Friedman | Rubin

Friedman | Rubin Wins $104 Million Verdict Against Drug Manufacturer and Distributor

Having awarded $14 Million in compensatory damages to a Nevada couple on Monday, a Clark County jury added $90 Million in punitive damages today.

Friedman | Rubin's clients, Michael and Josephine Washington, a 71 year old retired U.S. Air Force mechanic and his devoted wife, were each awarded $7 million for his contracting Hepatitis C at a Las Vegas endoscopy clinic and for her resulting loss of consortium. It was alleged that the defendants, Teva Parenteral Medicines Inc. (Teva), a division of the largest generic drug manufacturer in the world, and its distributer Baxter Healthcare Corp. (Baxter), had recklessly marketed Propofol, a drug used to sedate patients for surgical procedures. Internal documents and company filings with the FDA showed that the companies knew the larger vial sizes of 50 and 100 mL of Propofol were often mistaken by health care practitioners as multi-dose vials and that multi-dosing from these vials carried a extraordinary risk of spreading disease from patient to patient due to the drug's unique properties. Recognizing there were safer, practical alternatives to the larger vials, Teva and Baxter nevertheless steered its marketing toward 50 and 100 mL vials, discontinuing less profitable, but safer, alternatives. Teva and Baxter even encouraged misuse by distributing Propofol with a multi-dose spike. Over the years, reports of multi-dosing and the spread of disease from these large vials continued, but Teva and Baxter did nothing to address the problem, despite agreement in the medical community that multi-dosing from large vials was to blame. Compounding the problem, Baxter largely discontinued its force of sales reps and the direct doctor consultations regarding safety that they provided in favor of more profitable direct marketing over the internet.

In 2007, a large outbreak of Hepatitis C occurred in Las Vegas, which health authorities traced to the multi-dosing of Propofol at two endoscopy clinics. Over 50,000 people were placed at risk, and over 100 contracted Hepatitis C including Michael Washington.

At trial, Teva and Baxter insisted that they had no responsibility beyond labeling the vials "single use only." They contended that the healthcare practitioners at the now defunct Las Vegas clinics were entirely to blame. However, as Rick Friedman argued to the jury, the label was simply not big enough to hide their reckless decisions. Both companies were well aware that endoscopy centers had a propensity to multi-dose and had no need for vials over 20 mL. Both companies could have easily avoided harm simply by limiting sales to endoscopy clinics to 20 mL vials or less. Teva could have continued to produce smaller safer vials and prepackaged syringes. Choosing profits over patient safety was the wrong choice, as the jury's verdict made clear. The jury ordered Teva to pay punitive damages of $60 Million and Baxter, which no longer distributes Propofol, was ordered to pay $30 Million.

Washington v. Endoscopy Center of Southern Nevada LLC, 07A572224, District Court for Clark County, Nevada (Las Vegas). Plaintiff's trial team was led by Rick Friedman, and included Lincoln Sieler and William Cummings, all of Friedman | Rubin, and also Nevada co-counsel Patti Wise of Edward M. Bernstein and Associates and Matt Sharp.

Friedman | Rubin Supports U.S. Military Families with Jobs and Charitable Giving

The firm is proud to employ spouses of active duty members of the U.S. Military as well as former servicemen and women. These employees bring many positive attributes to their roles at Friedman | Rubin.

The firm is also proud to support two charities that help military families:

The Fisher House at Joint Base Lewis-McChord provides military members and their families a comfortable, nurturing and secure environment while they receive medical care at Madigan Army Medical Center.

The Navy-Marine Corps Relief Society provides financial, educational and other assistance to members of the U.S. Navy and Marines and their families, including:

interest-free loans and grants
Scholarships and interest-free loans for education;
Financial Counseling
Budget for Baby Workshops
Thrift Shops
Visiting Nurse Services;

We recommend these charities to our clients and business partners. Please click the links above to learn how you can help. Thank you!

Friedman | Rubin Obtains Ruling Denying Settling Defendants' Demand For Indemnification by Plaintiff's Counsel

An Alaska Superior Court Judge ruled from the bench today that a settling defendant could not demand indemnification by Plaintiff's counsel of Medicare Set-Aside Allocations intended to cover a claimant's future Medicare qualified medical expenses. Friedman | Rubin Partner Donna McCready had argued that such indemnification was an additional term not agreed to at the time of settlement and that it was unethical for Plaintiffs’ counsel to agree to indemnify defendant (and unethical for defendant to request Plaintiffs’ counsel to enter into such an agreement), citing a growing list of ethics opinions from around the country. Donna's briefs with attached opinions are linked here (Response, Reply) for the benefit of other attorneys faced with similar unethical demands from insurers or settling defendants.

On behalf of the firm, Rick Friedman is pleased to announce that two experienced Seattle attorneys, Richard Dykstra (formerly of Stafford , Frey & Cooper) and Lincoln Sieler (formerly of Mosler, Schermer, Jacobs & Sieler) have joined Friedman | Rubin at its new Seattle office location.

