Equitable Tolling of Medical Malpractice Claim Waiting Period on Supreme Court’s Mini-Oral Argument Calendar

The Michigan Supreme Court has ordered mini-oral argument to be held in two cases addressing a very significant issue dealing with whether trial courts can disregard the notice waiting period required before filing a complaint in a medical malpractice action, either by disregard of the defect or allowing amendment of the complaint under MCL 600.2301.

Here is the Court’s order, Furr v. McLeod Order, which the Court consolidated with another case addressing the same basic issue, Tyra v. Organ Procurement Agency of Michigan, et al., MOAA Order.

I previously wrote about these cases as they were making their way up through the Court of Appeals.  Those prior posts are below:

Equitable Amendment of Complaint Allowed in Med Mal Action

Court of Appeals Impanels Conflict Panel to Consider Whether Trial Courts Can Allow Defective Medical Malpractice Claims to Go Forward

Insurers and Businesses Should Always Consider What Options are Available for Insurance Coverage and Recovery of Insurance Assets When Facing a Dispute, Claim or Lawsuit

One of the most important ways insurance companies and businesses can manage their assets and control their liability is to think creatively about insurance and insuring agreements in managing their day-to-day business operations.  Disputes, claims, and yes, lawsuits often arise in the ordinary course of thriving and vibrant businesses.  This is a natural consequence of a successful business managing risk in the process of seeking to maximize profits.

As insurance coverage counsel, I regularly advise businesses and insurance companies as to their defense and indemnity obligations under commercial general liability, errors and omissions, and workers compensation insurance policies, among others.

I have assisted insurance companies and businesses by guiding them through various aspects of coverage, including initial assessment of coverage positions, preparation and drafting of coverage opinions, including preparing related correspondence to the insurers or insureds, and other parties involved, e.g., coverage denials, reservation of rights, etc., and pursuing, where appropriate, declaratory judgment and/or indemnity and subrogation actions with respect to coverage issues.

In this capacity, I have had several significant successes in both state and federal courts in securing judgments for businesses and insurance companies or in forcing agreeable settlements with insureds and other insurance companies.  Some of the cases and issues I have worked on include the following:

 

  • Providing coverage analysis and primary litigation support in filing a declaratory judgment action filed in federal court for a major national retail store as to potential coverage and indemnification from an insurer under an “additional insured” provision in a vendor / supplier contract between the store and the manufacturer. I served as primary insurance coverage counsel for the store relating to the underlying case, which was a personal injury / product liability lawsuit against the store involving paralysis of a 15-year old.  The plaintiff jumped into shallow water from a water trampoline manufactured by a company that sold a variety of recreation products in the retailer’s stores throughout the country.  The manufacturer and the retailer had a vendor-supplier agreement in which the manufacturer agreed to add the retailer as an additional insured to its general liability insurance policies, and provide indemnity to it for liability arising out of use of its products.  The insurer had agreed to defend the retailer in the lawsuit in Michigan.    Lawsuits were pending against the manufacturer across the country for injuries suffered due to use of another one of its products.  The manufacturer filed for bankruptcy protection in the 8th Circuit in Nebraska, after which the insurer pulled out of the defense of the retailer in Michigan.  I prepared a coverage opinion, concluding the insurer was obligated to continue defending the retailer, and I filed a declaratory judgment action in federal court in Michigan despite the bankruptcy stay.  I fended off attempts by the insurer to enforce the bankruptcy stay against the retailer in Michigan, won motions filed for contempt of the stay, and ultimately succeeded in forcing a settlement of the claim on behalf of the retailer for the total amount of the policy limits to which the retailer would have been entitled for coverage of the underlying claims.  This resulted in a $0 payout by the retailer in settlement of the underlying lawsuit in Michigan.

 

  • Filing suit against an insurance company in federal court for denial of coverage of an underlying lawsuit involving a shooting at a gas station. The case is Employers Mutual Casualty Company v. Al-Mashadi et al., 2009 WL 2711963.  While the underlying lawsuit was pending in circuit court, I filed the declaratory judgment action in federal court, drafted the summary judgment motion and brief, and argued there was no coverage for the underlying lawsuit and claim arising out of a shooting by an employee of one of his friends when the two were engaged in horseplay with a gun belonging to the gas station’s owner.  After arguing the motion, the district court granted the insurer summary judgment, ruling no coverage was owed by the insurance company in the underlying lawsuit.

 

  • Providing emergency litigation and appeal response to a zoning dispute in which an international energy company sought to construct (and did construct) a meteorological testing antenna (MET) a “wind testing tower”, without a proper zoning variance from the insured township. The township’s Zoning Board of Appeals rejected the power company’s appeal for a variance and the power company sued the township.  I stepped in and filed several injunctive motions, including an emergency circuit court appeal to thwart the power company’s efforts to permit the tower to remain as constructed on the property.  The circuit court issued injunctive relief (including an order to tear down the fully constructed tower) and forced the power company to pick up the insurer’s legal fees.

