Oral argument audio from EMA v Cansler considering whether NC Medicaid liens comply with Ahlborn case

If you are interested in hearing how the 4th Circuit came to the decision in E.M.A. v Cansler, wherein the Court held that NC's Medicaid lien statute was not in compliance with the requirements for subrogation as set out in Ark. Dep't of Human Servs. v. Ahlborn, 547 U.S. 268 (2006) the audio link is posted below.  E.M.A. v Cansler now stands for the proposition that Plaintiffs in NC can ask for a Court to determine Medicaid's share of a personal injury settlement in a post-settlement hearing where the Court determines what percentage of the settlement is compensation for "medical costs incurred" and paid by Medicaid.  

 

The oral argument can be heard here:  http://coop.ca4.uscourts.gov/OAarchive/mp3/10-1865-20111026.mp3#

 

Chris Nichols

www.NicholsTrialLaw.com

www.NicholsTrialLaw.com 1.800.906.5984

4th Circuit Court of Appeals upholds application of Ahlborn in NC- rejects reasoning of NC Supreme Court in Andrews

Finally!

After about 7 years of multiple protracted litigation on three separate cases, the United States Court of Appeals for the 4th Circuit has established in the matter of E.M.A. v. CANSLER,  that Ark. Dep't of Human Servs. v. Ahlborn, 547 U.S. 268 (2006) is the law of North Carolina and that the NC Supreme Court opinion of Andrews v. Haygood did not properly interpret Ahlborn as it applies to NC Medicaid reimbursement.

Congratulations to Bill Bystrynski of Kirby & Holt of Raleigh, NC for the huge win for his client.

I'm going to keep this post fairly short and then add more posts with analysis, but I think the court puts their finding best.

Given that North Carolina common law does not bar DHHS’s lien against E.M.A.’s settlement proceeds, we arefaced with the same question considered by the North CarolinaSupreme Court in Andrews: Whether North Carolina’sthird-party liability statutes comport with federal Medicaidlaw and Ahlborn merely because the subrogation statute, N.C.Gen. Stat. § 108A-57, "caps" the state’s recovery at the lesserof the actual medical expenses paid or one-third of the totalsettlement. The North Carolina Supreme Court in Andrewsand the district court in this case adopted a narrow interpretationof Ahlborn, limiting its holding to cases in which the partieshave stipulated to or otherwise allocated settlementproceeds between different categories of damages, therebyidentifying a sum certain for medical expenses. Thus, thesedecisions are based on the view that Ahlborn is inapplicablein cases involving an unallocated lump-sum settlement, suchas the instant matter.On the contrary, however, nothing in Justice Stevens’sopinion for a unanimous court in Ahlborn supports such acrabbed application of that case. The Ahlborn Court addressedthe specific issue of "whether [ADHHS] can lay claim tomore than the portion of [the recipient’s] settlement that representsmedical expenses." 547 U.S. at 280.

The Court in no way rested its analysis of this issue on whether there has been a prior determination or stipulation as to the medical expensesportion of a Medicaid recipient’s settlement. Thus, Ahlborn isproperly understood to prohibit recovery by the state of morethan the amount of settlement proceeds representing paymentfor medical care already received. The North Carolina statute’sone-third cap on the state’s recovery against a Medicaidrecipient’s settlement proceeds does not satisfy Ahlborn insofaras it permits DHHS to assert a lien against settlement proceedsintended (or otherwise properly allocable) tocompensate the Medicaid recipient for other claims, such aspain and suffering or lost wages (i.e., in cases where one-thirdof the recipient’s total settlement recovery is greater than theamount DHHS expended on the recipient’s behalf).10 See Andrews, 669 S.E.2d at 607-09 (Hudson, J., dissenting) (concludingthat the North Carolina statutes conflict with federalMedicaid law by allowing the state to recover from a recipientfunds that were for purposes other than medical expenses);Andrews, 655 S.E.2d at 445 (Wynn, J., dissenting) (same).

...

We are not persuaded that a mere "reasonable cap" on astate’s recovery from an unallocated lump-sum settlement satisfiesthe federal anti-lien law as required by Ahlborn. Indeed,contrary to the Andrews court’s reliance on Justice Stevens’sfootnote, the ATLA Brief, rather than advocating full recoverysubject only to a statutory cap, discussed procedures inseveral states to have "mini-hearings" to set allocations ofproceeds from tort settlements where there is no agreementamong the interested parties. Nevertheless, the Supreme Courtof North Carolina found that footnote 18 in Ahlborn authorizesthe states to mandate full recovery up to a legislativelydetermined,across-the-board limit or cap. This reliance is misplaced.

....

