Scottsdale Personal Injury Lawyer - Medical Malpractice

Assignments vs. Liens In the Personal Injury Context

Geoff Trachtenberg — Sun, 09 Dec 2007 08:41:24 GMT

A large number of people, attorneys included, don't know the difference between "assignments" and "liens."

Why does it matter, you ask? For a number of reasons that will be more obvious when the difference is understood.

An assignment is the easier of the two to understand since, as the name implies, it is an transfer of all or some rights or property to a third-party. Although an assignor cannot ever assign more rights or property than it holds, it can assign less than all of the rights or property subject to the assignment.

An assignment is bears the hallmarks of ownership. That is, an assignee steps into the assignor's shoes and has the ability to control the rights or property subject to the assignment. This means that the assignee can further assign the rights or property, can sell them, donate them, pledge them as collateral or simply enjoy the rights or property as though they were his or her own; subject, of course, to restrictions in the assignment agreement.

Here is where it will get tricky: an assignment can, in effect, extinguish an obligation to one party by transferring the obligation to another party.

Take, for example, a debt. Assume you owe a friend $10,000 for a car that you bought from him, and you agree to pay it of at a rate of $1,000 a year for 10 years. After two years, however, your friend decides that he really needs money and so he assigns the remaining $8,000 debt to me for $5,000 immediate cash. The debt to your friend is now, in effect, extinguished and transferred to me - that is, you owe me the $8,000.

You may not realize it, but a personal injury claim is a bundle of property rights, and to make matters a little more confusing, some states prohibit assignment of personal injury claims. Now, understand, this is a seemingly narrow restriction and assignment of other rights (such as debts) and property (such as cars) are fully assignable in every state.

What this anti-assignment law in the personal injury context means is that you cannot assign to someone a claim for bodily injury to a third-party. Remember, you can still assign the part of the case that corresponds to property damage, such as damage to your vehicle or personal belongings, and you can still assign any non-bodily injury claims, such as breach of contract or bad-faith.

Now keep that all in mind. What is a lien?

A lien is "[a] charge or encumbrance upon property to secure the payment or performance of a debt, duty or other obligation," and it "is distinct from the obligation which it secures." Matlow v. Matlow, 89 Ariz. 293, 297-98, 361 P.2d 648, 651 (1961) (citing 53 C.J.S. Liens Â§ 1, at 826). In Arizona, a lien can be created by statute, but an equitable lien may also arise from an express contract if the parties indicate an attempt to charge particular property as security for an obligation. Kalmanoff v. Weitz, 8 Ariz.App. 171, 172, 444 P.2d 728 (1968).

Unlike assignments, there is no prohibition on liens against personal injury cases, but this subject matter creates a great deal of confusion. Admittedly, what has contributed to the confusion is that the law has undergone centuries of perversion and that it is sometimes hard to tell the difference between an assignment versus a lien on a personal injury claim.

The courts examining this issue have often overlooked the distinction and, typically, have incorrectly deemed simple liens to be prohibited assignments without examining the real character of the transaction. To be sure, there are decisions that uphold standard (non-statutory) medical liens between a doctor and patient for services, and opinions which preclude insurance companies from recouping payment made to those same doctors as being impermissible assignments. These decisions are irreconcilable and fail to appreciate the difference between an assignment versus a lien on a personal injury claim.

Simply put, such arrangements - e.g., where someone is due money for services rendered - are permissible liens on a personal injury claims. That is, where an injured person owes money to a third-party and agrees to secure the debt with an encumbrance upon proceeds in a personal injury claim, the third-party does not own or control the personal injury claim (as they would had there been an assignment) and the personal injury claim remains "distinct from the obligation which it secures." The third-party has no say in how the claim is handled, does not need to assent to the settlement of the claim and will not be a party to signing a release of such a claim, which would be hallmarks of an assignment. To the contrary, if the injured party loses the personal injury suit, the "distinct . . . obligation" remains and must still be satisfied (absent an agreement making the debt or obligation contingent upon an event, such as prevailing in a personal injury action). In contrast, assignment of a losing claim would always result in an assignee receiving nothing (with the obligation having been extinguished upon the assignment).