 

  • Preparing a coverage opinion and denial of coverage letter in a defective construction / defective product dispute under an occurrence based general liability policy (including products / completed operations hazards coverage). The insured, a cement company, filed suit against contractors and subcontractors, and a city, for failure to pay for delivery of cement.  The defendants filed a counter-suit under various theories and alleged the cement was defective, causing defects in and need for repair to the newly installed sidewalks.  In its ruling in the underlying suit, the trial court concluded the cement met specifications required by the contract and was therefore not defective.  A combination of factors led to the defective sidewalks, but not the delivery by the cement company of a defective product. The weight of authority provides that no “occurrence” arises from the provision of a non-defective product when the manufacturer of that product seeks coverage for damages alleged as the result of incorporation of its product into other work.  Since the insured provided a product that met the specifications required for the municipal sidewalk project there was no “occurrence” and therefore no coverage for the claims in the underlying lawsuit.

 

  • Providing a “second look” coverage opinion where in-house coverage counsel concluded there was no coverage for business interruption losses as a result of a large stage collapse and resulting debris field on the floor of the Pontiac Silverdome during summer months when the Silverdome was rented out for various events. The insured supplied the staging, decking and truss grids for the event.  Contractors and subcontractors were employed to erect it.  I analyzed the applicable policy language and concluded coverage was owed on the precise risk involved.  The policy covered “property damage” which included the loss of use of property caused by an occurrence, even if that property had not itself been damaged.  Michigan courts have awarded consequential damages such as “delay damages”, “lost profits”, and “diminution in value and use”, in cases under commercial general liability policies with similar or identical language to the policies covering “occurrences” “because of” “property damage”.  As none of the “business risk” exclusions in the policy applied, and it appeared the stage collapse was not due to the fault of the subcontractors or contractors employed to erect the stage, coverage was arguably owed and the insurer had a duty to defend and potentially indemnify the owner of the Silverdome.

Feel free to call or contact me if your business would like to explore options regarding insurance coverage and recovery.

 

Equitable Amendment of Complaint Allowed to Toll Statute of Limitations in Medical Malpractice Action Even Where Original Complaint Filed Prematurely Before Expiration of Mandatory Notice Period

The Court of Appeals has issued its conflict panel opinion in the case of Furr v. McLeod, M.D., et al.  

This is a case I previously wrote about in which the Court of Appeals convened a special conflict panel to determine whether the filing of an original complaint before the expiration of the mandatory notice period for medical malpractice actions can serve to toll the statute of limitations if the trial court allows a subsequent, untimely complaint to be filed adding parties.  In this case, the trial court allowed equitable amendment of the complaint despite the defect and thus allowed the action against the defendants to proceed despite the expiration of the two-year statute of limitations as against them.

The opinion is here:

Furr.v.McLeod.et.al.conflict.panel.coa.opinion

I previously wrote about the intricacies of this issue when discussing the original opinion.  That blog post is here:

Furr v. McLeod – Court of Appeals Requests Conflict Panel to Resolve Conflict Over Tolling of Statute of Limitations in Medical Malpractice Action

Given that the panel here is still split over the resolution of this issue, and actually acknowledges the Supreme Court is going to have to address it, I suspect there will be more to say on this case in the near future.

The underlying issue affects the timeliness of medical malpractice claims and the necessity of plaintiffs to strictly comply with the notice periods and filing deadlines of complaints.

Throughout its storied history, Lacey & Jones has distinguished itself from other law firms by maintaining a robust Appeals and Legal Research Group.  Effective appellate representation demands different skills than those required by litigation attorneys.  Our appellate attorneys are adept at analyzing the intricacies of each case from an objective and critical perspective.  From reviewing and preparing the lower court record, identifying appealable errors, and developing a strategy to raise issues that will be addressed by appellate courts, our seasoned appellate team is capable of handling the most complex appeals from the application stage to oral advocacy before the highest courts.  Our research abilities and knowledge of current issues in nearly all major subject-matter areas of the law provide our clients with efficient and immediate assistance with complex and high-exposure cases.   We are experienced at navigating through the Michigan Court of Appeals and Supreme Court to shepherd the appeal in the most expeditious fashion possible so that it can be reviewed and quickly ruled upon.  During the last three decades alone, the Appeals and Legal Research Group at Lacey & Jones has been responsible for over 150 published decisions in the Michigan Court of Appeals and Supreme Court, including seminal decisions in workers’ compensation, governmental immunity, employment and labor law, civil rights law and insurance coverage.  Because of its specialized knowledge and focus on appellate law and its recognized expertise, the Appeals and Legal Research Group at Lacey & Jones has been asked to participate as amicus curiae writing briefs for the Supreme Court or as special counsel to the Michigan Attorney General and other governmental entities in some of the most significant cases in the Court of Appeals and Supreme Court.   Below are some of the recent significant cases in which Lacey & Jones, LLP’s Appeals and Legal Research Group has participated.

