Rumors are percolating that NYS Superintendent of Insurance Eric Dinallo will head the SEC in an Obama administration. This information comes via William Walters at the FedPoint Blog.

If this happens, it will no doubt have an effect on the medical malpractice insurance task force that he has up and running in New York, to determine what, if anything, should be done about malpractice insurance rates. He had previously threatened a $50,000 surcharge on doctors as a way to move his task force along.

Dinallo had been appointed by Eliot Spitzer, who had given a rousing speech to doctors that had come to Albany to lobby last year, just days before his prostitution scandal erupted. Many consumer advocates have been worried that he would try to "fix" the malpractice insurance problems by restricting access to injured patients to the courts, instead of addressing the source of the problems.

Anyone with more details on the rumors, feel free to contact me here: Blog [at] TurkewitzLaw.com

Labels: Insurance Industry

There is an article out today at LawyersUSA (Insurance industry woes rattle personal injury lawyers) in which I am quoted a bit. I had written previously about how the problems on Wall Street might affect the personal injury bar. (See, Wall Street Meltdown and Personal Injury Law.)

But in addition to the problems of insurance companies going belly-up, causing delays or worse in cases getting resolved (and forcing lawyers to carry the expenses even longer than they otherwise would), another problem also exists. The tightening credit market will likely effect the ability of personal injury lawyers to fund cases. If lawyers can't get a line of credit from the bank -- not because the attorney isn't creditworthy but due to panic and fear in general -- it means that they have to get funding from lawyer funding companies that charge outrageous interest rates.

But where to those lawyer funding companies get the money from, even if you agree to pay the high interest rates?

Hard times are ahead for the personal injury bar if the lawyers don't have their financing already lined up for their cases. And even if they do, people will now have to worry if that financing contracts or disappears altogether.

Labels: Insurance Industry, Law Practice

The personal injury bar likes to think of itself as recession proof. Regardless of whether stocks go up or down, people still get hurt because other people do dumb things.

But with the meltdown of mega insurer AIG, we could see something different. Even if they get rescued, there will no doubt be other insurers that have problems. We see this from time to time on a small scale when the executives drop their business ball, but we could now see it on a larger scale if things continue to go south. And a bankrupt insurance company would mean that the business end of lawyering could see some issues related to actually being able to get paid on a claim.

In New York, we have the State Liquidation Bureau that takes over when an insurance company goes belly-up. But even if they take over, there are long delays in getting the money in the door. In the words of the Bureau itself:

Unfortunately, the rehabilitation or liquidation of an insolvent insurance carrier usually means a delay in the settlement of outstanding claims. Where a solvent insurance company may settle claims in a matter of weeks, the complications of dealing with an insolvent company can lengthen the process considerably.

The mileage may vary in your state, but one thing is for sure, this business (and law is certainly a business, among other things) isn't quite as recession-proof as some believe.

One last thing, with the weekend meltdown of Wall Street, lawyers are signing up in record numbers for continuing legal education classes in bankruptcy, according to CLE provider LawLine.

Labels: Insurance Industry

The 11th Circuit Court of Appeals has upheld the Graves Amendment. That 2005 law protects car rental and leasing companies from claims of vicarious liability for injuries caused by their drivers.

The decision comes out of three consolidated suits in Florida, which had allowed (like New York) the injured to sue the owners of the cars, in addition to the drivers. The owners were held to be strictly liable for the conduct of the drivers if the drivers were negligent. This was a public policy choice made by the legislators of some states, since the owners, by being able to exercise some control over who drove their cars, were more culpable than the innocent victims.

But in 2005 a Republican congress decided to strip this power to control their own insurance laws away from the states, and preempted them by giving it to the federal government in the form of protection for the rental and leasing companies. (I wrote about my own rush to beat that law just days ago in The Million Dollar Listserv.) The hypocrictal conduct by the Republicans in usurping state authority for the benefit of these corporations has been widely derided.

While insurance laws are strictly state matters, the court held the statute constitutional under the Commerce Clause, due to the use and impact on rented and leased cars across state lines.

Given the current business friendly make up of the Supreme Court, I doubt that an appeal to that court would be successful unless other Circuits divide the issue. This is, to my knowledge, the first federal appellate decision on the law.

See also my post from last September from one of the lower court decisions: Car Rental Immunity Law Held Unconstitutional By Federal Judge.

Labels: Car Accidents, Insurance Industry

State Farm was hit last week by yet another racketeering lawsuit. The new suit is brought by a patient charging that State Farm was conspiring with so called "independent" medical exam companies to conduct sham exams designed to deprive injured people of benefits under New York's No Fault law.

Unlike the suit brought two months ago (see State Farm Hit With Civil RICO Claim Over Sham Medical Exams), which was brought by a physician charging that his practice suffered as a result of collusion between State Farm, medical exam companies and physicians, this one was brought by a patient and brought as a class action.

The suits arise as a result of New York's No-Fault law, that mandates each motor have insurance that provides up to $50,000 in basic economic loss regardless of fault. This loss includes both medical expenses as well as lost wages, among other things. (In exchange, the injured person surrenders the right to bring suit unless a serious injury has occurred.) As a condition to the treatment that the injured may obtain from their own medical providers, the insurance companies are entitled to force exams by their own "independent" physicians to see if the treatment is necessary. These so-called independent exams may thus be the means by which insurers stop paying for treatment, and has been the basis of these lawsuits.

The suit is brought by Bruce Rosenberg of Bellmore New York, who had also brought the prior State Farm suit as well as another by a practitioner against Allstate (see: Allstate Slammed With RICO Charge Over Sham Medical Exams).