On the basis of Ahlborn’s clear holding that the general anti-lien provision in federal Medicaid law prohibits a statefrom recovering any portion of a settlement or judgment not attributable to medical expenses, DHHS’s lien on E.M.A.’ssettlement proceeds in this case violates federal law. In order to comply with 42 U.S.C. §§ 1396a(a)(18), 1396p, and Ahlborn,North Carolina is free to implement a process by whichsettlement proceeds are explicitly allocated or otherwisedetermined. In this case, we must remand for an evidentiaryhearing consistent with this opinion to determine the properamount of the DHHS lien on E.M.A.’s settlement proceeds.

You can read the full opinion here:   Download F-Opinion

 

This is an outstanding opinion and reflects the excellent analysis of Judge Wynn and Judge Hudson on the NC cases of Ezell and Andrews.

I'll be writing a whole lot more on the issue, but wanted to get this out there.

I'm also proud that the 4th Circuit relied on a Memorandum issued by CMS to the states in their decision:

It is also illuminating that the Centers for Medicaid andMedicare Services ("CMS") issued a memorandum to all Associate Regional Administrators for Medicaid and State Operations in the wake of the Ahlborn decision to aid the states in understanding the effect the decision would have onstate third-party liability recovery. See Memorandum from Gale Arden, Director of CMS’s Center for Medicaid and StateOperations Disable and Elderly Health Programs Group(DEHPG) to all Associate Regional Administrators for Medicaidand State Operations, "State Options for RecoveryAgainst Liability Settlements in Light of U.S. Supreme CourtDecision in Arkansas Department of Human Services v. Ahlborn"(July 3, 2006) (hereafter "CMS Memorandum"). The CMS Memorandum stated that, post-Ahlborn, "if a State attempted to recover from more than the portion of a settlementthat the parties allocated to medical items and services,it was in violation of the federal anti-lien statute." Id. Additionally,the CMS Memorandum clarified that, "to the extent State laws permit recovery over and above what the partieshave appropriately designated as payment for medical itemsand services, the State was in violation of federal Medicaidlaws." Id.  (Page 32)

NCTrialLAw Blog was the first blog to find and publish Download CMS Advisory Ahlborn Settlement Options (July 2006)-1 after some deep searches on the Internet.  It was a sort of "smoking gun" that showed that CMS itself was telling the State of North Carolina that Ahlborn applied.

Chris Nichols

www.NicholsTrialLaw.com

www.NicholsTrialLaw.com 1.800.906.5984

A brief "how to" for dealing with Medicare

I was sent this brief "idiot's guide" to dealing with Medicare and thought it was an excellent summary of the process.  I've posted it in full, along with the contact information for a company that will help with the lien resolution process.  I am not endorsing their product as I have never used their services.

-Chris Nichols

http://lienblog.wordpress.com/2010/07/02/the-idiot%E2%80%99s-guide-to-medicare-lien-resolution/

The Idiot’s Guide to Medicare Lien Resolution

Typically, Medicare liens are placed on the personal injury case of a person whose treatment is paid by Medicare.  Medicare’s agents, the COBC, MSPRC, and CMS have a right to recover funds which would not have been paid without the negligent act which harmed the plaintiff-beneficiary.

If you are the Medicare beneficiary and plaintiff in a lawsuit, your attorney should handle the Medicare liens for you.  If you are the attorney, but you don’t know how to handle the lien, or just need some help, follow these simple steps:

