Vegas Personal Injury Law Blog

A few weeks ago, I was preparing jury voir dire questions for a short trial. Some of the questions that I prepared involved various issues of tort “reform” and other items currently in the media that dealt with negative events involving personal injury lawyers. One area that always has to be covered is the McDonald’s hot coffee case, because most potential jurors have been indoctrinated to believe that this case sets the standard for a frivolous lawsuit.

Recently, I viewed the HBO special- “Hot Coffee”.  This special starts off  by reviewing the details of the McDonald’s case.  If you have the impression that this was as frivolous suit, you should watch this one and one-half  hour special.  Stella Liebeck’s legs were scalded by coffee that was about the temperature of  the water in a car radiator (180-190 degrees).  This temperature is capable of causing third degree burns requiring skin grafting.  Ms.  Liebeck wasn’t the only one that was injured by this McDonald’s coffee. There were over 700 burn cases reported, because their holding temperature for coffee was so high.

The unanimous  jury found Ms. Liebeck to be 20% at fault and McDonald’s 80% at fault for the burns she sustained to her legs from the hot coffee.  The jury awarded Ms Liebeck $160,000.00 in compensatory damages and $2.7 million in punitive damages.  The purpose of punitive damages is to change behavior brought about by egregious conduct. The presiding judge reduced the total punitive damage award to $480,000.00.

The media picked up on the hot coffee case and made it the flashpoint for tort “reform”, which is an attempt to block civil lawsuits and the public’s right to get into court. The media never mentions that there are legal procedures in place that block any frivolous case from ever getting to trial. Nor do they attempt to provide the actual facts of the case.

After this case, big business, insurance companies, pharmaceutical companies, asbestos companies, oil companies, tobacco companies, health insurance companies and companies that insure doctors, tried to pass federal tort “reform” legislation. They banded together under an organization known as the U.S. Chamber of Commerce, which has its headquarters in Washington, DC.  This appears to be an agency of our federal government. It is not. Obviously, the U.S. Chamber of Commerce has  strong financial backing.  Carl Love and George Bush Jr. became the proponents of tort “reform.”  They advocated caps on compensatory, special, and punitive damages.  They preached  that frivolous malpractice suits were going to put our doctors out of business.

Bill Clinton vetoed federal tort “reform” legislation.

One of the purposes of tort law is to promote safety.  In order to do that, you have to hold entities that sell products and services accountable.  If we don’t, then those injured by the negligence of these companies must  look to state programs such as Medicaid to pay for support and medical care necessitated by their injuries.

Once the Chamber of Commerce was blocked from passing national tort “reform”, they centered their campaign  on providing financial support to elect candidates for the state courts that would be pro business and pro tort “reform.”  As a result of this state by state campaign, judges were put into place who were in favor of placing caps on punitive damages as well as caps on non-economic damages for pain and suffering, and even limitations on the recovery of medical expenses paid by insurance (Collateral source rule).

All of this was accomplished by taking snippets of information from cases where people were injured and using these negative aspects of these cases to make them look bad in the eyes of the public. All cases have some negative aspects.  In our state of  Nevada the aftermath of this tort “reform” campaign resulted in a $250,000.00 cap on non-economic damages on medical malpractice cases, a one-year statute of limitations, and restrictions on recovery of damages for medical bills that were  paid by insurance, obviating the collateral source rule on med-mal cases.  Some states have adopted caps on punitive damage, and other states have caps on the non-economic and/or entire amount of damages that a jury can award.

The bottom line is that our civil justice system needs tort law to maintain a civilized society and to pass the cost of damages caused by profitable injury producing products back to the manufacturers and companies that cause injuries to our friends and family.  This promotes safety in our society and protects the public from dangerous services and products.  The criminal justice system, to a certain extent, makes for a more civilized society, but it can’t control non-criminal conduct.  That’s where the civil justice system picks up.  Without access to the courts on tort cases, the public would be picking up the tab for damages caused by entities that should be held accountable for their actions.

Recently, I reviewed a Federal  case that was posted on the Nevada Justice Association list-serve.  This 9th Circuit case interpreted Arizona law regarding the testimony of treating physicians. This decision answers the question:  When does a treating physician’s testimony morph him into an witnesses hired to render expert opinions? If a treating physician renders opinions that go beyond the usual scope of a treating doctor’s testimony, the proponent of the testimony must comply with FRCP 26 (a) (2), which requires a full-fledged expert report stating opinions and the bases for those opinions.