Friedman \| Rubin^® Offices now include:
	3100 Two Union Square, 601 Union Street	Seattle, WA 98101	T: 206-501-4446	F: 360-782-4358
	1126 Highland Avenue	Bremerton, WA 98337	T: 360-782-4300	F: 360-782-4358
	1227 W. 9th Avenue	Anchorage, AK 99501	T: 907-258-0704	F: 907-278-6449

Mr. Sieler's practice emphasizes catastrophic personal injury, wrongful death, insurance bad faith and insurance coverage. Lincoln is a past chair of the Insurance Law Section of the Washington State Association for Justice.

Mr. Dykstra’s practice is focused on issues of insurance coverage and insurance claims handling. He has been involved in many of the noteworthy Washington cases that established the standards for coverage determinations and insurance company conduct.

Friedman | Rubin (www.friedmanrubin.com) is a dedicated joint venture litigation firm, focused on bringing civil cases to trial and maximizing recovery for our clients and co-counsel nationwide. .

District Court Prohibits Insurer From Claiming Policyholder's Disability was Caused by Sickness

Following a skiing accident in March of 1995 and orthopedic surgery in 1996, Dr. Stephen J. August found himself unable to perform as an eye surgeon due to a loss of proprioception in his hands. He had no choice but to wind down and close his medical practice. Fortunately, he had maintained disability insurance since 1980 that would replace at least a portion of his lost earnings. Moreover, his policy with Provident Health & Life Insurance Co. (a Unum Group company) provided for lifetime benefits if the disability was caused by an accident, but only until age 65 if due to sickness or disease.

In January of 1997 Dr. August submitted his claim to Provident, indicating on his claim forms that his disability was caused by the ski accident. The surgeon who operated on Dr. August also submitted forms certifying the ski accident as the cause of disability. Following an investigation into the accident claim and the extent of his disability, the company began paying full benefits without any reservation of rights or any assertion that the company had only accepted the claim based on the sickness provision of the policy. Benefits were paid for the next ten years, largely without incident. However, as Dr. August approached his 65th birthday, the company asserted, without explanation, that his benefits were ending at age 65. When Dr. August pressed the company for an explanation, the Unum adjuster explained that his claim had been "administered under the sickness provision" of his policy (even though he was never told of this) and that therefore benefits would terminate at age 65. When Dr. August protested that his disability was caused by an accident, the company promptly lined up its in-house doctor, Joel W. Saks, M.D., to opine that Dr. August's condition was in fact caused by sickness rather than accident. When Dr. August appealed the initial denial, the company brought in two more in-house doctors, Charles Sternbergh, M.D. and Richard Tyler, M.D., to support Dr. Sak's opinion. Dr. August's benefits were terminated on his 65th birthday.

Dr. August went in search of experienced legal counsel and was referred to Friedman | Rubin. On March 23, 2009, the firm brought suit on behalf of Dr. August in U.S. District for the Central District of California alleging breach of contract and bad faith, seeking policy benefits, general and punitive damages. Following more than a year of intense discovery, FR moved for summary judgment on the contract claim contending that Provident and Unum should be estopped from asserting a "sickness" defense given their ten year silence and payment of benefits without any reservation or qualification. The District Court, Dolly M. Gee presiding, granted the motion, issuing a strongly worded 22-page opinion concluding as follows:

It is undisputed in this case that Defendants failed to promptly provide information to Plaintiff necessary for him to protect his right to bargained-for benefits under the Policy. To allow Defendants now to defend against Plaintiffs breach of contract claim on the basis of their 2007 sickness determination would be "intolerably unfair" in light of their more than ten-year silence. For ten years, Plaintiff reasonably believed that Defendants accepted his claim, which he submitted on the basis of an accident, and was not notified by Defendants of any reason to believe otherwise.

* * *

[E]ven when viewing the evidence in the light most favorable to Defendants, the Court finds incontrovertible evidence that Defendants' dilatory conduct caused Plaintiff to suffer a disadvantage and that Defendants should not be permitted to exploit the disadvantage they inflicted on Plaintiff.

August v. Provident Life & Acc. Ins. Co., CV09-01951 DMG SHX, ___F.Supp.___, 2011 WL 1097461 (C.D. Cal. Mar. 23, 2011).

Following the Court's decision, Dr. August's benefits have been reinstated. More importantly, with breach of contract established as a matter of law, the issues for the upcoming jury trial have been narrowed to consideration of the insurer's bad faith, compensatory and punitive damages. The Federal Court decision also has important implications for other Provident and Unum policyholders with similar accident/sickness provisions in their policies. The decision establishes that insurers may not secretly administer a claim under the sickness provision, nor may they seek to determine that issue long after an accident claim is submitted.

Rick Friedman, James Hertz and Henry Jones of Friedman | Rubin and Mike Bidart of Shernoff, Bidart, Echeverria LLP, are counsel of record for Dr. Stephen J. August in the pending action.