  1. Report the case to the COBC
    1. Call (800) 999-1118
    2. Be prepared to give the following Plaintiff/Beneficiary information:
      1. Name
      2. Social Security Number
      3. Medicare Number (a/k/a HIC Number)
      4. Date of Birth
      5. Address
      6. Date of Incident
      7. Injury (the COBC prefers physical body parts )
      8. Defense insurance (if known)
  2. This should be the only time you deal with the COBC
  3. Wait 10-15 days.  During this time period the COBC will transfer the file to the MSPRC, another Medicare agency.  At the end of this time period you should receive two (2) pieces of Medicare lien information from the MSPRC:
    1. First, you will receive a Beneficiary Information Questionnaire (you will recognize this document based on the red grid lines on the back pages).  This document can be ignored if, and only if, the plaintiff-beneficiary’s information has not changed.
    2. Concurrently, you will receive a Rights and Responsibilities Letter.  This will give some information on the Conditional Payment Letter process.  No action on your part is required.
      1. This Rights and Responsibilities Letter starts a countdown until you should receive a Conditional Payment Letter (a/k/a the initial lien).  That countdown will last 65 days – however, you need something else to receive the letter.
      2. Within the 65 day period, you need to send consent  and proof of representation to the MSPRC.  If you do not send the consent, you will not receive information on the Medicare lien, nor will you be able to speak to MSPRC representatives regarding your case.
        1. Unfortunately, the MSPRC is notoriously slow.  Without constant checks on the status and timeline, your Conditional Payment Letter probably won’t arrive within the 65 day period.
          1. Be sure to call the MSPRC to check the status of your consent (its validity).
          2. Be sure to call the MSPRC multiple times after to check the status of your Conditional Payment Letter.
          3. Please be ready to wait when you call theMSPRC.  Hold times range anywhere from 10 to 55 minutes (and increasing).  In fact, due to theMSPRC’s inability to handle current volumes of mail, its call center is now closed on Fridays.
  4. After all that time and effort you should receive the Conditional Payment Letter.
    1. But if you did not bother to call the MSPRC – you probably don’t have it!
    2. You’ve received the Conditional Payment Letter, now what?
      1. Review the payments.  Check every ICD-9 code and injury to make certain they relate to the plaintiff’s sued-for injuries.
        1. Hint: ICD-9 Code 250.00 (Diabetes Mellitus) usually does not relate to malpractice or a personal injury.
  5. On nearly every Conditional Payment Letter there will be unrelated codes – this means the lien is too high and Medicare is claiming funds to which it is not entitled.
  6. If you have time before settlement you should Dispute theConditional Payment Letter.
    1. The MSPRC requires these in writing.
    2. Dispute the codes that are unrelated and explain why the MSPRCwas wrong to include them.
    3. Be detailed.
    4. The MSPRC will take 60-90 days to review your dispute.  When it replies to your dispute it will not give reasons, it simply sends a new Conditional Payment Letter.
    5. The case is settled, how do I pay Medicare?
      1. First you have to request a Final Lien Demand by notifying theMSPRC of settlement.
        1. Be sure to include the settlement, attorneys fee, any costs incurred (plus an itemization), and the date of settlement.
        2. In 30-45 days you will receive a Final Lien Demand.  This is the amount you must pay to Medicare from the settlement proceeds.
          1. You have 60 days to repay the lien before interest accrues.
          2. If you fail to pay within 60 days the interest will accrue for all 60 days plus any additional time.
  7. Final Lien Demand is not really final:
    1. You can appeal the Final Lien Demand on the basis that unrelated payments are included in the lien.
      1. You must do so within 120 days.
      2. Be very careful and detailed when appealing.  Keep in mind the MSPRC is the judge, jury, and executioner at this point of the Medicare lien appeal.
    2. Other methods exist to lower the lien, including:
      1. Compromises with CMS.
      2. Waivers through the Social Security Administration.
      3. Now that I appealed, how does my client get aMedicare Lien Reimbursement?
        1. Medicare lien reimbursements (for “overpayment”) take 10-14 weeks to be processed and sent to your client.
        2. You don’t have to do anything once the appeal has been agreed to by the MSPRC.
          1. But the check will go straight to the last-known address for the beneficiary.
          2. If you want the check to go to your office you must contact the MSPRC and request it be sent to you.
            1. Usually this check arrives as a two-party check.
            2. This will protect the interests of all heirs who have an entitlement to the lawsuit funds.
            3. Now you can put the check into your escrow account and disburse the funds as is legal, ethical, and agreed to by the plaintiff, heirs, and secondary lienholders.
  8. Timelines:
    1. Reporting to COBC – Day 1
    2. COBC transfer to MSPRC – Day 3-5
    3. MSPRC sends Rights and Responsibilities letter, starting 65 day countdown to a Conditional Payment Summary, or Initial Medicare Lien – Day 15-20
    4. Conditional Payment Letter arrives – Day 80-85
    5. Disputes add 60-90 days
    6. Compromises add 60-90 days
    7. Appeals add 60-90 days
    8. Notice of settlement to receive Final Lien Demand
      1. Was 10-21 days
      2. Now is 30-45 days
      3. If you do everything right in Medicare Lien Resolution, you could resolve a lien within 110 days; but, if you let letters sit and do not take the time to carefully review and resolve your liens, they could take years.
        1. Report early;
        2. Call often; or,
        3. GET HELP!  Lien Resolution Servicesspecializes in this process.  When we see a Medicare letter, we know what to do with it – reducing lag time and speeding up the lien resolution process.  LRS makeslien resolution 100% of our focus; we take this administrative work off your hands providing you with time to practice law and litigate cases.
        4. Best of all – The cost of lien resolution isbillable to the client, just like an expert fee.  The attorney pays nothing; and, while the client pays a small fee, he or she ultimately benefits by a reduced lien, faster disbursement, and results.
        5. Contact us for all of the above.
Ryan J. Weiner
Co-Founder Lien Resolution Services
www.lienresolutionusa.com
http://lienblog.wordpress.com
rweiner@lienresolutionusa.com

 

www.NicholsTrialLaw.com 1.800.906.5984

Medicare (CMS) offering new fixed percentage subrogation option for settlements of less than $5,000

New Fixed Percentage Option For Medicare's Recovery Claim

 

The Centers for Medicare & Medicaid Services will be implementing a new and simple fixed percentage option that will be available to certain beneficiaries beginning November 7, 2011. This option is available to beneficiaries who receive certain types of liability insurance (including self-insurance) settlements of $5000 or less.

A beneficiary who elects this option will be able to resolve Medicare's recovery claim by paying Medicare 25% of his/her total liability insurance settlement instead of using the traditional recovery process. This means that a beneficiary will know what he/she owes and will be able to immediately pay Medicare.

