from seeking damages for your basement flood.

2.    Contact your homeowner’s insurance company. If you make an insurance claim, keep all the records associated with the claim along with copies of your homeowner’s insurance policy.

3.    Photograph and videotape the damage to your home. Use a camera to take pictures and/or video of the current flood damage to your home and your property. Make sure to photograph high value items that were damaged.

4.    Make a timeline of the flooding event as it happens. Write down details of the flooding event as they occur, such as when you first discovered the water coming in, how long water was in your house, how deep the water was, what color the water was, and what did the water smell like. This information can be helpful in determining the cause of your flooding.

5.    Make a list of the personal and real property which has been damaged. If known, write down the approximate market value of the damaged property. If you wait too long to document the information, you may not remember everything that has been damaged.

6.    Obtain a written estimate to repair the damages to your real property. Real property loss includes damages to your paneling, drywall, tile, drop ceiling, carpeting, etc. This should be done even if you do not have the financial ability to pay for the repairs at that time.

7.    Keep track of your flood clean up. Keep all receipts related to cleaning of your house, including ones from commercial cleaning services and your personal cleaning supplies. Also, keep track of the amount of time that you spend cleaning.

8.    Seek legal assistance. Hiring an attorney is an important decision especially in basement flooding claims. Basement flooding claims involve complex issues of hydraulics, hydrology, engineering and governmental immunity. Hiring an attorney with significant experience in representing flood victims helps to effectively overcome those complex issues.

9.    Keep copies of your flood damage documentation. These documents include receipts, pictures, videos, insurance documents, estimates, insurance policies. You should also make copies of all correspondence that you have made or received from your local government regarding the flooding. Finally, it is important to keep all of your flood damage documentation in a safe place.

– See more at: http://mldclassaction.com/steps-to-protect-your-right-to-recovery-for-basement-flooding-damages/#sthash.ec3W7POK.dpuf

We here at the Michigan Association for Justice know that basement flooding can be a very traumatic experience.  Please call an MAJ member near you to get help working through this process. 

Sewage backup? Act quickly to protect your rights

Last year, MAJ member Kassem Dakhlallah, a senior partner at the AT Law Group, PLLC in Dearborn, wrote a great article about your rights when it comes to a sewer backup.  Most likely your homeowners insurance won’t cover it so it is important to know what your options are.

In order to receive compensation for a sewage disposal system event, a claimant must notify the governmental agency of a claim of damage, in writing within, 45 days after the date the damage was discovered, or in the exercise of reasonable diligence should have been discovered. However, a claimant’s failure to comply with the notice requirements does not bar the claimant from bringing a civil action against a governmental agency whose contacting agency was notified orally or in writing of an event before providing the requisite notice of a claim if the claimant can show that: (1) the claimant notified the contacting agency during the 45-day notice period; and (2) the claimant’s failure to comply with the notice requirements resulted from the contacting agency’s failure to comply with its duties to provide information regarding the notice requirements.

View the entire article at The Arab American News.


Disability Insurance: A Primer on what it is, how it works, and why it’s important to consult an attorney

By: Bradley M. Peri, Goodman Acker, P.C.

Disability insurance, similar to life insurance, is intended to protect future earnings and will replace your income in the event that you become physically unable to work.  Although it gets less attention than life insurance, many will agree that disability insurance is just as important.  According to the Council for Disability Awareness, about one in four of today’s twenty-year-olds have a chance of becoming disabled sometime before they retire.  In addition, the average long-term disability absence from work lasts 2.5 years.

While the majority of people are prepared for the medical costs (through their applicable health insurance) if they become disabled, many are not prepared for the loss of income.  So how does disability insurance solve this?
There are two types of disability insurance: Long Term and Short Term.  Either may be purchased individually, or by or for a group, such as part of an employee benefit package.
Short-Term Disability Insurance

Short-term disability insurance replaces a portion of lost salary in the event the claimant misses six months or less of work as a result of a temporary disability.  In most policies, the coverage will typically begin after all sick leave is exhausted, and will replace almost 100% of the claimant’s wages for the first monthly payment.  Thereafter, if the claimant remains unable to work, the majority of policies permit the monthly payment to drop to 60-66% of the claimant’s wages.  The length of coverage and payment percentage varies from plan to plan but most are consistent with the above.
Long-Term Disability Insurance

Many contend that long-term disability insurance is the most important insurance an individual can purchase.  After a claimant has exhausted all of their short-term disability insurance, long-term disability insurance will kick in.

Long-term disability insurance protects a claimant from loss of income in the event that he or she is unable to work due to illness, injury, or accident for a long period of time (i.e. in excess of six months.  Most policies will cover 50%-70% of the claimant’s monthly salary.  The duration of plan benefits can also extend for different lengths of time.  Some policies will only pay out for 5-10 years, while the majority will pay till the claimant reaches the age of 65 pending they continue to meet the definition of “total disability” defined by the policy.

Generally, there are several ways long-term disability insurance is paid for, with each option having different costs, as well as tax implications.  First, the plan can be paid for directly by the potential claimant themselves.  Next, and most common, the plan is paid entirely (or a portion) by the potential claimant’s employer.  In this situation, the plan is governed by the Employee Retirement Income Security Act of 1974 (“ERISA”).  Therefore, if a claimant is denied long-term disability insurance it is very important to get an attorney involved at the application level to determine whether ERISA is applicable or not.

When ERISA is involved, a claimant may internally appeal the claims administrator’s first denial of long term disability benefits within 180 days from the notice of benefit denial.  Most group policies allow for at least two internal appeals with the third appeal sometimes being optional to the claimant.  Many attorneys, including myself, use this initial 180-day period to gather and organize medical records, arrange for a medical examinations and functional capacity assessments of the claimant and retain an expert to perform a vocational analysis regarding the claimant’s background, training, and education as it relates to his or her performance of occupations.

After an appeal has been submitted to the carrier, ERISA provides that a long term disability plan administrator shall notify a claimant of the plan’s benefit determination on review within a reasonable period of time, but not later than 45 days after receipt of the claimant’s request for review.  If the plan administrator determines that an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 45-day period.  However, in no event shall the total period of review exceed 90 days.  As a pre-requisite to filing a lawsuit under ERISA the claimant is required to exhaust all of his or her internal administrative remedies.

The deadline for filing suit under ERISA for denial of long term disability benefits is established by the State’s statute of limitations for contract claims (usually a period of two years to six years).  However, in some cases the court will allow the long term disability plan administrator to establish a shorter limitation period for filing suit. Again, this demonstrates the importance of having an attorney review the policy to determine the actual limitation period for filing suit within your particular jurisdiction.