Providence "Strikes Out" in Fight to Keep Money Belonging to Injured Employees

After he was severely injured in a motorcycle accident, David Benson received a demand from his health insurer, Providence Health & Services ("Providence"), for 100% of any settlement he obtained from the other driver to reimburse itself for health benefits it paid to cover David's hospitalization and medical treatment. Given the small liability policy carried by the other driver, David would have received nothing for his lost wages, pain and suffering or disability. While Washington law requires an injured party to be "made whole" before an insurer can demand any reimbursement, Providence argued that Washington law did not apply because David's health coverage was provided as an employee benefit through his wife's job at Providence Hospital and Providence had elected to be governed by ERISA, a Federal law which supersedes many state laws protecting workers and insureds.

David's attorney, David Dawson, resisted Providence's demand relying on US District Judge Ronald B. Leighton's holding in Rinehart v. Life Insurance Company of America, obtained by FR's Ken Friedman and Lincoln Sieler. In April, 2009, Judge Leighton had held that Providence’s health plan was an ERISA exempt "church plan". Providence countered that despite the Rinehart decision, which it claimed was wrongly decided, its health plan was governed by ERISA because it had since formally elected to be governed by ERISA and further argued that its election operated retroactively. Providence then challenged David's attorney to have his case be the one to test Judge Leighton's holding in Rinehart. David's attorney contacted FR attorneys Ken Friedman and Lincoln Sieler, who happily accepted Providence's challenge.

After an initial adverse ruling in King County Superior Court, Providence removed the case to Federal Court to press its ERISA argument. On November 30, 2010, after more than a year of litigation, US District Court Judge Thomas S. Zilly ruled in David’s favor finding that the employee welfare plan sponsored by Providence was indeed a "church plan", that Providence did not elect to have the plan governed by ERISA until after David’s claims against it arose, and that Providence’s ERISA election did not operate retroactively. Judge Zilly concluded:

The defendants in this case come before the Court with a two-strike count. On two previous occasions, the applicability of ERISA’s church plan exemption to PN 501 has been decided against the defendants. Judge Leighton called the first strike in Rinehart, 2009 WL 995715 at *3, holding that PN 501 was a church plan. Although not parties in that action, the defendants were “at-bat.” Prior to removal in this case, State Superior Court Judge Doyle called the second strike. See King County Superior Court Cause No. 09-2-35792-7 SEA. Benson has delivered the third pitch, arguing that ERISA does not apply because PN 501 is a church plan. For the reasons set forth above, the Court agrees. Strike three! ERISA does not apply and the defendants have failed to meet their burden to show that this Court has subject matter jurisdiction on removal. (Emphasis added).

Judge Zilly's ruling permits the lawsuit to return to King County Superior Court, where FR will ask the court to certify Mr. Benson’s lawsuit as a class action for the benefit of all persons from whom Providence wrongfully received reimbursement. To read Judge Zilly's entire opinion click here.

This decision has important implications for employees with prior injury claims at all facilities run by Providence. Plan members generally include employees, spouses and dependents of any Providence entity. Providence Health & Services was founded and continues to be sponsored by the Sisters of Providence, a religious order of the Catholic Church. It includes 26 hospitals, more than 35 non-acute facilities, physician clinics, a health plan, a liberal arts university and a high school. It includes approximately 45,000 employees. The system office is located in Seattle, Washington.

Ken Friedman and Lincoln Sieler of Friedman | Rubin and Jeff Thomas of Gordon, Tilden, Thomas & Cordell, LLP, represent David Benson in the pending action.

A Snohomish County Superior Court Judge today awarded $530,000 today to Terry Buholm, a fourth generation fisherman turned commercial painter. Mr. Buholm, was 42 years old and married with young children, when he was injured in a rear-end collision. The accident caused an L2-3 herniation, which required a subsequent laminectomy surgery.

Lincoln Sieler, of Friedman | Rubin's Seattle office, and Joe Cunnane of Edmonds, Washington, tried the case after Safeco refused to tender its insureds’ $280,000 policy limits to settle Mr. Buholm’s claims. Safeco’s top settlement offer prior to trial was $97,000. Because Safeco failed to adequately protect its insureds from an excess verdict, it was required to pay the full amount of the judge’s award.

A Denver federal court jury today concluded that Continental Western Insurance Company breached its obligations under the insurance policy and acted in bad faith when it failed to timely pay benefits following a fire which destroyed a grain elevator and feed mill in Johnstown, Colorado in 2005. The owners, Wayne and Rhonda Spreng, were unable to rebuild due to delaying tactics used by the insurance company that also provided coverage to welders who had accidentally started the fire. The evidence demonstrated that Continental Western put its own financial interests ahead of its policy-holders when it withheld payment to the Sprengs. The jury awarded $3.5 Million dollars in compensatory damages and Continental Western may also be required to pay up to $1.5 Million in interest on the award as well as court costs.