  • Yono v. MDOT, ___ Mich. App. ___ (201_), amicus curiae brief to be filed after remand for Michigan Municipal League, et al., by Carson J. Tucker
  • State Farm v. MMRMA, ___ Mich App ___ (2013), amicus curiae for Oakland County in support of MMRMA application, by Carson J. Tucker
  • Hannay v MDOT, ___ Mich ___ 201_), application granted, amicus curiae filed for Michigan Townships Association, Macomb County, Oakland County and Wayne County, et al., by Carson J. Tucker
  • Yono v. MDOT, ___ Mich ___ (201_), oral argument on application granted, amicus curiae for Oakland, Macomb and Wayne County filed by Carson J. Tucker in support of the state’s application
  • Huddleston v. Trinity Health, et al., ___ Mich ___ (201_), oral argument on application granted, amicus curiae with Lawrence Garcia, Esq., for MDTC
  • Ashley, LLC v Pittsfield Twp., 494 Mich 875 (2013), application granted, for Pittsfield Township by Carson J. Tucker (resolved by settlement)
  • Bailey v. Schaaf, ___ Mich ___ (2013), amicus curiae for MDTC by Carson J. Tucker
  • Atkins v. SMART, 492 Mich 707 (2012), oral argument on application, Court of Appeals case reversed by opinion, Carson J. Tucker
  • Hagerty v Manistee, 493 Mich 933 (2013), amicus curiae for Michigan Municipal League, et al., by Carson J. Tucker
  • McMurtrie v Eaton Corp, 490 Mich 976 (2011)
  • Findley v DaimlerChrysler Corp., 490 Mich 928 (2011)
  • Brewer v. AD.Transport Express, Inc, 486 Mich 50 (2010)
  • Stokes v Chrysler, 481 Mich 266 (2008)
  • Brackett v Focus Hope, Inc, 482 Mich 269 (2008)
  • Rakestraw v Gen Dynamics, 469 Mich 220 (2003)

Supreme Court Leaves Plaintiff’s Medical Malpractice Claim Intact to Recover Damages for Loss of Kidney in “Dual Organ” Case

The Supreme Court has let stand a Court of Appeals decision, which held that a doctor’s alleged misdiagnosis and ultimate removal of a cancerous kidney gave rise to a cause of action for damages because of the potential for greater future harm due to the additional risk associated with having only one functional organ.

Lawrence Garcia, Esq. and myself submitted an amicus curiae brief on behalf of the Michigan Defense Trial Counsel in this case before the Supreme Court in which we urged the Court to allow the Court of Appeals decision to stand.

Here is the brief:

huddleston.sc.amicus.curiae.br

Previous posts about this case can be accessed here:

Amicus Curiae Brief Filed in Supreme Court in Medical Malpractice Case Alleging Misdiagnosis and Damages for Removal of Plaintiff’s Kidney

Supreme Court Grants to Consider Damages in Medical Malpractice Claim Alleging Loss of Kidney Constitutes Actionable Damages

Please let me know if you have any questions regarding this order.

Feel free to call Carson J. Tucker, Chair of the Appeals and Legal Research Group at Lacey & Jones, LLP at (248) 283-0763 if you have any questions about any of these cases.  Mr. Tucker regularly participates in cases before the Supreme Court and Court of Appeals on issues touching many subject-matter areas of civil litigation, including governmental immunity.

Throughout its storied history, Lacey & Jones has distinguished itself from other law firms by maintaining a robust Appeals and Legal Research Group.  Effective appellate representation demands different skills than those required by litigation attorneys.  Our appellate attorneys are adept at analyzing the intricacies of each case from an objective and critical perspective.  From reviewing and preparing the lower court record, identifying appealable errors, and developing a strategy to raise issues that will be addressed by appellate courts, our seasoned appellate team is capable of handling the most complex appeals from the application stage to oral advocacy before the highest courts.  Our research abilities and knowledge of current issues in nearly all major subject-matter areas of the law provide our clients with efficient and immediate assistance with complex and high-exposure cases.   We are experienced at navigating through the Michigan Court of Appeals and Supreme Court to shepherd the appeal in the most expeditious fashion possible so that it can be reviewed and quickly ruled upon.  During the last three decades alone, the Appeals and Legal Research Group at Lacey & Jones has been responsible for over 150 published decisions in the Michigan Court of Appeals and Supreme Court, including seminal decisions in workers’ compensation, governmental immunity, employment and labor law, civil rights law and insurance coverage.  Because of its specialized knowledge and focus on appellate law and its recognized expertise, the Appeals and Legal Research Group at Lacey & Jones has been asked to participate as amicus curiae writing briefs for the Supreme Court or as special counsel to the Michigan Attorney General and other governmental entities in some of the most significant cases in the Court of Appeals and Supreme Court.   Below are some of the recent significant cases in which Lacey & Jones, LLP’s Appeals and Legal Research Group has participated.

