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I am tired of seeing all the attack ads on TV. I evaluate the race for Governor based upon something that the TV ads never talk about: the Governor’s job duties. Our Governor is responsible for appointing the Director of the Department of Insurance. While banking is controlled federally through the Federal Reserve, insurance is controlled by each state’s Department of Insurance. For an insurance company to sell insurance in a state, the company must be licensed with the Department of Insurance. Any policy an insurance company wants to sell must be approved by the Department of Insurance. In prior newsletters, we have talked about the erosion of coverage in the average person’s insurance policy. All of those eroded policies have been approved by the Department of Insurance. Who the Governor will appoint as the Director of Ohio’s Department of Insurance is a big deal from where I sit, dealing with insurance on a daily basis. Insurance companies donate huge amounts of money to campaigns in order to have a say in choosing the Governor’s appointee. I would like to see the Governor choose a Director who cares about the citizens of Ohio as opposed to an appointee who is nothing but an insurance industry insider.
Another important function of the Governor is to appoint a replacement for any state judgeship opening. This includes openings in Municipal Courts, Common Pleas Courts, Courts of Appeals, and the Ohio Supreme Court. These positions probably number in the thousands, and are filled solely by appointment of the Governor. Many judges get their start this way. In the past, governors assembled a commission to find and vet qualified candidates to fill the vacant judgeships. More and more often, however, governors simply hand out judgeships as political patronage; as a reward for supporting the governor’s campaign. My understanding is that, as Governor, Richard Cordray would go back to appointing judges based upon merit and ability, and not based upon how much they have done for the party.
It is interesting that both candidates for Governor have served as Attorney General in the State of Ohio. If the Attorney General’s Office was a private law firm, it would be the largest law firm in the state, by far. The AG’s office is tasked with many duties and functions; one of which is protecting consumers. Under Richard Cordray, the Consumer Protection Bureau of the Ohio Attorney General’s Office was robust. Under Mike DeWine, it has been anemic.
I found it interesting that as the Attorney General who is charged with overseeing the legal landscape of the State of Ohio, Mike DeWine recently stated in an interview that we will “make Ohio the best place in the Midwest to start and run a business” and that we will “limit regulation that kills job creation.” In essence, Mike DeWine has stated that it is his intent to protect Ohio businesses and not protect Ohio’s individual citizens. Second, the “regulations” that he wishes to limit have already been manipulated as much as possible in order to support big business. That was all accomplished over the last few decades under the guise of “tort reform” with the intent of turning Ohio into a Utopia for big business and causing big business to set up shop in Ohio in droves. The ultimate intent has not come to fruition. There is nothing further to do through regulations to make Ohio more big business friendly short of eliminating the right to sue big business in the State of Ohio. Interestingly, the State of North Carolina, which has enjoyed much economic success over the last few decades, has been expanding regulations that protect people at the expense of big business, including the insurance industry.
At the end of the day, I have to support Richard Cordray as the candidate for the next Governor of Ohio because I believe that he will appoint a Director of Insurance who will be more concerned with the rights of Ohio’s citizens and less concerned with the political pull to be pleasing to the insurance industry’s big business lobbyists.
I believe Cordray will appoint judges using a process to find good judicial candidates as opposed to simply passing out political patronage. Finally, from an ideological standpoint, I believe Cordray cares more about individuals than he does about big business. I am certainly not against business; our law firm is a business. Ultimately, though, I don’t believe that business should take precedence over individual rights. Business doesn’t bleed, humans do.
Our office recently tried a case in Judge Lanzinger’s court in the Summit County Court of Common Pleas. Judge Lanzinger is a relatively new judge and is running for re-election. I give her credit for taking a week out of her time as well as her staff’s time to try our case. She was concerned about the facts, she was concerned about what happened, she did her homework, and she put effort, time and thought into the process. These are all things you would expect a judge to do. Unfortunately, it doesn’t always happen that way. Some judges don’t put forth that energy. We support her in her re-election campaign and wish we had more judges that were as concerned about individuals as Judge Lanzinger.
The process to resolve a personal injury claim has only grown longer and more complicated and much of that has to do with subrogation and reimbursement.
