The Check Has Arrived!

You know that there has been a successful resolution once you receive the check.  It arrived yesterday.  Finally, this frustrating VA experience can be tucked away in storage.

THE LIEN HAS BEEN WITHDRAWN!

It has been a frustrating couple of months, but the Veteran's Adminstration has withdrawn it's lien claim against my client's uninsured motorist settlement.  I have to give props to the AAA adjuster, David Flinn, who, having accepted my view of the law, in the last couple of days actively contacted the VA and their local counsel to withdraw the lien.  This morning, he received a faxed confirmation that the lien has been withdrawn and he has already ordered a new settlement check to be issued without the VA listed as a payee.

I might add that this is more than a victory for my client.  Hopefully, any pending uninsured motorist claims that AAA has with VA liens that have been asserted will be reviewed and the VA told where they can put their liens.  This should save hundreds if not thousands of veterans a lot of money.

SHAME ON THE VETERANS ADMINISTRATION!

I represent a client that recently settled a personal injury claim, and a check in the file, but I cannot deposit it. You may ask, "Why?" That is an excellent question. I have been asking myself the same thing. A little history about the case is in order.

My client (I will refer to him as "Mr. X"), a veteran, was injured in an automobile accident about 2 years ago. Some of his medical care was through the local VA Hospital. It turned out that the other driver was uninsured, so we made a claim against his own insurance carrier, under the uninsured motorist provisions of his policy. The case settled about a month ago. Although I was aware that the VA had provided some medical services to Mr. X, I was not aware that the Department of Veteran Affairs had contacted Mr. X's insurance carrier and asserted a lien against the recovery. Mr. X signed the release which was sent to Mr. X's insurance carrier and, after a week or two, Mr. X's insurance carrier sent the settlement check to my attention. To my dismay, the Department of Veteran Affairs was listed as a payee on the settlement check in addition to Mr. X and myself as attorney of record. I contacted Mr. X's insurance carrier and demanded that they remove the Department of Veteran Affairs as a payee and issue a replacement check because, according to my research, the Department of Veteran Affairs is not entitled to make a claim against a veteran's uninsured motorist coverage. They only have a right to make a claim against the Third Party (negligent uninsured motorist) or that person's liability insurance carrier.

THE LAW

The relevant statute is the Federal Medical Care Recovery Act (FMCRA) 42 U.S.C. §2651. The FMCRA states, in part: "... the United States shall have a right to recover (independent of the rights of the injured or diseased person [emphasis added]) from said third person, or that person's insurer, the reasonable value of the care and treatment so furnished..."

As noted, FMCRA does not provide for a right to make a claim against uninsured motorist coverage because that is first-party insurance, not third-party insurance. Furthermore, as noted in the parenthesis, that right is independent of the rights of the injured person.

The FMCRA was a response by Congress to a decision by the United States Supreme Court in United States v. Standard Oil Co., 332 U.S. 301, 67 S.Ct. 1604 (1947), where the government argued that it was entitled to recover its expenditures because the negligence of third parties tortuously interfered with the relationship between the government and its employees. The Supreme Court rejected this argument, reasoning that federal law is the sole basis for interpreting the legal relationship between servicemen and the government and no federal law existed to sustain such a claim.

There have been a number of appellate cases that have interpreted the limits that FMCRA gives to the VA:

In Government Employee Insurance Company v. Roman David Andujar, 773 F. Supp 282 (1991), the Federal Government attempted to assert a lien against an uninsured motorist recovery. The Court reviewed the Federal Medical Care Recovery Act (FMCRA) 42 U.S.C. §2651, and concluded that the government was entitled to assert a lien only against a third party tortfeasor or insurance carrier, not from uninsured motorist coverage, stating:

"The court concludes that the United States is not entitled to any portion of the proceeds of the uninsured motorist coverage. In its brief, the United States argues that the "appropriate consideration [in deciding this motion] is whether the United States qualifies for consideration as an insured person under the policy." By the express terms of the policy, the United States is not an insured or a third party beneficiary. Cf. Allstate Ins. Co., 573 F. Supp. at 145_46 (United States' third party beneficiary claim inconsistent with provisions of state statute). Under the arguments advanced by the United States, it is not entitled to any portion of the proceeds."