In order to elect this option, the following criteria must be met:

  1. The liability insurance (including self-insurance) settlement is for a physical trauma based injury. (This means that it does not relate to ingestion, exposure, or medical implant), and
  2. The total liability settlement, judgment, award, or other payment is $5000 or less, and
  3. The beneficiary elects the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident, and
  4. The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.

A full explanation, including instructions on how and when to elect this option, will be available on this website on November 7, 2011 in the Fixed Percentage Option section of both the Attorney and Beneficiary Toolkits.

Please Note:When a beneficiary elects this option, he/she must understand that as part of choosing the option he/she will be giving up the right to appeal the fixed payment amount or request a waiver of recovery for the fixed payment amount. 

 

www.NicholsTrialLaw.com 1.800.906.5984

North Carolina Supreme Court Historical Society: 20th Annual Meeting Thursday, October 27, 201

Lawyers:

The North Carolina Supreme Court Historical Society invites you to attend the 20th Annual Meeting and Dinner on Thursday, October 27, 2011.  The dinner will be at the Carolina Country Club, 2500 Glenwood Avenue, in Raleigh, North Carolina.  The reception starts at 6:00 PM and dinner starts at 7:00 PM.  The speaker will be Scott A. Miskimon of Smith Anderson.

Portrait_JohnLouisTaylor

 To register, go to this web page:http://www.ncschs.net/Event_Registration.aspx?eventid=5The NC Supreme Court Historical Society was established in 1991 for the purpose of preserving the legal heritage of North Carolina. The Society’s sole purpose is to collect and preserve the history of the court, including attorneys and others who interact with the judicial system, as well as the cases that may be generated from those interactions.

www.NicholsTrialLaw.com 1.800.906.5984

NC Senate Bill 33 and Loss of Liberty: How the NC GOP rolls back 235 years of independence and makes big PHARMA the new "King"

Two Hundred and Thirty-five years ago to the day, North Carolina was the first of the Colonies to authorize its delegates to declare independence from Great Britain.  

So how is this relevant to "tort reform" and the pending legislation called Senate Bill 33 in the North Carolina House?  Well, this law, proposed by Rep. Johnathan Rhyne (R- Lincolnton), takes away an essential ingredient of Liberty of the people of North Carolina-  The right to a jury trial.

Rep. Rhyne's bill says that when a citizen is hurt or killed by a negligent emergency room physician, or nurse, or hospital worker, that injured person has no right to sue for negligence.  Further, the bill says that when a citizen of North Carolina is injured or killed by a defective drug manufactured ANYWHERE in the world, that citizen can not sue the manufacturer if the drug has been "approved" by a state or federal agency.  Taking away the "right to redress" or "the right to sue" is the same as depriving someone the right to a jury trial.  If you can't sue, you can't get a jury.  The doors to the court house are closed to these people.

The Halifax resolves speciically address the right to trial by jury.  In the Resolves the authors talk about the King seizing "Ships belonging to America" which "are declared prizes of War" and that the colonies have been deprived the legal right to get these ships back or enter into a process of determining the legal rights to the ships:  "And ...the United Colonies and their sincere desire to be reconciled to the mother Country on Constitutional Principles, have procured no mitigation of the aforesaid Wrongs and usurpations and no hopes remain of obtaining redress by those Means alone which have been hitherto tried."

Rep. Rhyne's proposed legislation takes us back to the days of being subjugated to the King and the Crown.  Of course, one might make the distinction that under Rhyne's law, the State of North Carolina is not "profiting" from the people.  That is true, but Rhyne's law is even WORSE.

Under Rhyne's proposals, the State of North Carolina not only denies "obtaining redress" but does so to the financial advantage of international drug companies and for-profit hospitals and corporate physician groups.

This law is a glaring example of "Big Government" taking fundamental liberties of THE PEOPLE and redistributing the spoils of war to anti-liberty, big monied cronies.

Thomas Jefferson, the author of the Declaration of Independence and the third President of the United States, said, "I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution."

Senate Bill 33 takes away the trial by jury of people injured by negligent doctors and also those hurt or killed by defective drug products. These people are completely deprived of their liberty to hold bad actors accountable for their wrongs.

Why is the NC GOP rolling back our rights to pre-independence days?

Why did certain colonists remain loyal to the King? Scholars say one unifying characteristics of Loyalists to the Crown during the Revolution was this:  They had a long-standing sentimental attachment to Britain, often with business ties.  Also known as MONEY. 

How much did Rep. Jonathan Rhyne take from Big PHARMA and Medical Lobbyists?

PLEASE: preserve your liberty and rights. Call Anyone on this list and tell them to vote NO to SB33: https://spreadsheets.google.com/ccc?key=0AlinyCcVT4eGdGZLZU95VTREcW12RXBoLXlKU2paSWc&hl=en#gid=0

The below is from:  http://ncpedia.org/history/usrevolution/halifax-resolves

HALIFAX RESOLVES

Excerpted from "Historical Miscellanea: An Early History of North Carolina," North Carolina Manual, 1991-1992, published biennially by the NC Department of the Secretary of State.