Although the legal concepts of subrogation and reimbursement are not new, their application in the personal injury field is relatively new. Subrogation means “The substitution of one person in place of another with reference to a lawful claim.” Recently, health insurers and auto insurers have added subrogation rights into their contracts such that they have the right to stand in an injured person’s stead for a claim. For example, health insurers pay medical bills that are related to injuries a person received in a collision. Technically, the health insurer then has the right to bring a lawsuit or make a claim directly against the responsible party to be paid for the claim. In essence, they substitute themselves in place of the injured party in the legal claim. While their policy gives them this subrogation right, rarely do they use it. The reason is that they do not want to incur any expense for prosecuting the claim; they merely want to be reimbursed. So additionally, they have liberally sprinkled reimbursement rights in their contracts.
Reimbursement is exactly what it sounds like. Insurers claim the right to be paid back from their insured, any monies that are recovered for things the health insurer paid. In a typical injury case where an injured party receives medical care from hospitals, doctors, etc. the bills are submitted to the health insurer who pays them, the health insurer then seeks reimbursement for those bills. The injured party has the right to bring a claim against the responsible party. So it now becomes the injured party’s job to go out and collect money on behalf of the health or auto insurer if they paid bills, for example, under the auto policy’s medical payment coverage.
At first blush that may sound reasonable. The problem is, as consumers, you have paid for these coverages and then the coverages are watered down. In essence subscribers are punished for purchasing the coverage. I’ll discuss further how insureds are punished for buying insurance later in this letter.
Folks who have health insurance should be entitled to the coverage purchased. If someone falls down the steps at home and requires medical attention, health insurers would have to pay those bills. No one would bring a legal claim because it was the individual’s fault that he or she fell down the steps. The insurance company would just have to pay the bills. However if someone else may be responsible, the insurance company wants to be paid back. Do injured parties get a refund in premium dollars for coverage if monies are recovered? No.
If a subscriber did not use health coverage in a particular month and asks the health insurer to be reimbursed for the premiums paid that month; will they comply? Certainly not! Why should insurers be reimbursed for the very activity they are paid to do?
The insurance industry will tell you that having these rights allows them to control costs and keep their premiums down. Over the last decade or so as the insurance industry invoked reimbursement and subrogation rights, premiums have not gone down, they haven’t even held steady; they’ve only gone up. I would argue that subrogation and reimbursement rights have done nothing to curb the cost of insurance. But let’s say the insurance industry is correct that these rights help them control costs. Consider the following scenario: A routine rear-end auto collision occurs where someone is transported by an ambulance to the hospital for some bumps and bruises and then follows up with a primary care doctor, receives some physical therapy and is then released from medical care. A reasonable person might understand why insurance companies make reimbursement claims. The medical bills total $10,000.00, the health insurance through negotiated rates with the medical providers, pays $6,000.00 to cover the $10,000.00 in bills and the company wants their $6,000.00 back.
Under current law they can be entitled to the $6,000 back. If the case settles and the company is not paid back, the repercussions could be that the health insurer bring suit against their insured to collect their money or suspend or cancel coverage.
Consider a more complex case: one in which there is an argument about who’s at fault in the collision or possibly an argument about the medical treatment received whether it can be related to the collision or to some pre-existing medical condition.
Think about the following scene: two people collide in an intersection, there are no witnesses and both claim they had the green light and the other person had the red light. According to the reimbursement/subrogation claims explained earlier, the health insurance company will want all of their money back from their insured. But the other driver’s auto insurer will not pay because they argue it is not their insured’s fault. That fact won’t stop the health insurer from seeking reimbursement.
Another potential scenario: consider that a person has knee surgery a week before a collision and that follow up care and physical therapy are already scheduled except the collision aggravates the knee and prolongs recovery. The health insurance company will claim every dollar spent for post-collision treatment even though treatment was scheduled as a result of the knee surgery. How much should they get? They want it all. Their subrogation and reimbursement rights allow them to get the first dollar and every dollar until their claim is paid. Another scenario to help sway you: a collision victim incurs serious injuries resulting in $100,000.00 in medical bills but the person who caused the accident only has $50,000.00 in coverage. The injured victim could not work for six months and ends up with plates and screws to repair a broken bone and has some permanent injuries. The health insurance company will claim the entire $50,000.00 that the victim is entitled to collect from the responsible person. The injured person would get nothing for pain, suffering, lost wages or permanent injury.