In UNITED STATES of America v. Thomas TRAMMEL, et al., 899 F.2d 1483 (1990), where the government appealed from an order of summary judgment denying its claim under the Federal Medical Care Recovery Act ("FMCRA"), in affirming the dismissal, the Court fully discusses what the FMCRA allows and doesn’t allow, to wit:

"Although the government only had a derivative right of subrogation under the original draft of the Act,11 subsequent amendments granted the government the right to sue independently. Currently, the FMCRA expressly permits the government to enforce its right of recovery either by direct legal action or by intervening or joining in any action brought by the injured party against the third_party tortfeasor. [emphasis added] 42 U.S.C. Sec. 2651(b). The independent right to sue, however, does not mean that an independent cause of action exists in all circumstances. The FMCRA states:

"In any case in which the United States is authorized or required by law to furnish hospital, medical, surgical, or dental care and treatment ... to a person who is injured or suffers a disease, after the effective date of this Act, under circumstances creating a tort liability upon some third person ... to pay damages therefor, the United States shall have a right to recover from said third person [emphasis added] the reasonable value of the care and treatment so furnished."

EVEN THE VA'S PRACTICES AND PROCEDURES DOCUMENTATION CONFIRMS THERE IS NO RIGHT TO MAKE A CLAIM AGAINST UNINSURED MOTORIST COVERAGE:

II. PRACTICE AND PROCEDURE, B. REMEDIES, Section 16, states:

"Where definition of "insured" in insurance policy for coverage against uninsured motorist coverage includes only named insured and his relatives and residents of his household, and other persons while in or upon, entering into or alighting from owned automobile, United States could not recover [emphasis added] for medical expenses from insurance carrier as "insured" party. United States v Allstate Ins. Co. (1969, ND Fla) 306 F Supp 1214."

On the next page it states:

"U.S. has no direct right to proceeds of deceased victim’s uninsured motorist policy under 42 USCS § 2651, where uninsured motorist collided with victim’s car due to motorist’s negligence, Army hospital provided $76,155.29 in medical care for victims as required by law, but victims and motorist all died anyway due to severe injuries from crash, because § 2651 provides U.S. with right to recover only from tortfeasor. [emphasis added] Government Employees Ins. Co. v Andujar (1991, DC Kan) 773 F Supp 282."

CONCLUSION

All of my communications regarding the lien were with a paralegal at the local office of the Department of Veteran Affairs. When I contacted the Assistant Regional Counsel, he was completely unfamiliar with the law and told me "the paralegals run the program."  I have since written to the General Counsel of the Department of Veteran Affairs in Washington, DC and am awaiting a response. I hope he will do the right thing and straighten this out. When I hear back, I will post a copy of his response.

Gordon A. Glenn
09/09/2011

WHY NOTARIES NEED THUMBPRINTS!

As some of you may know, I am also a Notary Public.  I have been asked, on occasion, why I request a thumbprint from every signer.  The simple answer is that it is just another level of security to insure that the person signing is who they say they are.  It deters impostors from trying to commit fraud, because they will be reluctant to leave behind evidence that could link them to a crime.  Furthermore, recording the thumbprint for every signer also protects the Notary if the notarization is ever contested.  Surprisingly, California and Illinois are the only states with any kind of thumbprint requirement.  I expect this practice will gain a lot of traction and will be adopted by most states in the coming years.

Is Your Insurance Carrier Wrongfully Refusing Payment To You?