Most policies also require the claimant to apply for “other income” after they are disabled for a set period of time.  Typically, the policy will require the claimant to file for Social Security Disability, and will even assist in the application process, and then take a set off from any amount received.  More often than not, the insurance carrier will terminate the claimant’s long-term disability benefits even though he or she is also collecting Social Security Disability.  Essentially, the insurance carrier will avail themselves of the claimant’s Social Security Disability award by reducing the claimant’s long-term disability payments and then ignore or repudiate that award when considering the claimant’s continued plan benefits.  Although the Social Security Administration’s disability determination is not binding on an ERISA plan administrator, Calvert v Firstar Finance, Inc, 409 F3d 286; 2005 US App LEXIS 8484 (CA 6, 2005), the courts will often consider it as a factor in determining whether the insurance carries made the appropriate decision regarding the denial and/or termination of a Claimant’s benefits.  Napier v Hartford Life Insurance Co, 282 F Supp 2d 531; 2003 US Dist LEXIS 16950 (ED Ky 2003).

Therefore, if you or someone you know plans on filing for short or long-term disability it is very important to have an attorney assist in the application process and review the applicable policy to determine what benefits the claimant is entitled to, whether ERISA is involved and what limitation period is in effect for filing suit.

In Defense of the Civil Trial by Jury

Last year, at the Michigan Association for Justice’s Annual banquet, United State Senator Sheldon Whitehouse gave the following speech.  The speech was presented on May 11, 2013 at The Henry, in Dearborn, Michigan during MAJ’s 68th Annual Banquet:

Tonight, I’d like to speak to you about the civil jury. No one knows better than trial advocates about civil juries as an instrument of justice.
But the civil jury is more than an instrument of justice. The civil jury is also a structural element of our American system of government. It is part of our constitutional design of separated powers. This political character of the civil jury is what I want to focus on tonight.
I don’t intend this just as an academic question. You know better than I: the civil jury is under attack, as I’ll discuss further in a minute, and it’s under attack by powerful corporate forces –and by a Court that seems to have fallen under the control of those powerful corporate forces.
We need to marshal all our available arguments in its defense, and as I hope I can show, the institutional role of the civil jury, its structural role in our American system of government, is a powerful argument in its defense. And it is an argument strongly supported by long history and great authorities.
We are in a battle, and we should arm ourselves with this argument. I’ll be fairly brief in summarizing the argument tonight, so as not to overbear your hospitality, but I promise that the more you dig into this argument the more good information you find, and the stronger the case becomes.

Let’s start with some history.

Roots of our jury system can be traced back to twelfth-century England when King Henry II first guaranteed his subjects trial by jury as a common right for certain disputes. It took firm hold, and by the 1760s, Sir William Blackstone extolled the trial by jury as the “glory of English law.”

Blackstone understood the civil jury to be a political institution. He explained its value: [T]he most powerful individual in the state will be cautious of committing any flagrant invasion of another’s right, when he knows that the fact of his oppression must be examined and decided by twelve indifferent men, not appointed till the hour of trial; and that, when once the fact is ascertained, the law must of course redress it. This therefore preserves in the hands of the people that share which they ought to have in the administration of public justice, and prevents the encroachments of the more powerful and wealthy citizens.

You will note that most of the structural checks and balances in our constitution are designed to protect against the concentration and abuse of governmental power; uniquely, the jury is an institutional check against “the most powerful individuals,” against the “encroachments of the more powerful and wealthy citizens.” It’s the institution for ordinary people.

The earliest American settlers well understood the importance of the jury. Juries were established as a right in 1624 in Virginia, in 1628 in the Massachusetts Bay Colony, 1677 in the Colony of West New Jersey, and 1682 in Pennsylvania.

Colonial Americans attacked British efforts to curtail the jury in the 1760s and 1770s, leading up to the Revolution. In response to intrusions on the jury in the notorious Stamp Act, colonists declared that “trial by jury is the inherent and invaluable right of every British subject in these colonies.”

As independence loomed, the jury figured prominently. The 1776 Virginia Declaration of Rights provided: “That in controversies respecting property, and in suits between man and man, the ancient trial by jury is preferable to any other and ought to be held sacred.” And Mr. Jefferson’s very Declaration of Independence included as its grounds the King “depriving us, in many cases, of the benefits of Trial by Jury.”

The drafters of our State Constitutions in the new republic prized that rightful power. Ten states included provisions protecting the civil jury in their early Constitutions or Bills of Rights. The civil jury was a structural element of the American model of government consistent with the Locke and Montesquieu vision of separated powers.

When the original federal Constitution was silent on the civil jury, Americans sounded the alarm. The pamphleteer calling himself “A Democratic Federalist” urged his fellow citizens to “never consent to part with the glorious privilege of trial by jury, but with your lives.”

By August 1788, five of the thirteen ratifying conventions already had demanded greater jury safeguards, and the Bill of Rights was sent to the States with the Seventh Amendment, enshrining the civil jury in our federal Constitution.

James Madison, who once doubted the need for a Bill of Rights, supported the amendment, stating that “[t]rial by jury in civil cases is as essential to secure the liberty of the people as any one of the pre¬existent rights of nature.” When Alexis DeTocqueville wrote his renowned “Democracy in America” half a century later, he agreed, calling the American jury an “institution of government” and “a mode of the sovereignty of the people.”

So we can see that the civil jury was, from its beginnings in England, a mechanism for the people to exercise an element of sovereign power, and to defend themselves against oppression by the powerful and wealthy. It was a flashpoint for colonists in the revolutionary period for exactly this reason; it was explicitly preserved in the Bill of Rights to serve this political function; and it was clearly recognized as such by DeTocqueville and other students of American politics.

Against that historical backdrop, consider the recent Supreme Court decisions that have undermined the civil jury and its role in American society.

These decisions, relating to arbitration, pleading, class actions, and punitive damages, actually do not interpret the Seventh Amendment — indeed, they consistently ignore the Constitution’s civil jury amendment, as they busily make it harder for individuals to get to a civil jury, and harder for the civil jury to play its intended function in our system of government.
Look at arbitration.

The Federal Arbitration Act dates back to 1925, and for a long time, the Supreme Court applied the statute narrowly.
That changed in 2001. The Court expanded arbitration by expanding the Act’s coverage of employees engaged in “interstate commerce.” Then the Court held that arbitrators may even adjudicate whether their arbitration clause is unconscionable. Recently the Court held that mandatory arbitration clauses may prohibit class actions.

The result: more and more cases funneled into business-friendly arbitration, and away from the civil jury.
Look at pleading. Federal Rule of Civil Procedure 8(a) was long understood as providing a simple notice pleading system intended to focus litigation on the merits of a claim.

The Court’s decisions in Twombly and Iqbal departed from this understanding, deciding that a complaint “must state a claim to relief that is plausible on its face.” This made it easier for defendants to use dispositive motions to keep civil plaintiffs away from a jury.

Relatedly, the Roberts Court has made it harder to establish that a class action is appropriate. As a result, injured Americans may be left to pursue relief one by one, effectively preventing cases of large¬scale but low-amount fraud from ever getting before a civil jury.

Last, look at damages. Recent Supreme Court decisions have increasingly limited the civil jury’s traditional authority to impose punitive damages.

