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2020 – 2021 Dishonorable Mentions

“Dishonorable Mentions” generally comprise singularly unsound court decisions, abusive practices, legislation or other actions that erode the fairness of a state’s civil justice system, but aren’t otherwise discussed in other sections of the Judicial Hellholes report.

IDAHO SUPREME COURT ALLOWS ‘PHANTOM DAMAGES’ AND EXPANDS MEDICAL LIABILITY

An Idaho Supreme Court ruling, issued in the final days of 2019, will allow plaintiffs’ lawyers to mislead jurors by introducing inflated bills for medical treatment that no one paid and assert creative theories of liability against healthcare providers.

The ruling came in the context of a medical malpractice case in which the plaintiff alleged that a patient developed complications as a result of hip replacement surgery, including becoming infected with Methicillin- Resistant Staphylococcus Aureus, a type of bacteria that is resistant to antibiotics. The trial court ruled that the jury should determine his damages for medical expenses based on the amount his healthcare providers accepted as payment for his treatment. The Idaho Supreme Court reversed this ruling, however, and found that the jury should consider only the amounts originally invoiced by the providers, before significant portions of these bills were written off to reflect the amount paid through Medicare.

The high court ruled that after the jury reaches an inflated amount of damages for medical expenses based on the invoiced amounts, a judge can reduce the award to deduct amounts not paid. The problem with this approach is that a jury may be influenced by costs of medical expenses that do not reflect reality to award higher noneconomic or other damages.

The Idaho Supreme Court also ruled that plaintiffs’ lawyers who represent clients who believe they were harmed by negligent medical care are not limited to bringing lawsuits under Idaho’s Medical Malpractice Act, but can assert a variety of common law actions.

For example, the case before the Court included claims for intentional infliction of emotional distress, negligent infliction of emotional distress, gross negligence, reckless, and willful and wanton conduct. The lower court had dismissed these claims, finding them subsumed by the Idaho Medical Malpractice Act, but the high court reinstated them. The court found plaintiffs’ lawyers cannot use other causes of action to circumvent the proof requirements of the Medical Malpractice Act, though it left the door open to lawsuits against healthcare providers where these evidentiary requirements may not apply.

MISSOURI APPELLATE COURT RESTRICTS RIGHTS OF DEFENDANTS UNDER ‘065 AGREEMENTS

A unique Missouri law permits a defendant to allow a plaintiff to obtain a judgment against it in court, so long as the plaintiff only seeks to collect the award from the plaintiff’s insurer. Such agreements are known as ‘065 Agreements, reflecting the Missouri statute that authorizes them. In 2017, the Missouri legislature amended this law to require that parties give notice to the insurer of these types of agreements, so that the insurer can intervene and protect its interest if needed.

In July 2020, a Missouri appellate court held that the statute only provides insurers with a right to decide whether to defend the policyholder in the underlying litigation before entering an ‘065 agreement or intervene in a pending lawsuit. It does not give them the ability to contest the policyholder’s liability or the plaintiff’s damages when it intervenes.

In that case, Plaintiff Collin Knight entered a settlement with his grandparents (the Knights) after being injured in a water ski accident while under their supervision. After State Farm declined to defend or indemnify the Knights, the parties agreed to limit the settlement amount to the Knights’ insurance. At arbitration, the plaintiff was awarded $6 million, and the Knights provided notice to State Farm, which sought to intervene. The circuit court confirmed the arbitration award, and State Farm appealed, contending it had a right to a jury trial and to dispute the charges. The appellate court upheld the lower court’s decision.

OREGON SUPREME COURT STRIKES DOWN LIMIT ON NONECONOMIC DAMAGES

In July 2020, the Supreme Court of Oregon invalidated a state law that placed a reasonable limit on the subjective and immeasurable portion of awards in personal injury cases – those awarded for noneconomic damages.

Oregon has had ping-pong like rulings on the constitutionality of noneconomic damage limits for the past 25 years. The Oregon Supreme Court upheld a noneconomic damage cap when applied in a wrongful death case in 1995. The Court then invalidated the limit in a 1999 product liability case as a violation of the right to jury trial. Just four years ago, the Court overruled the 1999 case, finding it “wrongly decided” a case finding damages limits permissible in a medical malpractice case against a state hospital. In that instance, the Oregon Supreme Court observed that “it is difficult to see how the jury trial right renders a damages cap unconstitutional. Neither the text nor the history of the jury trial right suggests that it was intended to place a substantive limitation on the legislature’s authority to alter or adjust a party’s rights and remedies.”

Yet, in Busch v. McInnis Waste Systems, this year, the Court ruled that the statutory limit violated a citi- zen’s right to remedy. That case stemmed from a pedestrian who was awarded $10.5 million in noneconomic damages, including for pain and suffering, in addition to $3 million in economic damages, after he was hit by a garbage truck while crossing a Portland street. The state’s high court ruled that the legislature generally cannot limit noneconomic damages without providing an injured party a “quid pro quo,” some other supplemental remedy. The Court also improperly second-guessed the need for a statutory limit and the level at which it was set, intruding on the legislature’s policymaking role.

Unlike the Oregon Supreme Court, most other state and federal courts have upheld such laws as a legitimate, constitutional public policy decision. As a result of the decision, Oregon residents can expect it to become more difficult to reach reasonable settlements in personal injury cases, to pay higher insurance rates, and to have more defensive medicine and reduced access to medical care.

WISCONSIN TRIAL COURT ALLOWS JURY TO CONSIDER IRRELEVANT EVIDENCE AND JUNK SCIENCE

In February 2020, a Wisconsin trial court doled out a $38.1 million verdict after a teenager rear-ended the plaintiff’s 2013 Hyundai Elantra. But rather than place responsibility on the driver, plaintiffs’ lawyers led the jury to place 84 percent of responsibility for the plaintiff’s injuries on the car’s manufacturer, providing a deep pocket for recovery. This outcome was influenced by the court’s improper admission of junk science and other evidence. As a result, Hyundai is on the hook for $32 million of the award.

The plaintiff claimed the prongs used to hold the driver’s headrest were improperly designed; the same headrest design has been used in millions of cars by many carmakers across the world. At trial, the court refused to exclude evidence of unrelated product recalls and Hyundai’s subsequent remedial measures. The automaker has appealed the decision.

If the verdict is not reversed, it is possible that a single court in Wisconsin, not a regulatory agency or trade group, will influence automakers to redesign their headrests and risk widespread recalls.

ACTIVIST NEW MEXICO ATTORNEY GENERAL SEEKS TO EXPAND LIABILITY UNDER STATE’S PUBLIC NUISANCE LAW

New Mexico Attorney General Hector Baldereas (D) is suing the makers of Zantac under public nuisance doctrine. The State alleges that the heartburn medication contains a contaminant, NDMA (n-nitrosodimeth- ylamine) and that New Mexico residents who have used the drug have an elevated risk of cancer. The lawsuit follows an April 2020 recall, ordered by the Food and Drug Administration after the agency found that levels of NDMA in the drug can rise during storage to amounts beyond the acceptable limit. Even though the FDA and manufacturers acted promptly to remove the drug from the market, New Mexico is seeking to profit off the recall. The State’s complaint explicitly asks that any recovery against the makers of Zantac and pharmacies selling Zantac be an amount to fund a statewide medical monitoring program “for many years to come.” This is an inappropriate expansion of the public nuisance doctrine, and capricious attorneys general should not sue regulated and rule-following companies in order to fund public services.