Insurance Law

Law Suit Crisis in NC? Not even close, malpractice refund check "in the mail"

As a personal injury lawyer in the state capitol, Raleigh, I hear a lot of "complaining" by physicians about "crazy lawsuits."  I always tell them (many of whom are friends) that malpractice lawsuits in North Carolina are either declining or at worst, holding steady. 

The main insurer for physicians, NC Medical Mutual, has just announced that they MADE so much money last year, they are issuing a refund to doctors.  And guess what?  This is NOT a result of tort reform.  We have had no major laws pass in our state which resulted in "savings."

In fact, based upon actuarial studies, the reality appears to be that when lobbyists for the insurance companies were screaming for tort reform, what they were doing behind the scenes was RAISING premiums for physicains to create what I would call a "manufactured problem."  The doctors' own insurance company was gouging them, and then asking them to donate money to "tort reform" causes, which of course, are insurance company lobby groups.

Looks like the physicians have finally reigned in their own insurance company by realizing that the "crisis", if there is one, is mostly in the minds (and wallets) of the insurance industry.

from the News and Observer

N.C. insurer to pay dividend
Medical Mutual will also pay off debt as drop in malpractice suits boosts profit

David Ranii, Staff Writer
The state's largest medical malpractice insurer says that fewer lawsuits filed against doctors will allow it to pay its policyholders a $3 million dividend -- its first dividend ever.
Raleigh-based Medical Mutual Insurance Co. of North Carolina said it posted a 7.4 percent increase in profit last year as the number of lawsuits filed against its policyholders fell to 298 last year. That's down from 326 in 2006.

In addition to paying the first dividend since the company was founded in 1975, Medical Mutual also plans to erase its $10 million in debt this year. And, over the next four years, it plans to refund $12 million in capital supplied by its policyholders in 2003 as part of a plan to shore up the company's finances and stabilize its premium rates.

In recent years the N.C. Academy of Trial Lawyers, whose members include the personal-injury attorneys who sue doctors for malpractice, has bashed Medical Mutual for charging rates that the lawyers' group labeled excessive.

Medical Mutual's CEO Dale Jenkins said the dividend and capital refund to shareholders demonstrates "we are a very good steward of the resources the [doctors] have provided to us. We recognize every day that it is their money."

Medical Mutual hasn't sought a rate increase from state regulators since 2005. The latest positive financial results will allow the insurer to hold rates steady again this year.

Medical Mutual's dividend will be in the form of a credit that physicians receive when they renew their policies, said Jenkins. The average credit will be about 5 percent of the annual premium for most of the 6,300 North Carolina physicians who are policyholders. Medical Mutual is a mutual insurance company that is owned by its policyholders.

"We're always glad to see a company ... able to give money back to its shareholders," said N.C. Insurance Department spokeswoman Chrissy Pearson.

Jenkins said the number of medical malpractice lawsuits has fallen nationwide. In addition, Medical Mutual has taken steps aimed at limiting lawsuits. The company has established stringent underwriting guidelines in order to avoid insuring doctors it considers high-risk, Jenkins said. "We do not take all comers," he said.

The company also sends out teams of nurses to assess doctors' practices and recommend ways to minimize risks, he said.

Profit last year totaled $26.1 million, up from $24.3 million in 2006, Medical Mutual reported. Assets increased by $44.9 million, to $416.2 million.


Chris Nichols 1.800.906.5984

Contributory Negligence in NC: why comparative won't raise insurance rates

NC Lawyers' Weekly has provided a great link to an article that was run in the Winston-Salem Journal about contributory negligence laws in North Carolina. 

Contrubutory Negligence is an issue that people don't know or care about, until they face the problem themselves.  Basically, in NC, even if you are hurt by someone else's negligence, if the other person can prove you are just a little bit to blame for your injury, you are barred from any recovery.  That's right.  Someone else is 99.9% to blame, and you are barred from recovery.