In the 1990s, the Court began to impose both procedural and substantive limits on jury awards in state court cases. In 2008, the Court took this concept even further, holding that an award of punitive damages higher than the compensatory damages award would make punitive damages too “unpredictable” for corporations.

Think of it. The judgment of the jury; its role as a mechanism for redress against the powerful; and the historic wisdom of the Founding Fathers, all yielded, to providing corporations “predictability.”

That result, of course, has been the intent of organizations such as the U.S. Chamber of Commerce and its “Institute for Legal Reform.” A corporate-funded “Astroturf” campaign has pressed the fight in local judicial elections, in state and federal legislatures, and in the court of public opinion.

Ask Americans to fill in a blank before the word “jury,” and how many of them would come up with the word “runaway”? Every one who does is a testament to the influence of this campaign.

We have backslid a long way from the popular outcry for jury trial in 1776. One might even wonder whether we, as Americans, have lost our historic understanding of the political function of the civil jury.

We forget our history at our peril. The American system of government, after all, is built on Montesquieu and Locke’s premise that divided government and separated powers are most protective of individual liberty. The civil jury further distributes the authority of the state, vesting citizens with authority to resolve disputes among citizens. And, uniquely, it creates protections for ordinary people not just from abuses by government, but from the encroachments of the wealthy and powerful.

Imagine that you are all alone and unpopular; that the forces of society are arrayed against you. Imagine that your adversary’s lobbyists have the legislature tied in knots and the governor in their pocket. Imagine that the owners of the local press have marshaled public opinion against you.

Under our system of government, one last sanctuary remains: the hard square corners of the jury box stand firm against the tide of influence and money.

That was why DeTocqueville called the jury an “institution of government” and “a mode of the sovereignty of the people.” Not for nothing was the chapter of “Democracy in America” in which he discusses the civil jury entitled: “On What Tempers the Tyranny of the Majority.” Not for nothing did Blackstone stand the jury against “the encroachments of the…powerful and wealthy.”

The powerful will always seek to gain influence over the levers of government. That is the premise of our system of government, but it is also the fact. Look at the efforts of big corporations to seek influence over the legislative and executive branches, through lobbyists and campaign contributions, and now through Super PACs. Not the jury; trying that with a jury would be tampering, a crime.

It appears that powerful and wealthy commercial interests have succeeded at inhibiting the very institution of government designed exactly as a check and balance to counter their power and wealth.
So, what can we do?

First, the Court could incorporate the Seventh Amendment against the states. The civil jury would appear to meet the incorporation doctrine’s judicial test that it be “deeply rooted in this Nation’s history and tradition” and “fundamental to our scheme of ordered liberty.”

The Supreme Court also could be as solicitous of the Seventh Amendment as it is of other amendments.
In the First Amendment context, the Supreme Court has struck down rules that “chill” the exercise of free speech rights. Why not, under the Seventh Amendment, strike down rules that “chill” the ability to proceed to a civil jury?

The Supreme Court has shown great solicitude for the Second Amendment, recently discovering an individual right to bear arms for the purpose of self-defense. Could you imagine the Supreme Court making decisions affecting access to guns, without discussing the Second Amendment? They made decisions limiting access to juries without discussing the Seventh Amendment.

In the Fifth and Sixth Amendment contexts, Miranda warnings inform an individual of his or her legal rights, to avoid unwitting surrender of rights protected by the Constitution. Why not, in the context of the civil jury, prohibit pre-dispute mandatory arbitration clauses without a clear and specific knowing, voluntary waiver?

Congress too can act.

Congress could override most if not all of the Supreme Court’s recent decisions that have undermined the civil jury. Unfortunately, the same power of corporate interests, from which the jury is protected by anti-tampering laws, usually defeats these legislative efforts. The Lilly Ledbetter Act, which related to the civil justice system if not the civil jury, provides some hope for those of us championing this fight, but it will be an uphill slog.

We could do more in Senate confirmations to promote the civil jury’s structural role. Judicial nominees should not be confirmed to the bench thinking that the civil jury is simply an appendage of the court to manage and diminish.

I hope that history will prove that the Court understands the importance of the jury. It’s not headed that way now. The Seventh Amendment is an inconvenient amendment for a Court so often dedicated to the well-being of corporations. But Constitutional text and American history place the civil jury squarely as a political institution within our American system of government.

At our peril, we allow it to wither unheeded and unappreciated. Let’s not make that mistake. Let’s not lose this argument.
Juries aren’t runaway. They are American.

Workers’ Compensation “Phantom Wage” Argument Put to Rest

By Robert J. MacDonald

The Supreme Court has denied defendant’s application for leave to appeal in the much watched workers’ compensation case of Vrooman v Ford Motor Company (After Remand) (Docket No. 147952 1/31/14), where the plaintiff was awarded full unreduced wage-loss benefits. Previously, the Court had remanded the case to the Board of Magistrates, for additional findings of fact and conclusions of law, citing Lofton v AutoZone, Inc, 482 Mich 1005; 756 NW 2d 85 (2008), and Harder v Castle Bluff Apartments, 489 Mich 951; 798 NW2d 26 (2011). Vrooman v Ford Motor Co, 489 Mich 978; 799 NW2d 17 (2011). Following the remand and a renewed award of full benefits, 2012 ACO #90, the Court had initially denied a “bypass” appeal (Docket No. 146368 3/4/13). The Court of Appeals also denied leave to appeal.

In this case (involving an injury governed by the law in effect before the 2011 amendments to the Worker’s Disability Compensation Act), the defendant argued that the injured worker’s benefits should be reduced by the worker’s theoretical wage earning capacity, even though the evidentiary record did not include proof of job offers or actual job opportunities available to the plaintiff. The defendant, like many employers and carriers around the state, had been insisting that the Supreme Court’s vague orders in Lofton and Harder must be interpreted to permit reduction of benefits for a mere wage earning capacity regardless of actual job opportunities reasonably available to a worker.

The Supreme Court orders in Lofton and Harder had remanded for consideration and application of MCL 418.361 which provides that a partially disabled worker “shall be paid weekly compensation equal to 80% of the difference between the injured employee’s after-tax weekly wage before the personal injury and the after tax weekly wage which the employee is able to earn after the personal injury.” Defendants have been arguing that these orders somehow intended to overturn longstanding doctrine established and reiterated in Hood v Wyandotte Oil & Fat Co, 272 Mich 190; 261 NW 295 (1935), Langkill v Robins Conveying Belt Co, 279 Mich 81; 271 NW 560 (1937), Tulk v Murray Corp of America, 276 Mich 630; 268 NW 761 (1936), Kurz v Mich Wheel Corp, 236 Mich App 508; 601 NW2d 130 (1999), lv den 462 Mich 861; 613 NW2d 719 (2000). They have argued that magistrates should rely on the testimony of vocational consultants hired by the defendants regarding an injured workers’ theoretical wage-earning capacity and use that testimony to determine what a worker is “able to earn” despite the absence of actual job opportunities reasonably available to the plaintiff.