Halifax Resolves

North Carolina, on April 12, 1776, authorized her delegates to the Continental Congress to vote for independence. This was the first official action by a colony calling for independence. The 83 delegates present in Halifax at the Fourth Provincial Congress unanimously adopted the Halifax Resolves, which read as follows:

The Select Committee taking into Consideration the usurpations and violences attempted and committed by the King and Parliament of Britain against America, and the further Measures to be taken for frustrating the same, and for the better defence of this province reported as follows, to wit,

It appears to your Committee that pursuant to the Plan concerted by the British Ministry for subjugating America, the King and Parliament of Great Britain have usurped a Power over the Persons and Properties of the People unlimited and uncontrouled and disregarding their humble Petitions for Peace, Liberty and safety, have made divers Legislative Acts, denouncing War Famine and every Species of Calamity daily employed in destroying the People and committing the most horrid devastations on the Country. That Governors in different Colonies have declared Protection to Slaves who should imbrue their Hands in the Blood of their Masters. That the Ships belonging to America are declared prizes of War and many of them have been violently seized and confiscated in consequence of which multitudes of the people have been destroyed or from easy Circumstances reduced to the most Lamentable distress.

And whereas the moderation hitherto manifested by the United Colonies and their sincere desire to be reconciled to the mother Country on Constitutional Principles, have procured no mitigation of the aforesaid Wrongs and usurpations and no hopes remain of obtaining redress by those Means alone which have been hitherto tried, Your Committee are of Opinion that the house should enter into the following Resolve, to wit

Resolved that the delegates for this Colony in the Continental Congress be impowered to concur with the other delegates of the other Colonies in declaring Independency, and forming foreign Alliances, resolving to this Colony the Sole, and Exclusive right of forming a Constitution and Laws for this Colony, and of appointing delegates from time to time (under the direction of a general Representation thereof to meet the delegates of the other Colonies for such purposes as shall be hereafter pointed out.

Hooper, HewesBW, PennThe Halifax Resolves were important not only because they were the first official action calling for independence, but also because they were not unilateral recommendations. They were instead recommendations directed to all the colonies and their delegates assembled at the Continental Congress in Philadelphia. Virginia followed with her own recommendations soon after the adoption of the Halifax Resolution, and eventually on July 4, the final draft of the Declaration of Independence was signed. William Hooper, Joseph Hewes, and John Penn were the delegates from North Carolina who signed the Declaration of Independence.

www.NicholsTrialLaw.com 1.800.906.5984

Live blogging from Tory reform Committee

Rhino says collateral source is out of bill.

Punitives clarified that no attorney fees will be paid on punitive 75% paid to state.

2.3a. Med mal changed from 250 per defendant to 500k total not per defendant.

Change page 7 and 8. Products

Provisions in products bill apply only to Drugs no other products. Same as Michigan

Page 8 lines 44 and 43
6-21.1. Change. Subsection 3.
Exceeded highest offer 30 days before commencement of trial.

Page 2 sexton 1.3 sub d and e
Omitted previous and now restored.

Old section 2.4 DSO in med mal has been deleted.

Next post

www.NicholsTrialLaw.com 1.800.906.5984

Why conservatives should hate NC "tort reform" in Senate Bill 33: A Tea Party primer

The North Carolina Legislature is considering passing a law which was written, largely, by multinational pharmaceutical corporations.  The Bill would make NC the worst state in the nation in terms of protecting its citizens from wrongdoers.

The legislators who have bought into the corporate lobbyist's money agenda in Senate Bill 33 would gladly sacrifice the liberty of the citizens at the throne of the new "King": international pharmaceutical corporations and insurance companies.

Constitution

This BOLD parts are from the "core values"  listed for the "Tea Party Patriots" and serve as an example of Tea Party values.  http://www.teapartypatriots.org/mission.aspx

Core Values of the Tea Party

  • Fiscal Responsibility
  • Constitutionally Limited Government
  • Free Markets

Fiscal Responsibility: Fiscal Responsibility by government honors and respects the freedom of the individual to spend the money that is the fruit of their own labor. A constitutionally limited government, designed to protect the blessings of liberty, must be fiscally responsible or it must subject its citizenry to high levels of taxation that unjustly restrict the liberty our Constitution was designed to protect. Such runaway deficit spending as we now see in Washington D.C. compels us to take action as the increasing national debt is a grave threat to our national sovereignty and the personal and economic liberty of future generations.

Why "tort reform" proposed by the NC legislature is contrary to these values:

Fiscal responsibility emanates from the individual and is embodied by the government which derives its existence from the will of the people.  "Tort reform" in the form of arbitrary caps on damages and immunity from certain forms of negligence by certain "classes" of individual (for example, immunity for negligent emergency room doctors) shifts the natural consequences of actions from the wrong doer to the government.  Individuals who do harm should be held personally responsible for the full extent of their harm and not shift financial responsibility to government entitlement programs.

