CLIENT ADVISORY
Update on the Medicare Secondary Payer (MSP) Mandatory Reporting Provisions in
Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA),
(See 42 U.S.C. 1395y(b)(7)&(b)(8))
The Centers for Medicare & Medicaid Services (CMS), in efforts to assist the reporting requirement for Responsible Reporting Entities (RRE), established a webpage dedicated to the Section 111 reporting for liability insurance (including self insureds), no-fault insurance and workers' compensation (CMS often refers to these as NHGP or Non-GHP for Non-Group Health Plans). Read More
Pennsylvania Case Summaries
Webb v. City of Philadelphia
___ F.3d ___, 2009 U.S. App. LEXIS 7169 (3rd Cir. 2009)
In this employment discrimination case, the Third Circuit addressed the issue of “whether a police officer’s request to wear religious garb with her uniform could be reasonably accommodated without imposing an undue burden upon the City of Philadelphia.” The Third Circuit upheld the lower court’s decision that this request could not be reasonably accommodated.
Webb was a practicing Muslim who began employment with the City of Philadelphia in 1995. In 2003, Webb requested permission to wear a head scarf while in uniform and on duty. The Philadelphia Police Department had a specific directive with respect to what was permissible for police officers to wear while on duty. This directive specifically prohibited anything that was not listed. The directive does not authorize the wearing of any religious symbols or clothing as part of that uniform. When Webb wore the headscarf without approval, she was sent home and disciplined. Webb subsequently filed an action for religious discrimination, retaliation/hostile work environment, and sex discrimination under Title VII and under the Pennsylvania Religious Freedom Protection Act. The District Court found in favor of the City. On appeal, the Court addressed the religious discrimination and sex discrimination claims under Title VII.
With respect to the religious discrimination claim, the Court of Appeals held that while Webb’s religious beliefs were sincere, any accommodation by the City would impose an undue hardship to the police department. The Police Commissioner indicated that the reason for the Department’s religious neutrality in its dress code was to promote the image of an impartial police force “free from expressions of personal religion, bent or bias.” The Court also pointed out that uniform requirements are crucial to the safety of officers and promote morale and public confidence. Although Webb claimed that other police officers displayed religious symbols on their uniforms without disciplinary repercussions, she did not identify who or when those instances occurred and did not establish that the police department was even aware of the alleged instances. The Court declared that “these blanket assertions with no specific evidence do not create a genuine issue of material fact.” Accordingly, the District Court’s grant of summary judgment on those grounds was proper.
With respect to the sex discrimination claim, the Court held that since Webb’s claim of sex discrimination was not sufficiently related to her religious discrimination claim, she could not be excused from her failure to administratively exhaust those claims. For that reason, the grant of summary judgment on that basis was also appropriate.
Any questions regarding this case can be directed to David Schwalm at (717) 255-7643 or dschwalm@tthlaw.com
Gunn v. The Automobile Ins. Co. of Hartford
2009 Pa. Super. 7039
Decided: April 15, 2009
The Pennsylvania Superior Court holds that a trial court’s order denying severance of a bad faith claim until after resolution of the accompanying UIM claim, even though the bad faith claim is dependent on the outcome of the UIM claim, is not an immediately appealable order.
Background: Gunn was involved in a motor vehicle accident and sued the other driver. She settled for $88,000 (the policy had a $100,000 liability limit). She had a UIM policy with a $100,000 limit, and her insurer offered $30,000. She filed suit alleging breach of contract and bad faith. Her insurer filed a motion to stay the bad faith claim (and preclude discovery) until the UIM claim was resolved, on the basis that Gunn must prove entitlement to UIM benefits, by proving damages in excess of the $100,000 liability limit of the other driver. The insurer argued that the bad faith claim was dependent on the outcome of the UIM claim. The trial court denied the motion, observing that the bad faith claim is severed in any event, as the UIM claim would be decided by a jury, and the bad faith claim by the court. The court also allowed discovery on the bad faith claim to proceed, as more convenient for the parties and the court, so that the same judge could try the bad faith claim immediately after the jury’s determination of the UIM claim, denying any prejudice to the insurer. The insurer appealed.
