News Briefs

MISSOURI

Insurer to Pay $8 Million: State Farm Insurance has been ordered to pay more than $8 million to a tow truck driver and his sister-in-law who were acquitted of insurance fraud after being accused of faking the theft of a vehicle. Jackson County Circuit Judge Charles Atwell said he would award $4.5 million to Jennie Hampton, of suburban Olathe, Kan., owner of the Toyota 4Runner reported stolen in 1997, and $4.2 million to Marvin Vail, 33, of Edgerton, Kan. “We felt that a significant punitive award was justified, particularly given State Farm’s size and conduct,” said Attorney James P. Frickleton, who represented Hampton and Vail. “We’re very pleased with the court’s decision and feel it’s a continuing vindication of Ms. Hampton and Mr. Vail.”

Hampton and Vail sued State Farm Insurance and the National Insurance Crime Bureau, an organization that investigates insurance fraud. Jurors in September awarded $800,000 in damages to the pair after finding they were the victims of malicious prosecution. But the decision on punitive damages was left to Atwell. The crime bureau settled with the pair after trial.

After Hampton’s vehicle was found burned in rural Miami County, Kan., in December 1997, State Farm refused to pay her claim. The company accused her of lying in claiming that the Toyota’s engine was in “excellent'” condition before the reported theft, citing reports she had talked about engine a few weeks before the event. Hampton and Vail were acquitted in May 2001. Frickleton said State Farm and the insurance crime bureau relied on incomplete, hearsay evidence in seeking the prosecution.

Lacking Earthquake Insurance: Barely four out of every 10 Missouri homeowners carry earthquake insurance, a cause of concern cited as Gov. Matt Blunt heard briefings on the state’s earthquake preparations.

Blunt held a closed-door Cabinet meeting at the State Emergency Management Agency to hear summaries of the earthquake plans at each of the state’s agencies.

Of particular concern is what would happen if a major earthquake occurs along the New Madrid Fault, which extends from northeast Arkansas through southeast Missouri into southern Illinois.

The governor asked agencies to update their earthquake plans after Hurricane Katrina hit the Gulf Coast earlier this year, swamping not only homes but also the emergency relief efforts. Blunt said he was pleased with the plans made by state agencies.

The focus is on providing immediate care to people’s physical and emotional needs, then restoring services and rebuilding homes, businesses and communities, he said.

Yet that could prove difficult for homeowners who don’t pay the extra premium for earthquake coverage and cannot afford to rebuild on their own. “A significant number are without earthquake insurance, including many Missourians within southeast Missouri,” Blunt said.

Statewide, fewer than 41 percent of home, farm and mobile home insurance policies have earthquake coverage, according to Department of Insurance records. In the city of St. Louis and the 47 counties most prone to earthquake damage, 62 percent have earthquake insurance.

But that percentage appears that high only because 72 percent carry earthquake insurance in heavily populated St. Louis County. Earthquake coverage hovers around 50 percent in New Madrid, Mississippi and Pemiscot counties, where damage is expected to be the heaviest. Department of Insurance officials said they are trying to draw attention to the need for earthquake insurance.

U.S. Geological Survey scientists have said there is a 25 percent to 40 percent chance of a magnitude 6.0 earthquake along the New Madrid Fault in roughly the next 50 years.

OHIO

Cut in Payments: In a decision that could cost the state millions of dollars, a judge said the Ohio Bureau of Workers’ Compensation did not follow state procedures when it cut payments to hospitals for treating injured workers.

The bureau announced it was cutting its rates by $50 million in August to match more closely with hospitals’ actual costs. The Ohio Hospital Association, which represents 170 hospitals and 40 health systems, said the ruling by Franklin County Common Pleas Judge Charles A. Schneider gives the group a chance to argue against the rate cut.

Schneider ruled that the bureau should have sought approval for a cut from the Joint Committee on Agency Rule and Review. The hospitals sued the bureau, saying the cuts would force patients to wait longer for care and could eliminate some care altogether.

The state plans to appeal the ruling. The reduced rates, which took effect Oct. 1, will hold for now, and if the bureau loses its appeal and the new fee schedule is thrown out, the state will repay the hospitals, bureau spokesman Jeremy Jackson said.

The bureau cut hospital reimbursement rates by 55 percent for inpatient services and 50 percent for outpatient procedures. Gov. Bob Taft ordered the cuts after The Columbus Dispatch reported that hospitals were making an average 50 percent profit on workers’ compensation reimbursements.

Stop Smoking or Lose Job: Scotts Miracle-Gro Co., looking for ways to hold down health insurance costs, will require workers who smoke to quit by or lose their jobs.

