News Briefs

Massachusetts

Auto Producer Reassignments Delayed: Massachusetts Insurance Commissioner Julianne Bowler has asked that a plan for reassignment of auto insurance producers doing business with the state’s residual market, Commonwealth Auto Reinsurers, be delayed in response to criticism by several insurers of the proposed formula for redistributing Exclusive Representative Producers. Bowler did not say whether she agreed with the criticisms but called upon CAR to provide specifics of its plan for her consideration. The CAR plan is in response to Bowler’s Sept. 30 directive that CAR make reassignments to more evenly and fairly spread the quality and quantity of ERP exposures among servicing carriers. Bowler acknowledged criticisms of the plan by Plymouth Rock Assurance Company and One Beacon Insurance Company that the plan fails to consider the impact of the redistribution on consumers and ERPs and that it allegedly fails to account for any of the successes that a company may have earned through its fraud fighting efforts and its effective management of its ERP business.

Another Insurer Leaves Coast: The state’s second largest commercial insurer of coastal properties is dropping coverage to 6,500 policy holders in southeastern Massachusetts and Cape Cod because company reinsurance payments are rising by as much as 20 percent as a result of Gulf Coast hurricane damage. Hingham Mutual Group will not renew affected policies beginning in February, said George Cole, senior vice president. The reinsurance increase would cost the company about $1 million, Cole said. “We simply can’t afford the reinsurance costs. We have seriously reduced our coastal exposure.” Cole said Hingham Mutual decided to drop policies rather than raise rates because the time necessary for obtaining state approval for the increases wouldn’t come in time to offset costs. Insurers have been dropping policies on the Cape and islands over the past several years in response to rising reinsurance costs and new computer models that predict high losses in the event of a serious storm. The Andover Group, the state’s largest home insurer, announced last May it would begin to drop all of its approximately 14,000 policies on the Cape. Although the likelihood of a major hurricane hitting the Northeast is slim, the high value of coastal properties in Massachusetts would cause staggering damages, said state Division of Insurance spokesman Chris Goetcheus. “Home values are so high it makes reinsurers very nervous,” he said. Agents said it’s likely the only viable option for Hingham Mutual customers will be the FAIR Plan. After years of modest increases, the FAIR Plan’s rates are also expected to rise up to 25 percent in the coming year in response to higher costs for reinsurance and storm risks.

$36.5 Million Award Sets Record: A jury has awarded $36.5 million to the family of a 6-year-old boy who is blind, brain damaged and suffering from cerebral palsy since he was injured during his delivery via a surrogate mother at Hartford Hospital. The hospital was found 60 percent liable; the attending physician, Dr. Peter J. Doelger, an obstetrician/gynecologist, 40 percent. The judgment may have set a new record for a Connecticut malpractice award. The previous record was a $27 million verdict in 1999 against Yale-New Haven Hospital and Yale University. A six-member jury in Waterbury Superior Court reached the verdict in the case of Nicholas Cowles, born Feb. 10, 1999. “If the evidence had shown that Hartford Hospital and Dr. Doelger were not at fault, we would have gone that way. We just didn’t see anything that showed us remotely that they weren’t liable,” jury foreman Julie Torres said. The jurors found Doelger failed to interpret strips from a monitoring device that indicated the fetus was in distress, court records show. The difficult delivery continued so long, the fetus suffered from a dangerous increase in blood acidity; the child should have been delivered by Caesarean section long before it was, the jurors concluded.

$32 Million to Construction Worker: A Waterbury, Conn., jury has awarded $32.1 million to a Bristol construction worker paralyzed in an accident more than a decade ago. Norman Pelletier, 54, was permanently paralyzed below the chest when a steal beam at a Shelton construction site broke loose and hit him. Although he cannot move the lower part of his body, he can still feel pain from his injuries. Pelletier won the right to sue Sordoni Skanska Construction of New Jersey in a precedent-setting state Supreme Court case two years ago. Sordoni had argued that because Pelletier worked for one of its subcontractors, Berlin Steel Construction Co., it could not be held responsible for his injuries.