Columnist Scott Sexton has written a series of excellent articles on the subject and really puts a human face on this convoluted and political issue.  I highly recommend reading these articles.

I'll also add this to the mix.  One of the problems with contributory negligence is that it is so often a bar to people seeking legal representation.  Lawyers who represent injured people know that they could spend years working on case and lose everything at trial simply because a jury felt the Plaintiff may have played some very small part in causing the accident.

Here are some the the previous articles by Sexton:

Contibutory Negligence: it's "an insurance company's dream "

"Never mind that Joshua was 7 years old and was within 3 feet of the curb, or that Logan was drunk and driving on the wrong side of the road. "By way of affirmative defense, Defendant Logan pleads the contributory negligence of the decedent Plaintiff Joshua Franklin Palomares-Beckles," wrote Rodney Guthrie, Logan's attorney. If a jury in North Carolina decides that you are even a tiny bit at fault in this sort of case, you are entitled to nothing under state law, under a concept called contributory negligence. "In general, I'd say contributory negligence is an insurance company's dream," said Walter Holton Jr., the attorney who filed the lawsuit on behalf of Beckles-Palomares. "

Wreck victim faces being victimized by outdated law

"After an automobile accident in New Hanover County involving his daughter, Ashley, a student at the University of North Carolina at Wilmington, Norris has become something of an expert on a legal concept known as "contributory negligence," an outdated and completely unfair area of insurance law used only here and in three other states. That leaves option C. "Our insurance company is also using the contributory-negligence law claim that Ashley is limited in what we can recover," Norris said.

'There is no lobby for the little people' in this state

"Just four states - North Carolina, Virginia, Alabama and Maryland - still hang on to the concept of contributory negligence, a relic from English Common Law. "

Don't believe hype that law would increase insurance rates
By Scott Sexton

Scott Sexton
Email Bio

On its face, insurance law - specifically a legal concept called “contributory negligence” - is something that only a serious policy nerd could love.

That is, unless (or until) you or someone you know gets hosed by that law. Then it’s not so boring.

Contributory negligence works like this: If you’re in an accident and deemed to be just 1 percent at fault, you’re not legally entitled to one red cent to cover your damages from the idiot (or his or her insurance company) who was 99 percent to blame.

Three recent columns explored some of the more outrageous abuses of this law. Possibly the worst was the insurance-company attorney who argued that a 27-year-old man killed by a hit-and-run driver in October 2003 while changing a flat tire in Orange County was partly responsible for his own death.

It’s a shameless, outdated blame-the-victim strategy. It also seems like an easy law to change.

Yet objections remain. The state, for example, could switch to a “comparative-negligence” system. If you’re 90 percent at fault, you (or your insurance company) pay 90 percent of the damages.

“Comparative negligence is a nightmare to apply. Few people agree on the percent fault they are assessed, it increases lawsuits, is a cash cow for lawyers, and raises everyone’s insurance rates,” wrote one reader who works in the insurance industry. “If you haven’t noticed, N.C. enjoys some of the lowest auto-insurance rates in the country.”

Good point. And it’s one worth exploring.

Low-rate state

North Carolina does indeed enjoy consumer-friendly auto-insurance rates - the sixth lowest in the country, according to the N.C. Department of Insurance.

That’s not, however, because of any sense of fair play by insurance companies nor because contributory negligence keeps costs down.

The credit goes to a man who next to nobody has heard of, state Insurance Commissioner Jim Long. He is basically the final word on insurance rates in North Carolina.

Every Feb. 1, the N.C. Rate Bureau - an umbrella organization representing insurance companies - files a rate request. The bureau then makes a rate recommendation. Actuaries and attorneys with the Department of Insurance negotiate any changes with the rate bureau. If there’s no agreement, then Long decides.

“It’s a pretty long and pretty dull process unless you are an actuary,” said Chrissy Pearson, a spokeswoman for the Department of Insurance.

Given that background, I figured that Long’s thoughts on the merits of contributory negligence versus comparative merits would be worth hearing.