The subject has been smoking hot around here, as one of the defendant doctors responded on this blog with a guest post (see: A Doctor, Sued In Insurance Company RICO Suit, Responds To The Charge). In the comments, other defendants have also stepped forward, and thus far 39 comments have been recorded as the subject sizzles on, away from this blog's main page.

I don't know attorney Rosenberg, but he clearly seems to be taking on an entire industry with these three suits (and one wonders if more are to come from other patients). And if he has the goods, evidence-wise, we may see some remarkable legal action in the year or two ahead.

Hat tip to David Gottlieb who first uncovered the suit and blogged it at No Fault Paradise.

The suit was filed in the United States District Court for the Eastern District of New York. A copy of the suit is here: RICO-Sundahl-v.StateFarm.pdf

Labels: Insurance Industry

Tort "reform" comes in many flavors. The most obvious is when businesses ask for various protections and immunities from negligent acts by asking that the most badly injured be limited in the compensation they need to be made whole again.

But then there is the more insidious kind, the kind that comes in the form of federal preemption concepts and insurance regulations, that make the eyes glaze over for mere mortals. Only wonks and (some) lawyers understand the significance.

Brooks Schuelke tackles that topic today. It comes as the Treasury Department introduces a plan to overhaul financial institutions, that takes on more importance in the wake of the Bear Stearns debacle. And part of that may be national regulation of the insurance industry, which is to say, doing away with the consumer protections that various states have in favor of a one-size-fits-all federal scheme.

His post is here, and well worth the read: How the Paulson Plan Will Affect Personal Injury Claims.

Labels: Insurance Industry, tort reform

New York's new governor, David Paterson, was sent a joint letter yesterday by several consumer groups over the state's medical malpractice insurance issues. Contention arose when former Gov. Eliot Spitzer, in response to a 14% malpractice rate hike (see: Why New York Medical Malpractice Insurance Jumped 14%) created a task force under the supervision of Insurance Superintendent Eric Dinallo to come up with solutions. The commission, however, was stacked with more than 20 medical and insurance interests and just three consumer interests.

A press release was issued yesterday from the Center for Justice and Democracy indicating that the groups were "gravely concerned that any recommendations that are the product of such process will not serve the public interest" due to the stacked deck.

The letter itself details a failure by the task force to turn over information to consumer advocates and that a "major reform proposal" will be unveiled shortly despite the fact there have been no meetings for months. Consumer groups, it appears, are only superficially a part of the task force. The groups claim they are "mere window dressing, to be used as stage props to create the illusion of inclusion."

Given Spitzer's pro-physician bias, the conduct of the task force comes as no surprise (see Eliot's Mess: The Ramifications for Medical Malpractice "Reform" in New York). Hopefully, Gov. Paterson will deal with issues with an even hand.

The letter was sent by: Center for Justice & Democracy, Center for Medical Consumers and Citizen Action of New York (members of a task force) as well as by the statewide consumer group NYPIRG, medical malpractice victim group PULSE, and CURE-NY, a statewide coalition of 13 public interest groups.

See also: It's Not Just Wall Street That's Happy To See Spitzer Go (Mother Jones Blog)

Labels: Insurance Industry, Medical Malpractice

New York's doctors, led by the state Medical Society, rallied last week for tort "reform," blaming lawsuits for the increase in insurance premiums. According to a medical society press release, 1,500 physicians traveled to Albany last Tuesday to protest on the steps of the State Capitol. The issue they brought to the legislators was high medical malpractice premiums, which I reported last July jumped 14% (see: Why New York Medical Malpractice Insurance Jumped 14%).

As you can see from that link (You did read that link, didn't you? I hope so because it's important), the jump was related to artificially low rates set by the New York Insurance Department for years combined with the state swiping almost $700M from the rainy day fund.

But when the doctors rallied in Albany, it was injured patients that were their targets. In a surreal moment, Dr. Robert Goldberg, the head of the Medical Society, offered up in a press release this humdinger of Doublespeak:

Physicians firmly believe that patients who truly suffer injury due to medical error should be fully reimbursed for economic damages, but non-economic awards must be reined in and the litigation process must be made equitable.

In other words, caps on lawsuits must be imposed on the most badly injured individuals because it would be inequitable to fully compensate them. Equity, it appears, demands giving some level of protectionism to the person that caused the injury. George Orwell would certainly be proud.

One of the reasons this bit of propaganda is important is because payments to the injured had nothing to do with the rate hike. In fact, both the number of malpractice case and the amount of payments made have been relatively flat nationwide since 1991.

And the nationwide trend does not differ in New York. In November 2007, Public Citizen put out a report (that I discussed previously here: Will NY Doctors Be Hit With $50,000 Surcharge?) that reached these conclusions, among many others:

• There have been fewer medical malpractice payments in the past five years than in any five-year period on record;
• Amounts paid out, when adjusted for inflation and population, have either risen slightly in the past five years or declined slightly, depending on the measure used;
• Only about 1 percent of New York's doctors are enrolled in the state's program for physicians deemed too risky by commercial insurance providers. Yet these doctors' payments have been so massive that they and other losses have drowned the program in more than $500 million in red ink this decade;
• A sliver of doctors are responsible for nearly half of the dollars paid out for medical malpractice in New York. Physicians who made three or more malpractice payments between 1990 and 2006 -- accounting for no more than 4 percent of New York's doctors -- were responsible for nearly half (49.6 percent) of medical malpractice dollars paid out on behalf of doctors in the time period.
• Costs for cases involving brain damage, blamed by some for rising insurance rates, are in fact modest in comparison with other types of cases. The category for injuries including brain damage ranks 5th of 10 in total amounts paid out. This fact exposes the lunacy of the radical proposal to deprive newborn babies of their legal rights and cede their care to a state-run fund.
• Researchers have found that premiums consistently make up only a small percentage of doctors' total expenses and that rising premiums have not, historically, depressed physicians' incomes.