A federal court jury today concluded that Northwestern Mutual Life Insurance Company breached its contractual obligation to pay disability benefits to a Tacoma dentist, Dr. Richard Koch, who had paid premiums for more than 14 years. Although Northwestern Mutual admitted that Dr. Koch was totally disabled from his profession due to a condition that affects vision known as bilateral vestibular hypofunction, the company refused to pay Dr. Koch disability benefits alleging that he had failed to disclose an unrelated health condition in his application in 1994. The jury rejected Northwestern Mutual's contentions, finding that the company had not proven it was entitled to rescind Dr. Koch's policy and further finding that the company had breached the contract of insurance.

As a result of the jury's verdict Northwestern Mutual is obligated to reinstate Dr. Koch's benefits and may be required to pay his attorney fees and court costs.

A Jefferson County jury awarded just under $3.1 Million today to Friedman | Rubin's client, a Conifer, Colorado man injured in an August 24, 2008, rear-end collision. Scott Martin, the married father of five, was stopped on Highway 285 waiting for traffic to clear to make a lawful left turn when a vehicle struck him from behind. It was undisputed that the other vehicle was traveling an estimated 60 miles per hour and that the other driver's negligence caused the accident.

Martin suffered what was characterized as a "mild" brain injury, but among other deficits, he was no longer able to handle work dispatching trucking cargoes as he had in the past. His attorneys, Rick Friedman of Bremerton, Washington, and Richard Kaudy of Denver, tried the case after failing to resolve the case with Allstate Insurance Company, which insured the other driver. The issues decided by the jury were the seriousness of Scott Martin’s brain injury and the amount of damages needed to compensate him.

The multi-million dollar award is one of the biggest personal injury verdicts ever recorded in Jefferson County, Colorado. The attorneys expressed gratitude for the jury’s award. "This verdict vindicates Jefferson County values of thrift, hard work and family values," Kaudy said, adding that "the jury worked hard to protect this working family from suffering undeserved economic hardship." According to judicial observer James Chalat, the verdict stands as the largest personal injury verdict in Jefferson County.

The Martin family, some of whom are shown in this pre-injury photo with Scott Martin (Trial Exhibit 21), are very thankful.

The Arizona Court of Appeals issued a landmark decision today, agreeing with FR on every issue presented for review. The decision in Mendoza v. McDonald's Corp., addresses important issues that arise in almost every bad faith case involving the delay or denial of a workers compensation claim. These issues include: 1) the scope of damages available; 2) implied waiver of privilege when defense counsel influence claims decisions; 3) respondeat superior liability of insurer for defense counsel misconduct; and 4) the preclusive effect given to compensability determinations made in administrative proceedings.

A Jefferson County jury awarded $3.8 Million to a Paducah woman for an insurer's unreasonable delay in settling her medical malpractice claim against a doctor who had performed an unorthodox surgical procedure he described as a "modified abdominoplasty" at Lourdes Hospital in July of 2003. The surgery on Deborah Daniels, a respiratory therapist, resulted in life-threatening complications requiring multiple and extended hospital stays. She brought suit against the surgeon, Dr. David Grimes, in June of 2004. By May of 2005 her doctor reported she would never be able to work again.

Although the insurer had information indicating that Dr. Grimes' liability for Daniels’ injuries was reasonably clear, American Physicians Assurance Corporation made no meaningful attempt to settle Daniels' claim until July and August of 2006. Even after their own board-certified medical consultant told them that Dr. Grimes surgery was “inexcusable and indefensible,” they continued to delay settlement efforts and offered only $75,000 to settle the case at a court ordered mediation. These delays left Daniels destitute and under severe financial stress. Ms. Daniels testified that the day of mediation made her feel like her entire life and 20 year career were worth nothing in the eyes of the insurer. The financial and emotional stress, and AP’s threat to void coverage, compelled her to settle her claim against Dr. Grimes for significantly less than the policy limit of $1 Million.

After settling the claim against the doctor, Daniels brought suit directly against American Physicians alleging that its delay in settling the claim and its refusal to pay a fair sum for her injuries violated the Kentucky Unfair Claims Settlement Practices Act. Her Louisville attorney, Hans Poppe, foresaw that he would need to be a witness at trial. Therefore he sought out attorneys specializing in "insurance bad faith" litigation. He hired the Friedman | Rubin firm with offices in Alaska and Washington. According to attorney Ken Friedman who tried the case, "AP Assurance said they did nothing wrong or unusual in this case and that every claim was handled in this same manner.” Friedman continued, “I don’t think they realized until the end of trial that it was their ‘business as usual’ tactics that were on trial in this case.” The jury heard evidence that the claims adjusters were given financial targets to pay less in claims to injured patients in 2006 and adjusters had goals to push more claims to trial rather than settlement. The jury awarded Daniels $350,000 compensatory damages and $3,479,277 in punitive damages. Friedman said “the jury deserves a lot of credit for analyzing a complicated set of facts and understanding what went wrong, and why. They also deserve credit for rendering a verdict that will send a message to all insurers in Kentucky that they have serious obligations to make a good faith effort to pay valid claims promptly and fairly.” The jury wanted the company to get the message -- the punitive award was the exact sum that the claims adjuster was told to cut from her block of claims in 2006.