You can read the rest of the article by going to the Winston-Salem Journal.

-Chris Nichols 1.800.906.5984

Allstate Pleads Guilty to Criminal Charges

A friend forwarded me a great article by a columnist who writes for a Philadelphia newspaper.  It exposes some of the horrible practices that I've noticed over the years by one of America's largest insurers, Allstate.  Some of Allstate's practices are so extreme that I've had Allstate adjuster say to me "I know this case is worth more, but this is all I'm authorized to pay.  I don't blame you for filing a law suit."

Herb Denenberg writes for The Bulletin. Denenberg notes Allstate's recent guilty plea to six federal indictments and discusses several anti-consumer practices of Allstate, including complaints by CFA, the Consumer Federation of America ( Part of his article quotes the CFA report,

"The Allstate Corporation has been at the forefront of the insurance industry in unjustifiably raising home and automobile insurance rates relative to the amount paid out in claims, in using questionable practices to settle claims and in attempting to shift costs to taxpayers."

EXCESSIVE RATES AND PROFITS BUT ANEMIC PAYOUTS TO POLICYHOLDERS. The report notes that Allstate paid out only 59 percent of the premium dollar on claims to policyholders from 1997 to 2006. The industry average is 65 percent. In other words, CFA argues Allstate should have cut its premiums or perhaps paid out more in claims. But in CFA’s view, Allstate is now charging too much for the benefits delivered to its policyholders.

HIGH CONSUMER COMPLAINTS. The complaints filed against Allstate, many relating to claims practices, are more numerous than almost all of its major competitors. Of 13 major auto insurers, Allstate had the second highest complaint ratio in two recent years. This is based on data collected by the National Association of Insurance Commissioners.

QUESTIONABLE CLAIMS SETTLEMENT PRACTICES. CFA says Allstate has adopted an automated claims settlement procedure designed to cut claims payments to policyholders, without regard to the validity of the claim and without an examination of the claim. As a result, CFA says it can document a systematic underpayment of claims based on aggregate data. The data show that Allstate reduced its payouts by about 20 percent relative to the industry for the year 1996 through 2006.

You can read the entire report at The Denenberg Report

Chris Nichols 1.800.906.5984

Great video on the myths of "Tort Reform": Mr. Fancy Pants

This is a great YouTube video on the issue of "Tort Reform."

The video does a great job showing how giant corporations have twisted and distorted the truth about law suits in America simply to poison jury pools.  They do this so they can continue to deny responsiblity for wrong doing, and basically "save a buck" at the expense of injured people who have done nothing to cause their own injuries.

It's about 8 minutes long and worth the watch.



Chris Nichols 1.800.906.5984

Business Community says Too Much "Tort Reform" not so good

My friend Roy Harmon from South Carolina (Health Plan Law Blog)posted an interesting article today about how "tort reform" has been successful in many states but now even businesses are beginning to feel the negative effects.  Of course, those of us who practice trial law have know for years that it is easy to find yourself on either side of the "v" as we say.  (In other words, if you pass laws that limit Plaintiff's ability to seek redress, you may very well find that if YOU have been wronged, your rights have been limited).

In the ultimate "what comes around goes around,"  lawyers who represent business interests are griping about how tough it is to get justice in business versus business cases.  The article also cites how, despite massive reforms, Medical Malpractice Insurance companies keep rasing rates, despite paying out fewer claims.  This once again proves the folly of limiting rights based upon political motivations.

Read Roy's Post "The Trouncing of Trial Lawyers"

Chris Nichols
Nichols Law Firm 1.800.906.5984

Anti-Tort Reform Blog: The Tortellini

Tort Reform is a Great Idea, Until YOU Get Hurt

You don't have to look very far on the Web to find websites devoted to eliminating your right to recover fair and just compensation for the carelessness of another individual.  Websites like Overlawyered try to convince everyone that almost every law suit filed is frivolous, and that every jury verdict is pushing the insurance industry and businesses toward bakruptcy. 

