Teddy Snyder

Month: December 2023

  • Inflation Reduction Act Update

    Will the Inflation Reduction Act affect your settlement? A prior post discussed that possibility. A year later, there are developments

    The First Drug Designation
    The Department of Health and Human Services has named the first ten drugs to be subject to negotiation. The chosen drugs represent about 20% of total Part D annual spending, fifty and a half billion dollars.

    The drugs are principally used for cardiac disease and diabetes as well as the autoimmune diseases psoriasis and Crohn’s disease. These are not conditions caused by run-of-the mill tort or workers compensation cases. They might occur as a result of medical or pharmaceutical malpractice, but that is not something practitioners are likely to see frequently.

    Big Pharma Litigation
    Predictably, passage of the Inflation Reduction Act provoked a rash of lawsuits from drug manufacturers challenging the law. Among others, plaintiffs Pharmaceutical Research and Manufacturers of America, Merck, and Janssen Pharmaceuticals have complained that the law unconstitutionally forces manufacturers to sell their products at below-market prices.

    Briefing is ongoing, and appeals are sure to follow.

    The Conclusion for the Claims Community

    There was a lot of hoopla when this law passed about how it would finally tame the high cost of pharmaceutical drugs. However, the evaluation of cases with significant ongoing drug expense appears to be unaffected, at least for now.

  • When Does Negotiation End?

    More than 95% of all cases settle. Sometimes cases don’t settle at mediation, but shortly thereafter as participants spend more time thinking about their litigation prospects. Unfortunately, there is a number of cases which do not settle until just before trial, at the courthouse steps both figuratively and sometimes literally. You will get the best result when you view negotiation as a continuous process.
     
    Before Litigation
    Some litigation professionals don’t like to “show their hand.”  This can be a mistake.

    For claimants, it’s wise to provide adequate support in your initial demand letter. Claimants who make a demand without adequate backup guarantee themselves a lengthy and expensive litigation. If your opponent sees you as making a mere nuisance claim, they are unlikely to spend enough time working up their case to foster early settlement. If you must file promptly because of an imminent deadline, let the defense know you are still open to early negotiation.

    On the other hand, knee-jerk defense pleadings and motions may unnecessarily waste money by ignoring settlement opportunities.

    During Litigation
    Just because your jurisdiction has a timetable for mediation and settlement conferences doesn’t mean you can’t negotiate settlement at other stages.

    Negotiations are often fruitful while dispositive motions are pending. Don’t just file away discovery responses for review at a later date. Spend time analyzing how they affect case evaluation now. Many cases settle at the conclusion of a deposition. When I was an active litigator, I started trials of some cases which ended up settling before conclusion.

    Immediately after trial, but before the time for post-trial motions and appeals has lapsed, is an excellent time to settle; both sides have solid feedback at this point of how the case plays out. Many appellate courts have mediation programs to allow even the most intransigent parties to come to agreement at this stage.

    If the parties agree, you can convene a mediation in any phase of the claim. It just takes a phone call or an email to get some available time slots with your favorite mediator.

    You’re in a Community
    Practitioners within a practice area run into each other again and again. Your life will be much easier if you can get along with your opposite number. If you act like a jerk, you can’t expect any favors when you are the one in need.

    Keeping in mind that your case is likely to eventually settle, congenially let your opponent know that you are always willing to discuss settlement at any stage of this claim– or the next one. Seen in that light, the negotiation process never ends.

  • Communicate! Why Are Counsel Non-Responsive?

    A recent CLM magazine article listed multiple reasons for claim processing inefficiencies. One was “unresponsive counsel.”

    That got me thinking about why this should be.

    Staff Counsel
    Everyone is on the same team. Staff counsel have no motive to perform work to increase billings. Theoretically, at least, communication between Claims and staff counsel should be seamless.

    Outside Counsel
    Outside counsel who have secured a place on a carrier’s approved panel cannot rest on their laurels. These panels are routinely reviewed. Many carriers maintain departments or hire outside contractors to conduct deep-dive audits of panel counsel performance.

    Panel counsel firms survive on income from their carrier clients. When panel counsel cannot handle the case due to a conflict of interest or geographic issues, outside counsel not on the panel may be appointed. They, too, want to keep getting these assignments.

    So why would they put that at risk by failing to respond to client inquiries?

    CUMIS Counsel
    The insurer has the least amount of control over the activities of outside counsel who was chosen by the insured because of a potential coverage conflict of interest.  It may be difficult to obtain comprehensive reports because of the need to protect the insured’s continuing access to benefits from the insurer’s duty to defend.

    Possible Reasons
    Just as claims reps may be overburdened, so are their counsel. Many attorneys are juggling heavy caseloads that hinder their ability to respond promptly. Sometimes they automate their reporting by repeatedly sending in the same report with hardly any revision. If we’re being honest, let’s admit that some claims reps “check the box” that a report was received without drilling down to see if the case is progressing as it should.