"Tort reform" in the form of NC Senate Bill 33, simply redistributes the cost of individual harm from the wrong doer to the tax payer.  More specifically, by providing immunity to certain types of negligent physicians, when those physicians cause great harm to individuals, the harmed individual will eventually take tax dollars in the form of entitlement programs such as medicare, social security disability, and medicaid.  The harmed citizen will be a drain on our government and our taxes. 

Fiscal responsibility demands that the individual causing harm rely on their own resources and insurance converge in a robust free market- not the government to use tax dollars to bail out the negligent.

"Tort reform" is not fiscally responsible.

Constitutionally Limited Government: We, the members of The Tea Party Patriots, are inspired by our founding documents and regard the Constitution of the United States to be the supreme law of the land. We believe that it is possible to know the original intent of the government our founders set forth, and stand in support of that intent. Like the founders, we support states' rights for those powers not expressly stated in the Constitution. As the government is of the people, by the people and for the people, in all other matters we support the personal liberty of the individual, within the rule of law.



Why "tort reform" proposed by the NC legislature is contrary to these values:

There is no question that our founders believed in, and enshrined with the Constitution, the unalienable right to a jury trial for civil suits, which our Founding Fathers protected through the 7th Amendment to the Constitution after centuries of recognition in British law and Judeo-Christian writings.

Historically, the right to a trial by jury was the basis for "The Declaration of the Causes and Necessity of Taking Up Arms," which was a document issued to explain why the colonists had initiated armed conflict against Great Britain, and was written by John Dickinson of Virginia based on a draft by Thomas Jefferson.

Dickinson wrote in the Declaration, "Parliament was influenced to adopt the pernicious project, and assuming a new power over them, have in the course of eleven years, given such decisive specimens of the spirit and consequences attending this power, as to leave no doubt concerning the effects of acquiescence under it. They have undertaken to give and grant our money without our consent, though we have ever exercised an exclusive right to dispose of our own property; statutes have been passed for extending the jurisdiction of courts of admiralty and vice-admiralty beyond their ancient limits; for depriving us of the accustomed and inestimable privilege of trial by jury, in cases affecting both life and property..." -- Declaration of the Causes and Necessity of Taking Up Arms, enacted July 6, 1775 by the Second Continental Congress

The "tort reform" proposed by the North Carolina legislature fundamentally deprives citizens of the right to a trial by jury in several ways.  First, it grants blanket immunity from suit to certain classes of citizens, namely, emergency physicians and emergency room personnel, and corporate producers of pharmaceuticals (drugs).  The proposals say, quite plainly, that a citizen injured or killed by any of these privileged groups can not sue and have a jury determine the fairness of their claim.

The Constitution clearly guarantees the right to a trial by jury to all citizens in the 7th Amendment.

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.


John Adams wrote:

As the Constitution requires that the popular branch of the legislature should have an absolute check, so as to put a peremptory negative upon every act of the government, it requires that the common people, should have as complete a control, as decisive a negative, in every judgment of a court of judicature.

He also wrote, "Representative government and trial by jury are the heart and lungs of liberty.  Without them we have no other fortification against being ridden like horses, fleeced like sheep, worked like cattle and fed and clothed like swine and hounds."

Thomas Jefferson, the author of the Declaration of Independence and the third President of the United States, said, "I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution."

James Madison, the author of the Constitution and the fourth President of the United States, said, "Trial by jury in civil cases is as essential to secure the liberty of the people as any one of the pre-existent rights of nature."

"Tort reform" as proposed in SB33 and other bills curtails the natural right to trial by jury and should be opposed.

Free Markets: A free market is the economic consequence of personal liberty. The founders believed that personal and economic freedom were indivisible, as do we. Our current government's interference distorts the free market and inhibits the pursuit of individual and economic liberty. Therefore, we support a return to the free market principles on which this nation was founded and oppose government intervention into the operations of private business.

Why "tort reform" proposed by the NC legislature is contrary to these values:

A free market economy rewards entrepreneurs for their actions that benefit society.  The manufacturer who builds a superior product wins in the marketplace, and few would question that manufacturer's right to reap the rewards of its own ingenuity.  This is largely because the manufacturer has, in the effort to succeed, shouldered a risk of failure.  It is the marketplace, comprised of ordinary people, rather than the government, which determines whether the manufacturer wins or loses.

If the efficient production of material wealth is all that concerns us, then the marketplace needs no other rewards or penalties.  Most will agree, however, that manufacturers should be encouraged to create safe as well as efficient products, for the number of deaths and injuries annually caused by defective products is astronomical.  According to the 2003 Annual Report of the U.S. Consumer Product Safety Commission, there were 4,509 deaths and 13,690,526 injuries associated with just 15 categories of consumer products during that one-year reporting period.  Deaths and injuries caused annually by toxic pharmaceutical products also rival these numbers.