Holding: On appeal, the Pennsylvania Superior Court holds that it has no jurisdiction to hear the appeal, as the trial court’s order denying the severance is not an appealable collateral order, and any appeal must await the conclusion of the case. For appeal, an order must be: 1) separable from and collateral to the main cause of action; 2) the right involved is to important to be denied review; and 3) if review is postponed until final judgment, the claim raised on appeal will be irreparably lost. The Superior Court holds only that the first prong of this test is met. With respect to second prong, the trial court’s decision to stay does not go beyond the particular case, and simply because the insurer will incur expense and potentially unnecessary litigation preparation does not raise a sufficient important public policy right. No actual prejudice was shown. The third prong is not met, as there has not been any specific assertion of confidential or privileged information that would be revealed through discovery, that cannot be handled by a confidentiality order.
Any questions regarding this case can be directed to Paul Walker at 717-441-7061 (pwalker@tthlaw.com).
Minto v. J.B. Hunt Transport, Inc.
2009 PA Super 73
Decided April 17, 2009
The Superior Court holds that a “spoliation” claim by an employee against his employer is not barred by the exclusivity provisions of the Workers’ Compensation Act where the alleged spoliation (the “injury”) did not occur in the course of employment.
Background: An employer driver sued his employer trucking company, alleging the employer negligently destroyed and failed to preserve the seatbelts, brakes, “black boxes” and other parts of the truck he was driving when he was involved in an accident. As a result, he was prejudiced in his tort suit against third parties who manufactured the truck and its components. The trial court held that the exclusivity provision of the Workers’ Compensation Act barred the employee’s suit against his employer, and granted the trucking company’s motion for judgment on the pleadings. The employee appealed.
Holding: The Superior Court reversed the order of the trial court and remanded for further proceedings. Generally, the Workers’ Compensation Act bars an employee’s suit against his employer for injuries that occur in the course and scope of the employee’s employment, with limited exceptions. One of the exceptions is where the injury did not arise in the course of employment. The Superior Court examined the complaint, and determined that the employee alleged that when the employer failed to preserve the truck parts, he was not longer an employee (the company had terminated him), or, alternatively, if he was an employee, that he was not actually engaged in the furtherance of the trucking company’s business. It is important to note that the Court emphasized that it was not expressing any opinion regarding the truth of the averments that the employee was not acting in the scope of his employment or was not an employee at the time, but merely accepting them as true, as must be done when ruling on a motion for judgment on the pleadings. Accordingly, were it to eventually be determined that Minto was still an employee at the time of the spoliation, or was acting in the course and scope of his employment when the spoliation occurred, the trucking company would likely prevail on a motion for summary judgment.
Any questions regarding this case may be directed to Corey J. Adamson at 717-255-7639 or cadamson@tthlaw.com.
Archibald v. Kemble
2009 Pa. Super. 79
Decided April 23, 2009
The Pennsylvania Superior Court vacated summary judgment in this negligence claim. Plaintiff and Defendant played ice hockey in an adult non-checking league. Plaintiff alleged that Defendant caused him to crash into the boards, sustaining serious, permanent injuries. The Court distinguished this case from other sport situations because the participants were adults, subject to league rules, who knew or should have known the rules and that the purpose of the rules was to protect the safety of players.
The case does not adopt a mere negligence standard of care, noting that to do so would lead to an abundance of litigation and discourage participation in sporting activities. The court cited with approval the § 500 of the Restatement defining reckless disregard as conduct which disregards the safety of another such that it would lead a reasonable person to realize that the conduct creates a substantial and unreasonable risk of physical harm to another.
As a practice pointer, the case is significant because the court held that recklessness did not need to be specifically plead since it is a condition of mind covered by the general pleading requirements of Pa. R.C.P. 1019 (b). The heightened burden rests with the plaintiff, thus, the case should have been submitted to a jury.
Any questions regarding this case may be directed to Kathy Williams at (610) 332-7029 or kwilliams@tthlaw.com.
McGovern v. City of Philadelphia
554 F.3d 114 (3d Cir. 2009)
The Third Circuit addressed the issue of “whether a private right of action against state actors can be implied under 42 U.S.C. §1981.” In this case, McGovern, a white male, was employed by the City of Philadelphia. In September 2003, he filed a complaint with the EEOC and received a right to sue letter a year later. In December 2004, he was allegedly fired for performance and behavior issues. McGovern, however, did not file an action regarding his discharge until three years later.
Since McGovern had failed to file an action within the time permitted by Title VII or §1983, he attempted to file a race discrimination claim under 42 U.S.C. §1981. That statute has a four year statute of limitations. Nevertheless, the statute does not explicitly provide a private right of action. Accordingly, the Third Circuit ruled that McGovern had no claim. In doing so, it followed five other Circuit Courts, including the Fourth, Fifth, Sixth, Tenth, and Eleventh Circuits. The Ninth Circuit Court of Appeals, however, reached a contrary decision in African-American Contractors v. City of Oakland, 96 F.3d 1204 (9th Cir. 1996).
McGovern relied primarily upon the decision in City of Oakland to support his claim. The Third Circuit, however, rejected that reasoning since it was inconsistent with the decision of the United States Supreme Court in Jett v. Dallas Independent School District, 491 U.S. 701 (1989). The Court declared, “[i]n sum, because Congress neither explicitly created a remedy against state actors under §1981(c), nor expressed its intent to overrule Jett, we hold that ‘the express cause of action for damages created by §1983 constitutes the exclusive federal remedy for violation of the rights guaranteed in §1981 by state governmental units.’”
Any questions regarding this case can be directed to David Schwalm at (717) 255-7643 or dschwalm@tthlaw.com
Erie Ins. Exchange v. Abbott Furnace Co., et al.
2009 Pa. Super. 88
Decided: May 13, 2009
The Pennsylvania Superior Court affirms a judgment in favor of Erie, holding that the “gist of the action” doctrine precludes coverage despite physical damage to personal property other than the work product of the insured, caused by a malfunctioning furnace, as the negligence count in the otherwise contract-based complaint arose from the duties imposed by contract, not social policy.
Background: Abbott was insured by Erie, and entered into a contract to manufacture an annealing furnace. The furnace malfunctioned in a number of respects, and the Abbott’s repair efforts failed, causing damages, including physical damage to the purchaser’s products and materials. Abbot was sued for breach of contract, breach of warranty, breach of the duty of good faith and fair dealing, fraud, consumer fraud, and negligence (based on the alleged duty to apprise of the furnace’s defects). Erie denied coverage and refused to defend. Abbott sued, and on cross-motions for summary judgment, the trial court granted Erie’s motion and denied Abbott’s motion. Abbott appealed.
Holding: Abbott raises three issues on appeal: 1) whether Erie has a duty to defend and indemnify where allegations were made that the furnace actively malfunctioned and caused physical damage to personal, tangible property other than the furnace itself; 2) whether the trial court misapplied Kvaerner; and 3) whether the trial court erred in holding that the “gist of the action” doctrine precluded coverage. The Superior Court first states that it is well established the an insurer’s duties are triggered by the language of the complaint. The court observes that contractual claims of poor workmanship do not constitute the active malfunction needed to establish coverage. The court then looks at the allegations in the complaint, and holds that, looking at the action as a whole, the negligence alleged arises out of the contractual duties assumed by Abbott, and not breaches of duties imposed as a matter of social policy. On that basis, the court affirms the trial court’s judgment in favor of Erie.
Any questions regarding this case can be directed to Paul Walker at 717-441-7061 (pwalker@tthlaw.com).
New Jersey Case Summaries
DiMisa v. Acquaviva
969 A.2d 1091 (N.J. Supreme Court)
Decided April 14, 2009
Holding: Where the tortfeasor and the putative third party are effectively one, the third-party exception to the American Rule does not apply.
A third party sought an award of counsel fees under an exception to the American Rule. A prerequisite to an award of counsel fees under the exception to the American Rule is litigation with a third party precipitated by another party’s wrongful act. No matter how egregious that wrongful act, in the direct action between a plaintiff and a defendant, each party bears his or her own fees under the American Rule. In this matter, however, the tortfeasor was also the sole board member of the supposed third party, both of which were parties to the action.
If you have any questions, or wish to discuss this case, please contact Joseph F. Kulesa at (610) 332-7009 or jkulesa@tthlaw.com
Wakefern Food Corp. v. Liberty Mutual
406 N.J. Super. 524 (App.Div.)
Decided April 22, 2009
Holding: Despite a lack of physical damage to the electrical facilities, the power grid remained incapable of producing power, and the operative policy’s term "physical damage" was broad enough to include a "loss of functionality". The trial court's decision was reversed and remanded.
Although the power grid was not physically damaged, the grid's safety features prevented power delivery during a four-day power outage over much of the northeastern United States in August 2003. Several ShopRite stores lost produce as a result and turned to Liberty Mutual for coverage. The operative policy contemplated coverage for losses caused due to "physical damage" to off-premises electrical facilities, although "physical damage" was not defined. Liberty Mutual argued there was no coverage as there was no "physical damage" and that the power outage was caused by built-in safeguards in the grid. The trial court granted summary judgment in favor of Liberty Mutual, and the grocery stores appealed to the Appellate Division.
If you have any questions, or wish to discuss this case, please contact Joseph F. Kulesa at (610) 332-7009 or jkulesa@tthlaw.com
Bauer v. Nesbitt
969 A.2d 1122 (NJ Supreme Court)
Decided May 7, 2009
Holding: A tavern has no duty to monitor the sobriety of patrons to whom it does not serve alcohol. Further, although a tavern may have a duty to prevent inebriated patrons from accepting rides with inebriated parties, such claim must be alleged in the Complaint to survive, and cannot be inserted into a matter by the Appellate Division.
A 21-year-old patron named Hamby arrived at a tavern with his underage friend Nesbitt. Both were already intoxicated. Hamby was served alcohol. Nesbitt was only served soda, but he allegedly spiked it with rum from a bottle brought in by Hamby. The men left the tavern with Hamby as a passenger in Nesbitt's vehicle. The vehicle crashed into a guardrail, resulting in Hamby's death. Both men were found to be legally intoxicated at the time of the accident. The mother of the decedent filed suit against Nesbitt and the tavern, but the claim against the tavern was dismissed, as the trial court found the tavern had no duty to supervise the activities of patrons to whom no alcohol was served. The appellate court reinstated the claim, finding that the tavern may have had a duty to prevent Hamby from accepting a ride from a patron who was visibly intoxicated, regardless of whether he was served alcohol. The tavern appealed the matter to the New Jersey Supreme Court.
If you have any questions, or wish to discuss this case, please contact Joseph F. Kulesa at (610) 332-7009 or jkulesa@tthlaw.com
Maryland Legislative Update
The following is a summary of important issues that were before the Maryland Legislature in the 2009 Session.
Several Bills affecting civil trials failed in this session. In common law, parties to a civil controversy were entitled to a jury trial regardless of the amount in controversy. The Maryland constitution was amended several years ago to guarantee a right to a jury trial if the amount in controversy exceeded $10,000.00. Since that amendment, there have been several attempts, and again in 2009, to increase the amount in controversy in civil proceedings in which a right of jury trial is guaranteed. Both a House Bill and Senate Bill would have increased the amount in controversy to $20,000.00. Both bills failed.
A House Bill, designated the Baltimore City Lead Poisoning Recovery Act of 2009, made it out of committee but failed. This bill, if it would have passed, would have changed the standard of liability in both, negligence and products liability actions involving lead based paint in residential buildings in Baltimore City. The bill would have essentially allowed market share liability in limited cases in a limited geographic area. The present difficulty for plaintiffs with lead based paint cases against manufacturers is product identification. The bill as drafted, appealed to different segments. The bill would create the Maryland Lead Restitution Fund, which would consist of funds received by the State of Maryland for its claims against manufacturers. This Fund would be used for lead abatement and lead hazard elimination in Baltimore City housing stock. With regard to private remedies, the potential plaintiffs would not only be lead poisoned individuals, but also landlords facing suit by those individuals.
House Bill 287, which passed, clarifies that a Condominium Council of Unit Owners’ responsibility to repair or replace common elements. For many years, the Maryland Condominium Act had been interpreted to require the Condominium Council of Unit Owners to maintain a master insurance policy that would protect both the common elements and individual condominium units from damage or destruction. However, in 2008, the Maryland Court of Appeals affirmed the lower court ruling that the Maryland Condominium Act does not require a condominium association to repair or replace property of an owner in an individual condominium unit after a casualty loss. This was in the reported case of Anderson vs. Council of Unit Owners of the Gables on Tuckerman Condominium, 404 Md. 506 (2008). In essence, what the Maryland legislature has done is overruled, by statute, the recent interpretation of the Maryland Condominium Act, by Maryland’s highest Court. This statute reinstates the carriers’ previous interpretation of the Maryland Condominium Act.