A King County jury awarded $5.86 Million to a Washington man injured in a head-on collision. FR’s client suffered a fractured leg, various contusions and a traumatic brain injury (TBI) causing him to remain in a coma for several days following the accident. The seriousness of plaintiff’s brain injury was the central issue in the claim.

Defendant’s vehicle was insured by PEMCO with a policy limit of $1.25 Million. Plaintiff made a policy limit demand at mediation but it was rejected by the insurer. At the same time, PEMCO assured its driver that in the event of an excess verdict, it would pay “any amount awarded.”

Plaintiff’s attorney, Ed Harper of Kirkland, recognized that PEMCO’s assurance to its driver meant that there was no cap on potential recovery. He asked Rick Friedman of Friedman | Rubin to join him for the trial.

Friedman recognized that the difficulty with the case was getting the jury to recognize the seriousness of the client's brain injury despite his retained intellectual capacity and communicative skills. At the same time, it was necessary to counter the defense strategy which sought to blame the client.

Friedman’s strategy was straightforward. In addition to the medical and psychological experts, the focus at trial would be the testimony of friends, family, and others, who could shed light on the client’s mental deficits. In-depth interviews of parents, friends and others revealed telling examples of the client's mental abilities before and after the accident. These stories supported the expert testimony indicating that while the client substantially retained his native intelligence, he now has great difficulty with memory, concentration, and multi-tasking.

Facing Harper and Friedman at trial caused PEMCO to re-evaluate its settlement position. Having previously rejected plaintiff’s $1.25 Million demand at mediation, PEMCO offered $2 Million as the trial got underway. As the trial proceeded, PEMCO upped its offer to $2.5 Million. These offers were considered but were allowed to expire as Harper and Friedman concentrated on delivering a better result. After a two week trial, the jury returned a fair verdict.

U.S. District Court Judge Ronald B. Leighton ruled today that FR's client, Edward Rinehart, an employee of Providence St. Peters Hospital, a division of Providence Health & Services (PH&S), is not subject to ERISA limitations which would have precluded his state law claims brought to seek redress for alleged mishandling of his disability claim by Life Insurance Company of North America.

Judge Leighton ruled that the long term disability (LTD) plan sponsored by PH&S is a "church plan" and that PH&S did not effectively elect to have the LTD Plan Governed by ERISA. This decision has important implications for employees with disabilities at all facilities run by PH&S.

PH&S was founded and continues to be sponsored by the Sisters of Providence, a religious order of the Catholic Church. PH&S includes 26 hospitals, more than 35 non-acute facilities, physician clinics, a health plan, a liberal arts university, a high school, approximately 45,000 employees and numerous other health, housing and educational services. The system office is located in Seattle, Washington.

The court's decision permits Mr. Rinehart to pursue his state law claims including breach of the implied covenant of good faith and fair dealing. The decision will undoubtedly be relied upon by other LTD claimants with pending claims. To see a copy of the Judge Leighton's decision, click here.

The Washington Court of Appeals, Division 1, today affirmed the verdict in favor of two teenage bus passengers who had been attacked and beaten aboard a Metro bus by a group of youths in May of 2005. The December 6, 2007 jury verdict awarded in excess of $250,000 to plaintiffs Carmen Rollins, represented by Ken Friedman, and Will Hendershott, represented by Andy Schwarz. In its appeal, King County claimed that the victims were themselves to blame. The Court rejected this claim finding that no evidence supported this argument. To see a copy of the Court's decision click here.

From a legal perspective, the Court of Appeals decision made important clarifications to the doctrine of joint and several liability in Washington. Indeed, the appeal drew amicus briefs from the Washington Defense Trial Lawyers, the Washington Transit Insurance Pool, Pierce Transit, as well as the Washington Association for Justice (f/k/a Washington State Trial Lawyers Association). Thankfully, the Court of Appeals reached the correct decision. The victim's awards were affirmed and vexing legal uncertainties were finally put to rest.

The jury trial and resulting verdict were well covered by the SEATTLE TIMES in 2007. The story was featured on the front page during trial and after the verdict. It was also the subject of a lead editorial the week following the verdict. See the following links to the Seattle Times stories:

Hawaii Court Says Insurer Acted in Bad Faith when it Denied Death Benefits to Mother of Fatally Injured Worker

Chief Judge Randal Valenciano of Hawaii’s Fifth Circuit Court (Kauai) today announced a verdict in favor of the plaintiff, Esmeralda Ordonez, following a September, 2008 trial. Ms. Ordonez, an elderly widow who lived in Venezuela, filed suit against Hawaii’s dominant workers compensation insurance carrier, Hawaii Employer's Mutual Insurance Co. (HEMIC). Ms. Ordonez alleged delays in payment of her survivor’s benefits after her daughter, Mayra Rodriquez, was fatally injured while working at Gay and Robinson Tours in 2005.