On remand, the magistrate in Vrooman, like the magistrates in Lofton and Harder, rejected that approach. The magistrate recognized that the claimant had the physical capacity to do work that pays $9.00 an hour, but that Harder “made it clear that it is not a theoretical ability to work alone that gives rise to the right to reduce a claimant’s benefits, but instead such an ability coupled with an opportunity to exercise that ability to earn wages.” The magistrate recognized that the claimant had made a reasonable search for suitable work within her qualifications and training but could not obtain any such employment. A panel of the Michigan Compensation Appellate Commission affirmed the Magistrate’s award of unreduced benefits–and now both the Court of Appeals and the Supreme Court have left the award of full unreduced benefits undisturbed.

The outcome in the Vrooman case should make it clear that the Supreme Court–contrary to insurance carrier and defense bar hype– did not intend to overturn 80 years of precedent with its Lofton and Harder orders so as to radically rewrite the formula for determining the amount of benefits payable to injured workers. Injured workers who have some capacity for work who cannot obtain suitable work should continue to receive full benefits. For those injured after December 19, 2011, the effective date of the 2011 amendments, similar language is written right into the statute at MCL 418.301(4)(c).


MAJ Executive Board Member Robert J. MacDonald practices in Flint, where he specializes in workers’ compensation. He is the Chair of the MAJ Workers’ Compensation Committee. MAJ Member Daryl Royal represented plaintiff Kimberly Vrooman on appeal.

Medicare Liens: There’s a New Contractor in Town and Other Updates

By Donna M. MacKenzie, Esq.

Olsman Mueller Wallace & MacKenzie

As of February 5, 2014, the Coordination of Benefits Contractor (COBC) and the Medicare Secondary Payer Recovery Contractor are no longer handling Medicare’s recovery activities. Instead, all recovery activities are now being handled by the new Benefits Coordination & Recovery Center (BCRC).

Reporting your claim to Medicare

Whenever you have a tort liability, no-fault or worker’s compensation case, you will now provide the BCRC, not the COBC, with the following information:

  • Beneficiary Information: Name, Health Insurance Claim Number (HICN), gender, date of birth, address and phone number.
  • Case Information: Date of injury/accident, date of first exposure, ingestion or implant; description of alleged injury or illness or harm; type of claim (liability insurance, no-fault, worker’s compensation); insurer / worker’s compensation carrier’s (or self-insured employer’s) name and address.
  • Representative Information: Representative / attorney’s name, law firm name if the representative is an attorney, address and phone number.

To contact the BCRC by phone, call 1-855-798-2627. The BCRC is available Monday through Friday from 8 a.m. to 8 p.m. The address for the BCRC is:

Benefits Coordination & Recovery Center (BCRC)


P.O. Box 1138832

Oklahoma City, OK 73113

FAX: 405-869-3309

As usual, Medicare does not surf court dockets to find cases where Medicare’s reimbursement rights are at stake; it is entirely up to the beneficiary and/or the beneficiary’s attorney to report the claim to Medicare. This obligation is even more ominous since the passage of Section 111 of the Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) Extension Act of 2007 (MMSEA), which added mandatory reporting requirements for insurers. PL 110-173, §111, 121 Stat 2497-2500, 42 USC 1395y(b)(7) and (8). Because insurers are now reporting any payment to a Medicare beneficiary, Medicare now has a built in security system that will alert it anytime a beneficiary receives payment.

Section 111 originally called for a mandatory $1,000 per day penalty for an insurer’s failure to report; however, that penalty is now discretionary and “up to” $1,000 per day. PL 112-242, §203(1), 126 Stat 2380, 42 USC 1395y(b)(8)(E)(i), effective 1/10/13. Although the penalties have been reduced significantly, insurers are regularly reporting to Medicare.

In the event that an insurer reports a claim that was not reported by a beneficiary, in practice, Medicare will seek recovery from the beneficiary and/or the beneficiary’s attorney first. Under the Medicare Secondary Payer Act, Medicare can recover twice the amount of an unpaid Medicare lien. 42 USC 1395y(b)(2)(B)(iii).

Liability Settlement Threshold

Effective February 18, 2014 (as “clarified” February 28, 2014), Centers for Medicare & Medicaid Services (CMS) increased its reimbursement threshold; as a result, claims with total settlement value of $1,000 or less do not need to be reported or reimbursed.

Rights and Responsibilities Letter

Once your case is established with the BCRC you will receive a Rights and Responsibilities (RAR) letter.   In the past, this letter was sent by the MSPRC; this is now being handled by the BCRC.

The RAR letter provides confirmation that your claim is in the BCRC’s system. Once your claim is in the BCRC’s system, it will take approximately eight weeks for all medical claims that are related to your case to be retrieved by the BCRC.

The RAR letter will also request a Proof of Representation form.


Proof of Representation

Medicare will not communicate with anyone without an executed Proof of Representation. If your Retainer Agreement contains the following elements, it will serve as satisfactory proof of your representation:

  • The name of the law firm in the body of the Retainer Agreement, on the law firm’s letterhead, or on a coversheet on the law firm’s letterhead.
  • The attorney’s name, printed so the BCRC can read it.
  • The attorney’s signature and the date of the signature.
  • The beneficiary’s Medicare Number.
  • The attorney’s signature and date the attorney signed added to the bottom of the Retainer Agreement.

However, you may also use the Proof of Representation form created by CMS. You can have this Proof of Representation form executed by your client in advance. Either a compliant Retainer Agreement or the Proof of Representation will give you authority to act on the beneficiary’s behalf.

Conditional Payment Letter

A conditional payment is a payment that Medicare makes for services where another payer may be responsible. This conditional payment is made so that the beneficiary won’t have to use his/her own money to pay the bill. The payment is “conditional” because it must be repaid to Medicare when a settlement, judgment, award or other payment is secured.

Assuming that you have timely provided proper Proof of Representation, you will automatically receive a Conditional Payment Letter (CPL) within 65 days of receiving the RAR letter.

The CPL will contain an interim amount of the total claims that Medicare believes are related to your case. The CPL is not a request for payment. In addition, Medicare may continue to make conditional payments while a matter is pending. Consequently, the BCRC cannot provide a final conditional payment amount until there is a settlement or other final resolution of your case.

CMS’ systems retrieve additional paid claims for each established case once every 90 days. Therefore, updated CPL amounts are generally unavailable until at least 90 days after the initial CPL is issued.

Future Medical Care

In 2012, regulations were promulgated that covered the provision of medical care in the future in claims involving liability insurance. Despite being promulgated almost two years ago, these regulations have yet to be implemented. 77 FR 35917. Moreover, there exists no mechanism for the creation, maintenance, or even approval of any liability Medicare Set Asides by CMS.