  • State Farm v. MMRMA, ___ Mich App ___ (2013), amicus curiae for Oakland County in support of MMRMA application, by Carson J. Tucker
  • Hannay v MDOT, ___ Mich ___ 201_), application granted, amicus curiae to be filed for MTA, et al., by Carson J. Tucker
  • Yono v. MDOT, ___ Mich ___ (2014), Court remands to Court of Appeals after oral argument on application granted, amicus curiae brief for Oakland, Macomb and Wayne Counties filed by Carson J. Tucker in support of the state’s application
  • Huddleston v. Trinity Health, et al., ___ Mich ___ (2014), application denied after oral argument on application granted, amicus curiae brief filed by Carson J. Tucker and Lawrence Garcia, Esq., for MDTC
  • Ashley, LLC v Pittsfield Twp., 494 Mich 875 (2013), application granted, for Pittsfield Township by Carson J. Tucker (resolved by settlement)
  • Bailey v. Schaaf, ___ Mich ___ (2013), amicus curiae for MDTC by Carson J. Tucker
  • Atkins v. SMART, 492 Mich 707 (2012), oral argument on application, Court of Appeals case reversed by opinion, Carson J. Tucker
  • Hagerty v Manistee, 493 Mich 933 (2013), amicus curiae for Michigan Municipal League, et al., by Carson J. Tucker
  • McMurtrie v Eaton Corp, 490 Mich 976 (2011)
  • Findley v DaimlerChrysler Corp., 490 Mich 928 (2011)
  • Brewer v. AD.Transport Express, Inc, 486 Mich 50 (2010)
  • Stokes v Chrysler, 481 Mich 266 (2008)
  • Brackett v Focus Hope, Inc, 482 Mich 269 (2008)
  • Rakestraw v Gen Dynamics, 469 Mich 220 (2003)
  • Sington v Chrysler Corp., (2002)

Other appeal cases Carson Tucker has handled include

  • Hamed v. Wayne County, et al., 490 Mich. 1 (2011), reversing Court of Appeals published opinion after being briefed and argued by Carson J. Tucker on behalf of Wayne County
  • Odom v. Wayne County, et al., 482 Mich. 459 (2008), reversing Court of Appeals after being briefed and argued by Carson J. Tucker on behalf of Wayne County and Wayne County Sheriff and Deputies
  • Michigan Department of Transportation v Employers Mutual Casualty Co, et al., 481Mich. 862 (2008), reversing Court of Appeals after being briefed and argued on application by Carson J. Tucker for Trucking Company and Insurer
  • Nuculovic v. Hill and SMART, 287 Mich. App. 58 (2010), briefed by Carson J. Tucker for SMART
  • Molnar v. Amy Allen, Oakland County Care House, et al, 359 Fed. Appx. 623 (6th Cir. 2009), affirming district court’s judgment in favor of client represented by Carson J. Tucker
  • Molnar v. Amy Allen, Oakland County Care House, et al., Case No. 09-1536 (2009), successful defense of application to United States Supreme Court by Carson J. Tucker
  • Wetherill v. McHugh, et al., Case No. 10-638 (2011), co-draft response on behalf of South Dakota National Guard to petition for appeal to United States Supreme Court, cert denied by Supreme Court.

Amicus Curiae Brief Submitted in Huddleston v. IHA of Ann Arbor, P.C., et al, Supreme Court No. 146041

We submitted an amicus curiae brief on behalf of the Michigan Defense Trial Counsel in this case before the Supreme Court to address the extent of damages potentially available in a medical malpractice action involving the loss of a “dual organ” by the plaintiff as a result of the alleged malpractice.  Here is the brief:

huddleston.sc.amicus.curiae.br

I had previously written about this case in a blog post here:

Supreme Court to Consider Causation and Speculative Injury Claims in Medical Malpractice Action

Court of Appeals Requests Conflict Panel to Resolve Issue of Whether Plaintiff’s Prematurely Filed Complaint Can Be Equitably Amended to Allow Notice Period to Toll Statute of Limitations in Medical Malpractice Action

Yesterday, the Michigan Court of Appeals issued an adversarial published opinion in the case of Furr v. McLeod, MD, et al, Court of Appeals Docket No. 310652.  The panel ruled as it did only because prior Court of Appeals precedent  required it to do so under Michigan Court Rule (MCR) 7.215(J).  However, the panel requested impaneling a conflict resolution panel by the Court of Appeals to address whether its own holding remains good law in light of Michigan Supreme Court precedent suggesting that a contrary result should now issue. MCR 7.215(J) obligates a Court of Appeals panel to follow precedent in opinions issued by it after November 1, 1990.  MCR 7.205(J)(3) allows the Chief Judge to poll the judges of the Court of Appeals to determine whether the particular question at issue is outcome determinative and warrants convening a special panel to rehear the case for the purposes of resolving the conflict that would have been created but for the provision of subrule (1) (the provision requiring the Court in the issuing opinion to follow prior decisional case law).