Due to the anti-assignment case law, which is inconsistently applied, this causes confusion in personal injury cases. Although we are not going to ever resolve the issue here, it helps to remember the reason for anti-assignment law in the personal injury context is to prevent "trafficking in personal injury claims." That is, the courts long ago decided that it was not acceptable for people to market in buying and selling personal injury actions, ostensibly because of the unsavory possibilities of having injured people victimized by those wishing to purchase such rights. In reality, it has more to do with the image of justice and the likelihood that it would encourage fraudulent personal injury claims.

Ironically, the quiet exception to the rule prohibiting assignment of personal injury claims is that attorneys are permitted to take contingency fees on personal injury claims, which (if you believe what you read about other so-called impermissible assignment arrangements) is nothing more than an assignment of a personal injury claim. It used to be that such arrangements were considered impermissible, but after many years the courts relented an allowed contingency fee arrangements in all but criminal and divorce proceedings. In those cases, courts still felt that there was too must risk to allowing contingency fees -- that contingency fees would encourage unethical or unsavory conduct in criminal and divorce cases.

The reason contingency fees are allowed to attorneys, however, is to open the door to parties who would not otherwise be able to afford paying for attorneys on an hourly basis. And, most often, the same reason underlies lien arrangements for injured persons, whether it be health insurance liens, contractual doctors liens, liens for pharmaceutical expenses, liens for rental cars or liens for cash advanced to pay bills. Accordingly, although courts have long misunderstood and confused the difference between impermissible assignments and permissible liens, the simple fact is that such liens are a necessary element in modern personal injury practice to provide immediate care and compensation to impecunious injured parties who cannot afford to battle for years with an insurer for a tortfeasor. Such arrangements to not give rise to the concerns underlying the old anti-assignment laws and, in fact, do not reveal ownership characteristics of assignments.

Originally posted at InjuryBoard by Geoff Trachtenberg

Failure to Plead Sufficient Facts - The New Legal Malpractice?

Geoff Trachtenberg — Sun, 21 Oct 2007 15:48:53 GMT

There's a new case out this week from Division Two, Cullen v. Koty-Leavitt Insurance, which deals with the reasonable expectations doctrine in the UIM setting. The case is not particularly fascinating from a substantive perspective, but it raises questions about potential legal malpractice exposure.

In sum, Cullen filed a UIM claim based upon the fact that his family was given the right to privately use a business vehicle. The vehicle was owned by the business, Sierrita Mining and Ranch Company, and had UIM coverage with Auto Owners. The named insured was the business, and there were no additional insureds.

Cullen was injured while riding in another vehicle and filed a UIM claim with Auto Owners. The insurer denied his UIM claim, he then filed suit and the trial court dismissed the action.

First, the Court of Appeals expressly adopted the Supreme Court's holding in Bell Atlantic Corp. v. Twombly, the case that overruled the familiar Conley v. Gibson standard for dismissal.

This is a significant move and one wonders how the Arizona Court of Appeals, which is bound to follow the Arizona Supreme Court on such matters, saw fit to disregard the Arizona Supreme Court and unilaterally adopt the United States Supreme Court's Twombly holding. In any event, doubt no further, the "notice pleading" landscape has changed in Arizona as follows:

"While a complaint attacked by a Rule 12(b)(6) . . . motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Instead, the complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level."

The Court stated "when a complaint fails to recite at least the basic facts supporting a claim for relief, we cannot see how a defendant would have fair notice of the nature and basis of the claim." The Court then, turning its attention back to Cullen's case, stated it was limiting its review to the facts alleged in the complaint and the terms of the insurance contract.

Second, the Court went on to state that "[i]t is clear that the UIM provision of the policy Auto Owners issued to Sierrita does not provide Cullen with UIM coverage." This is pretty straight-forward since the only named insured was the business and Cullen was not injured while in the insured vehicle.