MyMSP Online Portal

Once your CPL has been sent, you can view up-to-date conditional payment summaries on the MyMSP tab of the Medicare website, which can be found at www.mymedicare.gov. The beneficiary must register on the website in order to obtain this access. An attorney or representative can register the beneficiary and as long as the attorney has the sign-in ID and password, the attorney can access the beneficiary’s information on this website.

Dispute Process

One you receive the CPL, you should review it thoroughly to make sure that only case related claims are included. If there are any unrelated claims, you can submit documentation supporting that position to the BCRC. Within 45 days, the BCRC will review the submitted disputes and remove any unrelated charges. During the review process, if the BCRC identifies additional payments that are related to the case, those charges will be included in the recalculated CPL.

Pre-settlement demand

As of February 21, 2002, beneficiaries have been able to receive a final conditional payment amount prior to settlement, but only where the settlement is being paid for physical trauma and does not exceed $25,000. In addition, the incident must have occurred at least six months before the proposed conditional payment amount is submitted to Medicare, the beneficiary must have completed treatment for at least 90 days before submitting the amount, and further treatment cannot be expected. Under this process, a request for a final conditional payment amount is submitted to Medicare and Medicare will respond within 60 days.

These requirements significantly limit the number of cases in which a final demand can be obtained pre-settlement. In January 2013, however, President Obama signed the Strengthening Medicare and Repaying Taxpayers (SMART) Act into law. PL 112-242, 126 Stat 2373. Under the SMART Act, §201, 26 Stat 2375-2378, 42 USC 1395y(b)(2)(B)(vii), settling parties can notify Medicare of an anticipated settlement, judgment or other payment within 120 days of an anticipated settlement. Medicare would then have 65 days (with the ability to request an additional 30 days) to determine its lien amount. If the settlement occurs within 3 days of Medicare’s decision, the lien will be considered final. This entire process would take place through a specific password protected website created by Medicare. Unfortunately, over one year has passed since the Act was signed into law and the final regulations have not yet been implemented. It is unknown when that will happen.

Demand Letter

When you report your settlement, judgment, award or other payment, the BCRC can take steps to expedite a final demand amount.

To request a final demand from Medicare, you need to provide Medicare with the following information:

  • Total amount of the settlement
  • Total amount of med-pay or PIP
  • Attorney Fee Amount Paid by the Beneficiary
  • Additional Procurement Expenses Paid by the Beneficiary
  • Date the Case was Settled

The final demand that you receive from Medicare will include a reduction for your procurement costs. Medicare typically calculates the ratio of costs and expenses to the final settlement amount, and reduces its lien using that same ratio.

Statute of Limitations

The new statute of limitations, effective as of July 10, 2013, provides that Medicare has three years from the date of reporting to file suit for recovery under the Medicare Secondary Payer Act. 42 USC 1395y(b)(2)(B)(iii).

Judicial Estoppel: Another hurdle in employment discrimination cases


By: Heidi T. Sharp

Heidi T. Sharp practices in the areas of Civil Rights, Real Estate, Small Business Formation and Representation, with focus and specialization on Employment and Labor. She is a partner at the law firm of Burgess & Sharp, PLLC located in Clinton Township, Michigan.

The doctrine of judicial estoppel can be a deadly sword against a debtor who has an employment discrimination claim but does not list it on their petition in bankruptcy, and a complete shield to the employer, who avoids liability for potentially discriminatory conduct. Inronically, the debtor’s bankruptcy is often necessitated by the financial condition they are placed in by a defendant’s discriminatory conduct.

History of Judicial Estoppel

Judicial estoppel was recently invoked and upheld by the Supreme Court in New Hampshire v Maine[1] as “an equitable doctrine invoked by a court at its discretion.”[2] Justice Ginsburg explained, “‘[W]here a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position, especially if it be to the prejudice of the party who has acquiesced in the position formerly taken by him.’ Davis v Wakelee, 156 US 680, 689 (1895).'” 532 US at 749. The purpose of the doctrine is “to protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment.”[3] In the “unusual circumstances” presented by the New Hampshire case, the Court used the doctrine against the State of New Hampshire, which had clearly and unequivocally argued a different interpretation of the phrase “middle of the [Piscataqua] river” in a separate 1977 consent judgment concerning border rights with Maine.

In New Hampshire, the Supreme Court noted that it had not previously had occasion to “discuss the doctrine elaborately”. 532 US at 749. Reviewing the existing case law, the Court held that the three factors that “typically inform the decision whether to apply the doctrine (of judicial estoppel) in a particular case” are: (1) “a party’s later position must be ‘clearly inconsistent’ with its earlier position”; (2) “whether the party has succeeded in persuading a court to accept that party’s earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create ‘the perception that either the first or the second court was misled’”; and (3) “whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.”[4]

The Sixth Circuit first applied the Supreme Court’s test in the bankruptcy context in Browning v Levy.[5] The court posited the test as follows: “The doctrine of judicial estoppel bars a party from (1) asserting a position that is contrary to one that the party has asserted under oath in a prior proceeding, where (2) the prior court adopted the contrary position “either as a preliminary matter or as part of a final disposition.” The court explained later that the doctrine is “utilized in order to preserve the integrity of the courts by preventing a party from abusing the judicial process through cynical gamesmanship.””[6] In Browning, the court declined to apply the doctrine, reasoning that omission of a claim on the bankruptcy petition was, in that case, consistent with inadvertence.[7]

The Sixth Circuit next examined the doctrine in 2004 in Eubanks v CBSK Financial Group, Inc,[8] which cited Browning to the effect that mere inadvertent omission of a claim in the original petition does not trigger application of the doctrine, stating it “should be applied with caution to “avoid impinging on the truth-seeking function of the court, because the doctrine precludes a contradictory position without examining the truth of either statement.”[9]

Most recently, in 2010, the Sixth Circuit again discussed the doctrine of judicial estoppel in White v Wyndham Vacation Ownership, Inc,[10] which is often relied upon by defendants in bringing motions to dismiss based on judicial estoppel. In White, long before she declared bankruptcy, the plaintiff had made an EEOC claim and had a right to sue letter, which she received about a month before her bankruptcy petition. The court found that she was clearly a party to an administrative proceeding that she should have disclosed under Section 4 of her Statement of Financial Affairs and question 21 of Schedule B.[11] However, the plaintiff did not disclose her claim at all. The court could not find any possible excuse for her not having done so, reasoning that she clearly knew of the harassment claim and had a motive for concealment.[12] The court then stated that summary judgment would be granted unless plaintiff could provide sufficient facts to show “an absence of bad faith” (in particular, through her attempts to correct her initial omission) and that her omission resulted from inadvertence or mistake and was not intentional. Citing the previous Sixth Circuit cases, the court noted, two circumstances in which a debtor’s failure to disclose might be deemed inadvertent are: (1) “where the debtor lacks knowledge of the factual basis of the undisclosed claims,” and (2) where “the debtor has no motive for concealment”.[13]