Quite often, I get calls from prospective clients wanting to know if their insurance carrier is acting in bad faith.  This is quite different from just a genuine dispute over liability or how much the claim is worth.  Sometimes, a refusal to pay a claim is reasonable in light of the circumstances.  But, inherent in all insurance contracts is a covenant to act in good faith.  An unreasonable denial of a claim, either based on liability or the amount of the damges, can be an act of bad faith.

It is well known that an insurance carrier has an obligation, implied in its contract with its insured, to act in good faith in all dealings, including investigation of claims. An insured depends on the peace of mind that comes with purchasing of a health insurance plan. When an insurance carrier fails in its obligations, the insured suffers the foreseeable consequences of not just unexpected out of pocket expenses, but the peace of mind that was bargained for. An insurance carrier must put its insured, at a minimum, in as much regard as itself, if not more so.

ESTABLISHING BAD FAITH

When talking of insurance bad faith, it inevitably requires a breach of the insuring agreement, the contract. There are certain elements that are common to all first party bad faith causes of action:

A. REQUIREMENTS

In the California Practice Guide — Insurance Litigation, Sections 12:822, it states:
"In General: To establish "bad faith" liability in first party cases, plaintiffs must show:

• Standing to sue: Plaintiffs must be an insured or express beneficiary under the insurance contract;
• Proper defendants: Privity of contract must exist between the plaintiff and defendant insurer;
• Benefits due: The insurer's withholding of benefits due under the policy, and;
• Unreasonableness: The insurer's withholding of benefits was "unreasonable" or "without proper cause" under the circumstances.

B. WHAT IS UNREASONABLE?

The following conduct by an insurance company has been held admissible to show it acted "unreasonably"[California Practice Guide — Insurance Litigation, Section 12:847]:

• Failure to investigate claim thoroughly;
• Failure to evaluate claim objectively;
• Unduly restrictive interpretation of claim form;
• Using improper standards to deny claim;
• Unreasonable delay in payment of claim;
• Dilatory claims handling;
• Deceptive practices to avoid payment of claim;
• Abusive or coercive practices to avoid payment of claim;
• "Postclaim underwriting";
• Other disregard for the insured's rights;
• Unreasonably low settlement offers;
• Unreasonable litigation or litigation tactics to avoid payment of claim.

Assuming bad faith is established, the insured is entitled to all the damages that he/she suffered as a result of the breach of contract and this also includes damages for emotional distress caused by the willful refusal to pay the underlying claim. There is no requirement that the insured show significant financial loss as a result of the carrier's conduct. It should be sufficient that the insured incurred attorney fees, had to make payments to medical providers out of savings and stocks, and any other foreseeable financial effects to qualify for emotional distress damages. In addition, the law is clear that if there is a finding of despicable conduct, malice or criminal intent, punitive damages may be awarded as well.

The above is not meant as a complete dissertaion on the entire topic of insurance bad faith, but is a good guideline to at least begin the process of understanding whether such a claim does exist.  If you think you have a potential insurance bad faith claim, contact me, Gordon A. Glenn, Esq., at (619) 285-8191 to set a free consultation.

 

Is A Class Action The Best Way To Go?

Today, June 20, 2011, the U.S. Supreme Court ended the class action status for a discrimination suit against Wal-Mart.  Below is a link to an article discussing the ramifications:

Supreme Court Decision in Wal-Mart Class-Action Claim Brings Praise, Anger

Frankly, class action suits can, and do, provide the potential for a large fee for the lawyer(s) representing the class, but the members of the class, generally, don't do so well.  On their own, they may do a lot better. A case in point is the bad faith claim I brought for a client against Blue Cross.  Read about it below:

Bad Faith Claim Vs. Blue Cross of California

We were proceeding alone while a firm in Los Angeles was representing a class of insureds for the same type of claim.  On our own, we won a $900,000 award against Blue Cross.  The class action settled a couple of months later.  The class members may have received recompense for the unpaid medical bills, but my client ended up with substantially more than any of the class members.  Quite often, class action claims do not make any sense for the victims.