Has any of this stopped the doctor's lobby from claiming that hitting victims a second time, by depriving them of a right to fully recovery, will help? Of course not. The only real questions are these:

• Will the doctors abandon the White Coat of Silence that stops them from turning in bad physicians?
• Will the doctors finally help to rid the state of the of the small percentage of doctors that are responsible for the majority of malpractice payouts?
• Was the medical society's propaganda known to the doctors who answered their call to lobby, or where they snookered by their own people?
  

--------------------
Full disclosure: I have lobbied New York's legislators several times in the past to keep the courthouse doors open for the injured, and am currently scheduled for a return visit in May with the New York State Trial Lawyers Association.
--------------------

Addendum - see also:

• Patient Safety Express (The PopTort):

  "Only 4% of New York's doctors are responsible for half of all of the state's medical malpractice payouts. How many more people have to be infected by deadly diseases, or killed by incompetent practitioners before the state will act?"

• Patient Safety Express, Day Two (The PopTort):

  This morning, the "Patient Safety Express" made its way to Albany. The 15-foot syringe and handful more medical malpractice survivors made it through the metal detectors at the State Capitol to tell their stories to the media....

Labels: Insurance Industry, Medical Malpractice

Last night I posted about the just-filed Allstate RICO suit, that includes charges that doctors and medical exam companies conspired with Allstate for "independent" sham exams and reports designed cut off treatment for patients. I also had written of a similar suit against State Farm.

Now, one of the defendant doctors responds:

------------------------------------------------------------------------------

By Anonymous

Part of the problem with McGee's case is that he is under investigation by Allstate, Geico and State Farm for insurance fraud. This was explained to us by the carrier I am on the suit with. They further explained to us that by law they have the right and have exercised the right to freeze his payments since he was not cooperating with the investigation. They felt this is a retaliatory suit. If he felt so strong about his claims why did he not contact the attorney general? (I will answer that)....Because this case is about money....it is a civil case..bottom line dollars and cents.

I would also like to point out that Dr. McGee was on the DD panel for some time also performing IME's. Personally, I feel that although I am named, I dictate all my reports, one by one verbatim. While they might sound a like and look a like, they are all done by me, my voice recording saved to back this up. As for the fee splitting every IME company in the industry uses the same method for payment.

As someone who performs IMEs I also treat a large amount of patients with private insurance and no fault (unsolicited). I apply my standard of care in my office setting to my IME setting. Over the past 15 years, I have gotten more praise from my patients then one doctor deserves. This is because I think I have always advised them to stay active with walking and swimming. I generally do not recommend physical therapy for more then a few months at a time. I find that staying fit, walking, swimming, home exercise programs and stress management are very useful tools for soft tissue injuries mainly neck pain and back pain. As an electro diagnostic consultant I do refuse to do EMG's that do not enhance patient care; That was not popular with my partner(s). As an IME provider I have called claim reps over some serious issues. My most memorable being a man with a damaged prosthetic from an accident who on my 2nd IME still did not have it fixed due to the claim rep not approving it. I also have had to send claimants to emergency rooms more then once for possible cellulitis for surgeries a few days prior for injuries alleged to be from the accident I was evaluating them for. It certainly was not the popular thing to do but, first do no harm is the oath I stand by...I had 1 claimant who saw her doctor a day before who reported bowel and bladder issues and then when I examined them they had no rectal tone...I am sure you know what that means-another medical emergency!

I do admit that I do recommend no treatment after about 5 months only if there are no positive findings on physical examination. So many times these claimants are mislead that if they quit there jobs and feign pain that they will get a large amount of money. TO me this just breeds laziness. I would hope at that time there treating physician offers them encouragement, home exercise programs, healthy lifestyle tips etc...So many times I hear that there physician has literally dropped them.

No one has ever, ever, ever, asked me to change an opinion. The allegations of false reports is bogus and coming from John McGee who is famous for owning Bill Mills to me has no merit. Furthermore, on the Allstate summons page 34 paragraph 95 he mentions that the documents to prove this have not yet been discovered. That will not fly in a RICO case. I have already had the case reviewed by a half a dozen attorneys familiar with RICO who all agree that the elements needed for a true RICO case are not there. There needs to be a crime within a crime with hard evidence-not assumptions. This case has no concrete evidence just a bunch of assumptions.

I have a years worth of voice recordings to show my reports are authentically mine and I know that I have never excepted a bribe or for that matter have been offered a bribe, ever. I have done IME's on claimants who have then asked for me to treat them.....I do admit I make more money from IME's but time wise I spend more time treating. That is probably due to that fact that I take medicare whose reimbursement for time is about a 1/3 of the time of an IME and my medicare patients all have co morbidities. So I see and treat more patients by a measure of time but dollar for dollar I get paid more per IME. But on top of that I make more money from investments outside of medicine so how much I make in medicine would be moot as money is not the only motivator for doing IME's in my case.