The holding of White and the established tests were followed in the unpublished case Finney v The Free Enterprise System, Inc,[14] where the Court declined to apply judicial estoppel to several plaintiffs in a collective action. In Finney, Theodore Jackson worked for Free Enterprise from October 20, 2003 to October 17, 2005. Jackson joined the action in question by filing an opt-in form with the court on June 12, 2009. With the assistance of counsel, Jackson filed for Chapter 13 bankruptcy on September 30, 2009, but did not disclose the claim on his schedule which accompanied the petition, and his plan was confirmed on December 10, 2009. On August 19, 2010, approximately three weeks after the defendants filed the motion for summary judgment to dismiss the plaintiff’s claim on judicial estoppel, the plaintiff amended his bankruptcy petition to reflect his claim in the action.   Jackson stated in an affidavit to the court that he did not know until receiving notice of the defendants’ motion that he was required to list his claim in his bankruptcy schedule. Jackson has stated that he “did not intentionally omit reference to the lawsuit or try to hide it,” but “simply did not know it was supposed to have been listed” and his bankruptcy attorney did not tell him otherwise.[15]

The Court in Finney found that the record did not reflect bad faith on Jackson’s part when the facts were reviewed because he did not know that the needed to include the action on his bankruptcy filings and acted quickly to amend his bankruptcy filings once the problem was brought to his attention:

On the other hand, Jackson’s swift amendment of his bankruptcy petition after the defendants’ motion was filed tips the scales strongly in his favor. The defendants, citing White, argue that Jackson’s amendments were “too little, too late.” The defendants note that the Sixth Circuit in White did “not consider favorably the fact that White updated her initial filings after the motion to dismiss was filed,” because to do so would “encourage gamesmanship.” White, 617 F3d at 481. White, however, is distinguishable from this case for two reasons. First, the Sixth Circuit’s finding of bad faith in White was bolstered by other factors—such as White’s decision to file her lawsuit only after her bankruptcy plan was confirmed—that led to a conclusion that White’s omission was not due to inadvertence or mistake. See id. at 480–483. Second, even when the plaintiff in White amended her bankruptcy filings after the defendants filed their motion to dismiss, the amendment still did not reflect the estimated amount of her claim or whether White was the plaintiff or defendant in the lawsuit, which further indicated White’s apparent desire to conceal the claim from the bankruptcy court. Id. at 481. The defendants do not argue, nor does the court find, evidence of such behavior here.

Because judicial estoppel, as previously noted, should be “applied with caution,” Eubanks, 385 F3d at 897, the court will decline to apply the doctrine here. The defendants’ motion for summary judgment with respect to Jackson’s claims will be denied.[16]

How to avoid the Judicial Estoppel Trap

The best way to avoid judicial estoppel is by conducting a very thorough first interview with any potential client. On your list of required questions should always be “have you filed bankruptcy in the last seven years?” If so, even if the bankruptcy has been closed for some time the plaintiff should petition the bankruptcy court to re-open their action and add the proposed defendant(s) as possible assets from potential litigation under the inquiry regarding “contingent and liquidated claims of every nature”. By re-opening the bankruptcy before beginning any litigation, the plaintiff will be able to demonstrate that they did not conceal any potential assets from their debtors and any failure to list the claim at the time of the bankruptcy was because it had (a) not yet become ripe or was (b) inadvertent. The key to whether or not a prior bankruptcy needs to be re-opened depends on how long the person was employed with the defendant and when their prior bankruptcy occurred. For example, if someone had been employed with the defendant for five years before bringing a claim, their bankruptcy was three years ago, and they claim ongoing discrimination up to the point of their termination, the bankruptcy must be amended to add the claim against the defendant because the cause of action accrued during the time of the bankruptcy. On the other hand, if someone filed bankruptcy five years prior and did not begin employment with the defendant until two years after the close of the bankruptcy then there is no need to re-open the bankruptcy. When a person was employed with the defendant throughout their bankruptcy but their claim is a discrete action at the time of termination, re-opening a bankruptcy may not be necessary but advisable based on the current state of the courts.

For those clients who are still employed, and elect to file bankruptcy after termination or during a period of lay-off, they should be counseled to list even a potential claim if they have sought legal advice or filed with the EEOC or other agency regarding the situation with their employer.

If you do face a judicial estoppel motion, the best way to oppose it is to demonstrate to the court that your client inadvertently failed to list the potential asset and had no intention of concealing it. Your client’s educational background, whether they used an attorney to file the bankruptcy, what information they provided to the bankruptcy attorney and the proximity in time between the bankruptcy filing and the adverse action alleged in your case will all be important in taking such a stance.

Like many of the other judge-made doctrines judicial estoppel is here to stay.[17] Along with the other many hurdles to a jury, plaintiffs’ attorneys should continue to be wary of a bankruptcy filing by their clients or a bankruptcy trustee taking over their case.

End Notes

[1]. New Hampshire v Maine, 532 US 742; 121 S Ct 1808; 149 L Ed 2d 968 (2001).

[2]. Id.

[3]. Id. at 749-750.

[4]. Id. at 750-751.

[5]. 283 F3d 761, 775 (6th Cir 2002).

[6]. Id. at 776.

[7]. Id.

[8]. 385 F3d at 897.

[9]. Id.

[10]. 617 F3d 472 (6th Cir 2010).

[11]. Id. at 474.

[12]. Id. at 478-479.

[13]. Id. at 479.

[14]. 2011 WL 1157696 (WD Ky March 29, 2011 No. 3:08-cv-383-S).

[15]. Id at *2.

[16]. Id.

[17]. Concerns about a client’s bankruptcy history and failure to disclose a claim are not limited to employment cases or Federal jurisdiction. See, e.g., Miller v Chapman Contracting, 477 Mich 102; 730 NW2d 462 (2007) (affirming the trial court’s decision that amending the complaint in an action for auto negligence to substitute plaintiff’s bankruptcy trustee as plaintiff after the expiration of the period of limitations would be futile); Szyszlo v Akowitz, 296 Mich 40; 818 NW2d 424 (2012), lv den (reversing the trial court’s conclusion that plaintiff was not a proper party in interest to a medical malpractice claim, which his bankruptcy petition schedule of assets listed as exempt under 11 USC 522[11][D], and affirming the trial court’s conclusion that plaintiff was not judicially estopped by listing the his “current market value” of his interest in the claim at $15,000 from seeking damages in excess of the circuit court’s $25,000 jurisdictional minimum), and Spohn v Van Dyke Public Schools, 296 Mich App 470; 822 NW2d 239 (2012) (holding that judicial estoppel applied because, by failing to disclose her potential Elliott-Larsen Civil Rights Act sexual harassment claim in her bankruptcy, plaintiff assumed a position that was contrary to the one in the lawsuit; the bankruptcy court adopted the contrary position by confirming plaintiff’s Chapter 13 plan, and plaintiff’s omission did not result from mistake or inadvertence).