Changing the facts a little: the victim has a $100,000.00 auto policy that includes under insured motorists coverage and the person who causes the collision has a $50,000.00 policy. The victims sustain injuries costing $100,000.00 in medical bills. The responsible auto insurance company will pay their $50,000.00, and the victim’s insurance coverage would cover another $50,000.00 available from their own auto policy (this brings up another discussion about why only $50,000.00 is available — that would be because in Ohio consumers who purchased $100,000.00 are forced to set off any amount of coverage that the responsible person has. Many states do not allow that set-off… if consumers pay for $100,000 in coverage they get $100,000 in coverage in addition to whatever else the other party has.) Now the victim’s health insurance company wants the $50,000.00 collected from the responsible person and they want the $50,000.00 in under insured motorist coverage. Again, the injured person gets nothing.
Stop and think about that situation, both health coverage and under insured motorist coverage were purchased in good faith. The victim will derive no benefit from either of those purchases because one pays the other. That is the ultimate rip off in insurance coverage, the consumer pays for both coverages and one is used to pay off the other.
Some states have come along and outlawed this subrogation and reimbursement nonsense. The reality is at the end of the day, we see no benefits to the insurance companies over this subrogation and reimbursement process. The insurance companies have platoons of employees that spend an inordinate amount of time tracking who owes whom money. Today State Farm may pay to reimburse Allstate and tomorrow Allstate will pay to reimburse State Farm. At the end of the day they’re both spending a lot of money figuring how much each one should be paying each other. They worry about that a lot. At the conclusion of every case one of the last hurdles we go through with insurance companies is verifying with each individual insurance company the exact amount of money each claimed so that each one can make sure the other got paid. They spend more energy, time and concern making sure that they pay each other than they do paying the injured human person whose life was affected by the carelessness of one of their insureds.
The last state that I know of to legislate out this subrogation and reimbursement nonsense was North Carolina and I applaud them for doing so.
Consumers should receive the coverage for which they pay. People who have the wherewithal and the foresight to pay for health coverage, automobile coverage or medical payment coverage or any coverages chosen ought to get the benefit of those.
The processes that Ohio insurance companies have created are ultimately enforced by the Ohio Supreme Court (made up of 7 statewide elected Justices) and are drafted by the Ohio Legislation made up of 99 state representatives and 33 senators. The governor signs legislation into law. As we head into an election season consider the amount of money spent on these elected positions for the state senate, state legislature, governorship and Ohio Supreme Court then think about where the millions and millions of dollars originate. Special interests (like the insurance industry) are to thank.
We have a client, we will call her Amanda. She just graduated from college and was looking for a job. She went on vacation with her boyfriend to Virginia Beach. On the way to Virginia Beach her boyfriend who was driving ran into the back of another vehicle. In the collision Amanda broke her leg. Amanda’s boyfriend was insured by State Farm and the car he was driving was insured by State Farm. Amanda had been staying with an aunt and uncle while at college and was on their State Farm policy. She had a car of her own which was also insured by State Farm. Amanda had also an apartment near school which was insured by State Farm. As Amanda’s medical bills began to roll in, she sought help from State Farm. State Farm told her that the coverage her boyfriend and the car he was driving had lapsed a few hours before the collision. Amanda sought our help. We told State Farm if their position was that the driver and his car were not covered at the time of the collision because it lapsed a few hours earlier then surely he was uninsured and Amanda should be covered under the uninsured provisions of the policy of which she was on. State Farm responded by telling us Amanda was not covered at that time for uninsured motorist coverage because she was not a named insured on the policy. She was only a named driver on the policy. The difference being that a named insured was provided full coverage. A named driver had to be a “resident relative”. A resident relative was defined as a blood relation that resided in the same house. Since Amanda had an apartment near school, she technically did not live in the same house as her aunt and uncle. Therefore, she was not covered. When we pressed State Farm on whose idea it was to name her as a “driver” as opposed to an “insured”, State Farm clammed up. We attempt to get this information from the State Farm agent who sold the policy and she refused to respond. The next thing we knew Amanda had been sued in Federal court by State Farm. The basis of the lawsuit was State Farm wanted the Federal court to declare that State Farm had no obligation to provide her any coverage. In that Federal court lawsuit, we are able to ascertain that it was the agent’s decision to name Amanda as a mere “driver” as opposed to an “insured”. Had she been named as an “insured” there would’ve been full coverage and no questions. The cost difference between naming her as a “driver” as opposed to an “insured?” None. Zero. Not a penny. So why have two classes of people covered under a policy? Those as a first class insured, that get full coverage and those who are only a driver and get some second tier of coverage? Seems to me it creates the opportunity for State Farm to deny coverage. I believe their desire to sue in Federal court was an effort to gain some backing for their position. This, however, failed and at the end of the day State Farm had to pay Amanda for her injuries under the uninsured motorist coverage of the policy under which she was covered.
