Lawyers, businesses groups tackle Oregon product liability laws
Business advocates and trial lawyers could be headed for a showdown over Oregon's product liability laws before the legislative session comes to its scheduled end, and the verdict is anything but certain.
The fight is over the ban Oregon places on the right to sue a manufacturer if you're harmed by a defectively designed product that's more than eight years old. Lawyers say that's one of the shortest windows in the nation, second only to North Carolina's six year limit.
They're pushing to put Oregon in line with neighboring California, Washington and Idaho and allow residents to sue the manufacturer for damages within "the useful life of the product," a decision that's made on a case-by-case basis.
They say that would bring justice to Oregonians like the five teachers from the Lake Oswego school district, whose eyes were badly burned by radiation leaked from a broken metal halide light hanging in an elementary school gymnasium.
The teachers -- most of whom still can't venture outside without sunglasses, and must deal with constant burning and itchiness in their eyes -- have been unable to sue the New Jersey-based manufacturer of the bulbs, because of the Oregon law's eight-year window.
Confronted with such stories in the past, lawmakers have tended to carve out exemptions to the eight year rule: for families hurt by exploding sidesaddle gas tanks, breast implants and asbestos exposure.
Just this session, lawmakers extended the statute of limitations for civil claims for injury or death linked to the use of some painkillers, including Vioxx, which has been linked to the increased risk of heart attack or stroke.
Lawyers say such cases are relatively rare, but that the mounting list of exemptions has made the case for a wholesale overhaul of the statute.
Business groups, however, are arguing vociferously against any such thing, saying it could drive up insurance costs, particularly for manufacturers, encourage frivolous lawsuits and scare away new businesses.
And they point out that manufacturers can't be responsible for how a product is treated or maintained after it has been sold.
"Asking manufacturer to be responsible for acts of others which we have no control over is poor public policy," said Howard Werth, controller of Gunderson LLC, the Portland-based railcar manufacturer, at a recent hearing in front of a House committee.
But trial lawyer Richard Lane told lawmakers at the same hearing that to sue, plaintiffs would have to show that defects were present at the time of initial sale, and that there had been no alteration or misuse of the product.
Although Republicans have traditionally been more aligned with business interests, and Democrats tend to be more sympathetic to pleas from the legal community, the proposed bill has its advocates and opponents from both parties.
Some Dem-ocrats, such as Rep. Mike Schaufler, D-Happy Valley, have already made it clear that they will be siding with industry on this one. And some Republicans, like Rep. Dennis Richardson of Central Point, have come down on the side of the lawyers.
"Individual families have lost their rights because of an arbitrary date," said Richardson, who is also a lawyer. "When people are seriously injured by defectively designed products, those responsible for the design should pay. Otherwise, it shifts responsibility to the taxpayers, which is unfair and irresponsible," he said.
Odds for passage this session look dicey, because lawmakers have plans to exit the legislative session no later than June 29, and the bill had not yet had a hearing on the floor of either chamber at press time.
But it could wind up as a last-minute bargaining chip, party insiders said.
"At the end of every session, there are always a number of important bills that are passed, and they wait because they are hard to pass," said Rep. Greg MacPherson, D-Lake Oswego, a lawyer who heads the House Judiciary committee. "My guess is that this bill will still move."
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Washington takes workers' comp rate holiday
Washington's Department of Labor and Industries announced that beginning July 1, employers can take a workers' compensation premium partial rate holiday.
The rate holiday means that most Washington employers will deduct much less from their employees' paychecks for workers' compensation premiums. L&I estimates that in the next six months, the state will save $315 million in avoided workers' comp premiums. In hazardous industries such as construction, manufacturing and agriculture, the savings for employers and workers will be considerable, L&I said.
The six-month reduction in workers' compensation premiums was proposed by Gov. Chris Gregoire late last year and adopted by the L&I in March.
For work performed from July 1 through Dec. 31, employers and workers will not pay the Medical Aid Fund premium. L&I will pay that premium for them from excess reserves that have accumulated in that fund.
On average, the savings will represent about 34 percent of total premiums paid into the workers' comp system for work performed in the second half of the year, L&I said. Because employers and workers pay equally into the Medical Aid Fund, both will benefit equally.
The rate holiday is temporary and will end Jan. 1, 2008.
More information is available at www.RateHoliday.LNI.wa.gov
Calif. workers' comp written premiums down 17%
The Workers Compensation Insurance Rating Bureau of California has released the results of its report summarizing insurer loss and premium experience through March 31, 2007.
According to the report: "California written premium reported for the first quarter of 2007 is estimated at $4 billion, approximately 17 percent below the written premium reported for Q1 of 2006. The average statewide insurer rate per $100 of payroll for policies written in Q1 is $2.93, 23 percent below the average rate charged for the first six months of 2006 and 55 percent below the average rate charged in the second six months of 2003."