The case is a medical malpractice action filed against the various defendants arising out of an alleged act of malpractice in which the plaintiff alleged her “left recurrent laryngeal nerve” was errantly transected during a thyroidectomy procedure.  This required additional surgical intervention to repair the nerve and ultimately left the plaintiff with alleged upper respiratory problems and “bilateral true vocal cord paralysis”.  Michigan Compiled Laws (MCL) 600.2912(b)(1) requires for a plaintiff to pursue a medical malpractice action, he or she must provide a written “notice of intent” to file such an action against the defendants and then wait 154 days (if the defendants do not respond or specifically indicate they do not intend to settle (more about this in a moment), or, alternatively, 182 days.  Under MCL 600.5838(a)(1) (subject to a discovery exception not applicable in this case), a plaintiff’s medical malpractice claim “accrues” when the act of malpractice occurs.  After that date of accrual, the cause of action is then subjected to a two-year statute of limitations (suit must be filed within two years of the date of accrual or it will be time barred). MCL 600.5805(6).

Various courts have addressed the issue of whether the premature filing of a complaint after the notice of intent is served (either before either 154 days (if defendant did not respond or specifically indicates no intent to settle or engage in good-faith settlement negotiations) or 182 days) implicates the two-year limitations period.  Thus, if the complaint is filed within the notice period, but prematurely, then the 154- or 182-day “notice period” does not act to “toll” that limitations period. MCL 600.5856(d); MCL 600.2912b.  Therefore, the filing of a complaint within this window that is upon a date beyond the two-years from the date of accrual will be time barred.

Two Court of Appeals decision seem to indicate that MCL 600.2301 allows a trial court to amend the complaint to reflect the date postnotice period so that it does not act to time-bar the action.  That is essentially what the trial court did in this case.

In Burton v. Reed City Hospital Corp., 471 Mich. 745 (2005), the Michigan Supreme Court held if a plaintiff files his or her complaint before the notice period expires, MCL 600.2912b does not “toll” the limitations period.  The Court reasoned the language of that provision is mandatory and MCL 600.5856(d) only tolls the limitations period if the plaintiff’s notice complies with MCL 600.2912b.

In Zwiers v. Growney, 286 Mich. App. 38 (2009), the Court of Appeals held that MCL 600.2301 allowed a trial court to equitably amend the complaint to reflect a post-date of the waiting period so that the premature filing did not erase the tolling of the statute of limitations.

In a subsequent case, Driver v. Naini, 490 Mich. 239 (2011), the Supreme Court held a plaintiff could not amend an original notice of intent to add a nonparty defendant and have that amendment “relate back” to the original notice for purposes of the statute of limitations.  The Court disavowed that MCL 600.2301 would apply in a situation in which there was no technical viability to the claim – because if a complaint is filed prematurely within the notice period, but after the statute of limitations has expired, there is no “pending” action for MCL 600.2301 to remedy.

Subsequent to that case, in Tyra v. Organ Procurement Agency of Michigan, ___ Mich. App. ___ (2013) (COA Docket No. 298444), the Court of Appeals ignored this nuanced reading of MCL 600.2301 and held a trial court could use this provision to permit plaintiff to amend her complaint on the basis of Zwiers and MCL 600.2301.  So, the Court of Appeals ruled in Tyrasupra, that a trial court could exercise its discretion to allow amendment of a premature complaint to escape the failure of tolling where it was filed prematurely.

The defendants appealed, arguing that Supreme Court precedent has since refuted the theory that MCL 600.2301 allows a trial court to equitably “fix” the fatal filing defect by allowing amendment of the complaint so it is filed on the proper day.  This is what the trial court did in the instant case and defendants appealed.  While noting Tyra precedentially controlled its holding, the Court of Appeals panel in this case goes on to criticize that decision and provides reasoning why it should be overruled.  The Court states:

“Subsequently, and to the contrary, the Michigan Supreme Court in Driver held that a plaintiff cannot commence an action that tolls the statute of limitations against a particular defendant until the plaintiff complies with the notice-waiting-period requirements of MCL 600.2912b.  Nothing [in subsequent Supreme Court precedent] altered [the] holding. . . .  [T]he focus of MCL 600.5856(c) is compliance with the notice waiting period set forth in MCL 600.2912b.  Therefore, but for Tyra, we would conclude that the trial court erred when it relied on Zwiers to determine that it could amend the plaintiff’s complaint under MCL 600.2301.  After the Michigan Supreme Court’s decision in Driver reached the opposite result on this point of law, this Court’s holding in Zwiers is no longer controlling law.”

The Court also notes that the shorter 154-day notice period is implicated only if the healthcare provider specifically indicates its intent not to settle; it does not apply if the healthcare provider defendant merely indicates or acknowledges the notice.

The takeaway from this is significant.  The opinion is published.  The convening of a conflict panel is not unanimously agreed with (Owens concurs in the result (because it followed precedent), but does not believe a conflict panel is necessary.  Judge Kelly concurs in the result only, and then also in the necessity of a conflict panel.  Thus, the case is likely to get additional treatment.  If a conflict panel is not convened, there will likely be an application filed in the Supreme Court by the defendants.

The issue affects the timeliness of medical malpractice claims and the necessity of plaintiffs to strictly comply with the notice periods and filing deadlines of complaints.