Third, the Court addressed the reasonable expectations argument. The Court explained that "[t]he [reasonable expectations] doctrine necessarily applies to the reasonable expectations of the contracting parties, not to the reasonable expectations of a hopeful insured, such as Cullen, who is a stranger to the insurance contract." The Court concluded that "the reasonable expectations doctrine d[oes] not apply to an injured party who 'had nothing to do with the purchase of the policy in question [and] never had an insurable interest or expectancy under the policy.'"

Then the Court gets cheeky. The Court stated that, despite Cullen's status as a "stranger" to the insurance contract, "Cullen's complaint is sufficient if the facts he alleged permit the inference Sierrita had a reasonable expectation Cullen would have portable UIM coverage under the policy it purchased from Auto Owners."

Ho-hum, what could they be thinking? How about this: "In his briefs to this court, Cullen describes several factual scenarios that arguably could prove one of the above situations applies to his claim. His complaint, however, contains none of them. Although Cullen's complaint conclusorily asserts he had a reasonable expectation of coverage, as we have explained, his expectations are not relevant here." So, the Court affirmed the trial court and denied the insurers' request for attorneys' fees.

Message: if you want to avoid being sued, forget notice pleading, you better allege facts, facts, facts to support your legal claims.

Originally posted at InjuryBoard by Geoff Trachtenberg

Experts Not Allowed to Testify to the Percentage of Fault

Geoff Trachtenberg — Thu, 06 Sep 2007 16:41:05 GMT

Division One just handed down Webb v. Omni Block, Inc., a clearly written opinion which decisively eliminates an expert's ability to testify as to the "percentage of fault" for any party or non-party.

In Webb, defendant, Omni Block, hired an expert who testified as to the specific percentage of fault (or lack thereof) for various parties and non-parties. Judge Jones allowed this testimony and the jury came back with an allocation that was very close to the allocation suggested by the defense expert. The Court of Appeals quickly dispatched the portion of the appeal challenging the expert's qualification and focused, instead, on the appropriateness of the testimony on the "ultimate issue" pursuant to Rule 704.

Rule 704 states that "[t]estimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact." The Court noted that a first-blush reading of Rule 704 "appears to support Omni's argument because it permits opinion testimony [about the percentages of fault] that encompasses an ultimate issue."

However, the Court observed, pursuant to "the comment to Rule 704, opinion testimony on an ultimate issue must still be helpful to the trier of fact and cannot be couched in legal conclusions that simply opine 'how juries should decide cases.'" Quoting McCormick on Evidence, the Court noted:

Undoubtedly some highly opinionated statements by the witness amount to nothing more than an expression of his general belief as to how the case should be decided or the amount of damages which would be just. All courts exclude such extreme, conclusory expressions. There is no necessity for this kind of evidence; its receipt would suggest that the judge and jury may shift responsibility for the decision to the witness. In any event, the opinion is worthless to the trier of fact.

"We therefore hold that [Omni's expert's] opinion apportioning of percentages of fault to the parties and non-parties constituted inadmissible legal conclusions under Rule 704 because he thereby told the jury how to decide the case. Once [Omni's expert] testified to the duties and responsibilities of the parties involved, the distribution of fault among the parties responsible was the jury's responsibility."

It's good to see the Court of Appeals finally adding teeth to the Comment to Rule 704. Many of us have used that Comment extensively to advocate for limitations to the substance for expert testimony, and so now that it was the basis of a published opinion, perhaps we will have greater success in getting judges to address the aggressive invasion of the jury's province by defense experts.

Originally posted at InjuryBoard by Geoff Trachtenberg

Three Trial Courts Hold Medical Malpractice Statute Unconstitutional

Geoff Trachtenberg — Fri, 31 Aug 2007 08:54:14 GMT

In last few years, many states adopted protectionist legislation in favor of the medical industry. The legislation essentially puts up various barriers to bringing medical malpractice cases by, among other things, attempting to impose expensive and burdensome constraints on the way these types of cases are litigated.