To view the full report, visit https://wcirbonline.org/resources/data_reports/pdf/
073103_insurer_exp_report.pdf
Lawsuit claims insurer denied firefighter's benefits, caused death
The family of a Puyallup, Wash., firefighter has filed a lawsuit claiming the city of Puyallup and its insurer illegally denied health benefits after the worker contracted a disease on the job that eventually led to his death.
David Potter, a 20-year veteran of the force, was diagnosed on Aug. 22, 2005, with T-cell Lymphocytic Leukemia, a form of cancer.
Considered an occupational disease for firefighters, state law mandates that any firefighter who contracts Leukemia be entitled to benefits including medical treatment without co-pays or deductibles.
Studies have shown a link between T-cell Lymphocytic Leukemia and exposure to toxic smoke, fumes and chemicals encountered by firefighters.
However, the suit alleges the city and its insurance company intentionally denied Potter's claim until after the leukemia took his life on June 1, 2006, to avoid paying what could have totaled more than $1 million in medical costs. Potter was diagnosed with leukemia and applied for benefits with the city on Aug. 22, 2005, but according to the complaint, the city and its insurer, Safety National Casualty delayed processing his claim.
"This is the most cynical manipulation of a person's life I've ever witnessed," said Ron Meyers, an attorney representing the Potter family. "We have abundant evidence that will show that the city and its insurance company played God with David's life, simply to test the boundaries of the law and save the costs of his treatment."
The family's contention is borne out in a series of e-mail documents uncovered during an investigation. According to the law firm representing the family, the complaint cites a memo from insurer SNC sent on April 26, 2006, which reads: "As it stands right now, we could be exposed to $750 million to $1 million case when you take into consideration the costs of chemotherapy, bone marrow transplants and the cost of the pension."
A second memo on May 3, 2006, appears to validate the insurer's desire to avoid payment by saying, "it appears the crux of the problem is the insured's inability to identify another cause for the cancer," the firm stated.
According to attorney Meyers, Potter and his family fought to get the city to live up to its obligations. On May 23, 2006, they convinced the Washington State Department of Labor and Industries to order the city and SNC to authorize medical treatment, but the city appealed L&I's decision. According to the complaint, David Potter died from a treatable condition on June 1, 2006.
Meyers said it wasn't until Jan. 3, 2007, the day before the appeal hearing, that the city and its insurer agreed to honor Potter's claim.
Puyallup is self-insured but relies on Safety Northern Casualty to pay medical claims over a specific dollar figure. Penser North America is Puyallup's claims administrator.
David Potter joined the Puyallup Fire Department in 1989, eventually being named battalion chief.
Stritmatter Kessler is a law firm with offices in Seattle and Hoquiam and is representing the Potter family.
Ariz. high court to review product liability case
The Arizona Supreme Court announced it will be reviewing a product liability case in which a lower court decided that all parties in a distribution chain could not be sued equally.
At issue in State Farm Insurance v. Premier Manufactured Systems, is whether the Arizona Legislature's principles of comparative fault are applicable to participants in the distribution chain of an allegedly defective product.
Previously, the Arizona Court of Appeals ruled that they are.
In the case, the plaintiff, who was insured by State Farm Insurance, discovered that an under-sink water filtration system had leaked, damaging his home and property. The insured had properly installed and maintained the system in the two years prior to the leak.
The system was packaged and sold by Premier Manufactured Systems Inc. Worldwide Distributing Ltd. manufactured the canisters holding a series of filters and sold them to Premier.
State Farm paid its insured approximately $19,000 for the losses, then filed a strict products liability case against Premier and Worldwide to recover the amount it had paid.
The court entered a default judgment against Worldwide because the company was defunct. Premier denied liability. Thus, State Farm moved for summary judgment on issue of comparative fault, asserting all entities in a distribution chain are joint and severally liable.
The state superior court held that the entities involved in the manufacture, production and sale of a defective product to consumers are severally at fault. Worldwide was determined 75 percent at fault, and Premier 25 percent at fault.
State Farm appealed.
The Supreme Court is expected to make a ruling in mid-summer.
Lake Tahoe fire estimated to incur more than $25 million in losses
A wildfire in Lake Tahoe, Calif., that has destroyed at least 220 homes and forced about 1,000 people to flee their neighborhoods is anticipated to incur more than $25 million in insured losses, according to estimates by risk modeling company Air Worldwide Corp.
The fire, which was believed to be caused by human activity, was approaching 2,500 acres and was 10 to 15 percent contained at press time, Lt. Kevin House of the El Dorado County Sheriff's Department told The Associated Press. No injuries were reported.