The lawn and garden company wants workers to live healthy lifestyles, said James Hagedorn, the company’s chairman and chief executive. Scotts recently opened a $5 million fitness and medical facility.

Scotts is joining other companies focusing on smokers to cut health insurance costs. Some companies make employees who smoke pay higher health insurance premiums, or don’t hire them.

“Why would we admit someone into this environment when they’re passing risk along to everyone else? Our view is we shouldn’t and we won’t,” Hagedorn said.

Scotts, which made $100 million on sales of $2.3 billion in its last fiscal year, has 6,000 employees in the United States and overseas. It said it could fire smokers legally in 21 states.

The company also will require higher premiums for workers who refuse to take a health survey in 2006. In 2007, premiums will rise for workers who don’t follow doctor recommendations to improve their health.

In a 2004 survey of 270 professionals, the Society for Human Resource Management found 4.4 percent preferred to not hire smokers. Fewer than one percent said their companies have a formal policy against hiring smokers.

NORTH DAKOTA

Wrongful Death Against Drug Maker: A woman whose daughter was shot to death in Minot, N.D. in 2003 has filed a wrongful death lawsuit against the man convicted in the killing, his parents and the makers of the drug Zoloft. Lisa Anderson’s lawsuit alleges Zachary Schmidkunz’s parents, Rhonda and Gail Schmidkunz, should have known about his depression and suicidal thoughts and kept him away from a shotgun. It also claims Pfizer Inc., the maker of the antidepressant drug Zoloft, knew of but failed to warn that Zoloft’s side effects could lead to uncontrollable rage in young patients. Anderson is seeking unspecified damages.

Gail Schmidkunz referred questions about the lawsuit to attorney Richard Hagar, who said it seemed ironic. He said the role of the medication was not considered in sentencing Zachary Schmidkunz, and “it didn’t seem to weigh well with the jury, either.”

Bryant Haskins, a spokesman for Pfizer, said the company had not seen the lawsuit, but he said Zoloft has been on the market for 14 years and has been used safely by millions. “There is no scientifically based evidence to suggest that Zoloft causes patients who are being treated to commit violent acts harming other people,” Haskins said.

Anderson’s daughter, Alexis Walter, was shot to death in November 2003, in the family room of the Schmidkunz home. Zachary Schmidkunz was convicted of killing her and was ordered to serve 35 years in prison. He has filed an appeal.

During his two-week trial in December 2004, Schmidkunz testified he had taken Zoloft for 18 days and then stopped, except for one he thought he took the day before he killed Walter.

INDIANA

Immigrant License Plates: Undocumented immigrants in Indiana would receive a special driver’s license if they pass an exam and buy auto insurance under a proposal a state representative said he plans to introduce. State Rep. John Aguilera, D-East Chicago, said the licenses would not help people gain U.S. citizenship but would be more like a permit to grant driving rights to illegal immigrants, The Times of Munster reported.

“It should be framed as a public safety issue. That’s what we’re trying to impact here,” said Aguilera, the only Latino member of the Legislature and chairman of the Indiana Commission on Hispanic/Latino Affairs.

The commission plans to present the General Assembly with the detailed report on the issue next month.

A state permit would ensure that immigrant drivers have insurance and know the rules of the road, he said. It could make them less likely to leave accident scenes, he said.

Tennessee and Utah both recently established immigrant driving permits, and Illinois considered a similar measure in 2003, but it failed. No state can issue an official license because a new federal homeland security law requires that applicants present a Social Security card to get a license.

WISCONSIN

Med-Mal Merger: ProAssurance Corporation and Physicians Insurance Company of Wisconsin, Inc. have agreed to merge PIC Wisconsin into ProAssurance through a proposed stock-for-stock transaction.

The companies said that the merger will expand ProAssurance’s presence in the upper Midwest and provide access to states ProAssurance does not yet serve. The transaction should close in mid-2006.

The definitive agreement calls for each share of PIC Wisconsin stock to be converted into shares of ProAssurance stock having a value of $5,000. The exchange ratio is based on the average closing price of a share of ProAssurance stock on the ten trading days preceding the effective date of the merger.

Victor T. Adamo, president of ProAssurance, said ProAssurance expects to add more than 9,000 policyholders as it expands its footprint west into Wisconsin, Minnesota, Nebraska, Nevada, and South Dakota, and adds to its business in Illinois, Iowa, and Kansas.

The proposed transaction will require the approval of PIC Wisconsin’s stockholders and state and federal regulators.

Topics Catastrophe USA Workers' Compensation Illinois Wisconsin Missouri