The Appellate Strategist

The Appellate Strategist

Insights on appellate issues, trial consultations, and evaluating appeals

Illinois Supreme Court Holds Fees and Costs Not Deductible From Health Care Lien

Posted in Illinois

6019647611_ee54e77128_zYesterday, a unanimous Illinois Supreme Court resolved an important question for the health care industry. In an unanimous opinion by Justice Mary Jane Theis, the Court held in McVey v. M.L.K. Enterprises, LLC that a health care provider’s lien on a tort recovery cannot be reduced by a share of attorneys’ fees and costs before being distributed. Our detailed summary of the facts and lower court opinions in McVey is here. Our report on the oral argument is here.

McVey began when a waitress at a restaurant owned by the defendant dropped a tray of drinks on the plaintiff’s foot. Plaintiff settled the resulting lawsuit for $7,500. The plaintiff filed a petition to adjudicate liens, but ultimately only the hospital which treated the plaintiff appeared at the hearing.

Although the hospital’s lien was $2,891.64, all parties agreed that it was limited to a maximum recovery under the lien statute of $2,500 – one third of the plaintiff’s recovery. In resolving the motion to adjudicate liens, the trial court acknowledged that the Fifth District’s decision in Stanton v. Rea required that, in order to ensure that the plaintiff received the statutory minimum of 30% of the recovery, fees and costs be deducted before the judgment is allocated. However, the court concluded that Stanton was inconsistent with the Supreme Court’s decision in Wendling v. Southern Illinois Hospital, and the court declined to follow the Fifth District’s decision. The Appellate Court reaffirmed Stanton and reversed.

The Supreme Court reversed the Appellate Court. The Court emphasized that each and every time the statute described the calculation of the hospital’s lien, the statute referred to the “verdict, judgment, award, settlement or compromise” – with no mention of any deduction for fees and costs. The Court commented that its holding was consistent with Wendling, which also involved hospital liens. In Wendling, the lower courts had concluded that the hospital’s lien should be reduced by one third to account for fees and costs pursuant to the common fund doctrine. The Supreme Court held that the plaintiffs’ attorneys had not recovered the fund for the benefit of the hospital, and therefore, there was no basis for deducting fees. The same was true in McVey, the Court held – there was no basis for concluding that the plaintiff’s counsel had recovered the fund for the benefit of the hospital, so there was no reason to require the hospital to bear a portion of the costs of the suit.

Image courtesy of Flickr by Bill McChesney.

Florida High Court to Examine the Scope of a Psychotherapist’s Legal Duty to Prevent an Outpatient’s Suicide

Posted in Florida

3248483447_95d2e9957a_z

The Florida Supreme Court has accepted review of Granicz v. Chirillo, 147 So. 3d 544 (Fla. 2d DCA 2014), where the Second District reversed a summary judgment in favor of a psychotherapist, finding that plaintiff’s expert testimony established that the psychotherapist owed a legal duty to prevent his outpatient’s suicide.  See Chirillo v. Granicz, No. SC14-898.

This case arises from the suicide of Jacqueline Granicz, who had been treated for depression as an outpatient by Dr. Joseph S. Chirillo, Jr. beginning in 2005.  In October 2008, Jacqueline called Dr. Chirillo’s office and reported that for about four months “she had not felt right”, was under mental strain and crying easily, was not sleeping well, and was having gastrointestinal problems.  Jacqueline attributed these problems to her current antidepressant medication and told Dr. Chirillo’s office that she had stopped taking it.  Dr. Chirillo changed Jacqueline’s medication and referred her to a gastroenterologist, but did not insist that she schedule an appointment with him.  The next day Jacqueline committed suicide.

Jacqueline’s husband, Robert Granicz, as personal representative of Jacqueline’s estate, sued Dr. Chirillo, alleging that he breached his duty of care in treating Jacqueline.  Dr. Chirillo moved for summary judgment arguing that he did not owe a duty to Jacqueline as a matter of law to prevent her from committing an unforeseeable suicide while not in his control.  To oppose the motion, Granicz filed the depositions of two experts who testified that the standard of care required Dr. Chirillo to see Jacqueline, assess her condition to determine if she was having thoughts of suicide, and to intervene if necessary.  The trial court granted entered final summary judgment against Granicz based on its finding, as a matter of law, that Dr. Chirillo did not owe a duty to prevent the unforeseeable suicide of an outpatient.

The Second District reversed.  It found that the trial court in determining whether a duty was owed should have focused broadly on whether “whether the [Dr. Chirillo’s] conduct created a foreseeable zone of risk,” instead of whether Dr. Chirillo could foresee the specific injury that actually occurred.  Applying this “foreseeable zone of risk” test, which derives from the Florida Supreme Court’s landmark decision in McCain v. Florida Power Corp., the Second District concluded that Granicz’s expert testimony established that Dr. Chirillo owed a legal duty to Jacqueline that precluded summary judgment.  The Second District, however, recognized that its decision conflicts with that of the First District in Lawlor v. Orlando, 795 So. 2d 147 (Fla. 1st DCA 2001).

The parties have completed their briefing in the Florida Supreme Court and oral argument is scheduled for September 2, 2015.