Throughout its storied history, Lacey & Jones has distinguished itself from other law firms by maintaining a robust Appeals and Legal Research Group.  Effective appellate representation demands different skills than those required by litigation attorneys.  Our appellate attorneys are adept at analyzing the intricacies of each case from an objective and critical perspective.  From reviewing and preparing the lower court record, identifying appealable errors, and developing a strategy to raise issues that will be addressed by appellate courts, our seasoned appellate team is capable of handling the most complex appeals from the application stage to oral advocacy before the highest courts.  Our research abilities and knowledge of current issues in nearly all major subject-matter areas of the law provide our clients with efficient and immediate assistance with complex and high-exposure cases.   We are experienced at navigating through the Michigan Court of Appeals and Supreme Court to shepherd the appeal in the most expeditious fashion possible so that it can be reviewed and quickly ruled upon.  During the last three decades alone, the Appeals and Legal Research Group at Lacey & Jones has been responsible for over 150 published decisions in the Michigan Court of Appeals and Supreme Court, including seminal decisions in workers’ compensation, governmental immunity, employment and labor law, civil rights law and insurance coverage.  Because of its specialized knowledge and focus on appellate law and its recognized expertise, the Appeals and Legal Research Group at Lacey & Jones has been asked to participate as amicus curiae writing briefs for the Supreme Court or as special counsel to the Michigan Attorney General and other governmental entities in some of the most significant cases in the Court of Appeals and Supreme Court.   Below are some of the recent significant cases in which Lacey & Jones, LLP’s Appeals and Legal Research Group has participated.

  • State Farm v. MMRMA, ___ Mich App ___ (2013), amicus curiae for Oakland County in support of MMRMA application, by Carson J. Tucker
  • Hannay v MDOT, ___ Mich ___ 201_), application granted, amicus curiae to be filed for MTA, et al., by Carson J. Tucker
  • Yono v. MDOT, ___ Mich ___ (201_), oral argument on application granted, amicus curiae for Oakland, Macomb and Wayne County filed by Carson J. Tucker in support of the state’s application
  • Huddleston v. Trinity Health, et al., ___ Mich ___ (201_), oral argument on application granted, amicus curiae with Lawrence Garcia, Esq., for MDTC
  • Ashley, LLC v Pittsfield Twp., 494 Mich 875 (2013), application granted, for Pittsfield Township by Carson J. Tucker (resolved by settlement)
  • Bailey v. Schaaf, ___ Mich ___ (2013), amicus curiae for MDTC by Carson J. Tucker
  • Atkins v. SMART, 492 Mich 707 (2012), oral argument on application, Court of Appeals case reversed by opinion, Carson J. Tucker
  • Hagerty v Manistee, 493 Mich 933 (2013), amicus curiae for Michigan Municipal League, et al., by Carson J. Tucker
  • McMurtrie v Eaton Corp, 490 Mich 976 (2011)
  • Findley v DaimlerChrysler Corp., 490 Mich 928 (2011)
  • Brewer v. AD.Transport Express, Inc, 486 Mich 50 (2010)
  • Stokes v Chrysler, 481 Mich 266 (2008)
  • Brackett v Focus Hope, Inc, 482 Mich 269 (2008)
  • Rakestraw v Gen Dynamics, 469 Mich 220 (2003)

Supreme Court Issues Peremptory Order Reversing Court of Appeals Opinion Admitting Expert Opinion Without Supporting Literature in Medical Malpractice Case

This peremptory order issued by the Michigan Supreme Court on September 25, 2013, reverses the Court of Appeals opinion in Tondreau ex rel Estate of Peetz v. Sachinders S. Hans, M.D., P.C.coa.opn.

In this medical malpractice case plaintiff alleged malpractice against the defendants and claimed a procedure “a carotid endarterectomy” was the cause of “chronic subdural hematoma” suffered by the decedent.   Decedent’s estate filed suit and sought to admit testimony of two expert witnesses under Michigan Rule of Evidence 702.  The experts testified that the procedure performed by the defendants caused the injury that lead to decedent’ s death.

Defendants objected to the admission of this on the basis that the expert opinion testimony as to this theory of injury was nowhere supported by expert literature on the subject or any other supporting information among the medical community – there were no studies or literature that directly stated this could happen as a result of the procedure performed.  The Court of Appeals ruled the absence of a specific study did not render the expert’s opinion lacking in reliability and therefore inadmissible.  See Slip Op. at 5.

The Supreme Court reversed, ordering the case back to the trial court to sustain the objection and exclude the supporting evidence.  In its order, the Court clearly states “[w]hile peer-reviewed, published literature is not always necessary to meet the requirements of [Michigan Rule of Evidence] 702, in this case the lack of supporting literature, combined with the lack of any other form of support for these opinions render the opinions unreliable and inadmissible under MRE 702.  Edry v. Adelman, 486 Mich. 634, 641 (2010).”

This order provides guidance for practitioners considering the reliability and admissibility of expert testimony in future cases.  A final Supreme Court disposition of an application and that contains a concise statement of the applicable facts and reasons for the decision is binding precedent.  Mich Const 1963, Art 6, § 6; See also Dykes v. William Beaumont Hosp., 246 Mich. App. 471, 483-484 (2001), citing People v. Crall, 444 Mich. 463, 464, n. 8 (1993).  Reiterated more recently in DeFrain v. State Farm Mut. Auto Ins. Co., 491 Mich. 359 (2012).  This order certainly meets that requirement.  Read it here: Tondreau v. Sachinder S. Hans, M.D., P.C.Order.09.25.2013.