Also as a doctor who performs IMES, I ironically find that the large IME companies, mainly the ones named in the suit really could care less about if I continue or discontinue treatment. My recommendations have been questioned by smaller companies and not to my surprise I never got work from them again..That is not a problem for me. It might be a flaw in the system but I would not want to work with a company that put me under pressure to change my reports. I would also like to give you my opinion on causality after reading Harvey Goldberg's testimony. I do very few liability exams so causality is usually not a problem in the no fault sector. There are a few carriers that never ever want it addressed. Then there are companies that always want it addressed. I feel that in No fault causality is really a legal term. That is because I was once deposed and asked how I could feel that a cause and effect relationship existed with no police accident report was reviewed or AOB form. I had based it on the claimants history of the accident. To me when I have to start analyzing the insurance documents...I have left the field of medicine and have entered into the legal arena.

I would never omit a CR statement based on the outcome of an exam but if I was asked to leave it out regardless of my opinion prior to the exam I cannot see the fault in that as a physician. I have been told sometimes to take it out of my report as the directions I was provided with indicate that "causality has already been established" or some other believable statement. To me the most important merits to the report are that my history and physical examination remain my opinion. After that M&S, apportionment and CR can be addressed at any future time since it is based on those elements.

To conclude in my opinion Dr McGee is not going to be credible for so many reasons. Besides for owning so many bill mills, being under investigation himself and also being on IME panels his claims are just not how it is done with these companies. Maybe that was his experience on a panel which makes me question his integrity and intent even more. Of interest, there is a case now involving RICO which involves personal injury attorneys referring claimants to the same doctors over and over....we should all stay tuned for how that one ends......

One more experience I want to share. I was recently asked to testify in a civil courthouse on a bill for a diagnostic test in dispute. To my surprise the insurance carrier produced as a witness the claimant who denied even having the test...It was settled in 20 seconds....I was paid for the day and home before 10 AM!

Labels: Insurance Industry

Allstate Insurance was hit late last week with a 78 page racketeering complaint, charging the good hands people with conducting sham medical exams. The rigged exams were done to deny payments for future treatment, according to a civil complaint filed in the United States District Court for the Eastern District of New York. McGee-v-Allstate.pdf

This racketeering allegations were filed by a physician, John McGee, just one month after he filed a similar racketeering complaint against State Farm. The doctor charges that Allstate conspired with medical evaluation companies and physicians to contest the necessity for care and treatment rendered by McGee to his patients. Allstate, through these companies and physicians, conducted "independent" exams to see if treatment was still needed, but which exams McGee says were rigged. Those companies and doctors are co-defendants in the suit. He alleges a scam to "defraud over a million dollars through the creation and submissions of thousands of fraudulent documents created for the sole purpose of denying [McGee] his constitutional rights to practice medicine in the state of New York."

According to McGee, the defendants were producing boilerplate medical evaluation reports and falsely represented that the tests were independent under New York's No-Fault law. The medical evaluators profited, it is alleged, due to the increase in business from Allstate while Allstate profited by not having to pay for medically necessary future treatments.

McGee also alleges that kickbacks are involved, with Allstate paying an amount in excess of the No Fault fee schedule, with a portion getting kicked back to the evaluation company.

The defendant evaluation companies include D&D Evaluations, Medimax and Allegiance Healthcare. These companies had merged to become another defendant, Hooper Evaluations, in 2006, and are owned by Hooper Holmes, Inc. (AMEX-HH). The company has seen its stock tank from $4.30 last April to $0.65 cents at its close on Friday.

[A related story on allegedly "independent" medical exams is here: How to Fool a Jury (Is It Insurance Fraud?)]

Plaintiff's counsel is Bruce Rosenberg of Bellmore, New York, who also filed the suit against State Farm.

Full Disclosure: I have pending personal injury litigation where Allstate and State Farm are the insurance carriers and where one or more defendants may be involved with medical exams.

Update: 3/3/08 -- A Doctor Sued, In Insurance Company RICO Suit, Responds To The Charge

Labels: Insurance Industry

New York has a No Fault law that applies to injuries from car accidents that limits the rights of people to bring suit unless they have a "serious injury." And my upstate colleague Jim Reed at ZiffLaw described a fundamental problem with that law, via an email exchange with a prospective client: If you are lazy and "milk" the injury, you qualify to bring suit under New York's statute, but if you struggle back to work, and work despite the pain and limitations you might have, you don't qualify. The "serious injury" law, in other words, works as an incentive for people to be lazy and complain instead of being as productive as they can.

This problem arises because, under New York's No-Fault Law, one can only bring a suit after an auto accident if the "serious injury" fits one of these definitions:

1. A personal injury that results in death;
   
2. Dismemberment;
   
3. A significant disfigurement;
4. A fracture;
   
5. The loss of a fetus;
6. Permanent loss of use of a body organ, member, function or system;
   
7. Permanent consequential limitation of use of a body organ or member;
   
8. Significant limitation of use of a body function or system; or
   
9. A medically determined injury or impairment of a non- permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person's usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment" (See, for example, Oberly v. Bangs Ambulance; Insurance Law § 5102 [d]).

This significant restriction on bringing suit was a trade-off for the guaranteed health benefits of the No-Fault Law that started in 1973 and was amended in 1977 to the present formulation. But it also works in the counter-productive manner of encouraging people to stay home and not work. And that makes for bad public policy.

It also means that a fractured pinky that heals in a few weeks would qualify as "serious" under the law, but soft tissue back pain that lasts for years might not, especially if objective results don't turn up on radiological studies or the physician does a poor job documenting the injury and the specifics of the limitations.

It is this conundrum that brings up the problem with "medical mills" that some folks complain about. In order to document the injury properly, one needs physicians who are familiar with the legal requirements of satisfying a statute that includes a "significant limitation of use of a body function or system." That may not be the type of language that doctors learn in medical school or the way they were taught to make their medical records, creating a problem and cottage industry of those doctors who will document the way the legislature wants, and who will also find the time to testify in court.