Image Courtesy of Flickr by Sean McGrath

Florida High Court to Decide When a Trial Court May Set Aside a Default Judgment

Posted in Florida

16630286757_669a03b225_z

On April 9, 2015, the Florida Supreme Court held oral argument on Santiago v. Mauna Loa Investments, LLC, No. SC13-2194 (review granted May 22, 2014), which will require the Court to clarify the scope of a trial court’s review of an allegedly deficient complaint when determining whether to set aside a default judgment.

Anamaria Santiago leased commercial space from Mauna Loa Investments, LLC.  Santiago tripped and fell on the property in 2008 and sued Mauna Loa two years later in 2010.  Santiago alleged that Mauna owned, maintained and/or controlled the property at the time of her fall.  Mauna’s counsel never filed a responsive pleading and the trial court entered a default against Mauna.  Mauna moved to set aside the default arguing that it did not own the property on the date of Santiago’s injury.  In support of its argument, Mauna noted that in 2011 Santiago sued Iberia, NV, LLC seeking damages for the same injury.  In that suit, Santiago alleged that at the time of the accident, Iberia and Antonio Martinez-Marmol owned the property and that the property was conveyed to Mauna three months after the accident.  Shortly after the Iberia suit was filed, the trial court consolidated the Iberia case with the Santiago case.  After a jury trial on damages, the trial court entered a final judgment against Mauna for over $1 million.

Mauna appealed to the Third District.  The Third District vacated the default and the final judgment and dismissed the complaint for failure to state a claim upon which relief may be granted.  The Court rested its conclusions on two rules of law.  First, a default judgment cannot be entered against a defendant when the complaint fails to state a cause of action.  And second, a motion to set aside a default requires no showing of excusable neglect when the motion demonstrates that the allegations in the complaint do not entitle the plaintiff to relief.  The facts demonstrated that Santiago had no viable claim against Mauna because the special warranty deed attached to the Iberia complaint established that Mauna did not own the property on the date of Santiago’s injury.  Santiago also admitted that Iberia owned, controlled and maintained the property at that time.  To view the district court decision, which is reported at 122 So. 3d 520 (Fla. 3d DCA 2013), click here.

The Florida Supreme Court accepted review because the district court’s decision conflicted with other Florida decisions.  In support of conflict review, Santiago argued that the Third District’s decision ignored several fundamental principles of Florida law and procedure including:  (1) a court may not look beyond the four corners of a complaint when determining whether the complaint states a cause of action; (2) in looking beyond the complaint, the Third District ignored that:  (a) a plaintiff may plead claims in the alternative, and (b) consolidated actions are not merged so as to incorporate the allegations of one action into the other; and (3) the Third District granted relief based on an argument the appellant failed to argue below and presented for the first time on appeal.

At oral argument, the supreme court was troubled by the Third District’s use of the deed attached to the Iberia complaint to determine that the Santiago complaint failed to state a cause of action.  The Court also repeatedly noted that the Third District’s focus on ownership alone to find that no duty existed was “fallacious” because maintenance and control could have given rise to a duty and a single deed is not conclusive proof of property ownership.

This article will be updated once the Court decides this case.

Image Courtesy of Flickr by GotCredit

 

Florida High Court Set to Clarify When an Insured Is Entitled to Attorneys’ Fees When an Insurer Initially Denies a Sinkhole Claim

Posted in Florida

4328053801_fff3e59529_m

On April 15, 2015, the Florida Supreme Court accepted review of Omega Insurance Co. v. Johnson, No. 5D13-1701, 2014 WL 4375189 (Fla. 5th DCA Sept. 5, 2014), which found that an insured was not entitled to an award of attorneys’ fees under section 627.428, Florida Statutes and the confession of judgment doctrine based on an insurer’s post-suit tender of policy benefits for a sinkhole claim after the insurer initially denied the claim.  See Johnson v. Omega Ins. Co., No. SC14-2124.

Omega Insurance Co. issued to Kathy Johnson a homeowner’s policy that contained a provision for sinkhole damage coverage.  When Johnson noticed structural damage to her home, she filed an insurance claim with Omega, asserting that the damage was caused by sinkhole activity on the property.  Omega investigated the claim in accordance with chapter 627 by retaining a professional engineering and geology firm to conduct testing.  The firm’s report concluded that sinkhole activity was not a cause of the damage to Johnson’s property.  Based on the report, Omega denied Johnson’s claim.  Instead of availing herself of the right to participate in a neutral evaluation program, Johnson retained a civil engineering firm to evaluate the cause of the damage to her home.  Johnson’s firm found that sinkhole activity did cause the structural damage.

Johnson then filed suit against Omega for failing to pay her policy benefits.  Upon motion by Omega, the trial court stayed the litigation to allow a neutral evaluation to take place.  The neutral evaluation report agreed with the report issued by Johnson’s firm.  Upon receipt of the report, Omega paid the policy benefits.  Johnson then moved for an award of attorneys’ fees under section 627.428, Florida Statutes which provides that “[u]pon the rendition of a judgment or decree  . . . against an insurer and in favor of any named . . . insured . . . under a policy or contract executed by the insurer, the trial court . . . shall” award the insured its reasonable attorneys’ fees.  Based upon the confession of judgment doctrine, which equates an insurer’s tender of policy benefits or a settlement agreement with a “judgment” under § 627.428, the trial court granted the motion.