The medical lobbyists, of course, claim that the legislation is necessary to protect medical professionals against "frivolous lawsuits." So, at the outset, let me state my whole-hearted agreement that "frivolous lawsuits," where they exist, should not be allowed and the parties should be punished for bringing them.

With that out of the way, let me state my other belief that the predominance of such lawsuits are a carefully orchestrated insurance-industry fiction designed to sway public opinion. Simply put, these types of lawsuits are far to complex and expensive for attorneys to waste time and money on unless they are believed to be meritorious. Indeed, these types of lawsuits almost always require experts in the medical field to testify about the standard of care (i.e., what "should have been done" in a particular situation) and the need for, and cost of, such testimony is itself a significant barrier to prosecuting these types of cases unless they are worthy.

Anyway, back to the case at hand. Arizona has a legislative scheme on this subject and one of those statutes, A.R.S. Â§ 12-2604, purports to control the requirements for expert testimony in medical malpractice cases. The trouble with this type of statute is that it imposes special burdens on medical malpractice victims that are not imposed on the rest of the world of plaintiffs. In particular, it purports to designate who may testify as an expert witness, usurping the role of the court pursuant to Rule 702 of the Arizona Rules of Evidence. As a result, many courts around the country are holding that these statutes are unconstitutional and now several Arizona trial judges have agreed that Arizona's version is improper.

While not explaining his ruling, this week Judge Robert E. Miles summarily held the medical malpractice statute, purporting to limit expert testimony, was unconstitutional. This is the third trial court to find the statute violates fundamental rights. Earlier this year, Judges Anna Baca and Paul Katz also held that the medical malpractice statute was unconstitutional.

Although the debate about whether there is really a crisis in the medical malpractice arena is an important one with widely divergent views, it is good to see that judges are not afraid to strike down unfair statutes that favor one group over another. For more informaion on this subject matter, please refer to the section on Medical Malpractice and Negligent Care.

Originally posted at InjuryBoard by Geoff Trachtenberg

Bell Atlantic v. Twombly: The Day "Notice Pleading" Died (Sort Of)

Geoff Trachtenberg — Wed, 29 Aug 2007 14:20:02 GMT

On May 21, 2007, the U.S. Supreme Court handed down Bell Atlantic v. Twombly, 550 U.S. ___ (2007), announcing the "retirement" of the long-standing standard for dismissal of complaints articulated in Conley v. Gibson, 355 U.S. 41 (1957) - i.e., the standard that complaints should not be dismissed "unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."

Bell Atlantic represents a sea change in "notice pleading" standards. As one law professor recently observed:

The question, though, is what that change will look like. What does Bell Atlantic really mean? Clearly, Conley's "no set of facts" language is dead, at least as to the meaning that was customarily ascribed to it. And, at least for the kinds of costly class action antitrust cases like the one initiated by Twombly, Bell Atlantic erects an additional "plausibility" requirement of fact pleading in its place, what I have called "notice-plus."

Originally posted at InjuryBoard by Geoff Trachtenberg

The Medical Malpractice Myth: Legal Analysis Finds That Patients Fare Poorly in Court

Geoff Trachtenberg — Sat, 12 May 2007 21:23:24 GMT

As any medical malpractice attorney worth their salt will tell you, there is absolutely no epidemic of plaintiffs' medical malpractice verdicts. As these attorneys know, very,very few medical malpractice cases are worth pursuing and fewer still result in a monetary award or settlement. Indeed, it is somewhat laughable that so-called tort reformers advance medical malpractice caps of $250,000 since there are so few awards that are in excess of $250,000 and the very few that do, are clearly worth more -- afterall, would $250,000 be enough if the victim of the medical malpractice was a doctor?

Anyway, don't take my word for it, read what a law professor at the University of Missouri at Columbia has concluded concerning medical malpractice verdicts:

There is no empirical evidence to support the much-publicized notion that the tort system amounts to a lottery for injured plaintiffs, as President Bush and others have long maintained, writes Philip G. Peters Jr. in the May edition of the Michigan Law Review. If anything, the system appears to be biased against them.