Michigan’s Medical Malpractice Tort Reform “The Juice Isn’t Worth the Squeeze”

BY: Norman D. Tucker

Some still proclaim there is a medical malpractice crisis, or too many cases being filed. There is a crisis to be sure, and it’s not too many claims being filed, but too few. Most meritorious claims can no longer be filed. The so-called Michigan “malpractice tort reform” of 1994 gave health care providers de facto economic immunity. The question is: was this an unintended consequence, or clever planning? While some may debate the motivation behind this legislation, no one debates the results. Today, Michigan attorneys decline to pursue the vast majority of meritorious cases. The potential recovery, plus the risk, simply does not justify the substantial investment of time and money. When attorneys cannot economically take and pursue meritorious cases, wrongfully injured Michigan citizens are barred from the courts; their rights have been taken away.

To appreciate the numbers that follow, one must understand how the malpractice tort law changed, effective April 1, 1994. Malpractice cases now have caps on noneconomic injuries.[1] While there are two tiers, an upper and lower cap, 95% of all cases fall in the lower cap definition. The lower cap started at $280,000, increasing yearly by the Consumer Price Index, and is $440,200 for 2014. Unless there are lost wages or large medical bills, the lower cap sets the ceiling for potential recovery. So, the first effect of the 1994 legislation is that recoveries have been drastically lowered.

On the other side of the equation, litigation costs were driven up. Before 1994, if one had a post-operative cardiology case and the defendants happened to be an internist, a cardiologist, a nurse, and a thoracic surgeon, one could pursue the case with one expert. Today, one is required to have 4 experts, one for each defendant, and with identically matching qualifications.[2] The cost of litigation just quadrupled. These are just two examples, but the total effect is 6th grade math; the potential recovery has been drastically reduced and the cost of litigation has been drastically increased. In economic terms, the net profit margin has been so squeezed that very fewer cases can be economically pursued – resulting in economic immunity.

The new filing numbers confirm the above effect on cases that one can pursue. In 1986, eight years before the 1994 legislation, over 3600 medical malpractice cases were filed. Today, malpractice filings have plummeted by over 80%.[3] By 2009 there were 707 new malpractice cases filed;[4] 808 in 2010; 798 in 2011; and 797 in 2012.[5]

Between 1991 and 2006 indemnity payments fell 60%. The only things that went up during this same time were the cost of defense, and insurance company profits. Defense litigation costs rose 109%.[6] Why would defense costs go up when filings are drastically down? More cases were being tried as the defendant’s losses are “capped”. Caps on noneconomic injuries encourage defendants to gamble in the courtroom; even if they lose, the judge takes away any award over the cap. MCL 600.1483 and MCL 600.6304(5).

It did not take defendants long to learn that caps removed the risk of trial. In 2000, about 5% of malpractice claims were resolved by trial; by 2007 that figure had almost quadrupled to 18%.[7] In cases without substantial economic damages, the plaintiff would be offered far less than the lower cap. If patients wanted full value for their injury, they would have to try the case. Many patients and their attorneys accepted these low offers to avoid the risk and substantial expense of trial. It should be no surprise that Michigan ranks dead last in the nation in payouts. Per information that has now been removed from the Kaiser Foundation web site, but documented elsewhere, “The national average [payout per claim in 2006] was $308,600…. the state with the lowest average malpractice payout was Michigan at $132,380 with 389 claims paid.”[8]

With reduced recoveries, and the increased costs with more experts and more trials, a plaintiff’s attorney has to think long and hard about taking a case limited to the lower cap. Because an affidavit of merit against each defendant must be filed with the complaint, costs in an average case can be $20,000 before one gets into court. By the time the case gets to trial, it is not uncommon to have invested $70,000 to $100,000 in costs, not to mention the 2-3 years of work. And, what happens if the plaintiff wins; there is invariably an appeal. For persons injured by medical malpractice, plaintiff’s attorneys are the gatekeepers to the courthouse. Once plaintiff’s attorneys learned that most low cap cases were an unreasonably, high risk investment, most of these plaintiffs were barred from the courthouse.

Stephen Daniels, at the American Bar Foundation, summed up the problem of high litigation costs and capped recoveries: 95% of patients who seek an attorney for harm suffered during medical treatment will be shut out of the legal system, primarily for economic reasons. The bottom line per Daniels, “the juice isn’t worth the squeeze”. “Lawyers are the gatekeepers to the law,” Daniels said. “You can have all the rights in the world, but if no one will take your case, then those rights mean absolutely nothing.”[9]

What was the alleged justification for barring injured Michigan citizens from the courthouse? One justification, and used again in 2012 with another round of malpractice bills, is that doctors are leaving the state for fear of being sued. Some even suggested doctors were going to Texas, which is said to have the most restrictive malpractice laws in the U.S. Unfortunately, the justification for malpractice tort reform has always been anecdotal, but as a wise physician once said, “The plural of anecdotal is not science”. As of 2009, the Center for Health Workforce Studies ranked Michigan 15th in the nation for actively practicing physicians per 100,000 citizens, well ahead of Texas, which was ranked as 42nd.[10] In 2012 the Kaiser Foundation ranked Michigan 8th in the U.S. in total number of practicing physicians.[11] More importantly, David Hyman,M.D., J.D., the H. Ross and Helen Workman Chair in Law and Professor of Medicine at the University of Illinois, who has seriously studied the issue, found no correlation between a state’s tort laws and the physician supply; not even in Texas.[12]

Some claim more tort reform would reduce the cost of health care by removing doctors’ fears of being sued and the unnecessary testing that this fear allegedly produces; commonly referred to as defensive medicine. The evidence for this assertion is published surveys of physicians, or more anecdotal evidence. Arnold Relman, M.D., Professor of Medicine at the Harvard Medical School, and one of the nation’s preeminent experts on health care, suggests the real reason for the survey’s answers blaming lawsuits for the high cost of medicine is simply to justify physicians’ overutilization of services – which makes them more money.[13]

Expenditures are largely driven by the supply of services… doctors and other providers have a vested interest in continually increasing the amount of medical services they provide… savings would be about 30 to 40 percent of the total now being spent on health care services.

It does not take a Harvard Professor to tell us that the promised results did not happen. After 20 years of the nation’s most severe tort reform, has anyone noticed any reduction in their medical bills or insurance premiums?

Some claim fewer lawsuits has little effect on the larger population so a few less lawsuits costs the average Michigan citizen very little. That would only be true if all the bills from medical injuries also disappeared with the lawsuits, but the medical bills don’t go away, and these are substantial. The cost of preventable medical errors per year in 2006 was $17 billion;[14] that figure is estimated to be over $22-25 billion today. The social costs are estimated to be between $393 billion and $958 billion, amounts equivalent to 18 percent and 45 percent of total U.S. health care spending in 2006.[15] When the lawsuits go away, the bills do not – these are still paid by the injured patients, or passed on to the taxpayers through Medicaid, Medicare[16] or higher insurance premiums.