Omega appealed and the Fifth District reversed, finding that Omega’s initial denial was not wrongful or unreasonable.  The Court’s conclusion was buttressed by several facts:  (1) Omega complied with its statutory obligations under chapter 627 by retaining an engineer to identify the cause of loss and issue a report; (2) The report, which is presumed correct by statute, found that sinkhole activity was not the cause of the damage; (3) Before filing suit, Johnson failed to present her countervailing report to Omega, failed to at least notify Omega that she disagreed with its report or failed to further attempt to discuss her claim with Omega.

This article will be updated once the Court decides this case.

Image Courtesy of Flickr by Seattle Municipal Archives

Unanimous Illinois Supreme Court Strikes Down State Public Pension Reform Act

Posted in Illinois, Pension Reform Litigation

13633022513_eb04353de8_z(1)As we predicted, the Illinois Supreme Court has unanimously struck down the state Public Pension Reform Act. The Court’s opinion was written by Justice Lloyd Karmeier.

We’ve written extensively about the background of the pension debate and the legal issues involved over the past year. For a guide to our previous posts, both here and at the Illinois Supreme Court Review, click here.

The State of Illinois’ five public pension systems have been severely underfunded for generations. The problem hasn’t been caused by a shortfall in employee contributions; the General Assembly has failed, again and again, to make the required contributions. As the Court points out, the shortfalls were apparent as long ago as the Report of the Illinois Pension Laws Commission in 1917. Subsequent Commissions warned of the likely consequences of perpetual underfunding again in 1947 and 1969.

It was “[c]oncern over ongoing funding deficiencies and the attendant threat to the security” of Illinois’ public employee retirees which led directly to the adoption of the Pension Protection Clause by the 1970 Constitutional Convention. That clause provides: “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”  According to the Court, the meaning of the Clause is crystal clear: “That article XIII, section 5, created an enforceable obligation on the State to pay the benefits and prohibited the benefits from subsequently being reduced was and is unquestioned.”

The General Assembly’s ongoing failure to adequately fund the pension system comes in for extended criticism in the Court’s opinion. As the Court points out, a 1982 report of the Securities and Exchange Commission characterized the legislature’s funding approach as having “no relation to actuarial calculation.” The legislature enacted another funding plan in 1989, “but it failed as well.” The legislature tried again in 1995, but that plan contained “inherent shortcomings” which led directly to the explosion in pension obligations around the time of the Great Recession.   The SEC determined that the State was well aware of the adverse implications of its strategy, and the State’s chronic underfunding was the “primary driver” of an increase in the State’s unfunded liability between 1996 and 2010 of $57 billion, even though “[s]everal neighboring states” attained “far higher funding rates . . . during a similar time frame.” By July 1, 2013, the five state-funded systems contained only 41.1% of the funding needed to pay their liabilities.

The Pension Reform Act of 2013 was the legislature’s latest response to the long-running crisis. The bill attempted to reduce the unfunded liabilities in five ways: (1) delaying by up to five years the date on which employees under the age of 46 can begin receiving benefits; (2) capping the maximum salary that may be considered in calculating a retirement annuity; (3) discarding the system of automatic cost-of-living increases in favor of variable (and lesser) increases; (4) completely eliminating between one and five annual increases depending on the age of the employee; and (5) altering hiow the base annuity amount is calculated for purposes of what is known as the “money purchase” formula.

Five actions were filed challenging the constitutionality of the Act. The principal grounds cited were that the Act violated the Pension Reform Clause, but various complaints also argued that the bill violated the Contracts Clause and the Takings Clause. The Circuit Court granted the plaintiffs’ joint motion for partial summary judgment and invalidated the Act in its entirety on the grounds that it violated the Pension Protection Clause. Because the court had struck down a state statute, the appeal was taken directly to the Supreme Court pursuant to Supreme Court Rule 302.

The first issue – whether the Act violated the Pension Protection Clause – was “easily resolved,” according to the Court. The Clause “means precisely what it says,” the Court wrote: pension benefits are a contractual relationship, and they cannot be diminished. Thus, once an individual begins working for the State, subsequent changes to the Pension Code which have the effect of diminishing the benefits of membership in the Pension System cannot be applied to that individual. “[T]here is simply no way” to reconcile the Act with the Clause, the Court held. “In enacting the provisions, the General Assembly overstepped the scope of its legislative power.”

The Court then turned to the principal focus of the State’s defense of the Act, the State’s claim that the protection of the Clause was subject to an exception under the State’s police power. The Court emphatically rejected the State’s argument. As long ago as 1932, the Court pointed out, it had held that “any departure from the law is impermissible unless justification for that departure is found within the law itself. Exigent circumstances are not enough.”

The State argued that since the Clause makes membership in the Pension system a contractual relationship, benefits are subject to diminishment through the police power under the same circumstances that ordinary contracts are. The Court disagreed. First, pension benefits were not merely protected by the Contract Clause – the 1970 Constitutional Convention had rejected a proposal that pension benefits should solely be protected by the language of the Contract Clause. The Court pointed out that it had long ago rejected the proposition that there was an unstated police power exception to the Pension Clause in Felt v. Board of Trustees. Second, “legislation impairing contracts has actually been upheld against contract clause challenges only rarely.” This was particularly true, as the United States Supreme Court has recognized, when the obligation at issue was purely financial. “If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose,” the court wrote, “the Contract Clause would provide no protection at all.”