Originally posted at InjuryBoard by Geoff Trachtenberg

Tax Liability Arising Due to Confidentiality Clauses in Settlement Agreements

Geoff Trachtenberg — Thu, 10 May 2007 09:40:33 GMT

Did you know that a confidentiality clause can have tax consequences? This was the subject of a United States Tax Court opinion in Amos v. IRS (2003), the case where Dennis Rodman kicked a courtside TV cameraman in the groin.

The Court held that, if a portion of a settlement is attributable to a confidentiality agreement, that portion is taxable.

It is not clear what the long-term effects are for this holding, but there are ways to deal with it. For example, you will want to make sure any clause in a settlement agreement provides that the confidentiality agreement is mutual, and that no additional consideration is being paid for it. In the alternative, you should negotiate an additional and specific amount being paid in consideration for a confidentiality clause, recognizing the tax implications.

Obviously, consult a tax professional for up to date tax advice on this type of issue.

Originally posted at InjuryBoard by Geoff Trachtenberg

Is a Medical Malpractice Claim "Mature" If There Is No Present Injury?

Geoff Trachtenberg — Thu, 19 Apr 2007 08:57:14 GMT

As a rule, every medical malpractice claim must have four elements -- duty, breach, causation and damages -- and, at least as a general rule, you need all of them to have a cognizable claim. Sometimes, however, there can be an issue as to when a claim is "mature," i.e., complete or ripe.

Take, for example, a person who has an increased risk of disease because he has been exposed to a defective product, but no illness has manifested. In this situation, many courts have held that the person has no cause of action, but the issue is far from settled.

It is my view that a recovery should be allowed for the increased risk of future diseaseor for emotional distress as a result of the increased risk. Under these circumstances, it is also logical that a tortfeasor should be responsible for medical expenses necessary to monitor the person's health.

Take,for example, Sinclair v. Merck, 913 A.2d 832 (2007), where the plaintiffs contended they had an increased risk of myocardial infarction due to use of Vioxx, but admitted no present infections. While the trial court dismissed the lawsuit, the appellate court reversed.

The court acknowledged that evidence of current injury is required in some circumstances under New Jersey law, but suggested that this requirement did not necessarily apply where the plaintiff claimed direct exposure to the product and it was possible to assess the existence, dose and duration of the exposure.

The court refused to adopt a bright-line rule requiring the existence of a manifested disease for the maintenance of such claims. Rather, the court said it was necessary to determine what relief "is reasonable and necessary in the circumstances, bearing in mind that the remedy sought by plaintiffs cannot be 'easily invoked.'" That determination could not be made, the court said, on "bare pleadings." The court remanded the matter for discovery and an evidentiary hearing.

Notwithstanding the foregoing, courts have taken a variety of approaches to the requirement that a plaintiff must exhibit an actual injury to recover on a tort claim. In some cases the requirement has been strictly applied, and in other cases courts have shown a willingness to overlook the requirement, depending on the nature of the particular case.

It is unclear what Arizona would do in this circumstance. Consider Kenyon v. Hammer, 142 Ariz. 69, 688 P.2d 961 (1984). In Kenyon, the plaintiff brought a claim for bodily injury and wrongful death claim, based upon a doctor's nurse incorrectly recording a pregnant mother's Rh factor during pregnancy.

During the course of the pregnancy, a routine blood test revealed that Ms. Kenyon had Rh negative blood, but one of the doctor's nurses erroneously marked her chart to indicate that her blood type was Rh positive. A normal, healthy child with Rh positive blood was delivered on July 10, 1972. If the doctor had be aware that Ms. Kenyon had Rh negative blood, however, he would have administered RhoGAM, a drug which suppresses the immune response which Rh negative mothers may develop to the Rh positive blood cells of their child.