A treating physician is not considered an expert to render expert opinions when his testimony is confined his examination, diagnosis and prognosis of the patient. That testimony is not considered specially retained expert opinion.  But, once the lawyer for the claimant undertakes to elicit an opinion from the physician concerning whether or not a particular traumatic event caused the condition, as opposed to another cause, the physician has been transformed into the type of expert envisioned by the report requirement of FRCP 26.

Treating physicians are often confused about the difference between their role as a  treating physician and their role as an expert witness.

An expert witness is one retained to provide expert testimony in a case.  Generally, the treating physicians are excused from the requirement of this procedural rule requiring a party to timely disclose an exert witness.  A treating doctor may be provided with additional documentation by plaintiff’s counsel.  He may be asked to opine on matters outside the scope of treatment that he provided.  This may involve rendering opinions on the medical care rendered by other physicians.

Physicians are allowed to testify to opinions they formed in the course of caring for the patient.  As soon as the treating physician reviews bills and records outside of what is normally in their file, they become a hybrid expert.

The 7th circuit recently held that a treating physician, who is offered to provide expert testimony as to the cause of the plaintiff’s injury, but who did not make that determination in he course of providing treatment, is required to submit an expert report under FRCP 26(a) (2). The 8th Circuit requires the disclosure of a written report at any time a party seeks to have a treating physician testify concerning the causation of a medial condition, as opposed to merely the existence of a medical condition.

Therefore, it appears that a treating physicians are only exempt from the written report requirement when their opinions are confined to their  course of treatment of the patient.

The Nevada Rules of Civil Procedure provide for  expert disclosure dates deadlines for the exchange of initial expert disclosures.  Rebuttal disclosures are usually due 30 days  after the initial expert disclosure deadline.  Failure to meet these deadlines can be fatal to personal injury case.

So, the treating physician should always assume that his written report will be required in any normal litigation case.  Normal litigation involves those cases that are exempted from arbitration program, and involve damages in excess of $50,000.00.

In Nevada, in cases where damages have a value of $50,000.00 or under,  go first go into the mandatory Court Annexed Arbitration program.  If either side appeals, (assuming no exemption),  the case then automatically goes into the short trial program (one day trial). Although a report may not be essential in an arbitration or short trial case, a  report can be entered as evidence in the arbitration/short trial, and the physician does not need to testify.

If the case involves emergent care, chiropractic treatment or physical therapy, diagnostic testing and  treatment by a M.D. or a D.O., then the M.D. or the D.O. in heir discharge report should comment on causation,  the medical necessity of treatment of all of the patient’s providers, as well as and the reasonable and customary nature of the charges of all providers.

NRCP 16.1 requires the expert report to contain a complete statement of all opinions of the expert,  the basis and reasons for his opinions, the data or other information considered by the expert in forming his opinions, any exhibits or information that he reviewed to support his opinions, the qualifications of the expert, including a list of all publications authored by the expert within the preceding 10 years, the compensation to be paid for his review and testimony, and a list of other cases in which the witness testified as an expert at trial or by deposition, within the preceding four years.

Therefore, a treating physician’s perfect discharge report should cover the physician’s opinions concerning the causation of the patient’s injury (stated to a reasonable degree of medical probability), the medical necessity of the patient’s treatment and the reasonable and customary nature of the charges for all of the patient’s medical treatment. All physicians that are involved with treating  personal injury victims should have a current CV, testimony list, and fee schedule prepared for use in litigation cases.

Therefore, in most personal injury cases involving litigation, the treating physician will be considered to be  at least a hybrid expert. Treating physicians should look at the format for their narrative and discharge reports to see if it meets all of the requirements of an expert report as stated in this blog.

A Structured Settlement allows a personal injury claimant to obtain cash over a period of time, rather than obtaining his settlement in a lump sum. Structured Settlements started in the late 1970’s, and they are a big business. Structured Settlements only apply to large personal injury cases, usually involving policy limits settlements of at least $100,000.00. A Structured Settlement is an annuity.