    Rather than creating a litigation plan unique to the case, many insurance defense attorneys defend on autopilot. They send out irrelevant discovery or concentrate on battening down facts when there is a dispositive legal issue applicable to the facts already known. I have also had claims reps tell me that their counsel ignore their directions.

    Believe it or not, another reason may be that internal firm politics are getting in the way of efficient reporting.

    A Solution For Settlement
    We know that approximately 96% of all cases settle. I have reviewed many insurers’ litigation guidelines. Hardly any set rules about when to initiate mediation.

    The earlier parties start talking about mediation, the earlier the case is likely to settle. Revising guidelines to define events, such as deposition of the plaintiff, which trigger evaluation of mediation at this time would be helpful.

    If counsel (and perhaps claims) ignore the litigation guidelines, revision will be of little help. Of course, claims and defense counsel must cooperate to pay attention to their shared goal. Communication among all the players closes cases faster.

  • Be Nice

    Nice guys do not finish last. To the contrary, they are more likely to get a satisfactory result

    Remember Civility?
    I was kind of surprised to learn that a “California style mediation” means going into caucus immediately and staying there until settlement or final impasse. Apparently, in the rest of the country, advocates and parties talk to each other with the direction and help of the mediator. They actually collaborate face-to-face rather than through a mediator filter. Presumably, people are not throwing books on the conference table or stomping out the door. They are actually being >gasp< nice.

    Be Nice in Advance
    One way litigators can help everyone get to settlement faster is through good faith discovery. Don’t ask for overbroad responses. Burdening the opposition only delays the litigation. Don’t copy a bunch of boilerplate objections and not provide meaningful information in your responses. Get it done in time for everyone to have parsed the information in advance of the mediation.

    Actually prepare for the mediation. Every case turns on five or fewer issues. Define them, know what your evidence or the law is that makes yours a winning position. If you can define the pivotal issues, you can cogently present your case. A clear presentation of the groundwork of the case will likely endear you to the mediator.

    Seeing Yourself
    One theory is that negotiators have gotten nicer because of remote mediation. When someone can see himself/herself close up in the camera, that person can see how ugly that temper tantrum really is—not to mention ineffectual. Unfortunately, not everyone has gotten the message.

    What if past dealings block any interest in being nice to your opponent? Here is a trick. Pretend. You don’t have to feel nice—just pretend to be nice. Even if inside, you feel like you want to stab this person.

    Resolve to be nice—even if others are not. It’s the best way to move your case forward.

  • Health Insurance as an Item of Damage

    Future insurance premiums might be a valid component of a settlement evaluation.

    If the claimant must now pay premiums that would not be required “but for” the litigated occurrence, a claimant may present this expense as an item for compensation.

    Considerations include:

    • What did the claimant pay for health insurance prior to the occurrence?
    • Was the health insurance subsidized as an employment benefit which is no longer available?
    • Is the claimant on Medicare before the normal retirement age as a result of the subject occurrence?
    • Will this settlement disqualify the claimant from receiving public benefits?

    The premium is just the starting point. Parties may also calculate deductibles and co-payments, as well as items which may not be within the insurance coverage, such as transportation and home health care.

    The cost of health Insurance will continue to rise. In coming to an appropriate figure, parties may discuss a cost-of-living adjustment versus a reduction of future cost to present value.

  • Medical Expense HopScotch

    Injury claimants are most likely to accept a settlement offer that 1) takes care of liens without wiping out the entire settlement and 2) provides a safety net for their future medical care. In mediation, I try to prompt negotiators to present proposals which show how a demand or offer addresses these issues. To do this, negotiators must review past medical expense records, understanding that claimants may hopscotch among payors or have concurrent payors as their status changes.

    Private insurance Most Americans under 65 get health insurance through their or a family member’s employer. Some people may have purchased health insurance through an Affordable Care Act exchange such as CoveredCA.com; depending on their income, they may receive subsidies to reduce the premium. Claimants who are no longer able to work, and now have a pre-existing condition, may have transitioned from an employer’s plan to an Affordable Care Act plan. Some claimants may be self-procuring health insurance, including Medicare enrollees buying supplemental plans known as Medigap insurance and Part D prescription drug plans.

     

    Workers Compensation will have paid past medical expenses for an accepted industrial injury.

     

    Medi-Cal pays medical expenses for low-income individuals who qualify

     

    Medicare provides medical care for disabled people who have qualified for Social Security Disability Insurance after 30 months, as well as for Medicare enrollees  who have reached  normal retirement age.

     

    Out of pocket – Those with the financial ability to do so may self-pay when they lack insurance or want a procedure the insurer has denied or stalled.

     

    “On a Lien” – When an attorney refers the client to a medical provider who provides services without charge, the provider has a lien on the ultimate case proceeds.

     

    Every one of these possibilities (other than expenses paid out of pocket by the rare individual who can afford it) can give rise to a lien which must be resolved before settlement proceeds can be distributed. Negotiators should determine the extent of such liens before coming to mediation and be prepared with a plan to fund the injured person’s future medical needs.