I would suggest, especially if you’re insured by State Farm, that you demand that State Farm list all people in your family as “insureds” and not allow State Farm to spin them off as a “driver” that would get some second tier of coverage. Frankly, I think the agent involved in Amanda’s case really didn’t understand the difference. I believe many agents do not have the full knowledge of the workings of the policy they sell. Many agents are just doing what they’re told by the company who writes the policy.
Like a zombie stubbornly shambling toward you, the McDonald’s coffee story refuses to go down, despite the fact that the real case is far different from what people have heard. A respected journalism professor has called it one of the most misunderstood stories of our time.
79-year-old Stella Liebeck bought a cup of takeout coffee at a McDonald’s drive-thru in Albuquerque and spilled it on her lap. She sued McDonald’s and a jury awarded her nearly $3 million in punitive damages for the burns she suffered.
Typical reaction: Isn’t coffee supposed to be hot? And McDonald’s didn’t pour the coffee on her, she spilled it on herself! Besides, she was driving the car and wasn’t paying attention.
Now for the facts:
Mrs. Liebeck was not driving when her coffee spilled, nor was the car she was in moving. She was the passenger in her nephew’s car, that was stopped in the parking lot of the McDonald’s where she bought the coffee. She had the cup between her knees while removing the lid to add cream and sugar when the cup tipped over and spilled the entire contents on her lap.
The coffee was not just “hot,” but dangerously hot. McDonald’s corporate policy was to serve it at a temperature that could cause serious burns in seconds. Mrs. Liebeck’s injuries were far from frivolous. She was wearing sweatpants that absorbed the coffee and kept it against her skin. She suffered third-degree burns (the most serious kind) and required skin grafts on her inner thighs and elsewhere.
Liebeck’s case was far from an isolated event. McDonald’s had received more than 700 previous reports of injury from its coffee, including reports of third-degree burns, and had paid settlements in some cases.
Mrs. Liebeck offered to settle the case for $20,000 to cover her medical expenses and lost income. But McDonald’s never offered more than $800, so the case went to trial. The jury found Mrs. Liebeck to be partially at fault for her injuries, reducing the compensation for her injuries accordingly. But the jury’s punitive damages award made headlines — upset by McDonald’s unwillingness to correct a policy despite hundreds of people suffering injuries, they awarded Liebeck the equivalent of two days’ worth of revenue from coffee sales for the restaurant chain. That wasn’t, however, the end of it. The original punitive damage award was ultimately reduced by more than 80 percent by the judge. And, to avoid what likely would have been years of appeals, Mrs. Liebeck and McDonald’s later reached a confidential settlement.
Here is some of the evidence the jury heard during the trial:
McDonald’s Operations Manual required the franchisee to hold its coffee at 180 to 190 degrees Fahrenheit;
Every one of McDonald’s competitors tested served their coffee between 30-40 degrees cooler.