To be effective, the drug must be administered within seventy-two hours after delivery of an infant with Rh positive blood. Failure to administer the drug increases the risk of the immune response and the consequent risk to subsequent pregnancy by approximately ten times. The drug, however, was not administered and Ms. Kenyon developed the immune response and her ability to bear additional children was, therefore, substantially impaired.

Ms. Kenyon was unaware of this development.

Over five years after the birth of her first child, Ms. Kenyon again became pregnant. She was delivered of a second child on April 26, 1978. The second baby was stillborn as a result of the destruction of its blood cells by the mother's Rh antibodies.

Ms. Kenyon filed suit for bodily injury and wrongful death of the stillborn child. The doctor argued the claim was barred by the (then-applicable) three-year statute of limitations since the lawsuit was not filed within three years of the medical mistake -- i.e., the failure to administer RhoGAM at the time Ms. Kenyon's first child was born. The doctor also argued that there could not be a claim for injuries to a child that was not even conceived at the time of the medical mistake.

The Arizona Supreme Court disagreed. The Court held that Ms. Kenyon's claims were not barred and that the statute date began to run on the date on which second child suffered some injury and because the action was filed within two years from the date the second child was conceived. Thus, since the Arizona Supreme Court was willing to recognize a cause of action for damages from a medical mistake that led to a decreased ability to have children not yet even conceived, the Court might also be willing to recognize a claim based upon the increased risk of future disease or injury or for emotional distress as a result of the increased risk.

Then again, there's Transamerica Ins. Co. v. Doe, 173 Ariz. 112, 115, 840 P.2d 288, 291 (App. 1992), a Court of Appeals decision holding that being exposed to HIV-infected blood without showing any physical signs of being infected with the virus did not constitute a compensable bodily injury within the meaning of Transamerica uninsured motorist policy. So, who knows!

Originally posted at InjuryBoard by Geoff Trachtenberg

Certificate of Merit Legislation: Arizona's Unconstitutional Barriers to Justice

Geoff Trachtenberg — Sun, 01 Apr 2007 18:09:03 GMT

Like a number of other states, the Arizona Legislature recently caved to special-interests and adopted a so-called "certificate of merit" procedure for medical malpractice cases, ARS 12-2303. This procedure sets forth a somewhat complicated series of requirements for people filing medical malpractice claims. As a practical matter, however, the statute discriminates against those injured by a medical mistake and presents a significant barrier for those people to access the courts of law.

Although Arizona trial lawyers have not yet had the opportunity to challenged the constitutionality of this statute, other states are starting to address the issue. For example, as Nashville attorney, John Day, reported on his excellent blog, Day on Torts, the Arkansas Supreme Court partially struck down part of that state's certificate of merit legislation:

The Court ruled that the statute imposed a requirement for commencement of an action that was greater than that imposed by Rule 3 of the Arkansas Rules of Civil Procedure. The Court went on to say that "[t]he constitutional infirmity in Â§ 16-114-209(b) is the provision for dismissal if the affidavit does not accompany a complaint within thirty days. We do not hold today that the balance of Â§ 16-114-209(b), requiring a reasonable-cause affidavit, is constitutionally infirm. Having said that, it appears that without the time limit of thirty days, the statute largely is duplicative of Â§ 16-114-206 regarding the plaintiff's burden of proof and medical expert testimony concerning breach of the standard of care in the community."

The case is Summerville v. Thrower, No. 06-501, (Ark. S. C. March 15, 2007).

Originally posted at InjuryBoard by Geoff Trachtenberg

Couple Sues Fertility Clinic for Wrong Sperm

Geoff Trachtenberg — Fri, 23 Mar 2007 08:55:35 GMT

A whole new type of medical malpractice is brewing in the fertility field.

For example, today a New York court ruled that a couple can proceed with a lawsuit against a fertility clinic for medical malpractice after the wife gave birth to a daughter whose skin they thought was too dark to be their child.

This follows a story from two weeks ago, where a couple sued a negligent clinic for lost embryos.

Originally posted at InjuryBoard by Geoff Trachtenberg