A good recent example of “the bills don’t go away if there is no lawsuit, but are just passed on to Michigan citizens” is the dismissal of the Michigan Attorney General’s action against Merck to collect Michigan’s Medicaid payments for Vioxx.[17] In 1996, Michigan also gave drug companies immunity from product liability for the production and selling of defective prescription drugs. MCL 600.2946(5), 1995 PA 249, eff. 3/28/96. In 2008, the Michigan Attorney General, Michael Cox, sued Merck under the Medicaid False Claims Act, MCL 400.601 et seq., for fraud based on misrepresentations of efficacy and safety and sought reimbursement to the State of Michigan for Medicaid payments made between 1999 and 2004. In March 2011, the case was dismissed based on Michigan’s FDA immunity statute, MCL 600.2946(5). One case of immunity cost Michigan taxpayers $20 million.

When new cases dropped by 80% and indemnity payments fell by 60%, one would assume malpractice insurance premiums would fall by an equal ratio. Per the latest report of the Michigan Insurance Commissioner at the end of 2009,[18] annual average premium discounts averaged 19.8% for the 5 years of 2003 to 2007; less than on-third of the reduction in indemnity payments.

The list of rationalizations is long, but all the supporting evidence comes up short. If all this tort reform had nothing to do with solving legitimate problems, who could have benefited from such legislation? Perhaps this legislation did exactly what it was supposed to do, for those who paid for and promoted it; it drastically increased insurance profits. The real story is how this legislation was sold to the legislators, the medical profession and the public and, despite the facts, how they keep on selling it and how many continue to buy this bogus product. The real story is how injured patients and families subsidized profits, when there was no logical connection between malpractice claims and the promised savings, and how this carefully crafted legislation did nothing but eliminate thousands of the legitimate claims for which insurance was intended.

One does not have to be an economist to understand the road to profitability: increase revenues and decrease costs, or increase the squeeze to produce more juice. To avoid an avaricious insurance company image, all they had to do was disguise the solution as a “public service”; thereafter it would be easy to sell, and to keep on selling, and selling and selling. It worked in Michigan; malpractice tort reform legislation passed in 1975, 1986, 1994, and again in 2012.

By 2008, the average profit of the top ten malpractice insurers was higher than 99% of the Fortune 500.[19] And, no one should be surprised that one of Michigan’s largest professional liability carriers, Proassurance, had a 655% increase in net income between 2003 and 2011. In 2012, their CEO reported, “Financially, 2012 was among the best years in our history, with near record income.”[20]

Michigan citizens are getting squeezed and the insurance industry is getting the juice.

End Notes

[1]. MCL 600.1483, 1986 PA 178, as amended by 1993 PA 78, eff. April 1, 1994, and 2012 PA 608, eff. March 28, 2013.

[2]. MCL 600.2169, 1986 PA 178, as amended by 1993 PA 78, eff. April 1, 1994.

[3]. T. Berg, “Medical Malpractice Reform Analysis,” Michigan Medical Law Report, Fall 2007, Vol. 3, No. 3; Michigan Lawyers Weekly, July 2007.

[4]. Michigan Courts website, “Caseload Reports, Statistical Supplements, Statewide”, http://courts.mi.gov/education/stats/Caseload/Pages/statistical-supplements-archive.aspx (accessed January 23, 2014).

[5]. Michigan Courts website, “Caseload Reports, 2012 Statistical Supplements, Statewide”, http://courts.mi.gov/education/stats/Caseload/Pages/2012-Statistical-Supplement.aspx (accessed January 23, 2014).

[6]. Berg, supra.

[7]. Ken Ross, “Evaluation of the Michigan Medical Professional Liability Insurance Market”, State of Michigan, Office of Financial and Insurance Regulation, October 2009. Page 17, Figure 9.

[8]. Naples News 2007, “Florida below national average in amount of paid medical malpractice claims” http://www.naplesnews.com/news/2007/may/11/fla_below_national_average_amount_paid_medical_mal/?breaking_news (accessed January 25, 2014).

[9]. Allen, M., and Pierce, O., “Patient Harm: When an Attorney Won’t Take Your Case”, ProPublica, January 6, 2014. http://www.propublica.org/article/patient-harm-when-an-attorney-wont-take-your-case (accessed February 4, 2014).

[10]. Center for Health Workforce Studies, University of New York at Albany, 2011 State Physician Workforce Data Release, March 2011.

[11]. Kaiser Foundation website, “State Health Facts, Total Professionally Active Physicians”, http://kff.org/other/state-indicator/total-active-physicians/ (accessed January 26, 2014).

[12]. David A. Hyman, et al., “Does Tort Reform Affect Physician Supply?Evidence from Texas”, revised February 14, 2014, available online from the Social Science Research Network electronic library athttp://ssrn.com/abstract=2047433.

[13]. A. Relman M.D., “Health Care: The Disquieting Truth”, The New York Review of Books, September 2010.

[14]. J. Van Den Bos, “The $17.1 Billion Problem: The Annual Cost Of Measurable Medical Errors”, Health Affairs, 30, no. 4 (2011):596-603.

[15]. J. Goodman, “The Social Cost Of Adverse Medical Events, And What We Can Do About It”, Health Affairs, 30, no.4 (2011):590-595.

[16]. Section 2702 of the Patient Protection and Affordable Care Act, PL 111-148, however, is intended to “protect Medicaid beneficiaries and the Medicaid program by prohibiting payments by States for services related to provider-preventable conditions.” 42 CFR §447.46; 76 FR 32837, June 6, 2011. Similar provisions and regulations have been adopted for Medicare beneficiaries limiting payments for “hospital acquired conditions”. Affordable Care Act §3008. Under the Hospital-Acquired Condition Reduction Program, “payments to applicable hospitals are adjusted to provide an incentive to reduce hospital-acquired conditions, effective for discharges beginning on October 1, 2014.” 42 CFR §412.150(c). The rules for determining the payment adjustment under this program are specified in 42 CFR §§412.170 and 412.172, 78 FR 50967, August 19, 2013.

[17]. Attorney General v Merck Sharp & Dohme Corp, 292 Mich App 1; 807 NW2d 343 (2011), lev den 490 Mich 878 (2011).

[18]. Ken Ross, “Evaluation of the Michigan Medical Professional Liability Insurance Market,” State of Michigan, Office of Financial and Insurance Regulation, October 2009.

[19]. Tarricone, A.,Fool Me Once: The Insurance Industry Looks to Tort Reform to Pad Profits,” Huffington Post, September 30, 2009. http://www.huffingtonpost.com/anthony-tarricone/fool-me-once-the-insuranc_b_304594.html (accessed February 4, 2014).

[20]. Proassurance 2007 and 2012 Annual Reports.

Norman D. Tucker is an attorney-of-counsel at Sommers Schwartz PC located in Southfield, Michigan www.sommerspc.com