And it brings yet another problem: Treating doctors may need to exaggerate certain claims of the patient to fit into legislatively defined categories in order to keep the tap open from the insurance company that is paying the bills, because the real injuries may not qualify. And the insurance company, by contrast, as an incentive to hire "independent" doctors to check the patient and rig the exams to show no injuries to close down the tap, even if the injuries are real. In fact, this is the subject of two lawsuits that have been brought in New York, that are discussed here:

• State Farm Hit With Civil RICO Claim Over Sham Medical Exams
• Allstate Slammed With RICO Charge Over Sham Medical Exams
  

Now some of these problems will exist anyway, even without the statutory framework. But it seems to me that the statute has exaggerated the problem, and it may be time for New York to revisit the subject to clean things up.

Labels: Car Accidents, Insurance Industry

State Farm has been sued for racketeering in New York with a claim that it conspired with "Independent Medical Exam" companies and medical practitioners to produce fraudulent and sham medical reports. The suit, filed January 30th in the Eastern District of New York, is brought under the Racketeer Influenced Corrupt Organization Act (RICO). (This story has not been previously reported.)

State Farm acted in concert with "IME" companies and doctors to furnish fraudulent and boilerplate reports, according to the suit. The objective was to procure "scientifically dishonest reports in order to terminate benefits." The Complaint is here: McGee-v-StateFarm-RICO-Complaint.pdf

Of particular interest is that the plaintiff is not an injured accident victim that was wrongfully deprived of insurance benefits, but John McGee, a physician practicing rehabilitative medicine. The physiatrist asserts that claims submitted to State Farm are being wrongfully denied, thus depriving him of the revenue he should be receiving for the treatment he rendered. He alleges that "sham" examinations were done by the defendants to procure false findings so as to cut off the benefits, resulting in the claims he submitted being denied.

The Complaint alleges that State Farm and the other defendants communicated that the evaluations and reports must deny that its insureds needed future treatment and that there was a lack of medical necessity for prior treatment. The Complaint goes on to state that State Farm engaged the other defendants with the expectation that reports received would be favorable to the insurance carrier, and to the detriment of the insured.

McGee states that "State Farm made it known to the other defendants that if they did not provide sufficient denials within the evaluation reports then State Farm would not use their IME services."

The defendant "IME" companies are Independent Physical Exam Referrals, Inc., and Metro Medical Services, LLC.

According to the website of Independent, they play no role in the production of the report:

We have addressed the "independent" part of the examinations by requiring all reports to be independently processed by the medical provider, typed and forwarded on their own stationary. IPER does not participate in the production of the reports, thus ensuring an arms length transaction for our clients. IPER reviews all reports by a registered nurse only to ensure that essential components of the report are present and that your questions are answered. The medical opinions rendered are those of the examining physician and based upon his/her clinical assessment and review of medical records.

This description, however, is directly at odds with the allegations of the complaint, which states that "boilerplate medical evaluation reports" are used. That may be an easy thing to prove if identical language is used in many different reports.

Whether these companies are like Integrated Risk Services Inc. -- a company I wrote about Tuesday that specifically states it doesn't want information favorable to the plaintiff included -- remains to be seen. (See: How to Fool a Jury (Is It Insurance Fraud?))

Another part of the Complaint alleges that State Farm pays an excessive fee to the IME company for the doctor's services, and that the money is then shared with the IME company or a kick-back is given to non-medical personnel. The complaint sets forth (in paragraph 19) that felonies have been committed with respect to the sharing of medical fees with non-medical personnel.

Thanks to my anonymous tipster for the heads up.

The plaintiff is represented by Bruce Rosenberg of Bellmore, New York.

Update 3/2/08 -- Allstate was just hit with a similar suit: Allstate Slammed With RICO Charge Over Sham Medical Exams

Update 3/3/08 -- A Doctor Sued, In Insurance Company RICO Suit, Responds To The Charge

Labels: Insurance Industry

This is a lesson on how to fool a jury. And how to get caught. It's about doctors and lawyers and ethics that belong in the sewer. It's about potential insurance fraud. And it is an exposé of a very seamy side of personal injury trial practice. And I will name names. It might be the most important post I've made since I started blogging, and it comes out of a Manhattan trial that just concluded.

The story emerges because doctors who performed "independent" medical exams in a personal injury case were told, in writing, to game the system. A document was discovered in the file of a neurosurgeon that included this: If prognosis appears good, then state that - otherwise be silent.

We start with a basic aspect of personal injury practice: When you claim injuries to your body in a lawsuit the other side is entitled to have a doctor (or two) examine you to see if your claimed injuries are legitimate. Courts and defense lawyers like to call these "independent" exams. But are they?

The scene is Supreme Court in Manhattan (this is the main trial court, not the top appellate court). And on the stand is Harvey Goldberg, a physiatrist that was hired by the defendants to examine the plaintiff, Gerard Malloy. Malloy had suffered a terrible back injury when he tripped over an exhaust fan that had been left in a darkened hallway in a building. In the well of the courtroom stands David Golomb, one of the city's top trial lawyers, cross-examining Goldberg.