According to Air Worldwide, the "Angora Fire" appeared to have started in a region of mixed fuels that includes brush, light conifers and possibly some hardwood trees. Firefighters were initially aided by decreasing wind speeds and cooling temperatures on Sunday, June 24. However, by Monday, June 25, the fire overran the mixed medium and heavy conifer tree stand. In doing so, Air Worldwide said the fire was transformed from a conventional "brushfire" to a full-fledged "forest fire," complete with crowning.
Crowning signifies that flames have made their way up to the tops of the tree stands, at which time they tend to ignite neighboring treetops in a fast chain reaction, Air Worldwide explained.
"Given the current perimeter of the Angora Fire and nature of the land cover in the area, it is likely to become the first PCS-declared wildfire catastrophe since the Cedar and Old fires that hit California in October-November of 2003," Air said. "Based on initial reports of structure and home loss, it is anticipated that insured losses could exceed $25 million."
The Farmers Insurance Group of Companies did not have estimates of insured losses at press time, but said Farmers and its subsidiary company Foremost Insurance cover 2,283 autos, 3,378 properties, 137 mobile homes, 34 recreational vehicles, and 84 special dwelling policies in the area. Nine claims were reported to the company as of 9:30 a.m. Monday, June 25, the company indicated.
Earlier this year, state and federal fire officials had warned of a potentially active wildfire season in the Sierra Nevada following an unusually dry winter. The annual May 1 snow survey found the Tahoe-area snowpack at 29 percent of normal levels, the lowest since 1988. Fire restrictions have been in effect in Tahoe National Forest since June 11, stated the U.S. Forest Service.
The California Department of Insurance has deployed response teams to perform a damage assessment with the State Fire Marshall and to help with the recovery.
The Associated Press contributed to this story.
State Farm to cut Colo. auto rates 7.2%
State Farm Mutual Automobile Insurance Co. announced it is lowering its overall automobile insurance rate level in Colorado an average of 7.2 percent beginning July 16. The rate reduction represents an annual savings of $38.8 million to the company's Colorado customers, State Farm said.
With this reduction, State Farm Mutual has cut rates nine times and more than 40 percent since July 1, 2003, when the state switched from a no-fault to tort auto insurance system.
In addition, State Farm recently announced a $19.1 million dividend in Colorado from which auto policyholders in the state will receive 7 percent of their semi-annual premium. Dividend payments began in early April and will continue throughout the year.
"State Farm has very aggressively reduced rates in the four years since the change in Colorado's auto insurance system," said Ken Cook, vice president of operations for State Farm. "The old system had clear cases of abuse and costs were out of control. Due in a large part to the change and Colorado's very competitive auto insurance marketplace, rates are now much lower and customers are paying less for their auto insurance."
"Legislators should be thanked for moving away from the state's costly no-fault system to what we now have in place, which is similar to what most other states have," Cook added.
For the current rate change, premiums for medical payments and comprehensive coverages are decreasing the most. Comprehensive coverage pays for losses from such perils as theft, storm damage, fire, vandalism and glass breakage. Most policyholders will see a decrease in their liability and collision coverage premiums.
Premium changes for individual motorists will vary depending on factors such as the coverages they carry, discounts for which they qualify, where they live, kind of car insured, who drives it and how much it is driven.
About one in every five cars insured in Colorado is insured by State Farm, according to the company.
Oregon to stop printing producer licenses
The Oregon Insurance Division announced it will stop issuing printed licenses for insurance producers. Beginning July 1, there will no longer be printed initial, renewal, or replacement licenses. All license information for active licensees will be available on OID's Web site.
To view license status, producers should visit http://www4.cbs.state.or.us/ex/ins/inslic/agent/index.cfm. Insurance agencies should visit http://www4.cbs.state.or.us/ex/ins/inslic/agency/ index.cfm.
N.M. transportation operators to beef up coverage
Certain public transportation operators will soon be required by the New Mexico Public Regulation Commission to carry more liability insurance. Up to 3,000 so-called "incidental carriers" may be subject to the new requirement that began June 15.
Incidental motor carriers, which have previously not been subject to the Commission's regulatory authority, are those that transport 16 or more passengers but don't directly charge customers for that service. Examples include hotels or other businesses that offer customers free shuttle service, or a rafting company that transports its clients via bus to a waterway.
The PRC Transportation Division announced it will require such carriers to maintain public liability insurance of $250,000.
Currently, the PRC requires motor carriers that charge customers directly for transportation services -- taxicabs and charter buses, for example -- to maintain certain levels of liability insurance. The State Legislature this year made incidental carriers subject to the same kind of insurance requirements, which the PRC is charged with implementing.
"Many incidental carriers may already meet or exceed the new insurance requirements, but we want to make sure those that don't understand they need to make changes to their policies,"said PRC Transportation Division Director Ron Martinez.