By making manufacturers liable to the people they have injured, the once-revered common law tort system creates an incentive for the manufacturer to build a safer product.  Those who advocate more government might suggest that safety can best be engineered from above, by governmental regulation, but true advocates of a free market will agree that it is better to permit the manufacturer to determine how to make its own product safe for consumer use, rather than some government bureaucrat.  In exchange for the right to determine the most efficient way to make its products safe, however, a manufacturer must be subject to suit for failure to perform this undertaking.

"Tort reform" as proposed by the NC legislature in SB33 relieves manufacturers of defective products and providers of negligent services from the natural free market consequences of their actions.  This creates imbalance in the market and also encourages an increase in governmental regulations.

The free market demands that consumers have a right to recoup their losses through the fundamental right of trial by jury.  This provides natural incentives for "good behavior" in the marketplace.

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Will NC be the worst state for manufacturers? The unintended consequence of HB 542: Destroys insurance and business subrogation for losses from product fauilure

I am attaching below the letter I sent to three members of the North Carolina House Select Committee on Tort Reform.

I believe that House Bill 542 may "look" good for business but have the unintended consequence of making North Carolina the WORST place for manufacturing in the entire United States.  I've inserted a few comments below in [BOLD]  brackets.

Rep. Stam, Rep. Weiss, and Rep. Murray:

I am a lawyer, like each of you, and I would like to call to your attention what I think is a major unintended consequence of HB 542.  I called each of your offices today to discuss this issue.

HB 542 destroys the right of a NC manufacturer and their insurance company to subrogate on catastrophic losses caused by defective products.  This hurts manufacturing, business, and insurance interests in North Carolina.

Please read the below example:

Products Liability Immunity Destroys Business and Insurance Subrogation:  HB 542 gives immunity from suit to any company that produces a faulty product that has been "approved for sale" by any State of Federal regulatory agency.  This bar would apply to insurance subrogation claims against the original tortfeasor and therefore bars insurance companies and the self-insured from recouping losses caused by faulty products.

EXAMPLE.  Power Plant Explosion:  A North Carolina power company buys a defective industrial boiler from a Chinese (or any) manufacturing company. This product is "approved" by several state and federal agencies as required by law."  [Does this sound like the Apex Chemical explosion?]

That boiler explodes and spreads toxic ash over a 3 mile radius. The environment is polluted, people are made sick, and the business site is shut down. The NC business itself suffers a $300 Million dollar business and property damage loss and is sued by the State and citizens for the toxic ash injuries.  The insurer for the power company  (or self-insured company itself) must pay for the business loss, claims of injuries and property loss, but would be prohibited by HB542 from seeking a recovery from the negligent Chinese manufacturer.  The State of North Carolina would be prohibited from seeking compensation for the loss to the environment and the toxic clean up costs. This will increase the cost of insurance for business and the State and possibly force insurers to stop insuring for loss from product defect.

HB542 uses the following definitions:  [See page 8 of HB542] " (1) "Claimant" means a person or other entity asserting a claim"

"Product liability action" includes any action brought for or on account of personal injury, death or property damage caused by or resulting from the manufacture, construction, design, formulation, development of standards, preparation, processing, assembly, testing, listing, certifying, warning, instructing, marketing, selling, advertising, packaging, or labeling of any product."  (Emphasis added)

"No manufacturer or seller shall be held liable in any product liability action if any one of the following apply:"

Under this very simple language above, businesses that suffer catastrophic losses due to product defects will NOT be able to recoup those loses.

Moreover, what will be the effect on Business Insurance Policies?  A standard loss policy would have language like the following:

 "If we pay a claim under your policy, we will take over your right to recover that amount from any other person or organization. You agree to cooperate with us and not do anything that will interfere with our chances of recovery".

Insurers would be subrogated to the right of the North Carolina company.  Because subrogation is "the substitution of one person in the place of another with reference to a lawful claim, demand, or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities," the North Carolina Company would have no right to recover under HB542 and thus the insurance company would be subrogated to nothing.

North Carolina will be the ONLY state in the nation with such a law.

This raises many difficult questions:

1)  Will insurance companies issue large commercial policies to North Carolina manufacturers know there will be no right to subrogate in failed products cases?  Can businesses operate without this insurance?

2)  Will North Carolina manufacturers receive insurance rate increases due to the higher cost risk for North Carolina claims?

3)  Will manufacturers avoid locating in North Carolina because they will not be protected from defective products they purchase for their business?

4)  Will insurance products for consumers be impacted by the lack of subrogation for faulty manufacturing?  Will home owner insurance rates increase due to the number of fires caused by defective products where there will be no subrogatable interest for the insurance company?

5)  Why would a manufacturer choose North Carolina over 49 other states  knowing that it had no protections from faulty products within its own facility?


I ask that you stop HB542 before it further erodes North Carolina's business economy.