But all is not right with the report from the exam that Goldberg holds in his hands, because something seems to be missing. Like his opinions. So Golomb asks him, on a hunch, if there was another version of the report that did contain his opinions. Ummmm, well, now that you mention it, there had been another version comes the reply. Golomb presses on and discovers that Goldberg had not only been asked to edit his original report, but complied. He apparently took his opinion on the cause of Malloy's injuries out of the original report. The testimony looked like this from a transcript provided to me:

Q: So why is the report dated more than [one month after the exam], December 12 of 2006? Why? If you don't know, you can say that too, Doctor.
A: I don't know.
Q: Was there a prior version of this report? Was it sent to anybody to look over or edit?
A: There may have been a prior draft that was corrected.
Q: Changed? We don't know, do we?
A: There was an instance of the causality originally being requested, and then I was told that the causality was not requested.
Q: So if I understand you, you were told by the people asking you to prepare this report not to offer any opinion on what the cause of Mr. Malloy's injuries, if any, or problems, if any, were? Did I just understand that answer correctly?
A: Yes.

Why was removing causation so important? Because plaintiff Malloy had been in a car accident five years earlier, and the issue of whether it was the car accident or the trip that caused the back injury was pretty darn important. And Goldberg was asked to take his opinion out. And he complied, thereby creating a new report that he knew was incomplete.

Remarkable? Keep reading because it gets worse. The next day neurosurgeon Douglas Cohen prepares to take the stand, as he had also examined Malloy for the litigation. But before Cohen takes the stand, Golomb sees the doctor talking with the defense lawyer in the hall. And the defense lawyer is holding a paper in his hand that came from the doctor's file. And the lawyer is looking surprised, and very unhappy. And he knows that Golomb is watching the interaction.

With Cohen on the stand, Golomb discovers what that paper is. It is the instruction sheet for the doctor directing him to omit opinions from the "independent" report that are favorable to the plaintiff. Those marching orders, published here for the first time, included (IntegratedInstructions.TIF, another version of the file IntegratedRisk-Instructions.jpg):

• Point out whatever findings or claims are not related [to the lawsuit]. Otherwise be silent on causal relationship.
• If prognosis appears good, then state that - otherwise be silent
• If you can state that plaintiff can participate in all normal activities, do so. If not, be silent
  

This instruction sheet form from the folks that hired him came from a company called Integrated Risk Services Inc., whose job it was to set up these "independent" medical exams. The instructions appear clear that this was not to actually be an independent report, but in fact, was designed to be a deliberately incomplete and therefore deceptive report. And Cohen had errantly brought it with him to court. That form instruction sheet, by urging deliberate omissions, essentially asked the doctors to falsely claim their exams and reports where "independent."

So who runs this company and asks these doctors to do this?

A review of the website for Integrated Risk Services, Inc. reveals that this is "ATTORNEY MANAGED INDEPENDENT MEDICAL CONSULTATION SERVICES." Attorney managed, eh? I wonder which attorney is urging deceit for "independent" exams? A corporate search through the New York Department of State web site reveals the company registered without a name in a post office box in Great Neck, New York, while the web site for the company gives a different PO box in Syosset, New York, also without any names. Nice.

Edit: On 3/25/08 Steven Fruchtman, an attorney out on Long Island, called to say that the company was his. My prior investigation, which tracked the company down through a residential address of his father, has now been rendered moot and been removed. Steven Fruchtman informs me that his father has nothing to do with his business.

Is it called lying when you deliberately omit pertinent opinions in an exam you are claiming is "independent?" Is it suborning perjury by asking someone else to do that on the witness stand? Is it insurance fraud to be so deceptive if the objective is to deprive an individual of insurance funds to which they may entitled? If a plaintiff was deceptive, would the insurance industry and big business scream fraud and go running to the American Tort Reform Association? Is there one standard or two?

I leave it to you, dear reader, to ponder whether ethical violations have occurred for doctors and attorneys involved. And this is not just left to the reader, but to the NYS Department of Health. And to the attorney ethics committees of the state if, in fact, this was an attorney managed company and perhaps, to the NYS Attorney General should any of them stumble upon this little exposé.

Update, 3/25/08: After Steven Fruchtman called today, I made edits to this post as a courtesy to him, including the removal of information regarding his father. He has been invited to comment here if he sees errors.
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Full Disclosure: I know David Golomb for over 25 years and he trained under my father when he was a newly minted attorney.

Labels: Inside The Well, Insurance Industry

I had an accident on a local parkway on December 7th that I wrote about, after a car stopped suddenly in the left lane, I stopped, and was then rear-ended.

So here is the end of the story: There were no injuries of any kind to anyone that I know of. The little twinge I felt the night of the accident was just that, a little twinge of zero significance.

As to the property damage, my loss was covered 100% by the car that plowed into me. This isn't always the case, as new blogger Jim Reed discusses today.

Since I occasionally take my shots at various insurance companies on this blog for various acts of malfeasance, then fairness dictates I should also acknowledge a company when it does the right thing. The car that hit me was insured by Liberty Mutual.

Labels: Car Accidents, Insurance Industry

Some lawyers are dumb. I don't know how else to put it. And this particular pratfall has to be the fault of an attorney.

Last month I wrote of Progressive Insurance spying on a church group -- and taping private support group discussions where people were confidentially bearing their souls -- in order to obtain information on a claimant that was a member of the group.

After the Atlanta Journal Constitution busted this tactic on its pages, the CEO of Progressive apologized for the appalling conduct and said:

"When I read that story I was appalled and, frankly, didn't believe that it could possibly be accurate. I have since learned that the essential facts in the story are correct. What the investigators and Progressive people involved in that case did was wrong --period. I personally want to apologize to anyone who was affected by this incident."

So what happens now? According to yet another story in the AJC yesterday, Progressive is now defending a violation of privacy lawsuit that arose out of the spying on the confessionals, and now says its spying was reasonable. But this isn't because the defense lawyers are clueless and created the defense inadvertently. Progressive's spokesperson, according to the article, has defended the defense. That means, to me, that the idea either came from, or is being defended by, the general counsel to the company.