The Tortellini, "Bites of Law and Politics, with sauce"

Finally, a new website, The Tortellini , has been started by Stephanie Mencimer, a contributing editor of the Washington Monthly and a former investigative reporter for the Washington Post.

The Tortellini does a great job of debunking the myths of tort reform, and also highlights some of the personal injury lawsuits filed by the mostly Republican members of Congress who, in their "jobs" are constantly trying to eliminate the rights of other citizens to seek fair compensation.  Looks like these tort-reformers have no problem filing lawsuits when they think they have been injured.  Check out her section on Hypocrites.

Mercimer looks at the false propoganda and quickly and efficiently shreds it, revealing the truth behind the fiction of a "tort crisis" in America.  I encourage every consumer lawyer with a Blog or a Website to link to The Tortellini. 

---Chris Nichols

Link to Nichols Law Firm Website 1.800.906.5984

Insurance Company Profits Soar to $60 billion

My friend Mike Daisley, a great lawyer in Charlotte, NC with Wells, Daisley & Rabon, P.A., passed on this story to me today.  In addition to being a trial lawyer, Mike is also a radio host on a local Charlotte station, WBT News Talk Radio.

Not a day goes by that I don't read or hear about Trial Lawyers getting blamed for "the high cost of insurance" but the reality is that insurance companies traditionally take as much as they can.  The insurance industry is thriving, and yet, rates keep increasing across the board. 

The entire article from the New York Times can be read here.  Here is an excerpt:

Earnings for Insurers Are Soaring

Published: October 14, 2006

Insurance companies are expecting record profits in 2006 after predictions of  another year of  devastating hurricanes have so far come to naught.




Industry experts are estimating that profits may reach $60 billion, on a combination of higher premiums along the coasts, no major payouts for natural disasters and strong investment returns. The insurers also had high profits on other lines of coverage like auto insurance, workers compensation and general liability.

The record profits expected this year come after a terrible 2005, when insurers paid out $61 billion for damage from Hurricane Katrina and other storms. Even so, the insurers ended up with a profit of $43 billion for the year because of exceptionally good results on investments, declining claims on policies on homes away from the coast and profits on other lines of coverage.

I know that insurance is a business, and thus profits are the goal, yet at the same time, insurance companies are constantly poor mouthing to everyone who will listen.   When I represent someone who has a serious injury and the insurance company for the negligent driver wants to "nickle and dime" us to death, I can't help but think about $60 BILLION dollars and wonder how much of that money is owed from the blood sweat and tears of my clients.

-Chris Nichols 1.800.906.5984

Beware Umbrella Policy Exclusions

A Hole in the Umbrella

Most people driving around these days are blissfully unaware of Umbrella Policies.  Umbrella policies or "Personal Liability Umbrella Policies"  (PLUP) are insurance policies sold to cover individuals and businesses in case the "regular" insurance is not enough.  In other words, if you kill someone by your own negligence, and they sue you for more than your regular insurance policy limit and win, your Umbrella Policy will "kick in" up to its policy limits, which are usually at least one million dollars.

Here is the catch:  Most Umbrella policies EXCLUDE coverage for your family members.  What that means is that if you are driving the neighbor's kid to school and severely injure her because you ran a red light, your Umbrella policy will provide coverage for her injuries.  BUT, if you are driving your wife and your OWN child and ran the red light injuring them both, the Umbrella policy would pay nothing.  That's right, NOTHING, nada, zilch.  The Umbrella policy contains a provision called a "household exclusion" or "family member exclusion" that prohibits coverage for members of your household.

Agents Unwittingly sell Unfair Policies

Is that unfair?  Sure.  But insurance companies get away with it because no one reads their policy.  On top of that, many agents selling these policies do not even realize the provision is in there.  They may not realize it is in the Umbrella because North Carolina outlawed family member exclusions in other types of automobile insurance (liability, underinsured, uninsured) decades ago.

Want to know more about how to "fix" the Umbrella? on by clicking below......

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