Sordoni Skanska attorneys said they plan to appeal. If that appeal fails, Pelletier could receive an additional $8 million in interest because the company rejected his offer to settle the case for $6 million several years ago.

The case, which was in court for 10 years, ended after five weeks of testimony in Waterbury Superior Court. About $28.3 million of the $32.1 million is for medical costs and other damages, such as pain and suffering. The rest is for Reine Pelletier’s losses. When Pelletier was injured in June 1994, he worked for Berlin Steel Construction Co., a subcontractor for Sordoni Skanska on an expansion project at a Pitney Bowes facility in Shelton.

RHODE ISLAND

Landlords Challenge New Lead Law: A group of landlords has gone to court to ask a judge to strike down the state’s new lead paint law, saying it unfairly exempts certain property owners from following the regulations. Superior Court Judge Stephen J. Fortunato Jr. heard arguments for and against the law, which is designed to protect renters from being exposed to the toxic paint. The law, which took effect on Nov. 1, requires owners of properties built before 1978, when lead paint was banned nationwide, to take a lead awareness class, have their properties inspected and correct any hazards. But it also exempts owner-occupied properties with three or fewer rental units from following the law. Opponents say those exemptions mean the law is unevenly applied. But more than 20 groups have filed a brief asking that the law be upheld. Jan Flaherty, community organizer with Childhood Lead Action Project, one of the groups that joined in the friend-of-court brief, said that the owner-occupied exemption was sensible because landlords who stay at their properties are more likely to keep them well-maintained. Rep. Joseph Trillo (R-Warwick), who opposes the law said that a significant number of lead poisoned children at owner-occupied properties. If the state believes it has a vast lead paint problem, Trillo said, then it shouldn’t exempt those property owners from the law.

The challenge to the new law came as a Superior Court jury in Providence continued to hear testimony in the state’s public nuisance lawsuit against companies that made lead paint and pigment.

NEW YORK

Port Authority Bombing Ruling: The Port Authority of New York and New Jersey wants a jury’s decision that faulted the authority in the 1993 bombing of the World Trade Center tossed out, saying the judge in the case was biased. The authority claims Justice Nicholas Figueroa thought the plaintiffs should win before the trial began and showed that belief in a pretrial hearing. Andrew J. Carboy, a lawyer for the people and businesses hurt by the bombing, said the authority’s request was “old wine in a new bottle.” Six people were killed and 1,000 injured in the 1993 truck bombing that was carried out by Islamic militants. The jury in the case found the authority negligent Oct. 26, allowing up to 400 people to seek damages. The plaintiffs claim the authority didn’t do enough to prevent the bombing even though its own internal reports sited the basement garage as a target.

Agent Not Liable for Non-Disclosure: The Supreme Court of the State of New York, County of Nassau, has reversed a lower court decision that found an insurance agent could potentially be held responsible for misrepresentations in a life insurance application. In applications for two $500,000 life insurance policies, an insured failed to disclose that she regularly consumed large alcohol and had received treatment for substance abuse. This information came to light after her death and the carrier moved to rescind the policy due to a material misrepresentation. The deceased’s husband sued the agent, claiming that he failed to advise her of the importance of providing truthful answers. Under New York law, insurance agents are not held responsible for misrepresentations in insurance applications signed by the insured and which clearly state that the insured is attesting to the truthfulness. There is an exception, however, where the agent and the insured had a fiduciary relationship, such as where the agent provides services beyond assisting the applicant in purchasing insurance. This agent had provided the insured with financial advice. The trial court found that this financial advice role raised a question of fact as to whether he owed the insured a fiduciary duty. On appeal, attorney Jonathan Harwood, of Traub Eglin Lieberman Straus LLP, demonstrated to the court that there was not sufficient evidence to establish that a fiduciary duty did exist, as any financial services provided to the insured were distinct from the insurance services. The appellate court reversed the decision of the trial court, granted summary judgment in favor of the agent and dismissed all claims with prejudice. As a result, the agent no longer faces potential liability of up to $1 million.