So when the CEO said it was wrong. Period. I guess he didn't really mean "period" as in we-have-no-excuse-or-justification-and-won't-even-try. Because now the conduct is reasonable.

Some folks, it seems, know the fine art of taking a bad situation and making it worse.

(hat tips: The Consumerist and Shigley)

Addendum: Perlumtter & Schuelke weigh in with frivolous defenses driving up litigation costs.


(Eric Turkewitz is a personal injury attorney in New York)

Labels: Insurance Industry

Progressive Northern Insurance stepped waaaaaay over the line in investigating claims, when its investigation included infiltrating and taping private, church sponsored, support groups where people unrelated to any litigant were confidentially bearing their souls.

According to the Atlanta Journal-Constitution, a pair of detectives hired by Progressive became members of the Southside Christian Fellowship Church in August 2005 in order to get damaging information on two church members involved in a 2004 traffic accident.

The detectives talked their way into a private support group where members discussed abortions, sexual orientation and drug addiction, and taped the sessions, the newspaper said.

The CEO of Progressive then apologized after they were caught red-handed by the newspaper.

Under the label of "Insurance Industry" at the right, I have chronicled some of the misconduct in the insurance biz over the last year, but this story has to take the cake.

(hat tip to California Personal Injury and Insurance Blog via Bob Kraft's P.I.S.S.D.)

Labels: Insurance Industry

You may have seen the screaming New York headlines: Doctors hit with 14% increase in medical malpractice rates! Doctors in high risk specialties paying 6-figure insurance premiums! Insurance reserves so low carriers may become insolvent! Blame the lawyers! came the cry from the doctor's, for surely it must be due to medical malpractice cases. A little protectionism called tort "reform" would go a long way to curing the problem. Right?

Ahh, but truth is another matter. Was it really medical malpractice lawsuits that lead to this increase? Let's take a candid look at some actual facts:

• New York's Superintendent of Insurance, who sets the amount of rate increases, says this jump comes "After years of artificially low rate increases" and that "the rate increase comes after years of setting rates below what was needed." He did it now in order to avert a possible "irreversible crisis." (Did doctors previously complain that their rates were too low?) So, the Superintendent says, New York must play catch-up with a big rate hike;
• The State of New York had previously "appropriated" $691M of medical malpractice insurance reserves to balance the state budget from the Medical Malpractice Insurance Association. This association had been established by the state to satisfy any deficiencies attributable to the premium levels for malpractice policies, and for reinsurance. That surplus would have been used (if not taken for other purposes) for maintaining the solvency of New York's three medical malpractice insurance carriers.

OK, so the "crisis" was caused by lousy state policy under the George Pataki administration, by setting artificially low rates while also swiping the rainy day fund. Surely, however, the problem was also caused in part by increasing medical malpractice cases and payouts, right?

Well, no. In fact a study has shown that the number of medical malpractice cases in New York has remained static, and the amount of payouts has kept pace with other health care costs. When premiums go up, but the payouts are flat, you know you have a problem. But not one created by those who were injured by negligence.

And have high medical malpractice insurance rates in downstate counties chased away physicians, as the fear-mongers suggest? Not even close. It seems the number of doctor in New York jumped by 16% from 1995 to 2003, an increase greater than our growth in population. And the New York Times reported just last week in Few Young Doctors Step in as Upstate Population Ages, that while there was 6 percent growth in the number of doctors from 2001 to 2005, for a total of about 77,000 doctors, the way they are spread throughout the state is wildly uneven. The Times wrote:

While newly licensed doctors flock to New York City, Long Island and Westchester County, where there is already a glut, far fewer choose to practice in the vast upstate region.

As the article makes clear, and as New Yorkers know, upstate has suffered economic woes in past years, much of which was related to the loss of industry. This isn't a doctor issue. People move to the big city for a multitude of reasons, just as they always have.

Perhaps the problem is an onslaught of frivolous litigation? Nope, not that either, according to a report in the New England Journal of Medicine that disproves the myth of frivolous malpractice litigation.

Here's a suggestion for the new Eliot Spitzer administration: Government clearly created this insurance problem, as your Superintendent admits. You therefore need insurance reform. So don't try to fix it on the backs of the most badly injured of New Yorkers with some type of "tort reform" because that won't fix a government created problem. Even insurance company insiders will tell you that "tort reform" will not bring on lower rates.

And while the governor's brother is a neurosurgeon in a downstate county, and therefore probably both at the top end of malpractice rates along with his colleagues and in a good position to lobby his brother, it's hard to evaluate the significance of such expenses without also knowing what their income is. Complaining about a low-six figure premium while taking home a seven-figure income for a high-risk specialty will not bring too much sympathy.

Now here is a reform that the doctor's may want to entertain: With up to 98,000 people per year dying from medical errors, and with 68% of New York's medical malpractice payouts coming from just 7% of the doctors, maybe, just maybe, a little more gazing in the mirror might be in order? Perhaps the medical lobby should inform their physician-constituents about the facts, instead of simply handing them propaganda to put in their waiting rooms?

So what do I expect from all this? Not insurance reform, for that would be the obvious thing. And not greater enforcement from the State Health Department on recurrently problematic doctors. It hasn't happened yet, so why expect it now? No, I believe many will use this governmentally created mess as an excuse to strip rights away from those most severely injured by malpractice. You can almost hear the screams for caps (even though we already have them) and health courts coming from the protectionists who want to shield the negligent from taking responsibility for their mistakes.