Although the State had argued during the appeal that it was entitled to a remand to demonstrate the gravity of the financial emergency, the Court held that “it is manifest” that the State could not possibly make the showing which would be necessary to validate the Act, even if a police power exception existed. “[O]ur economy is and always has been subject to fluctuations,” the Court wrote. The possible consequences of chronic underfunding of the pension systems have been well known for decades. “[T]he funding problems which developed were entirely foreseeable.” The State could not claim that alternatives were unavailable; as one Senator pointed out during the debate on the Act, the State could have adopted a new schedule for amortizing the unfunded liabilities, or increased taxes. Thus, the Act wasn’t a last-ditch necessity, in the Court’s view, “it was an expedient to break a political stalemate.”

The United States Constitution forbids “Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,” the Court wrote. The legislature made no effort in approving the Act to “distribute the burdens evenly among Illinoisans. It did not even attempt to distribute the burdens evenly among those with whom it has contractual relationships.”

The State argued that finding that the Clause is not subject to a police powers exception amounts to holding that the State has surrendered its sovereign authority, “something it may not do.” In frequently eloquent terms, the Court rejected the State’s claim. The sovereign authority rested in the people of Illinois, the Court noted (a point which Justice Karmeier alluded to during oral argument). The expression of that sovereign authority is found in the Constitution, and the legislature “cannot enact legislation that conflicts with provisions of the constitution unless the constitution specifically grants it such authority.” The people surrendered none of their sovereign authority through the Pension Protection Clause, the Court held. Rather, they “simply withheld an important part of it from the legislature because they believed, based on historical experience, that when it came to retirement benefits for public employees, the legislature could not be trusted with more.”

“[T]here simply is no police power to disregard the express provisions of the constitution,” the Court held. Otherwise, “[n]o rights or property would be safe from the State. Today it is nullification of the right to retirement benefits. Tomorrow it could be renunciation of the duty to repay State obligations. Eventually, investment capital could be seized. Under the State’s reasoning, the only limit on police power would be the scope of the emergency.”

“Adherence to constitutional requirements often requires significant sacrifice,” the Court concludes, “but our survival as a society depends on it.” The commands of the Constitution apply just as much in times of crisis as at all other times:

Crisis is not an excuse to abandon the rule of law. It is a summons to defend it. How we respond is the measure of our commitment to the principles of justice we are sworn to uphold . . . Obliging the government to control itself is what we are called upon to do today. The Constitution of Illinois and the precedent of our court admit of only one conclusion: the annuity reduction provisions of Public Act 98-599 . . . violate article XIII, section 5.

Today’s decision, written by one of the Court’s three Republican members, is likely to create a political firestorm in Illinois.

Image courtesy of Flickr by David Wilson.

Florida High Court Overturns Summary Judgment for Defendant School Board, Deciding it Owed Common Law Duty to Student Athlete

Posted in Florida

10373593623_0f57221641_zOn April 2, 2015, the Florida Supreme Court quashed the Second District Court of Appeal’s decision in Limones v. School District of Lee County, 111 So. 3d 901 (Fla. 2d DCA 2013), and held that the school district owed a common law duty to supervise a student athlete who collapsed during a high school soccer game and that, once injured, the school district owed the student a duty to take reasonable measures and come to his aid to prevent aggravation of his injury.  To read the opinion, click here.

This case arises from the collapse of a high school athlete, Abel Limones, on the field during a soccer game.  When Abel stopped breathing and had no pulse, his coach and a nurse bystander performed CPR, but Abel was not resuscitated until emergency personnel arrived and used an automated external defibrillator (AED).  Abel suffered severe and permanent brain damage and his parents sued the school district, alleging that it was negligent in failing to maintain an AED on or near the soccer field, in failing to make it available for use, and in failing to actually use an AED on Abel.  The trial court determined the school district did not have a duty to make available, diagnose the need for, or use an AED and that, even if it did, the school district was statutorily immune from liability.

On appeal, the Second District affirmed the trial court’s decision, noting that while Florida courts had not addressed a school district’s duties in this context, the Fourth District in L.A. Fitness v. Mayer concluded that a business owner does not have a common law duty to provide CPR or maintain or use an AED when a business invitee collapses while exercising at the owner’s facility.  The Second District therefore determined that neither the undertaker’s doctrine nor section 1006.165, Florida Statutes, imposed a duty to use an AED on Abel and found that the school district was immune from civil liability under section 768.1325(3), Florida Statutes (2008).

The Florida Supreme Court, however, rejected L.A. Fitness as controlling, finding that the adult customer and the health club stand in a far different relationship than a student and a school district. Florida has mandated the education of minor children, which creates a unique relationship and which triggers a common law duty to supervise and aid students.  Furthermore, the Florida legislature has specifically mandated that high schools that participate in interscholastic athletics acquire an AED and train appropriate personnel in its use.