Chris Nichols

________________________________

(update) 

A non-hypotehtical Example of Products Liability Subrogation In Insurance

Here is an excellent example of how subrogation works in the context of product liability claims.  This is a blog post from Cozen O'Conner, a national law firm that helps insurance companies recover funds from manufacturers of defective produts when those products cause damage which is insured.  Here is a link to their full blog post. Lasko Recalls 4.8 Million Box Fans

The case involved a massive barn fire at a breeding farm in Hondo, New Mexico. Six world class race horse breeding stallions were killed in the fire and the barn itself was totaled. Cozen O’Connor represented over sixty sophisticated horsemen clients who had ownership interests in the stallions, and their insurers. The insurers for the horses and the barn went to great lengths to preserve the fire scene, and as a direct result of their diligence the experts were able to examine each electrical device in the barn and identify the fatal flaw in the Lasko fan motor.

On March 24th (long after the fire) the Consumer Product Safety Commission announced a voluntary recall of 4.8 million Lasko box fans. The recall notice reports “an electrical failure in the fan’s motor poses a fire hazard to consumers.” The CPSC cites a “barn fire resulting in extensive property damage” as a basis for the recall.

If this fire had occurred in North Carolina under House Bill 542, the lawyers at Cozen O'Conner would have been barred from seeking recovery from Lasko.  The insurer would have paid out millions and not been reimbursed by the negligent manufacturer of the fan.  And who would absorb the cost of the unreimbursed expenses?  Anyone who buys insurance.

_______________________________________

Hopefully this will make a difference.  This bill is not just about people injured by defective products, but also business.

This is an actual photo of the Apex, NC plant explosion at a chemical storage facility.

RLK_EQ_Fire

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If NC House bill 542 passes, we will need some new welcome signs for NC

If North Carolina House bill 542 passes, and gives amnesty to corporations that kill people, we'll need to change the "welcome signs" on all of our interstate highways.

Some suggestions:

Danger zone deadly products ahead yellow large


1 in USA for Danerous and Defective Products

Extreme Caution Defective Products Ahead

Haven for Dangerous Legal Drugs Sign

Most Dangerous HB 542

If NC HB542 Passes

The House Select Committee on Tort Reform will be considering amendments to HB 542 at their next meeting on Thursday, April 7, 2011 at 11:00 AM. As of right now, there will be no more public input.  Those opposing this bill were allowed 8 minutes to speak on the amnesty provision. 

If your Representative is a member of the Select Committee on Tort Reform, now is the time to contact them and express your opposition for HB 542. The action you take today will have a great impact on the final outcome of this legislation.  If you don't want NC to be the most dangerous state in the nation, call now.

House Select Committee on Tort Reform District Raleigh
Chair Rep. Daniel F. McComas (R, New Hanover) 910-392-3011 919-733-5786        
Vice Chair Rep. Johnathan Rhyne, Jr. (R, Lincoln) 919-733-5782 919-733-5782
Vice Chair Rep. James W. Crawford, Jr. (D, Granville) 252-492-0185 919-733-5824
Vice Chair Rep. David R. Lewis (R, Harnett) 910-891-4848 919-715-3015
Vice Chair Rep. Tim D. Moffitt (R, Buncombe) 828-651-8550 919-715-3012
Vice Chair Rep. Tom Murry (R, Wake) 919-468-1213 919-733-5602
Rep. Jeff Barnhart (R, Cabarrus)   919-715-2009
Rep. William D. Brisson (D, Bladen) 910-862-7007 919-733-5772
Rep. Becky Carney (D, Mecklenburg) 704-332-1893 919-733-5827
Rep. Jerry C. Dockham (R, Davidson) 336-250-7336 919-715-2526
Rep. Nelson Dollar (R, Wake) 919-233-8399 919-715-0795
Rep. Bill Faison (D, Orange) 919-606-6700 919-715-3019
Rep. Mitch Gillespie (R, McDowell) 828-652-5548 919-733-5862
Rep. Larry D. Hall (D, Durham) 919-489-0036 919-733-5872
Rep. Dewey L. Hill (D, Columbus) 910-646-4297 919-733-5830
Rep. Chuck McGrady (R, Henderson) 828-696-0672 919-733-5956
Rep. Marian N. McLawhorn (D, Pitt) 252-524-3113 919-733-5757
Rep. Grey Mills (R, Iredell) 919-733-5741 919-733-5741
Rep. Bill Owens (D, Pasquotank) 252-335-0167 919-733-0010
Rep. Diane Parfitt (D, Cumberland) 910-864-2427 919-733-9892
Rep. Shirley B. Randleman (R, Wilkes) 336-921-2043 919-733-5935
Rep. Ruth Samuelson (R, Mecklenburg) 704-366-8748 919-715-3009
Rep. Paul Stam (R, Wake) 919-362-4835 919-733-2962
Rep. Jennifer Weiss (D, Wake) 919-678-1367

919-715-3010

 

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