While New York's physicians already enjoy wide immunity from litigation payouts due to the horrible economics of taking medical malpractice cases, except in the most disastrous of matters, I fully expect their lobbyists will want more, more, more. And the facts be damned.
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Addendum, after Eliot Spitzer resigns: Eliot's Mess: The Ramifications for Medical Malpractice "Reform" in New York

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(Eric Turkewitz is a personal injury attorney in New York)

Labels: Eliot Spitzer, Insurance Industry, Medical Malpractice, tort reform

Not all suits are good ones, as we've seen with some of the claims of Judge Robert Bork (as well as the $67M pants story, now on trial), and here is another fine example:

A couple of doctors, including Dr. Michael Zeide pictured at right, who do a lot of work examining claimants for an insurance company, were called P.I.M.P.S., as in Professional Independent Medical Practitioners. So they sued the personal injury attorneys who made the comments.

The full report is in the Palm Beach Post (via Kevin.M.D.).

A bizarre part of the suit is that they sued as "John Does," a tactic attorneys usually reserve for sexual assault types of cases.

I'm betting the First Amendment will make very swift work of this matter. I would also note that people who routinely bend over backwards to make claims as an expert are often referred to as, ahem, the employee of the pimp.

Labels: Frivolous Claims, Insurance Industry, Medical Malpractice

A medical malpractice case settles early. And the doctor then claims that the insurance company was looking out for its interests instead of his own. He has sued his insurer.

The case is classic in the sense of exploring the conflict of interest between the insurer that wants to settle and the insured that doesn't.

But it's also highly unusual because, where I come from, medical malpractice cases never settle early so this is never an issue.

Here are the facts (from the Daily Business Review via Law.com): In 2002, the estate of a patient filed a malpractice claim against a doctor, who then notified Chicago Insurance, his liability carrier. Under Florida state law, the firm had 90 days to investigate the claim and decide whether to contest it or settle the case. (No such law exists in New York.)

According to an appellate court, the company ignored the doctor's protests that the case was defensible and did not undertake any study of his claims until a week before the deadline. The company elected to settle the claim instead of defending as the time was running out.

But that decision put a black mark the doctor's record and affected his insurability, he claimed. Chicago Insurance then canceled his policy and the doctor was forced to pay substantially higher premiums to obtain new coverage.

After a lower court dismissed the case, the doctor appealed, and has now won the right to go to trial. The language at issue included this:

"Any offer of admission of liability settlement offer or offer of judgment made by an insurer or self-insurer shall be made in good faith and in the best interest of the insured."

But, the court said, in return for accepting a policy giving the insurer the exclusive authority to settle claims within policy limits, the insurer must exercise its authority in the best interests of the insured, not in its own self-interest. The court held that "This obligation is solely for the benefit of the insured. If the insured cannot enforce this obligation, then it has no effect at all."

Labels: Insurance Industry

Chubb, which claims to insure 90% of the law firms listed in The American Lawyer's AM Law 200, seems to have tripped over itself in first trying to stop its insured from blogging, and is now trying to draw a distinction between "informational" and "advisory" blogs.

What the difference exactly is, escapes me. And that is because there are an unlimited number of shades of gray within this constantly morphing space.

Here are the definitions they are trying to create in their own bumbling way:

• An informational blog presents information or offers a forum for discussing issues in a neutral, unbiased way. This type of blog offers information similar to that found in an article or presented by an individual in a seminar -- informational blogs do not provide advice to a specific individual on a unique matter. Typically, these blogs pose a minimal level of risk from Chubb's underwriting perspective.

• In an advisory blog, however, a law firm offers advice. By its nature, then, it increases the risk of a malpractice lawsuit against the firm. An advisory blog can potentially establish an attorney-client relationship, possibly bypassing such safeguards as determining the suitability of a potential client and checking for possible conflicts of interest. As always, Chubb's underwriters will evaluate each submission on its own merits.

Now in one recent post of mine I discussed the tough legal issues that any individual claimant faced in regard to the tainted pet food in the news. Is that "informational" or "advisory?" (I would call it my opinion.) The news story is certainly a unique matter.

And if I decide to rip into Chubb for trying to draw a line that doesn't really exist, does that mean I am not discussing it in a neutral and unbiased way and therefore the blog is now outside their coverage? If I mock them for failing to have counsel review this new policy and I advise them to get it reviewed -- for no attorneys in their right mind would ever try to draw such a line, so it stands to reason it wasn't reviewed -- is my posting now advisory instead of informational? If I strongly suggest it was foolish to do this, are my comments advisory or informational?

And how an "advisory blog" establishes an attorney-client relationship, by the way, is beyond me. To establish a relationship one needs to have one-to-one communications, not just an opinion shouted to the world. (I wonder if Chubb considers that comment of mine informational or advisory, regardless of whether it is right or wrong?)

In trying to define the legal blogosphere and place these ever-changing formats into neat categories, Chubb is creating a problem by trying to graft static definitions onto a dynamic beast.

If this is the place that Chubb wants to go, then law bloggers who have them as their insurer need to bring their business elsewhere.

The only thing Chubb seems to have done right here is place a bulls-eye on its back for ridicule.

(hat tip to Kevin O'Keefe at LexBlog, who also has a copy of the Chubb press release)
Addendum: Rush Nigut has a great response at Kevin's blog:

Chubb is trying to save face. The company realizes it made a mistake with its blanket denial and the press release is a way to say, "We really didn't mean we wouldn't cover law firms that have blogs . . . you must have misunderstood us."

2nd Addendum: Robert Ambrogi at the Law.Com Blog Network chips in more with: Insurer: 'We Do Cover Blogs, Sort Of'

Labels: Blogging, Insurance Industry