For more information about this and other similar cases contact Carson J. Tucker, Chair of the Appeals and Legal Research Group at Lacey & Jones, LLP, a Birmingham law firm serving clients since 1912.  Mr. Tucker can be reached at (248) 283-0763.

Continuing its tradition of providing highly specialized and unique legal services to an exclusive clientele, Lacey & Jones, LLP, works with insurance companies and businesses to develop comprehensive insurance coverage strategies for all lines of coverage.  From the simplest review (second look) of an in-house counsel’s coverage determination to complete coverage analysis involving high-exposure, multi-party, multi-jurisdiction, multi-claim events, the firm is capable of assisting its clients in making valuable choices and advising them on the proper course of action.  The firm’s coverage counsel and litigation team is also capable of pursuing coverage determinations and indemnity or subrogation in courts by filing declaratory judgment actions or indemnity and subrogation actions, respectively.

Our attorneys have successfully navigated coverage cases in state and federal courts, involving multiple insurers, multiple claimants and multiple forums to arrive at favorable resolutions for our clients in eight figure exposure cases, including, but not limited to, environmental liability claims, construction claims, professional liability claims, catastrophic personal injury claims, and product liability claims.  Our coverage lawyers speak the language of insurers and understand the intricacies of policy coverage involving multiple insurers, multiple policy forms, and multiple layers and years of coverage.

    • Declaratory Judgment Actions
    • Coverage Analysis and Strategy
    • Property and Casualty Claims
    • General Liability Claims
    • Professional Liability Claims
    • Business Risk
    • Indemnity and Subrogation
    • Product Liability Claims
    • Construction Defect Claims
    • Government and Municipal Liability Claims
    • Workers’ Compensation Claims

For more information about Lacey & Jones, click on the following practice area company pages on Linked In.

Lacey & Jones, LLP’s Appeals and Legal Research Group

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Lacey & Jones, LLP’s Civil Litigation Group

 

 

 

New York’s Highest Court Holds Insurer Responsible Up to Policy Limits Where It Refused to Defend Attorney in Underlying Suit Alleging Professional Malpractice for the Lawyer’s Conduct Acting in His Capacity as a Principal of a Business and Insurer Could Not Invoke Policy Exclusions to Coverage

This is a rather unremarkable case from the point of view of the legal rules expressed by the opinion, but I wanted to highlight a few significant points for clients to consider when addressing the parameters of an insurer’s duty and the risk involved in not taking affirmative action if a dispute arises or, better yet, is anticipated.

The facts are somewhat peculiar, bringing into question a professional liability insurer’s duty to defend and indemnify claims regarding a business deal engaged in by its insured (an attorney) in which there appears no doubt the attorney was acting as a businessman and not an attorney in the endeavors that gave rise to the underlying claims.

The opinion, K2 Inv Group LLC v American Guarantee And Liability Ins Co, N.Y. Court of Appeals, No. 106, June 11, 2013, was released by New York’s highest court in June.  It demonstrates intolerance courts usually have where an insurer disclaims a duty to defend the insured in an underlying lawsuit and later claims it had no duty to do so because the policy would have precluded or excluded coverage.  There are some other important takeaways from the decision, as explained below.

The defendant in the underlying suit was an attorney.  He was part owner of a company (the borrower) that engaged in a loan transaction for $2.83 million with the plaintiffs in the underlying suit (the lender), which was comprised of two separate companies.  The lender’s loan was  to be secured by mortgages, the recording of which was to be the responsibility of the borrower.  However, the borrower failed to record the mortgages and subsequently defaulted on the unsecured loan.  The lenders filed suit against the borrower and its two principals, including the attorney.  Each of the lender companies included counts alleging legal malpractice against the attorney.

The attorney notified his malpractice insurer of the suit.  The policy limit was $2.5 million.  The insurer disclaimed a duty to defend the attorney and indemnify him for the claims against him, concluding, in part, the claims in the underlying suit were not “based on the rendering or failing to render legal services for others” and did not constitute the type of professional malpractice for which its policy provided coverage.  After the insurer issued its disclaimer, the plaintiffs made a settlement demand against the defendants in the underlying suit in the amount of $450,000.  After it was presented with the demand, the insurer again rejected it on the same bases that it had disclaimed a duty to defend and indemnify the attorney.

A default judgment in excess of the policy limits was entered in the underlying suit against the attorney.  All the remaining claims against the other parties were discontinued.  The attorney then assigned his claims against his malpractice insurer to the plaintiffs in the underlying lawsuit.  The plaintiffs stepped into the attorney’s shoes and sued the malpractice insurer alleging bad faith and breach of contract.