House bill renews federal terrorism reinsurance for 10 years
Congress officially has a new bill to reauthorize the federal terrorism reinsurance program. Two Democrats from Massachusetts -- U.S. Rep. Mike Capuano and the Chairman of the House Financial Services Committee Barney Frank -- have introduced HR 2761, the Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA).
The bill extends the Terrorism Risk Insurance Act (TRIA) for 10 years and, its supporters contend, will spur the development of a private market for terrorism risk insurance.
The Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA) includes provisions to: Extend TRIA for 10 years with current co-payments and deductibles for conventional terrorism acts; Expand TRIA's "make available" requirement to include nuclear biological chemical and radiological (NBCR) coverage; Change TRIA's definition of terrorism to include acts of domestic terrorism; Set the program trigger at $50 million; Add group life insurance to the lines of insurance for which terrorism coverage must be made available; Decrease deductibles and triggers for areas previously impacted by a significant terrorist attack; and, Continue to require studies of the development of a private market for terrorism risk insurance.
After the 9/11 terrorist attacks, many insurance companies excluded terrorism events from their insurance policies. As a result, Congress in 2002 passed TRIA, which created a federal backstop to protect against terrorism related losses. In 2005, the measure was extended for two years and currently is set to expire at the end of 2007.
"TRIA has helped make terrorism insurance available and affordable to businesses, particularly those in our major urban areas. Improving and extending the program will help stabilize the economy, as well as help protect American workers and our communities against possible terrorist attacks," stated Rep. Capuano.
"We need to keep in perspective that this bill is necessary for economic development and to protect property owners, building tenants, developers and people who work or live in high risk areas," Frank said.
While the TRIA program has been credited with keeping terrorism insurance affordable, the President's Working Group on Financial Markets last year concluded that a private market for terrorism insurance is not yet commercially viable, especially with regard to insurance against nuclear biological chemical and radiological (NBCR) acts of terrorism.
P/C insurers invest $320 billion in public projects
The insurance industry holds investments in municipal bonds worth more than $320 billion, investments that help fund construction of schools, roads, and hospitals, and support a variety of other public sector activities, according to a new industry study.
The report issued by the Insurance Research Council (IRC) found that nearly one-fourth of all of those investments by property/casualty insurers at the end of 2005 funded education-related activities and projects.
The report, "Municipal Bond Holdings of Property-Casualty Insurance Companies," analyzes the types of public projects funded through municipal bonds purchased by insurers.
The report reveals that municipal bonds for projects involving public utilities made up 15 percent of the total combined value of all municipal bonds held by P/C insurers. Transportation-related bonds accounted for 12 percent of insurers' municipal bond investments.
Insurance companies invest the premiums paid by policyholders to ensure that the money to pay claims is available when the need arises. Municipal bonds make up a large portion of the investment portfolios of many P/C insurers.
"Property/casualty insurers' impact on the economy goes beyond insurance," explained Elizabeth A. Sprinkel, senior vice president of the IRC. "Insurers also provide a major source of capital for the public sector."
The findings of the IRC report are based on data compiled by A.M. Best Co. IRC analyzed municipal bond data to determine the bonds' purpose and the state in which they were issued. Bonds held by insurers as of Dec. 31, 2005, were analyzed.
Supreme Court ruling limits investors' antitrust
Last month's U.S. Supreme Court's ruling that blocks investors from suing Wall Street investment banks under antitrust laws could save Wall Street firms a bundle by limiting investors to smaller recoveries.
In a case dating back to the dot-com bubble, the high court ruled Monday that antitrust suits would pose a "substantial risk" to the securities market. Damages in antitrust cases are tripled, in contrast to penalties under the securities laws.
The ruling struck down a lower court decision that would have allowed investors to go after Wall Street firms that they say engaged in anticompetitive practices by conspiring to drive up prices on about 900 newly issued stocks in the late 1990s.
Because the well-documented implosion of names like Enron Corp. swallowed any serious money that investors might hope to recover from that and other flame-outs, some investors have turned to the banks and other Wall Street regulars such as accounting firms that did work for such companies.
"The fact that these antitrust cases have been thrown out on these grounds I think will send a high profile message to would-be plaintiffs who were thinking of bringing antitrust claims in the securities context," said Wesley Powell, an antitrust lawyer with Hunton & Williams in New York.
Lawyers for investment banks say the difference between legal and illegal activity is a highly technical matter that must be left to highly trained securities regulators to decide, rather than to courtroom juries.
Powell noted that not only do those pressing claims under securities laws not have the triple damages awarded in antitrust cases, but such claims also have to meet a higher legal burden than claims made under antitrust laws.
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP writer Pete Yost contributed to this report.