Voluntary Structured Settlements are used in personal injury cases in situations involving claimants that can’t manage their own finances.

In some instances involving minors and incompetents, a court will order that the client’s portion of a settlement must be placed in an income producing investment.

In the state of Nevada we have a Minor’s Compromise Statute which involves a form of Structured Settlement. The court must approve a minor child’s settlement and will enter an order that the child’s settlement must be placed in a FDIC insured bank account in the state of Nevada, until the minor child reaches the age of 18 years. These funds can only be removed from the block account by court order. The court will only order the release of these funds before the child turns 18 years of age, only for reasons involving the special educational or medical needs of the minor child.

As far as personal injury settlements are concerned, the client’s part of the personal injury settlement is usually divided into three types of compensation. One portion is for medical bills. Another portion is for pain suffering. These portions free from federal income tax. Compensation for lost income for IRS purposes is considered to be a gain and various IRS’s Codes apply. Also, some States have state income tax laws that also apply to these settlements. So, the income tax consequences of a settlement must be considered when establishing a Structured Settlement for a client, if a portion of his settlement is for loss of income.

Attorney fees can also be structured. If an attorney wants to defer paying income taxes on a portion of or all of his fees, he can use a Structured Settlement. One example would be if an attorney had a very large fee on a case, he could purchase a Structured Settlement that would pay him a fixed sum per month, or he could receive a lump sum after a fixed period of years. This may be a way for the attorney to defer some income tax to a point in time when he has a reduced tax exposure.

The pros of a Structured Settlement for a minor or incompetent involve avoiding exploitation of these settlement funds by individuals who are close to the claimant. Incompetents and minors may use a Structured Settlement as a vehicle to pay for ongoing medical needs resulting from their accidents.

If you have a client that can not manage his money; or, if a client’s age or socio economic status would indicate that he would blow a large lump sum settlement; or, if a client would make bad financial choices in investing his settlement, a Structured Settlement may be appropriate for these individuals. When a settlement involves an incompetent individual, there have been many prominent attorneys who have found themselves involved in a malpractice lawsuit, because they did not structure the client’s settlement and persons close to the claimant have taken off with their settlement funds.

The cons of a Structured Settlement are as follows:

1. As we all know bank accounts as well as other investments are currently paying low rates of interest at the present time. Therefore, this may not be the best time to opt for a Structured Settlement. However, most Structured Settlements will pay a much higher return than bank interest.
2. If a claimant chooses a Structured Settlement, there is no large chunk of cash for him to use for a down payment on a house, or to pay income taxes.
3. Structured Settlements can also be sold. The older Structured Settlements have a higher interest rate, and the company purchasing the Structured Settlement would receive an income stream higher than the current interest rates. Some states have restrictions on selling Structured Settlements.

Structured Settlements can be done in a hybrid form. The claimant can take some cash now and structure the remainder of the settlement.

Some factors to be considered in selecting an insurance company or investment company to write a Structured Settlement are as follows:

1. The financial strength of the insurance company should be considered. State Farm is the largest insurance company in the world, and State Farm writes reinsurance for most insurance companies. So a company like State Farm will be around long after other insurance companies have become insolvent, because of a catastrophic insurance event. Allstate, Farmers, CNA, and Geico are all solid companies that will write Structured Settlements. You should avoid any fly-by-night company because they may not be around in the future, or may not be solvent enough in the future to make the structured payments. We are all familiar with AIG. We almost lost this company due to their involvement with mortgaged backed securities.
2. A Structured Settlement is an annuity. As far as annuities are concerned, some can contain language of an assignment and release. These can be sold to a another insurance company which may be less solvent, because the original insurance company may not want long term payments on their books. Other Structured Settlements can’t be sold because they are designated as buy and hold.
3. Financial planners and bankers give us the impression that there is no fee on the Structured Settlements, however most brokers will receive a four percent commission that will be advanced by the insurance company, so that the original principal amount of the settlement stays the same.
4. One caveat concerning Structured Settlements is that it is unethical for a claimant’s attorney to take a kick-back from the person or entity that establishes the Structured Settlement.

Therefore, Structured Settlement annuities, even those that are mandated by a court order, must be carefully established to meet the specific needs and financial concerns of each client.