The Court also found that the Second District incorrectly invaded the province of the jury when it considered whether a post injury effort required the school district to make available, diagnose the need for it, or use the AED on Abel. Florida courts have recognized a special relationship between schools and their students based upon the fact that school functions at least partially in the place of parents during the school day and school sponsored activities.  This duty to supervise requires teachers and other school employees to act with reasonable care under the circumstances. Therefore, it is for the jury to determine whether, under the relevant circumstances, the school employee has acted unreasonably, and therefore, breached the duty owed.

Lower courts in Florida have recognized that the duty of supervision creates the following specific duties owed to student athletes:  1) schools must adequately instruct student athletes; 2) schools must provide proper equipment; 3) schools must reasonably match participants; 4) schools must adequately supervise athletic events; and 5) schools must take appropriate measures after a student is injured to prevent aggravation of the injury.

In this case, Abel was a student who was injured while he participated in a school sponsored soccer game under the supervision of school officials.  Therefore, the school district owed Abel a duty of supervision and to act with reasonable care under the circumstances; specifically, the school district owed Abel a duty to take appropriate post injury efforts to avoid or mitigate further aggravation of his injury.

Having concluded that the school district owed Abel a common law duty, the Court then looked to whether the school district was immune from suit under Florida Statutes § 768.1325.  Known as the “Cardiac Arrest Survival Act,” this statute provides that “any person who uses or attempts to use an [AED] on a victim of a perceived medical emergency … is immune from civil liability for any harm resulting from the use or attempted use of such device” and that “any person who acquired the device and makes it available for use … is immune from such liability.”  The Court held that this statute creates two classes of parties that may be immune from liability arising from the misuse of an AED:  users (actual or attempted) and acquirers.  However, acquirers are only entitled to immunity if an AED is actually used or attempted to be used.  Because an AED was not used or attempted to be used in this case, the Court found that the school district was not entitled to immunity under § 768.1325.   The Court quashed the decision of the Second District granting summary final judgment in favor of the school district.

Justice Canady wrote a dissenting opinion in which he stated that the Court did not have jurisdiction to review the case.

Image courtesy of Flickr by Faungg’s Photos.

Illinois Supreme Court Debates Tort Duty of Care for 911 First Responders

Posted in Illinois

8665869054_54c9a0fc32_zIn the closing days of the March term, the Illinois Supreme Court heard oral arguments in Coleman v. East Joliet Fire Protection District, a case from the Third District. Coleman poses the question of whether public entities and their employees owe a tort duty of care to callers to 911 emergency lines. Our detailed summary of the facts and court decisions in Coleman is here.

The plaintiff’s decedent called 911 one evening in 2008. The call was transferred from the county 911 operator to the local fire district dispatch center. The first dispatcher tried to ask the decedent some questions, but received no answer. Ultimately, he hung up and tried to call back twice, receiving a busy signal both times. When the ambulance arrived at the house, no one answered. The paramedics asked the fire dispatcher to call the decedent, but received no response. Neighbors of the decedent attempted to reach the residence, and when they were unable to, they called 911 too. Another ambulance was dispatched, but that ambulance received no answer at the house either. While that ambulance was preparing to force entry, the decedent’s husband arrived home and let them in. The decedent was found unresponsive, and she was later pronounced dead at the hospital. The plaintiff filed claims for wrongful death and survival. The defendants successfully moved for summary judgment, and the Appellate Court affirmed.

Counsel for the plaintiff began the argument, arguing that the defendants had a tort duty under both the EMS Act and the ETS Act, as well as for other reasons. Counsel argued that it made no sense for the legislature to provide for a cause of action for willful and wanton conduct if the first responders owed no duty to patients under any circumstances. Justice Theis asked whether the EMS Act was an immunity statute – wasn’t duty something different from immunity? Counsel answered that the legislature wouldn’t have provided for immunity if there wasn’t a duty – you wouldn’t need it. Justice Thomas asked what the Court should do with Zimmerman v. Village of Skokie – it would seem that the Court addressed the continued viability of the public duty doctrine there. Counsel responded that in Zimmerman, the plaintiff wanted to take advantage of the special duty exception to override what the legislature had done with the Tort Immunity Act. Here, the opposite situation existed. Justice Thomas suggested that Zimmerman gave a principled analysis of why the public duty rule had survived the abolition of sovereign immunity as well as the Tort Immunity Act – wouldn’t that rationale apply here? Counsel responded that in fact, the Court hadn’t addressed head on whether Illinois still recognized the public duty rule. Instead, the Court decided based on the Tort Immunity Act. Justice Thomas said that was where Justice Theis was coming from regarding the distinction between duty and immunity. Counsel answered that his position was that unless a duty is created under the Acts, there is no need for immunity. Even if that weren’t so, counsel argued, the defendants were all volunteers. In order to determine that issue, one looked not to the employment status of the defendants, but rather to the scope of their undertaking. Justice Theis asked counsel whether he was arguing that the duty arose from the Acts, or from the traditional four-part common law test for duty. Counsel argued that the duty flowed from both sources. When the paramedics called their dispatcher and reported that there was no patient without a factual basis for doing so, the paramedics became volunteers. Likewise, dispatchers went further than they were required to when they called the next jurisdiction with the information. The Chief Justice asked whether the dispatcher was under a duty to transfer the call. Counsel answered that at some point, the dispatcher had exceeded her duty, increasing the risk of harm to the plaintiff. Justice Karmeier asked when the voluntary duty started. Counsel answered when the dispatcher called Orland Park rather than merely transferring the call. Justice Karmeier asked whether Orland Park staff were volunteers when they received the call. Counsel answered that Orland Park was a harder case. Justice Thomas asked whether voluntary undertaking was applicable when a defendant had a legal obligation to perform. Counsel answered that the issue was whether a defendant had gone beyond the scope of his or her undertaking. Justice Thomas asked whether there was a distinction between doing what the plaintiff was supposed to do in a negligent fashion and a voluntary undertaking. Counsel answered yes.