Mrs. Ordonez's attorneys presented evidence at trial that she lost virtually all her income when her daughter died. She was forced to survive on meager handouts from neighbors for over a year. Under the law, Mrs. Ordonez, as the sole surviving parent, was entitled to at least $48,000 in death benefits from HEMIC. HEMIC, however, delayed payment and forced the case to a hearing before an Administrative Law Judge, claiming that it wasn’t clear that the death was “compensable” under the statute. The Judge noted that HEMIC’s attorney had concluded in a matter of weeks that the claim was probably compensable, and acted without legal justification over the next 9 months when it refused to contact Mrs. Ordonez or offer her the benefits flowing from her daughter’s death.

Mrs. Ordonez eventually hired attorney David Robinson of the Honolulu firm of Robinson & Chur to pursue her claim. A year after her daughter’s death, a Hearing Examiner ruled that the claim was indeed work related and that the long overdue death benefits should be paid to Mrs. Ordonez. After payment was finally made, Robinson & Chur filed a civil lawsuit in Circuit Court alleging HEMIC acted in bad faith in seeking to avoid payment to Mrs. Ordonez. Plaintiff’s attorneys presented evidence at trial that the employer (G & R Tours) and the Insurance agent (Marsh USA) unsuccessfully tried to prod HEMIC into making payments after Ms. Rodriquez’s accident.

The Court awarded Mrs. Ordonez $75,000 in compensatory damages and $250,000 in punitive damages from HEMIC, finding that the insurer's conduct was motivated by a desire to avoid paying a legitimate claim. Judge Valenciano also stated that HEMIC’s conduct during the workers compensation claim was oppressive, willful, and in reckless disregard to the rights of the claimant.

Mrs. Ordonez was represented at trial by Ken Friedman, of Friedman | Rubin (Bremerton, WA) and Dan Chur of Robinson & Chur (Honolulu, HI). To see a copy of the Findings of Fact, Conclusions of Law and Judgment entered by the Court on April 9, 2009, click here.

U.S. District Court Judge James C. Mahan in Las Vegas has affirmed $50 Million in damages awarded by a jury in June against Paul Revere and Unum Group in the partial retrial of a lawsuit first tried to verdict in 2004. In the 2004 trial, the first jury awarded $1.6 Million in compensatory damages and $10 Million in punitive damages to G. Clinton Merrick in connection with the insurers' denial of his disability claim. The insurers appealed and the punitive award was ultimately sent back for retrial before a new jury. Merrick v. Paul Revere Life Ins. Co., 500 F.3d 1007, C.A.9 (Nev.), 2007.

In the June retrial, the second jury ordered Paul Revere to pay $24 Million and Unum to pay $36 Million for a total award of $60 Million. Today’s decision by Judge Mahan, while reducing the punitive award to $50 Million, affirmed the jury’s findings that both insurance companies had engaged in improper claims practices designed to cheat people out of their disability benefits. Judge Mahan found that the insurers engaged in a scheme to deny claims of their disabled policyholders, they were motivated by profit at the expense of their disabled insureds, and they profited enormously, going “from a company with little financial flexibility to a company with over $8 billion dollars in total stockholder equity.” Judge Mahan concluded that “much of this accumulation in value came at the expense of Defendants’ policyholders.” Although Judge Mahan agreed with the jury’s findings that both companies acted reprehensively, he was required to reduce the jury verdict against Unum on constitutional grounds to $26 Million, bringing the total award to $50 Million.

“The jury heard evidence of a fifteen year scheme to cheat disabled people,” said Rick Friedman, Merrick’s lead trial attorney. “Jury after jury and regulator after regulator have condemned their practices, but still they continue to cheat people.” Friedman expressed gratitude at Judge Mahan’s decision saying, “Judge Mahan is a very conservative judge. He presided over two trials, listening to the evidence and studying the exhibits that documented breath-taking corporate misconduct.” According to Friedman, “Judge Mahan’s detailed decision reflects a firm grasp of the facts and the law that must be applied to those facts. Given the present state of the law, Judge Mahan had no choice but to reduce the award. However, we are gratified that he did so in a way that makes clear how strongly the law condemns cheating the disabled.”

To see a copy of the Judge Mahan's decision, click here. The decision has been formally published by West Publishing using the following citation: Merrick v. Paul Revere Life Ins. Co., 594 F.Supp.2d 1168 (2008). A copy of the Amended Judgment entered following Judge Mahan's decision can be found here.

A federal court jury in Las Vegas returned unanimous verdicts today against Paul Revere Life Insurance Company and UnumProvident Corporation (Unum Group) in the partial retrial of a lawsuit originally tried to verdict in 2004. In the 2004 trial, the jury awarded $1.6 Million in compensatory damages and $10 Million in punitive damages to G. Clinton Merrick in connection with the insurers' denial of his disability claim. The insurers appealed and the punitive award was ultimately sent back for retrial before a new jury. Merrick v. Paul Revere Life Ins. Co., 500 F.3d 1007, C.A.9 (Nev.), 2007.