PENNSYLVANIA

Senate Revives ‘Fair Share’ Reform: The Pennsylvania state Senate has voted to restore the “Fair Share Act” lawsuit reform in a 32-18 vote. State Sen. Jake Corman (R-34), the bill’s author, said that Senate Bill 435 brings Pennsylvania in line with lawsuit reform passed in 44 other states by eliminating “joint and severability” in cases where a defendant is found to be less than 60 percent responsible.

Pennsylvania enacted similar reform in 2002, but in July of this year, the Pennsylvania Commonwealth Court ruled that the 2002 law violated the state’s single subject requirement of the state’s constitution because the legislation also included language regarding DNA testing of sexual and violent offenders. Sen. Corman’s Senate Bill 435 restores the Fair Share Act to statute in a single piece of legislation. Senate Bill 435 provides that a defendant only is responsible for its proportionate share, said Corman. Senate Bill 435 is now in the House of Representatives.

Church Opposes Sex Lawsuit Extension: Roman Catholic Church officials in Pennsylvania say a proposal that would allow sexual-abuse victims from decades ago to file lawsuits could lead to financial ruin for dioceses across the state. Some Harrisburg lawmakers want the state to create a one-year “window” to allow victims to file lawsuits, regardless of how long ago the abuse happened. The strict statute of limitations for sexual abuse cases in Pennsylvania has kept virtually all such cases out of the courts.

After being questioned by The Philadelphia Inquirer, the Archdiocese of Philadelphia released a statement supporting some proposed reforms and explaining why it was opposed to permitting old allegations to enter the courts. It warned that the change would likely expose the church and other institutions to huge damages, causing an “incalculable financial impact … felt in every corner of Pennsylvania.” Before a bill has even been filed, some Harrisburg politicians are quietly seeking a deal that would leave the current law untouched but pressure the state’s Catholic dioceses to put up millions of dollars for a victim-compensation fund.

The idea for a one-year “window” is modeled on one that California legislators opened in 2003, leading to 800 lawsuits being filed. So far, the Philadelphia Archdiocese has paid out $200,000 to settle sex-abuse cases. But the Pennsylvania Catholic Conference, an influential lobbying force in Harrisburg, has been warning lawmakers that changing the statute could create a flood of lawsuits.

MARYLAND

Court Reverses $3M Asbestos Award: Maryland’s second-highest court has reversed a $3 million jury verdict won by a former paper mill worker who alleged his lung cancer stemmed from asbestos exposure at the plant in western Maryland. The Court of Special Appeals ruled that defendant Scapa Dryer Fabrics Inc., a Windsor, Conn.-based unit of Britain’s Scapa Group Plc, should have been granted a motion to delay the 2003 trial to prepare its defense. The case was remanded to Baltimore City Circuit Court for a new trial. Scapa manufactured dryer felts, which is fabric attached to the conveyor belts of machines, that Carl Saville cleaned and maintained. Of the hundreds of dryer felts used at the mill during Saville’s employment, just two were asbestos-containing felts made by Scapa, according to the unreported opinion. And there were other sources of asbestos in the mill, according to the ruling. Saville was diagnosed with lung cancer and mesothelioma in 2001 or 2002. He filed suit in June 2002 against 32 defendants.

Johns Hopkins Response Center: How governments can best prevent, prepare and respond to mass casualties, whether from natural events such as Hurricane Katrina or a terror attack, is the mission of a new center led by Johns Hopkins University. A $15 million, three-year grant will establish The Center for the Study of High Consequence Event Preparedness and Response, one of a number of Homeland Security Centers of Excellence nationwide, Homeland Security Secretary Michael Chertoff announced. Chertoff said work done at the center will help provide “reasonable and robust” security through decisions that are based “not simply upon anecdote or emotion or what happen to be the passing topic in the news, but based on upon sustained and thoughtful consideration of what the risks really are.” The use of models and simulations to help in risk management and decision-making will be a focus of the center’s 90 investigators, who are spread over eight states and the District of Columbia, center officials said.

Chertoff pointed to recent changes in airline security measures as an example of the need to constantly adapt to an ever-changing security environment.

Topics Lawsuits Carriers Auto New York Agencies Legislation Reinsurance Massachusetts Pennsylvania Construction