Counsel for the county and dispatcher followed. Counsel argued that the dispatcher hadn’t performed a voluntary undertaking in responding to calls because that is her job – the statute speaks of both a transfer method and a relay method. Counsel argued that abolition of sovereign immunity impacted only one side of the analysis. Justice Theis asked counsel what was the harm of adopting the four-part test for duty. Counsel answered that uncertainty was the harm – otherwise, there would be hundreds of cases a year.

Counsel for the East Joliet Fire Protection District and the paramedics was next. Counsel argued that given the Tort Immunity Act, there is no tenable argument for a negligence duty. None of the defendants had engaged in a voluntary undertaking – all were merely doing their duty. Justice Theis asked what the need for an immunity was if there was no duty of care. Counsel answered that the Tort Immunity Act applies only to the government, not private EMS employers. The courts cannot be in the business of insuring the well-being of individual defendants. Counsel argued that the legislature has had many years to overrule the Court’s view of the public duty rule, and hasn’t done so – thus implicitly acquiescing in the Court’s view. Counsel wondered how first responders would manage with a regime where duty depended on case-by-case foreseeability. Once a paramedic starts providing treatment, counsel argued, the special duty exception applies, but until then, the public duty rule nearly always blocks a private tort suit.

Counsel for the Orland Park Fire Protection District followed. Counsel argued that one of the most important reasons to keep the public duty rule is to conserve governmental resources. The financial burden of broader tort exposure would require restrictions in emergency services, counsel argued. The public interest isn’t served, counsel argued, by allowing juries, armed with 20-20 hindsight, to second- guess discretionary acts of the defendants. If such an outcome is to be risked, the legislature should make the decision.

The sky didn’t fall in 1969 when sovereign immunity was effectively abolished by statute, plaintiffs’ counsel argued in rebuttal. Safeguards were in place – the need to prove foreseeability, the tort immunity act and the EMS and ETS Acts, limiting liability to willful and wanton conduct. Counsel concluded by arguing that the legislature had imposed a tort duty to locate the patient under the EMS Act, and the Court should not overrule that determination by imposing blanket immunity through the public duty doctrine.

We expect Coleman to be decided in four to five months.

Image courtesy of Flickr by Elliott Brown.

Illinois Supreme Court Appears Skeptical of Wrongful Death Claim Arising From Suicide

Posted in Illinois

15612459540_8ea5fa3110_zEarlier this month, the Illinois Supreme Court heard oral arguments in Turcios v. The DeBruler Company. Turcios poses a simple question: can a plaintiff state a claim for wrongful death arising from a suicide? Our detailed summary of the underlying facts and lower court decisions in Turcios is here.

In April 2011, plaintiff and her husband signed a one-year lease on an apartment. Less than three weeks later, the couple received a notice of eviction giving them 30 days to vacate the premises. Ten days after receiving the notice, they received a letter stating that the building would be demolished in three weeks. The defendant refused to accept a rent payment from plaintiff at the beginning of the next month. A week later, the plaintiff and her husband received another notice saying the building would be demolished.

Three days later, defendant allegedly allowed demolition to begin around plaintiff’s unit. Five days after demolition began, plaintiff’s husband committed suicide in the apartment.

Plaintiffs filed a five count complaint, purporting to allege claims for intentional infliction of emotional distress, wrongful eviction, breach of contract, wrongful death and survivorship. The trial court dismissed the final two counts, holding that there is no claim for wrongful death or survivorship arising from a suicide. The Appellate Court reversed.

Counsel for the defendant began the argument. As a general rule, counsel explained, defendants are liable only for proximately caused injuries. A defendant is only the legal cause of an incident if a reasonable person would see the plaintiff’s circumstances as a natural and probable result of the defendant’s conduct. The court has held that suicide is an independent intervening cause. Here, plaintiff claims that the usual rule doesn’t apply in cases of intentional infliction of emotional distress. The plaintiff cites out of state cases, but in order to recognize the tort, defendant argued, the Court would have to eliminate legal cause as an element of intentional tort cases. Counsel argued that every intentional tort case he’s found requires proximate cause, but the Appellate Court said that it’s only necessary that the emotional distress be proximately caused by the conduct, not the damages. That selective application of the principles isn’t supported by any language in the intentional infliction of emotion distress cases, counsel argued. The Appellate Court relied on Section 46 of the Restatement, according to counsel. But the fact that Section 46 doesn’t mention intervening cause, legal cause or foreseeability doesn’t mean that these concepts don’t apply to intentional infliction of emotional distress. Counsel argued that there were no Illinois cases involving intentional torts where proximate cause hadn’t been applied as an element of the claim. Indeed, the plaintiff’s claim not only failed under Illinois law – it wouldn’t be adequate under the law of any of the alternative states counsel relied upon either. No state in the country would hold that plaintiff’s claim states a cause of action, and the Court should not be the first, counsel argued in closing.