In today’s verdicts, the jury ordered Paul Revere Life Insurance Co. to pay $24 Million and UnumProvident Corporation was ordered to pay $36 Million. The punitive award of $60 Million is six times the previous award that had been appealed by the insurers following the 2004 trial.

As vice president at General Foods in the 1970s, Merrick was instrumental in the development of the Kool-Aid Man and Country-Time Lemonade advertising campaigns and had thereafter become a successful venture capitalist. Merrick was a founder and managing director of Consumer Venture Partners of Greenwich, CT, and also a founding investor and director of Samuel Adams Brewing Co. He purchased a Paul Revere disability insurance policy in 1989. In 1991, Merrick began to suffer the affects of Lyme disease with chronic fatigue syndrome, though it went undiagnosed for a period of time. His work performance suffered and he tried to continue working. By 1994 he could not meet the grueling business travel and analytic requirements of a venture capitalist and he moved to Summerlin, NV, for his health. He put his insurer, Paul Revere on notice of claim in 1994 and filed his claim in 1995. Paul Revere accepted liability in 1995 and continued to pay benefits until December 1996. At that time, Paul Revere was in the process of being acquired by Provident Companies, Inc. which in 1999 became, UnumProvident Corp., which subsequently changed its name to Unum Group in 2007.

Merrick's lawyers alleged that improper claims handling practices begun at Provident were brought to Paul Revere and influenced its claim handling with respect to Merrick’s claim both before the initial denial and afterward. These practices at the Unum Group of disability insurers have been the subject of media scrutiny including exposés on 60 Minutes and Dateline NBC as well as in multiple governmental investigations. “The jury heard evidence of a fifteen year scheme to cheat disabled people,” said Rick Friedman, Merrick’s lead trial attorney. According to Friedman, “The verdicts will keep coming until their practices change.”

For further details, click on any underlined item above. This includes the prior 9th Circuit Opinion discussing the facts in detail, the actual jury verdicts against the respective defendants and the biographical information of plaintiff's lead trial counsel, Rick Friedman. To see the Judgment entered by the court on July 3, 2008, click here.

Earthquake Victims' Families Awarded $2 Million From Building Owners Who Failed to Retrofit Historic Building

A jury awarded nearly $2 million in damages Monday for the families of two women killed in the collapse of a building in the 2003 San Simeon Earthquake, saying the building owners were negligent in failing to reinforce it. The verdict in the civil wrongful-death trial included an award for each for the surviving parents of Jennifer Myrick and for the surviving daughter and husband of Marilyn Frost-Zafuto.

Myrick, 20, and Frost-Zafuto, 55, died while trying to flee the historic Acorn Building in downtown Paso Robles during the magnitude-6.5 quake. In finding for the plaintiffs, the jury decided property owner Mary Mastagni and several trusts and businesses owned by her family were responsible for the 111-year-old Acorn Building and were negligent in its maintenance and operation.

The surviving family members attended nearly all of the two-month trial. All expressed satisfaction with the outcome. “It won’t ever bring my mother back or Jen; it won’t ever close that door for us,” Phillips said. “But the jurors have spoken, and there is accountability. That does give us the closure we were looking for.” Dennis Zafuto said the amount of money was not an issue to him, and he felt justice was served. “The price on someone’s life is impossible to determine,” he said. The Myricks said they hope the verdict will set an example for other owners of unreinforced buildings. The couple has worked to tighten legislation regarding such structures. “This has nothing to do with money,” Leroy Myrick said. “They could have given us $50 million, and it could never replace our daughter.”

Under state and local laws, the property owners had until 2018 to renovate the building for seismic safety. This fact came up frequently during trial and during the protracted jury deliberations. According to Plaintiff's attorney, Rick Friedman, the biggest hurdle in the case was overcoming the owners' claim that they were reasonable in postponing needed retrofitting. "The owners had notice of the danger and ignored it for years, therefore they bore a measure of responsibility." According to Friedman, the jury's decision will motivate building owners to make needed repairs sooner rather than later. "Unreinforced masonry buildings in earthquake prone areas are an invitation to disaster."

The state of Alaska has agreed to pay FR clients $2.4 million to settle a civil lawsuit that claimed the state failed to protect two boys who were abused and neglected in state foster care. The settlement comes after several days of disturbing testimony in a case that scrutinized the actions of the state agency. Over the boys' childhood, the state received about 40 reports of abuse or neglect. Almost all were mishandled. The worst incident happened in 1999 when the boys saw their foster mother kill another child and the boys were forced to help cover up the crime.

