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Around the Nation: July 2013

State news and updates from CLM state chairs, reps, and committees.

July 30, 2013 Photo


Further Erosion of Attorney-Client Privilege

In Cedell v. Farmers Ins. Co. of Washington, the Washington Supreme Court, in yet another controversial decision, substantially eroded the attorney-client privilege for first-party insurers being sued for bad faith claims handling. The court held that in cases claiming bad faith in the handling and processing of first-party claims, other than underinsured motorist (UIM) claims, there is a presumption of no attorney-client privilege. The court also held that, when an insured is suing for bad faith handling of a first-party claim, the “civil fraud” exception to attorney-client privilege does not require them to show actual fraud. Rather, if after in camera review of the claimed privileged materials the court finds “there is a foundation to permit a claim of bad faith to proceed, the attorney-client privilege shall be deemed to be waived.”—From Washington State Co-Chair Paul M. Rosner, J.D., CPCU



Change of Heart for Death Qualified Jurors

The question many people may have after a Phoenix jury couldn’t decide on a sentence of death or life in The State of Arizona vs. Jodi Ann Arias is “What did the jurors say during voir dire and what may have changed their attitudes?” The 12-person jury had little trouble convicting Arias of first-degree murder and found she did so with aggravating circumstances in the brutal death of her ex-boyfriend Travis Alexander. In the final sentencing phase, however, they were unable to reach a unanimous decision as to whether she should be sentenced to death. As with all trials, potential jurors are questioned extensively about their beliefs and potential biases during the voir dire stage. Before they are seated in a capital murder trial, jurors are “death qualified,” meaning they agree that they can decide to sentence a defendant to death. The outcome brought into question whether religion (Alexander was Mormon), gender (a female defendant), youth (Arias was 26), or the public nature of the trial played a significant role in changing the jurors’ willingness to render a sentence of death.—From Arizona State Chapter Lead Chair Bill Nebeker



EF5 Tornadoes Followed by More Devastation

In the wake of recent devastating tornadoes, primarily in El Reno and Moore, Governor Fallin issued Executive Order 2013-20 to protect consumers during this time of recovery. The executive order was issued on May 20 for damage that occurred in Cleveland, Lincoln, McClain, Oklahoma, and Pottawatomie counties. Over $5.4 million in assistance has already been awarded by the Federal Emergency Management Agency (FEMA) to individuals living in those counties. However, the order was amended just weeks later after more tornadoes, severe storms, straight-line winds, and flooding hit the area causing additional hardship. The governor’s request to include Canadian County for individual assistance was also approved, bringing the number of eligible counties to six. In Canadian and Oklahoma counties alone, more than 538 homes and businesses were impacted by the May 28 through June 2 severe storms.—From Oklahoma State Chapter Lead Chair Carol Prewitt



More Tort Reform Success

Governor Snyder signed into law Senate Bill 1115, which will significantly impact medical-malpractice lawsuits in Michigan and strengthen tort protections that were first passed in 1993 but have been subsequently weakened. Under SB 1115, certain damages, such as loss of society or companionship, are now considered noneconomic damages and subject to the Michigan noneconomic damages cap, which was $424,800 in 2012. The law also amends how future damages are calculated by a trial court. Previously, these damages were reduced to a present-day value using a simple interest method, resulting in errors that artificially inflated the value of an award. The new formula reduces future damages to a present-day value using a rate of five percent per year compounded annually, representing a fairer method that will prevent artificial inflation of awards. The law also establishes that set-offs must be subtracted from damage awards after the noneconomic damages cap has been applied. Some courts have applied the set-off before applying the cap. The new law makes it clear that the cap should be applied first, then the set-off.—From Michigan State Chapter Co-Chair Bonnie Hayward



Expert Testimony Rules Change

On June 5, 2013, Governor Scott’s efforts to initiate tort reform were successful in the adoption of the Daubert Standard for testifying experts. House Bill 7015 adopts the Daubert standard and creates a more rigorous threshold for admitting scientific evidence. The new standard for expert witnesses will require the court to determine if the testimony is based on sufficient facts or data, that the subsequent opinions are the product of reliable scientific principles and methods, and whether the expert applied the principles and methods reliably in the facts of the case.—From CLM Fellow Ralph Moon, Ph.D, Conestoga Rovers and Associates



Lead Paint Poisoning and Circumstantial Evidence

In West v. Rochkind, a lead paint poisoning case, the Court of Special Appeals of Maryland held that, where there is no direct evidence that lead-based paint was contained on a defendant’s property, the presence of lead-based paint may be inferred only if it is established that the defendant’s property was the only possible source of the plaintiff’s lead exposure. The opinion clarifies prior case law relating to the use of circumstantial evidence to prove negligence in lead paint poisoning cases. Circumstantial evidence may be used to prove negligence in a lead paint poisoning case involving multiple properties only if other potential exposure sources have been ruled out.—From Maryland State Chapter Co-Chair Susan Smith



SCOTUS Rules on Arbitration Agreements

On June 20, 2013, the U.S. Supreme Court issued another arbitration-related decision impacting enforceability of arbitration agreements regarding federal statutory claims. In American Express Co. v. Italian Colors Restaurant, the court held that the Federal Arbitration Act does not prohibit arbitration agreements requiring waiver of class arbitration of federal claims, even though expenses associated with proving the claims (e.g., expert witness expenses) made it economically unfeasible for putative class members to pursue arbitration individually. The majority of the court upheld the class arbitration waiver because the individual claimants still had the right to pursue federal statutory remedies, even if it may not have been worthwhile for them to do so in light of the limited damages recoverable on an individual basis.—From CLM Member Matthew Bakota, Buckley King, LPA

About The Authors
Bevrlee J. Lips

Bevrlee J. Lips was managing editor of Claims Management magazine (now CLM Magazine) from January 2012 until March 2017.  blips@claimsadvisor.com

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