Counsel for the plaintiff followed, arguing that the issue was whether a person who commits intentional wrongdoing will be liable when his or her act causing emotional distress was a substantial factor in causing the plaintiff’s suicide. Many courts have held that there is a significant distinction between persons acting intentionally and negligently, counsel argued. Justice Theis asked counsel whether he was tethering his argument to the tort of intentional infliction. Counsel said yes, the other jurisdictions’ cases did not involve intentional torts. The Chief Justice asked what happens if the victim goes out and hurts someone else – was there transferred liability for that? Counsel said no. So the liability was solely for suicide, the Chief Justice asked? Counsel answered that defendants are not liable for the criminal acts of the victim. The Chief Justice asked what would happen if the plaintiff was so distressed that he or she struck kids in a schoolyard. Counsel answered that at some point, there must be a limit to liability. All these cases involve suicide, counsel argued. Whether the rule goes beyond suicide can be left for another day. Justice Theis asked counsel what the Court should do with Martin v. Heinhold Commodities, Inc., which rejected any distinction between negligent and intentional acts. Counsel answered that Martin had a narrow meaning, applying only to intentional torts such as fraud rather than all intentional torts. Justice Thomas suggested that the Court’s phrase “such as fraud” in Martin was meant to be inclusive rather than exclusive. Counsel answered that the opinion is ambiguous. There is something about fraud, deceit and breach of fiduciary duty requiring a particularly acute connection between actions and damages. Justice Thomas asked whether counsel’s argument rested on how the Court interpreted the language “such as fraud” in Martin – as exclusive or inclusive. No, counsel answered, and here’s why. Counsel argued that no one had ever brought a similar case – an intentional tort followed by a suicide. The Court should take a look at what every other jurisdiction and the commentators have said – that there is a meaningful distinction between negligent and intentional conduct. To the extent that Martin has language foreclosing the plaintiff’s claim, the plaintiff is asking that the Court reconsider. Justice Theis suggested that the four out-of-state cases the plaintiff relied upon set out differing rules. What was the plaintiff proposing? Counsel argued that the issue was as stated in the PLA: whether Illinois should recognize a wrongful death claim where the conduct is a substantial factor in bringing about the suicide. Justice Theis suggested that the out-of-state cases were much more narrow than the plaintiff’s proposed rule, and counsel agreed, although several recognized a distinction between intentional and negligent tort. An intentional wrongdoer, counsel argued, should be liable for whatever happens. Justice Thomas suggested that the plaintiff’s rule would include school bullying, and counsel agreed that it would.

Counsel for the defendant began his rebuttal by arguing that although this was a case of first impression for the interrelation of suicide and intentional infliction, it was not the first case involving suicide and an intentional tort. In Luss v. Village of Forest Park, the Appellate Court applied the suicide rule and held that an intervening cause barred all intentional tort claims. The plaintiff’s cause of action was not sufficient in Illinois or any of the four other jurisdictions plaintiff relied upon. Counsel closed by arguing that the Court should not be the first to recognize a cause of action under such circumstances.

We expect Turcios to be decided in three to four months.

Image courtesy of Flickr by Andy Atzert.

Illinois Supreme Court Debates Whether Attorneys’ Fees Are Charged to Health Care Liens

Posted in Illinois

151980044_4c0b142051_zIn the final days of its March term, the Illinois Supreme Court heard oral arguments in McVey v. M.L.K. Enterprises, LLC. McVey poses a question of considerable importance for tort litigation: must attorneys’ fees and costs be deducted from a tort settlement before a lien under the Health Care Services Lien Act is paid? Our detailed summary of the underlying facts and lower court decisions in McVey is here.

McVey arose from an accident in a bar. After the plaintiff settled her lawsuit, a petition to adjudicate liens was filed by the hospital that treated the plaintiff. The trial court awarded the hospital $2,500, declining to deduct the plaintiff’s attorneys’ fees from the settlement before calculating the lien. The Appellate Court reversed.