Coffee as hot as McDonald’s, if spilled, causes third-degree burns (the worst kind of burn) in three to seven seconds;
Third-degree burns do not heal without skin grafting, debridement and whirlpool treatments that cost tens of thousands of dollars and result in permanent disfigurement, extreme pain and disability of the victim for many months, and in some cases, years;
The chairman of the department of mechanical engineering and bio-mechanical engineering at the University of Texas testified that this risk of harm is unacceptable, as did a widely recognized expert on burns, the editor in chief of the leading scholarly publication in the specialty, the Journal of Burn Care and Rehabilitation;
McDonald’s admitted that it has known about the risk of serious burns from its scalding hot coffee for more than 10 years — the risk was brought to its attention through numerous other claims and suits, to no avail;
In the 10 years prior to the case, McDonald’s coffee burned more than 700 people, many receiving severe burns to the genital area, perineum, inner thighs, and buttocks;
Not only men and women, but also children and infants, have been burned by McDonald’s scalding hot coffee, in some instances due to inadvertent spillage by McDonald’s employees;
McDonald’s admitted at trial that its coffee is “not fit for consumption” at the time it’s sold because it causes severe scalds if spilled or drunk;
McDonald’s admitted at trial that consumers are unaware of the extent of the risk of serious burns from spilled coffee served at McDonald’s then required temperature;
McDonald’s admitted that it did not warn customers of the nature and extent of this risk and could offer no explanation as to why it did not;
Liebeck’s treating physician testified that her injury was one of the worst scald burns he had ever seen.
Moreover, the Shriner’s Burn Institute in Cincinnati had published warnings to the franchise food industry that its members were unnecessarily causing serious scald burns by serving beverages above 130 degrees Fahrenheit.
In refusing to grant a new trial in the case, Judge Robert Scott called McDonald’s behavior “callous.”
In its ruling in the punitive damages phase, the Court found that McDonald’s had engaged in “willful, wanton, and reckless” behavior.
An expert witness for the company testified that the number of burns was insignificant compared to the billions of cups of coffee the company served each year.
At least one juror later told the Wall Street Journal she thought the company wasn’t taking the injuries seriously. To the corporate restaurant giant those 700 injury cases caused by hot coffee seemed relatively rare compared to the millions of cups of coffee served. But, the juror noted, “there was a person behind every number and I don’t think the corporation was attaching enough importance to that.”
In a story about the case published shortly after the verdict was delivered, one of the jurors said over the course of the trial he came to realize the case was about “callous disregard for the safety of the people.” Another juror said “the facts were so overwhelmingly against the company.”
That’s because those jurors were able to hear all the facts — including those presented by McDonald’s — and see the extent of Mrs. Liebeck’s injuries. Ask anyone who criticizes the case as a “frivolous lawsuit” that resulted in “jackpot justice” if they have done the same.
I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution. -Thomas Jefferson
Jury duty is a privilege and an obligation. If you are called, go serve with pride. Who knows when it may be you who needs a jury on your side.
When you go for medical treatment, the staff always asks for a copy of your health insurance information and then they bill your health insurance. If you are injured, the insurance process is very different. The medical facility not only wants to know who your health insurer is, they want to know about any other insurers: worker’s compensation, the insurer for the person who hit you, your automobile insurance. Why do the facilities ask for this information? The medical facility wants to figure out if any other types of insurance may be applicable. For example, worker’s compensation, automobile insurance (yours or the person who injured you). They want to know all possible insurers to see who will pay the most on their bill. If you have ever looked at your explanation of benefits from your health insurer after a visit with your doctor, you will see that what you were billed and what was paid by your health insurer are often two different amounts. Health insurers and medical providers have negotiated amounts that they will pay and accept for various treatments/procedures. When an insured is injured and other insurers are involved, medical providers use that as an opportunity to try to get out of the negotiated reimbursement rate they agreed upon with the health insurer. The medical provider will attempt to bill insurers with whom they may not have agreements. The lengths to which these medical providers go in order to extract the largest payment continues to expand. For example, our office had a recent case in which a senior citizen who was riding in a car that was struck by a drunk driver was hospitalized for several weeks. Her bill from Summa was over $100,000. The lady was on Medicare and had a supplemental insurance policy with Medical Mutual. All of the doctors and various outsider medical providers involved in her care billed Medicare and Medical Mutual and were paid.
Summa, however, elected not to bill Medicare and instead tracked down the responsible auto insurance company and sent their bill to an entity called American Medical Recovery and had them claim a lien on the proceeds from the insurance company of the person responsible for the collision. The responsible insurance company had a $100,000 policy limit. The responsible insurance company ultimately offered to settle their case for $100,000 (their policy limits). As there was no other insurance coverage available, the $100,000 limits were accepted. Then the responsible insurance company said, “Should we just send the check for $100,000 to American Medical Recovery since they claimed a lien in excess of $100,000?” Obviously, that would leave our client with nothing and would reward Summa for their creativity in refusing to accept the health insurance coverage that our client had at the time.