The $2.4 million is in addition to a settlement already paid by the state to the family of the child killed. The money is not enough to make things right for the boys, their lawyers said. Their childhoods were lost. Their ability to hold jobs and live on their own is questionable. They both are emotionally shattered. But advocates for A.J. and D.D., now 17 and 18, agreed to accept the money because the state threatened to tie up any jury award with years of appeals, said Ken Friedman, an attorney based in Bremerton, Wash., for Friedman | Rubin. "Frankly they can't wait years. They are about to turn 18 and 19 and they need the money to get on with their lives," Friedman said.

Anchorage Superior Court Judge Sharon Gleason approved the settlement, which will be paid in two weeks. Plaintiffs were represented by Ken Friedman of FR and Chris Schleuss of Anchorage.

On December 11, 2007, financial services firm Morgan Stanley agreed to settle claims of gender discrimination and defamation made by a former Financial Advisor in its Tacoma Branch for payment of $750,000. Deborah Dodson, who had worked as a Financial Advisor for Morgan Stanley from 1996 to 2005, filed suit in 2006 alleging that she was denied a lucrative joint production agreement with a senior advisor when the partnership was given to a less experienced and less qualified male broker in the office. Ms. Dodson’s suit also alleged that when she left Morgan Stanley, the broker who was able to enter into the joint production agreement called many of her clients in an attempt to retain their business and falsely claimed that Ms. Dodson had been fired for poor sales, and that she had been “overcharging” her clients.

In pleadings before the court, Ms. Dodson alleged that she was denied the partnership in part because of the social relationship between the Manager of the Tacoma Branch and the male broker who received the partnership, and what was described to her as the "good old boy" way of doing business.

Ms. Dodson, who now works as a financial advisor at H & R Block FA, hailed the settlement. “The Tacoma Morgan Stanley branch has been dysfunctional for years, and a very unpleasant place for female brokers. I hope this settlement is a recognition by the Company of the problem and I hope there will be a commitment to address the issues.”

The case originated when Ms. Dodson filed a complaint with the U.S. Equal Employment Opportunity Commission in August of 2004. After an investigation, the EEOC found reasonable cause to believe that Morgan Stanley’s policy of allowing established financial advisors to subjectively choose partners for lucrative agreements resulted in Dodson being unlawfully denied such a partnership in November of 2003 because of her sex.

Ms. Dodson was represented by attorneys Terry Venneberg and Ken Friedman, both of Bremerton. According to Venneberg, “Discrimination based on gender has unfortunately been a serious problem for many years in the financial services industry. It is our hope that this settlement, which follows on the heels on several settlements of class action lawsuits for gender discrimination against Morgan Stanley, will help rid the industry of unlawful discrimination, and give women the opportunity to succeed in what has traditionally been a male-dominated business.”

Ken Friedman Wins Verdict Against Seattle Metro — Bus Authority Required to Pay Victims of Beating on Bus

King County Metro was negligent when a bus driver took no action while two teenage riders were attacked and beaten aboard a bus by a group of youths, a jury ruled Thursday. The Superior Court jury voted to award in excess of $250,000 to plaintiffs Carmen Rollins, represented by Ken Friedman, and Will Hendershott, represented by Andy Schwarz.

After the verdict was read, Rollins, now 20, sobbed in the arms of her father. "I really do hope this helps promote bus safety," she said.

Attorneys for King County had argued that the driver behind the wheel of the Rainier Valley-bound No. 7 did not see the assaults on the articulated bus on May 22, 2005. However, while the driver testified that he did not see the beating, his trial testimony was inconsistent with the report he filled out the night of the incident and his testimonial account was disputed by witnesses from the bus.

Ken Friedman argued that the driver was to blame. "The driver could have called for backup or advice when he saw the rowdy group trying to board. He could have called for police help once the beatings began. He has an emergency button that he can press and police would have come at once. Instead, he did nothing."

Rollins and Hendershott were both 17 and dating at the time. They boarded the bus just after midnight with another friend. Rollins had just gotten off work at a movie theater. She noticed a raucous group waiting as the bus approached the Rainier Avenue-Alaska Street stop. The driver stopped and the group, described by the plaintiffs as about 30 male and female youths shouting profanities and exchanging punches, boarded the bus.

According to testimony, one of the men moved next to Rollins and caressed her leg, then others, including one who said he had a gun. They then began calling the couple names. Just before the bus made its next stop at South Graham Street, Rollins testified, the group "jumped" her and her boyfriend, threatening to rape her, and punched both of them in the face. The assault continued as the bus traveled through downtown Seattle. When the bus finally stopped, the driver opened all the doors and the group dragged the couple out through the rear door. The beatings continued just outside the bus until the couple's friend called 911 from a cell phone, and the bus drove away. When police arrived (only two minutes after the call) the bus had already left the stop. The assailants also were gone. No one was ever arrested.

The jury trial and resulting verdict were well covered by the SEATTLE TIMES. The story was reported by Natalie Singer and was featured on the front page during trial and after the verdict. It was also the subject of a lead editorial the week following the verdict. See the following links to the Seattle Times stories: