Law blocks federally insured doctors from disaster aid
Dozens of federally insured medical providers have been blocked from helping the Gulf Coast recover from Hurricane Katrina because their liability protection doesn't apply outside their own states.
Doctors and nurses from community health centers across the country who encountered the insurance problem after Sept. 11, and found it most devastating after Katrina, hope a change can be made before another emergency.
Unlike the 2001 terrorist attacks, the hurricanes raised the medical liability issue by hitting health clinics as hard as the victims they had to treat. Fourteen Texas centers asked sister clinics to send doctors, nurses, equipment and medication. Dozens of other centers in the state were among those prevented by the law from helping.
"If we are hit by another natural disaster, we'll have the same problems all over again," said Jose Camacho, executive director of the Texas Association of Community Health Centers.
One physician who was thwarted was U.S. Rep. Joe Schwarz, R-Mich. "This is a little quirk in the tort laws, but it's a big piece of a big puzzle," said Schwarz, an ear, nose and throat doctor in Battle Creek, Mich. "We have all these centers with superbly trained individuals who do these things locally all the time, and to deny people access to their physicians if there's a disaster is senseless."
His proposal to allow federally insured medical employees to be covered for work in a declared disaster area drew attention from Rep. Paul Gillmor, R-Ohio. Gillmor co-sponsored the bill because a health center in his district, Fremont, Ohio, tried unsuccessfully to send medical volunteers to Biloxi, Miss., as recently as January.
Similarly, it took so long for a federal review of Iowa volunteers that they had to return from New Orleans after a week, said Michelle Stephan, chief executive at Siouxland Community Health Center in Sioux City. "They just sat around. They went and viewed the damage, but they were almost in the way of relief efforts," said Stephan.
Private market
The Texas health centers tried buying private liability coverage for providers coming in from out of state. It didn't work, Camacho said, because the insurance market wouldn't support new coverage for the high-risk hurricane relief effort. A change in the law wouldn't affect the private insurance market; the federal insurance is funded entirely by taxpayers. Congress gave $1.8 billion to the centers in 2006, and $45 million was set aside for the insurance.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Doctors, agents, and an antique dealer defraud Pennsylvanian
An antiques dealer, an auto mechanic and even a couple of insurance agents are among the dishonored on 2005's Top Ten Pennsylvania Insurance Fraud cases list, released by the Insurance Fraud Prevention Authority. This year's list shows that the people who commit fraud come from many backgrounds.
Highlights from this year's list include the Philadelphia man who collected $261,000 in damages from a house fire investigators said he set; a doctor who learned that getting busted can be a bitter pill to swallow; and a man who billed his insurance company for anti-aging treatments.
"We release this list each year to show Pennsylvanian that insurance fraud is not always committed by hardened criminals, but by average consumers often unaware they may be committing a felony that could land them in jail," said Roy Miller, executive director of IFPA. "This list, as well as our newly designed website, informs individuals about different types of fraud; helping them stay on the right side of the law."
The top cases for 2005 were:
#1: Double Agent
A former Canonsburg insurance agent was busted for allegedly pocketing more than $51,000 in premiums that elderly victims paid for long-term care and home health insurance. The agent is charged with 12 counts of theft by deception and 12 counts of theft by failure to make required disposition of funds received.
#2: Doctor's Fraud Case Has a Ring to It
A well-known Lancaster City physician filed a fraudulent theft report and insurance claim during the 2004 holiday season. The doctor claimed that a diamond ring, appraised at $35,000, had been stolen from his car. He said he was planning to present the ring to his "wife" as a holiday gift. But authorities became suspicious when there was no sign of forced entry into the car, and later learned the doctor was unmarried. The doctor's former girlfriend told police she had returned the ring to him. Police say the doctor became frustrated when he was unable to sell the ring for its appraised value.
#3 A Wrinkle in Anti-Aging Treatment
Thomas Bechard went to the Palm Springs Life Extension Institute for hormone therapy treatments to slow the aging process. Bechard signed a contract indicating he understood the treatment was not covered by any medical insurance. Yet when Bechard returned home to Pennsylvania, he submitted $17,000 worth of claims to Highmark Blue Shield using official insurance code numbers. Highmark later audited Bechard's account. Interviews with Bechard revealed that he had purchased ICD-9 books before filing the claims to ensure he was using the relevant insurance codes.
#4: Filing was No Accident
A Delaware County man allegedly filed a workers' compensation claim in 2001, stating he had sustained injuries to his lower back, right leg and neck as a result of a work-related injury. However, the man allegedly failed to report that he was treated for injuries to his neck as well as back pain after a 1998 car accident. The suspect's employer's insurer settled his workers' compensation claim for $120,000 in lost wages and $52,000 in medical bills. The information about the 1998 car accident came out later. He is awaiting trial. If convicted, he faces seven years in prison and a $15,000 fine.
#5: Burning Down the House
A former Philadelphia-area antiques dealer found himself in hot water when investigators found inconsistencies after a fire ravaged his home. Authorities held Steven J. Menasion of Nottingham on charges of arson and insurance fraud. His insurance company, which paid Menasion $261,000 after fire, found that the destroyed items detailed in Menasion's insurance claim did not match with the charred remains at his home. For example, screws, nails or bolts from the $3,000 dining room set would have survived the blaze, and $700 worth of pots and pans would not have vanished without a trace, police said. Menasion is now in prison.
#6: Scam Runs Out of Gas
A Prospect Park auto mechanic thought he was going to make some money on the unseasonably warm afternoon of Feb. 24. The owner of E-Z Auto Repair on Lincoln Avenue, he had found a buyer for his Snap-On Modus Elite, a diagnostic computer used to repair cars. The problem was, the perpetrator had reported that same computer and other tools had been stolen from his shop in an Oct. 1 burglary. In fact, he had filed an insurance claim and was paid $18,570.30 by Mid-Continent Insurance Company. He didn't know that the man he had arranged to meet outside his shop that day was an undercover detective from the Delaware County Criminal Investigation Division.
#7: Bad Medicine
A Center City physician was charged March 23 in federal court with trafficking in thousands of Percocet and OxyContin pills, and with $104,000 worth of health-care fraud. Assistant U.S. Attorney Amy Kurland charged the doctor was with illegally selling nearly 3,500 Percocet pills and more than 2,360 OxyContin pills between October 2003 and June 2004. The doctor allegedly sold the drugs "without a legitimate medical purpose and outside the usual course of professional practice" and defrauded several insurers, including Independence Blue Cross, Aetna U.S. Healthcare, HealthNet, Keystone and Americhoice by filing claims for some of the drugs, which were valued at more than $104,000.
#8: The Name Game
Between April 2002 and July 2003, a woman was admitted to Thomas Jefferson University Hospital on six occasions for various medical treatments, including two surgical procedures. In five of the six admissions, she allegedly presented an Independence Blue Cross medical card belonging to a man and identified herself as his ex-wife, who was still covered under his insurance policy. The hospital billed more than $49,000 for services, of which Independence Blue Cross paid $3,000 before uncovering the fraud. The woman later admitted she had a relationship with the man and he had given her his ex-wife's card.
#9: Customer Disservice
A Bucks County insurance agent has been charged in connection with various scams after allegedly tampering with one of his client's insurance policies and stealing $127,233 of her money. According to the charges, in 1999, the client gave the agent $25,000 for the policy, but the agent allegedly pocketed the money. Four years later, the charges allege, the agent submitted a fraudulent withdrawal form to the insurance company, requesting $53,139 from a policy owned by the client. The agent allegedly forged the client's signature, had the check for $53,139 sent to his P.O. box and then forged the client's signature on the check.
#10: There's No Such Thing as a Free Ride
Johnny Bush learned the hard way that living off of insurance companies doesn't pay. Bush's troubles began after an auto accident on June 22, 2002. While damages to his car were negligible, Bush alleged that he injured his shoulder and he claimed lost prospective wages. Bush claimed he was just about to start a new job at Corporate Bank Transit. Progressive Insurance Company investigators learned Bush "lived off of insurance companies;" had numerous claims against various companies over the years; and had just settled a claim concerning a back injury. Bush's brother, the manager of Corporate Bank Transit, had written a letter at Bush's request stating that Bush was going to start a job there but later came to suspect his brother was up to something. Bush's brother testified before the jury, which convicted him. He was sentenced to 6 to 12 months in prison and four years consecutive probation.
Farming shown more dangerous in Virginia than mining
Coal mining, logging, firefighting represent just a handful of the dozens of jobs that spring to mind when it comes to dangerous work.
Farming isn't often one of them.
But data shows agriculture is outpacing mining as the most deadly occupation in the United States, and the trend is thriving in Virginia.
Agriculture accounted for 30.1 fatalities per 100,000 workers in the U.S. in 2004, according to the Bureau of Labor Statistics.
Virginia's farm-related deaths last year dropped three from the year before, according to Farm Bureau safety manager Bruce Stone. Still, unofficial records collected by the Virginia Farm Bureau Federation show 15 people died doing farm work last year. In comparison, no coal miners were killed on the job in Virginia during that time.
Among the key causes of farm deaths are overturned tractors, according to statistics. Turnovers accounted for five of last year's fatalities; four people were run over by tractors or other equipment, three were killed by equipment-related injuries, one by road accident and two by unspecified causes.
Stone has been compiling an unofficial record of Virginia farm fatalities since 1994. In the years since, about 199 people have died working on Virginia farms. That includes 83 who died in overturns.
The answer, he said, is the use of factory-built roll bars or cages and seat belts. The safeguards offer a 95 percent or higher survival rate should a flip occur, he said.
But about half of Virginia's tractors were manufactured before roll-over protection was available, explained Ron Saacke, who has been working with Stone.
Saacke said the Farm Bureau's statistics, which are compiled from news and accident reports, are more accurate than government figures, since not every death may be reported to the government.
Still, he said both entities may not know the true death toll.
Md. water taxi insurers sue Coast Guard
Insurers for the company that ran the water taxi that capsized in Baltimore's Inner Harbor, killing five people, have sued the U.S. Coast Guard, claiming the military branch certified the taxi for too many passengers.
The insurance companies allege that the vessel was not properly tested for stability by the Coast Guard before it was put to use and it should not have been allowed to carry 25 people.
The boat, run by Seaport Taxi, was one of several small water taxis that go between stops on Baltimore's Inner Harbor. On March 6, 2004, it had just left Fort McHenry with 25 people when severe weather moved into the region. Another Seaport captain radioed the Lady D's captain, Francis Deppner, suggesting he steer the boat to shelter. Deppner replied that it was "an excellent idea." Three minutes later, the Lady D was struck with winds nearing 50 mph, causing the 36-foot long boat to flip.
The National Weather Service concluded in a report in August that its forecasters were using limited radar information that day, preventing them from giving timely warnings of the advancing storm.
The Coast Guard issued the Lady D a stability letter in 1996, approving it to carry 25 passengers. The letter said the decision was based on a 1992 stability test of a boat of similar size and shape, the Raven, that was "witnessed and evaluated'" by the Coast Guard. An inspection of the Lady D was waived.
James Piper Bond, chief executive of the Living Classrooms Foundation, owner of Seaport Taxi before the water taxi operations ended in 2004said the lawsuit focuses on the fact that the U.S. Coast Guard certified the carrying capacity of the Lady D at a "grossly overstated number."
The lead plaintiffs are expected to be the Indemnity Insurance Co. of North America, of Philadelphia, and the Continental Insurance Co., of Chicago. Their lawyer refused to comment.
Although the Coast Guard had approved the Lady D pontoon boat to carry up to 25 people, those tests were based on a sister ship. Those tests contained errors and the Lady D was different enough from its sister ship that its stability was different, investigators from the National Transportation Safety Board concluded.
The Coast Guard regulations were also based on assumptions of an average passenger weight of 140 pounds, according to the documents. The Lady D, however, had an average passenger weight of 168 pounds when it flipped, making it 700 pounds overweight.
N.Y. homeowners market analysts disagree; how broken is it?
Assessing the condition of New York's homeowners insurance market is easier said than done. It's either strong, stable or fragile depending upon whether the analyst is an agent or an insurer.
Also, Allstate Insurance Co.'s decision to limit its business in eight counties in the state is either a "draconian" step or a measured response to hurricanes and financial reality.
While insurance companies told state officials at a Manhattan public hearing that the market is healthy despite planned cutbacks by the largest writer, some agents maintain that the market is "fragile" and have called for regulatory action to maintain access to markets.
Allstate, which writes about 25 percent of the market, maintained it had no choice but to curtail writings in light of hurricane forecasts, the density of certain downstate communities and its own concentration of business. "We are, and we will take steps to remain, a financially strong insurer. We also intend to remain one of the top insurers serving the New York marketplace," said Brian Pozzi, Allstate's regional counsel.
Allstate told Superintendent of Insurance Howard Mills that its reduction in policies would be less than four percent a year. The company also said that it would give insureds 75 days notice, more than the required 45 days.
But Mills, who called the hearing following the giant insurer's early February announcement, wondered aloud if the insurer's pullback was an overreaction.
"It seems to us and many of your customers that after a five year period of rapidly increasing your market share, built upon your long history of being very aggressive in this market, that this is a very draconian and sudden action," Mills commented.
If Mills is worried about consumers, he need not be, according to one insurer group, the American Insurance Association. The AIA told Mills that the state's homeowners insurance market is strong.
"The homeowners market is competitive throughout the state," said Gary Henning, AIA assistant vice president, Northeast region. "Additional capacity has been created in the marketplace since the end of the most recent hurricane season. New Yorkers should continue to have relatively easy access to the homeowners insurance market, despite the concerns."
More guarded optimism
Another insurer group was a bit more guarded in its optimism. Kristina Baldwin, regional manager for the Property Casualty Insurers of America, told regulators that there are still enough insurers in the state to avert a market crisis.
"All indications are that, despite the tumultuous 2005 hurricane season, insurance is available in New York's coastal areas," she said. "Still, some insurers are concerned about their ability to charge premiums to adequately cover their exposure and consumers may have fewer choices in some areas."
While insurers painted a positive picture, the Independent Insurance Agents & Brokers of New York, estimated 50,000 Long Island homeowners will have to find other coverage due to Allstate's cutbacks. These agents questioned whether remaining carriers would be able to absorb this business and said they are "deeply concerned about the health" of the Long Island and New York City market.
The Professional Insurance Agents of New York State said a survey of its members found that while there is no immediate crisis in availability in the area, Allstate's recent moves could potentially undermine the situation. "Our information suggests that, at this point in time the homeowners market in the downstate area remains adequate to handle the current level of new business," said N. Stephen Ruchman, immediate past president of PIANY, stressing that conditions may change.
N.Y. tour boat owner claims he's victim of insurance scam
Regulators in three states are investigating whether the owner of a tour boat that capsized on New York's Lake George and killed 20 elderly tourists was the victim of an insurance scam.
Texas, New York and Florida investigators are trying to determine whether a London reinsurer, a Texas insurance broker, and a Florida insurance intermediary sold a fraudulent insurance policy to the owner of the Ethan Allen tour boat that capsized, as the Detroit Free Press first suggested in its reports.
The 40-foot Ethan Allen capsized Oct. 2 on Lake George with 48 people on board.
Jim Quirk, whose company Shoreline Cruises owns the Ethan Allen, told the newspaper he believed the boat's $2 million insurance policy covered marine accidents. Quirk said his company, Shoreline Cruises, bought the policy for the Ethan Allen and four other tour boats in 2004 through Charles H. Wegman of Houston.
Florida intermediary
Wegman was apparently working with the Global Property Owners Association in Plantation, Fla., which at that time listed its address as a suite in Miami where virtual office services such as answering phones and collecting mail are provided for a fee.
Global Property said the policy would be written with United ReInsurance Group Ltd., whose address was another virtual office provider in London, according to the Detroit Free Press.
Shoreline Cruises lawyer, Michael Allweiss, said Shoreline sent $14,140 to Global Property's offices for the 2005 policy for five of its boats.
The families of the victims have been expecting Shoreline's insurance to help them with funeral and medical bills for the lake accident. But Global Property Owners Association maintains the Ethan Allen was insured only for accidents on land, the newspaper said.
Meanwhile, Texas regulators say associates of Global Property Owners Association and United ReInsurance are suspected of selling millions of dollars in nonexistent insurance, the newspaper said.
New York authorities are investigating because neither Global Property Owners nor United ReInsurance appears to be licensed to sell in the state. Neither New York state nor federal law requires require tour vessels to carry liability insurance, said Michael Barry, a spokesman for the New York State Insurance Department.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
If it's broken, how to fix N.Y.'s homeowners market
While some believe government action may be necessary to keep New York's homeowners insurance market from falling into a crisis, others note that the state's public policy already incorporates a number of protections for consumers and private incentives.
The biggest safety net is the New York Property Insurance Underwriting Authority, the state's market of last resort. Kristina Baldwin, regional manager for the Property Casualty Insurers of America, notes that the NYPIUA's role has been enhanced with the state's approval of "wrap around" coverage, which allows homeowners to receive fire and extended coverage through NYPIUA and liability, theft and other coverages from a voluntary insurer.
New York public policy also provides for a mandatory three-year renewal on homeowners business, according to New York Insurance Association Inc.'s Bernie Bourdeau. "That policy serves to stabilize the market against sudden shifts in company strategies," he suggested.
The state permits a wide variety of windstorm deductibles and recently authorized multi-tier rating programs for homeowners.
Agents are more inclined than insurers to welcome government involvement. Top on their list is legislation making the NYPIUA permanent, instead of subject to annual legislative reauthorization.
The Independent Insurance Agents & Brokers of New York, thinks the state should let insurers use computerized catastrophe models to determine rates. "These models have been used successfully in Florida and will help to stabilize the market and insure that fair and adequate rates are being charged," said IIABNY's Mark Hagan.
N. Stephen Ruchman, past president, the Professional Insurance Agents of New York, hopes the insurance department will try to persuade Allstate to reconsider, arguing that the customers dropped will likely be those who have had a claim or who live closest to the water. He worries more may be non-renewed than the existing market can absorb.
If government is called, more might be accomplished at the federal than state level. For instance,
Ruchman notes that the $250,000 coverage limit for the National Flood Insurance Program was set in 1968 and claims the entire program needs updating.
IIABNY supports a multi-state, multi-peril catastrophe fund, since a fund supported by New York state alone would not suffice. "There would not be enough spread of risk due to the geography of our state, and with the political controversy surrounding these kinds of funds, it is unlikely that a catastrophe fund would provide any short term relief," according to Hagan.
PIANY also urge caution about about any cat fund, especially at the state level. "We believe the first focus should be on federal tax policy, so that insurers individually could create additional catastrophe reserves for low-frequency, high-severity events," says Ruchman.
Several parties point to the Coastal Market Assistance Program, which was begun in the wake of Hurricane Andrew in 1992, as a possible answer should availability become a problem. It is a network of insurers and producers who assist coastal homeowners in obtaining insurance.
NYSIA's Bourdeau suggests that if problems arise, they could be solved by private markets if government does not overreact now.
"Companies today are poised to capture the market share being conceded by their competitors," says Bourdeau. "The worst thing that could happen at this point would be a government reaction, by legislation or regulation, that is perceived by these companies as restricting their ability to manage their business. That would reduce the flow of new capacity to the coastal market, the very thing that is most needed at this time."
AIG severs ties with C.V. Starr; expands global energy unit, forms new unit
American International Group Inc. announced that its AIG Companies terminated the agency relationship with Starr Technical Risks Agency Inc. and its subsidiaries (Starr Tech), insurance agencies owned by C.V. Starr & Co. Inc.
C.V. Starr is run by AIG's own former chairman and CEO, Maurice "Hank" Greenberg. The parties have been in a court dispute over Starr's attempts to move its AIG business to other carriers.
According to AIG's announcement, all current and future underwriting, claims, loss control and administrative functions relating to accounts formerly underwritten by Starr Tech on behalf of the AIG Companies will be managed by New York-based AIG Global Energy, which already provides insurance and risk management programs to energy and energy-related companies worldwide.
AIG Global Energy has expanded its scope of operations by creating a new division, AIG Global Energy-North America, to serve the worldwide property insurance needs of insurance customers in North America.
Starr Technical is a managing general agency that specializes in oil and chemical industry insurance.
The AIG Companies also announced that it has formed AIG Specialty Excess, an umbrella and excess casualty underwriting unit that the company says will concentrate on insuring specialty and difficult-to-place classes of business including construction, transportation, public entities and educational institutions.
Effective May 15, 2006, AIG Specialty Excess will respond to all in-force business, as well as new and renewal business currently handled by the C.V. Starr & Co. agency, a subsidiary of C.V.Starr & Co. Inc.
Last month, a New York judge granted American International Group a restraining order against Greenberg and Starr Technical Risk Agency, that bars Starr from placing its AIG business with other insurers.
The order barred Greenberg's agency from pursuing contracts with National Indemnity, a Berkshire Hathaway unit, for business currently with AIG.
AIG has claimed that Starr Technical has been using "unauthorized" reinsurance agreements with National Indemnity to take business now placed with AIG and give it to other insurers. AIG maintains that Starr Technical and AIG have had an exclusive contract since 1992, which includes allowing Starr Technical to sell policies in AIG's name.
C.V. Starr has countersued charging that AIG is trying to keep its agency from competing. Its lawyers have accused AIG of trying to close down Starr agencies and urging clients not to do business with Greenberg's companies.
Former Gen Re, AIG execs plead not guilty to reinsurance fraud charges
As a federal probe into the insurance industry widens, four former top executives of giants General Re and American International Group are pleading not guilty to fraud and conspiracy charges.
The Justice Department has accused the four of orchestrating an audacious fraud, putting together a sham reinsurance transaction that allowed AIG to falsely report some $500 million in reserves against losses and thereby mislead shareholders, Wall Street and regulators.
The alleged conspiracy, using phony contracts and a secret side deal, was designed to make it appear that AIG's loss reserves were growing so as to inflate the company's stock price, prosecutors say.
New York-based AIG, one of the world's largest insurance companies, last month agreed to pay a record $1.64 billion in a settlement with federal and New York state authorities. It also apologized for having deceived investors and regulators with misleading accounting practices.
AIG was alleged to have taken part in bid-rigging schemes, paid secret commissions to insurance brokers to steer business to it, used phony insurance deals to burnish its earnings and misstated the amounts of workers' compensation premiums it had collected.
All four were entering pleas of not guilty and planned to contest the charges at trial, their attorneys say. Each defendant, if convicted on all 13 criminal counts of conspiracy, fraud and making false statements to the SEC, could face a maximum 95 years in prison and $7.75 million in fines.
They also are named in a related civil lawsuit by the SEC alleging that they aided AIG's alleged securities fraud.
The indictment stemmed from the Justice and SEC investigations of a five-year-old deal between AIG and General Re. Wide-ranging investigations of the reinsurance business are being conducted by authorities in the United States and elsewhere.
Prosecutors say AIG had been concerned about Wall Street analysts' suggestions that it had insufficient reserves to cover potential losses and approached General Re to facilitate a deal that would increase its loss reserves on paper. But the deal had no substantive value, did not transfer risk, and was designed to cosmetically alter AIG's books, according to the indictment.
Two other former executives of Stamford, Conn.-based General Re--John Houldsworth and Richard Napier--pleaded guilty in June to roles in the sham deal. As part of their plea bargains, they have been aiding the investigation.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
National Law Journal says top verdicts, punitive damages fall in 2005
The National Law Journal reported that the total amount awarded by juries last year in the nation's largest cases declined for the third consecutive year.
Based on analysis of the VerdictSearch Top 100, a ranking of the largest jury verdicts in 2005, the NLJ reveals that juries awarded just $8.2 billion in compensatory and punitive damages in these cases last year, the lowest total since the newspaper began tracking these verdicts in 2001 and a decline of 28 percent from last year's total.
Punitive damages also continued to decline significantly, in part due to caps that have now been implemented in more than half of the nation's states.
The total for 2005 contrasted sharply with the $41.4 billion in total verdicts, adjusted for inflation, reported for 2002, the peak total for the past five years.
Punitive awards continued to decrease at a much faster rate than compensatory awards--which, by comparison, have remained relatively constant. In 2005, punitive damages totaled just $3.5 billion, down from the five-year period's high of $36.0 billion in 2002. The punitive damages portion of total awards over the past five years has also dropped markedly. In 2005, punitives made up 43 percent of the total awards, down from the five-year period average of 59.2 percent and 2002 peak of 87 percent of that year's total.
"Judicial and legislative efforts to rein in out-of-scale punitive awards appear to be gaining traction, as more states impose caps and plaintiffs lawyers move away from arguing for large punitive damages which they know will be reduced or thrown out," said Rex Bossert, editor in chief of the NLJ. "In this year's second-largest case, for example, the trial judge reduced the punitive award by the jury from $700 million to nothing."
Last year's largest jury award came in the securities fraud case brought by Coleman, the camping gear company owned by Revlon Chairman Ron Perelman, against Morgan Stanley. In May, a Florida jury awarded Coleman more than $1.44 billion in total damages, including $850 million in punitives. An appeal is pending.
The types of cases that made the Top 100 Verdicts of 2005 varied greatly, from accounting malpractice to workplace safety.
Product liability was the most common cause of action, with 14 cases. Thirteen trials involved motor vehicle cases, 11 involved medical malpractice, nine were breach of contract and seven were intellectual property cases.
U.S. postal customers gain right to sue for tripping over mail, rules U.S. Supreme Court
The Supreme Court has ruled that the U.S. Postal Service can be sued by a woman who tripped over mail left on her porch.
The 7-1 decision revived a woman's claim that she was entitled to damages after suffering wrist and back injuries during the 2001 fall at her home in suburban Philadelphia. The letters, packages and periodicals were put on Barbara Dolan's porch instead of in her mailbox.
Justice Anthony M. Kennedy, writing for the majority, dismissed concerns of costly litigation. "The government raises the specter of frivolous slip-and-fall claims inundating the Postal Service," he wrote. "Slip-and-fall liability, however ... is a risk shared by any business that makes home deliveries."
Justices had been asked to interpret a federal law that bars lawsuits over the "loss, miscarriage or negligent transmission of letters or postal matter." The court said the law did not cover Dolan's claim.
The Bush administration told justices last fall that the Postal Service delivers about 660 million pieces of mail each day and would have a hard time disproving accident complaints.
Justice Clarence Thomas sided with the government. In a lone dissent, he said that personal injury lawsuits resulting from mail delivery should be prohibited.
Thomas said that under the law, the post office cannot be sued if a carrier negligently drops a package of glassware, and if the customer is cut by the shattered glass. It makes no sense, he said, for the court to allow that same customer to sue if he trips on the package. "There is no basis in the text (of the law) for the line drawn," he wrote.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Sarbanes-Oxley oversight board facing constitutional challenge
A group of advocates for free enterprise and limited government that includes former federal independent counsel Kenneth Starr is challenging the constitutionality of the Sarbanes Oxley Act and its provisions that govern the accounting of public companies.
The Free Enterprise Fund of Washington, D.C. filed a constitutional legal challenge to the Public Company Accounting Oversight Board (PCAOB) created by Congress as part of the Sarbanes-Oxley Act, which was enacted in 2002 following a number of corporate scandals. The SOX Act has been criticized by businesses, including insurers, for imposing new costs on publicly traded U.S. businesses.
The lawsuit claims that although the Sarbanes-Oxley Act purports to make the board a private entity, it delegates to the board vast governmental powers.
The complaint was filed in U.S. District Court for the District of Columbia on Feb. 7.
The complaint alleges that the PCAOB violates the Appointments Clause of the Constitution because it is composed of superior "officers" who need to be appointed by the President rather than the Securities and Exchange Commission.
The suit's broader claim is that the PCAOB violates separation of powers principles because its members perform an executive function but are not appointed or removable by the President or any executive branch entity. By giving the board unbridled authority to set standards regulating accounting firms and to finance its own operations by charging a fee to public companies, Congress violated the constitutional prohibition on delegating its legislative powers to an entity outside the legislative branch, according to the suit.
The complaint seeks an order declaring unconstitutional the provisions of the Sarbanes-Oxley Act.
Best remains negative on U.S., Bermuda reinsurance markets; expects no upgrades in 2006
Despite some premium gains during the renewal season, A.M. Best remains negative on the U.S. and Bermuda reinsurance markets. The rating agency doesn't think there will be any rating upgrades or positive rating outlooks assigned in 2006, as the "underlying stability of these markets remains tenuous."
Best said the "U.S. and Bermuda reinsurance sectors remain susceptible to pricing competition as investor expectations for double digit returns run high. Should the currently perceived market opportunities in property not be significantly realized, the companies that received much of the new capital that recently flowed into these markets might be forced to find alternative strategies."
The weather remains a problem. Best notes that "another active storm season in 2006 or further reserve development from the 2005 storms, as some are predicting, would be material and may help to prolong the hard property market, but at an additional cost to earnings and capital. The financial flexibility of some companies is already stretched with debt to capital for the industry at an all time high."
Equity capital, which flowed into the reinsurance market after Sept. 11 and in 2004, was also available in 2005. However, according to Best's analysis, another year of catastrophe losses could well "dampen investors' appetites for a stake in insurance and reinsurance holdings."
Reinsurance treaty renewals show some premium increases
With the January renewal season now behind them, the world's global reinsurers are collectively breathing a small sigh of relief. While premium increases in the U.S. met or exceeded expectations, especially along the stricken Gulf Coast, there were few, if any, increases in other parts of the world, notably in Europe.
Swiss Re posted a 7 percent improvement in economic profit and premium growth to $7.1 billion. Munich Re said its reinsurance treaty renewal premium volume in January was around $10.57 billion.
A.M. Best issued a statement acknowledging that the "significant losses from Katrina, Wilma and Rita incurred by reinsurers have only helped to halt temporarily the downward trend in the underwriting cycle prior to these events."
A shift in emphasis also helped boost premiums. Swiss Re said it had seen growth in property and specialty lines of around 6 percent while liability and motor lines were cut back by 10 percent. While its premium volume for European treaty business remained unchanged, Swiss Re noted a 13 percent decline in the U.S. "due to reductions in liability business." This was balanced by "solid growth of 23 percent in Asia, predominantly in the emerging markets."
Munich Re said the average increase may have been around 3 percent, however some regions, notably those hit by the 2005 hurricanes, paid a lot more for reinsurance in the "high two-digit figures" on average. The highest increases were in offshore energy, with up to 400 percent in some cases.
Best confirmed that most of the significant price increases were limited to business lines affected by the U.S. hurricanes. It indicated that European treaty business, which accounts for approximately two thirds of the renewals, saw relatively stable premium rates. Best expects a return of competition, provided that "underwriting results in 2006 turn out to be favorable."