Let’s examine the legal issues here. Ohio has a statute that states healthcare providers must bill health insurers. You would think that statute would resolve the issue. By law Summa must bill the healthcare insurer, however, the Ohio Supreme Court in their own infinite wisdom has ruled otherwise. Thumbing their collective noses at the statute, the court recently held that a healthcare provider may bill whomever they like but can also collect from whomever they like. According to the Ohio Supreme Court, Summa’s action is perfectly legitimate. If our firm had adopted this position, our client would have received nothing. Summa would be paid $100,000, and our client the victim of a drunk driver who left her with some permanent injuries would get nothing. Well, that won’t happen on our watch. The thought of that prospect offends the common sense of justice. Decisions like this roll out of the Ohio Supreme Court on a regular basis and the average Ohio citizen has no idea of the implications of the rulings made by this court. Supreme Court decisions are set in the abstract and are frequently not easily grasped by voters.
Citizens receive a very rude awakening when they are confronted by an incident in which they find themselves injured and subsequently incur a large amount of medical bills. Ultimately, we must blame ourselves, the Ohio electorate for electing politicians and this includes most judges or justices. Many of these politicians gained their positions with the financial backing of big business, the insurance industry and/or a special interest group. We as the electorate choose our judicial candidates by listening to sound bites on television created as advertising campaigns that are bought and paid for by a who’s who in the insurance industry.
Citizens who don’t vote, have no right to complain. Citizens who do vote need to look carefully at those seeking election. Who is financing their campaign? What is the agenda of those financing the campaign? What is the agenda of the candidate? It is our obligation as voters to pay attention to who we elect and what they do.
As Justice Warriors for our clients we are always looking for laws (tools) to use in our quest to seek justice for our clients. Help us help you. Vote for those who truly care about people.
The Ohio Legislature recently passed legislation beneficial for injury victims. If we represented you in the past, you may recall at the conclusion of the case, we discussed the various parties requiring payment. Health insurers, auto insurers and disability insurers all have their hand out to get any money back they paid to an injury victim. In the past insurance companies did not have the right to be reimbursed. Changes in insurance company contracts and legislation ushered in an era of subrogation, a right on behalf of insurers to “re-coop” their expenses, and obtain reimbursement, from their insured, when their insured recovered money for an injury. We think it’s unconscionable that insured’s have to pay for coverage for unforeseen events and then insurers on top of their hefty profits try to seek reimbursement for what they were obligated to pay.
Has anyone ever been refunded the premiums they paid for coverage when an insurance company gets reimbursed? Contact our office if an insurance company willingly refunded money. When subrogation and reimbursement policies started, the Ohio Supreme Court developed a Make Whole Doctrine. Quite simply it states that before any insurance company can seek money the injured party has to be fully compensated. We think that only seems right. The insurance companies, however, were not happy. They demanded the first dollar and every dollar until they were fully paid. Then if any money remains, the injured party could retain what was left.
The insurance industry poured a great deal of money into judicial and other political campaigns to assure their position carried the day. The Make Whole Doctrine was cast aside and the law of the land became: insurance companies first. This created scenarios where people who sustained severe injuries and huge medical bills recovered nothing because the health insurer took all of the available recovery leaving the injured party with a shattered life, inability to work and no compensation. We are shocked that insurance companies could look at an injured party and take all the money even though the victim has to live with a horrible injury. They argue that this policy helps keep premiums down. Have any premiums gone down?
The unacknowledged problem with that approach is that society will pay the tab for the injured person to be on social security, welfare, Medicaid and Medicare while the health insurance industry executives pull down big salaries and donate big money into elections.
So what has our legislature done recently to ameliorate this problem?
They passed House Bill 64, which provides that insurance companies can only receive their proportionate share of the recovered funds available when the injured party is confronted with a less than full recovery. The law went into effect this fall. It is not nearly as good as the Make Whole Doctrine, but it is a far sight better than what has been the law. After about a decade and a half of the law consistently and repeatedly diminishing the rights and recovery abilities of injured people there is finally a change for the good. The insurance industry has fought this bill. Several states have outright banned subrogation and reimbursement. Ohio is behind the curve but at least we have finally turned the corner.