Counsel for the health care provider began the argument. Counsel argued that despite the Supreme Court’s clear instruction in Wendling v. Southern Illinois Hospital Services that the common fund doctrine doesn’t apply to health care providers, the Fifth District’s decision in Stanton v. Rea allowed attorneys’ fees to be shifted to health care lien holders on the grounds that Wendling only applies to common fund claims. Counsel argued that the statute is plain and unambiguous – if there are lien holders in a settlement, then the lien holder collects 40%. If the lien holders have liens exceeding 40%, then the Health Care Lien Act applies; if not, it doesn’t. If the Act applies, the gross settlement is multiplied by 40%, and the health care lien holder collects that. Thirty percent goes to the attorney, and the balance goes to the plaintiff. Stanton said that the legislature wanted the plaintiff to be guaranteed thirty percent, and for that to happen, attorneys’ fees must be deducted from every share. Justice Thomas asked if deducting costs and fees from every share means at times that the plaintiff gets less money. Counsel responded that the problem with the Fifth District’s decision is that the Court didn’t pay any attention to the Attorneys’ Lien Act. If one looks at the Act, it specifically says that the lien includes fees, costs and expenses. The Attorneys Lien Act specifically references the Health Care Lien Act, and says if that Act applies, the attorneys’ lien is limited to thirty percent, including costs and expenses. If one applies that rule, the plaintiff always gets thirty percent, which is what the statute calls for. Justice Theis said that counsel was suggesting that the costs are included in the 30% share in the statute – then what happens if the client and attorneys have agreed that the client is to bear the costs? Counsel responded that the attorney might have a claim against his or her client, but would not have a lien against the settlement. The attorney would have a contract with the plaintiff to get his or her costs back. Counsel explained that the attorney is entirely separate from the health care provider. The health care provider can’t intervene in the principal case, and therefore, the costs shouldn’t be paid out of the provider’s share, counsel argued. The legislature was clear about its intentions, because it was combatting the risk of a plaintiff getting nothing. The attorney’s expenses in Stanton had nothing to do with the legislature’s intent, counsel argued – the thirty percent share assigned to the attorney includes costs and expenses. Counsel argued that the statute is perfectly clear, and there’s no reason to go beyond the language of it.

Counsel for the plaintiff followed, asking what the courts should do when the party’s costs equal thirty percent. Under the health care provider’s solution, counsel argued, the provider gets 40%, the client gets thirty percent, and the attorney gets nothing. Justice Burke asked what language in the Health Care Act supports the conclusion in Stanton that fees and costs are deducted before the percentages are applied. Counsel answered that there is no express language in the Act, but the Court should reject a literal construction. Justice Thomas said that he understood and could empathize with counsel’s example where the attorney gets nothing. But by definition, a plaintiff’s attorney has already told the client that if the client doesn’t recover, the attorney absorbs costs. So if the case ends in a small settlement, isn’t that a risk the attorney took on from the beginning? Counsel answered that under such circumstances, the case would never be brought – and the only person rewarded is the tortfeasor. That, counsel argued, is an absurd result. Justice Karmeier asked how the court should get to the policy issues if it concludes that the language of the statute is clear that a lien includes fees and costs? Counsel answered that the court rejects a literal reading which leads to absurd or unreasonable results. Chief Justice Garman asked whether the statute was absurd in all circumstances. Counsel answered that in Wendling, the Court had not engaged in a statutory analysis of what the statute meant. The Court didn’t parse the statute or analyze how much each side would get. Counsel concluded by arguing that Stanton and McVey are not outliers. The overwhelming majority of the settlements the Court’s decision would apply to are in the tens, not hundreds of thousands, and if all the costs are assigned to the attorney or client, the attorney or client cannot possibly receive the percentage of the settlement which the legislature intended.

Counsel for the health care provider concluded by arguing that if the tortfeasor is being rewarded by the eventual result, that’s part of dealing with the legal system. Plaintiff is asking the Court to rewrite the statute, counsel argued – and that’s the legislature’s job. The statute is clear: the lien holder receives 40%, the attorney receives 30% and the rest goes to the plaintiff. The only way to accomplish that is to assign the percentages before deducting costs.

We expect McVey to be decided in three to four months.

Image courtesy of Flickr by Till Krech.

Join Us Wednesday for “The California Supreme Court: What to Expect in 2015″

Posted in Announcements, California

7177794150_5dcc918bbd_zOn Wednesday, April 29th at 11:00 AM Pacific/2:00 PM Eastern, Sedgwick’s Appellate Task Force will present its webinar “The California Supreme Court: What to Expect in 2015.” Highlights of the hour-long CLE presentation include:

  • Data Analytics and the Court: We’ll preview our group’s new data analytics database on the Court’s work since 2000. We’ll discuss which Court of Appeal districts are reversed most and least often; whether the Court more often reviews plaintiffs’ or defendants’ wins in each of the most common areas of the law on its docket (and how often each side’s decisions are reversed); the Court’s average time from argument to decision, and what a longer-than-average delay might mean; and the voting patterns of the individual Justices, including which Justices often vote together in close cases;
  • Personal Jurisdiction over Out-of-State Defendants: The Court will soon consider and apply recent landmark cases from the U.S. Supreme Court restricting plaintiffs’ ability to sue out-of-state defendants on claims with little or no connection to the forum. Will the California courts continue to be burdened with thousands of “litigation tourist” lawsuits in a time of tight court budgets?
  • Enforcing Limits on Healthcare Provider Liability: Can limits on healthcare provider liability be avoided by alleging a general negligence duty of care distinct from concepts of professional negligence?
  • Expanding the Scope of Asbestos Liability: A dozen years after the last domestic asbestos mine closed, will the Court double down on California’s pro-plaintiff asbestos standards by authorizing bystander suits by plaintiffs who never worked for the defendant or used the defendant’s products?
  • Arbitration of Consumer Disputes: Will the Court continue to soften its longstanding hostility to arbitration in the wake of recent U.S. Supreme Court decisions and hold that federal law preempts a state bar on arbitration clauses in consumer contracts?

For CLE details and to register for the webinar, click here.

Image courtesy of Flickr by Cliff.