The malpractice insurer moved for summary judgment, invoking two exclusions in the professional liability policy.  The first excluded coverage of claims based on or arising out of, in whole or in part, the insured’s capacity or status as a member, partner, employee, etc., of a business enterprise.  The second exclusion applied to claims based upon or arising out of the alleged acts or omissions of the insured while engaged in or for a business enterprise.  The insurer argued the claims in the underlying suit against its insured had arisen out of his capacity or status as a business owner and out of his acts or omissions on behalf of the business.

The plaintiffs filed a cross-motion for summary judgment.  The trial court denied the insurer’s motion and granted the plaintiffs’ motion on the breach of contract claim, while dismissing the bad faith claim.

The trial court reasoned the insurer had breached its duty to defend and was therefore responsible up to the limits of its policy for the judgment that had been entered against the attorney in the underlying lawsuit.  On appeal, the court affirmed, holding that the exclusions relied on by the insurer were inapplicable.  Two justices dissented on the basis that questions of fact existed as to whether the exclusions would apply – essentially the dissent would have allowed the insurer to re-apply the provisions of the policy (here the specific exclusions) to the dispute despite is refusal to extend a defense to the attorney in the underlying suit.

The insurer appealed.  The New York Court of Appeals affirmed.  The Court held that where a liability insurer breaches its duty to defend (or disclaims that duty), it cannot later rely on any specific provisions of the policy’s coverage terms (or exclusions) to escape its duty to indemnify the insured for a judgment obtained against the latter.

The opinion restates some familiar principles that are adhered to in a number of jurisdictions.  First, the duty to defend is broader than the duty to indemnify (the duty embraces claims alleged in the underlying complaint no matter how baseless they are if there is any reasonable chance the insuring agreement provides coverage).  An insurer that either disclaims its duty to defend (without a reservation) and fails to affirmatively seek a declaration concerning that disclaimer (by filing a declaratory judgment action), puts itself at risk that it will be responsible, at least, for any good faith settlement entered into between the insured and the plaintiff / claimant in the underlying suit, or, worse, as in the instant case, for the amount of a judgment obtained in that suit up to the limits of its policy.

On this latter point, it should be noted that some jurisdictions would not even allow an insurer the benefit of invoking its policy limits where it has breached its duty to defend without reservation and without seeking a declaration of its rights.  This is because once the insurer essentially disclaims that the insuring agreement provides the basis of any assessment of claims lodged against its insured, it takes itself out of the contractual terms of that agreement and puts itself at the mercy of the law of the jurisdiction controlling the dispute.  So, if a jurisdiction allows a quasi-contractual claim – such as estoppel, unjust enrichment, or bad faith (or some equivalent) – against the insurer by the insured (or the plaintiff who has been assigned the latter’s claims against the insurer as in this case), the insurer could face liability that actually exceeds its policy limits.  In other words, the insurer could be liable for the total amount of the judgment entered against the insured or a settlement entered into by the parties.  Here, that would have resulted in a judgment that exceeded the insurer’s policy limits by $300,000.

On this point, the Court quoted from another opinion:

It is well settled that an insurance company’s duty to defend is broader than its duty to indemnify.  Indeed, the duty to defend is exceedingly broad and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest a reasonable possibility of coverage.  If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be.

The duty remains even though facts outside the four corners of the pleadings indicate that the claim may be meritless or not covered…. Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course.

Further, the act of disclaiming a duty to defend without reservation and without seeking a declaration as to its rights under the policy also prevents the insurer from allowing a determination of coverage.  It may be, as the dissent in the lower appellate division noted, that a question of fact existed concerning whether the exclusions in the policy did indeed absolve the insurer of a duty to indemnify.  And, it appears from the facts presented that the attorney’s acts and conduct did fall within either or both of these exclusions.  The crucial point however was the underlying complaint did also allege acts of malpractice because of the attorney’s company’s responsibility to record the mortgages that secured the loans to his company.  Thus, the insurer could not rely on the obviousness of the true nature of the transaction, but rather its conduct was dictated by the allegations in the underlying complaint.

The Court noted it was indeed curious that the lenders in a loan transaction would have retained a principal of the borrower’s company to serve as an attorney to act as their lawyer, but that did not absolve the insurer from defending the claims alleging malpractice in the underlying lawsuit.

The Court does give some important guidance on ways in which an insurer may be able to yet challenge its failure to defend.  Noting the possibility that a court might absolve the insurer if it could be shown the underlying transaction implicated a reason to deny coverage based on public policy.  On this point, the Court noted that in the proper case an insured’s disclaimer of its duty to defend its insured in the underlying action may not bar it from asserting that its insured engaged in intentional wrongdoing for which it should not be provided insurance.

The court also alludes to the possibility that if the insurer can prove collusion between its insured and the plaintiffs in the underlying case to devise a plan whereby the latter could seek compensation from the former’s insurer, the insurer might have been able to escape its primary duty to defend.  However, no such facts were alleged or apparent from the case.

This case has been out for over a month and has gotten widespread attention.  Although, that may be the result of the forum from which it issued rather than its statements of law, which, again are fairly typical.  For insurers and business owners though there are takeaways from this case that teach important, simple lessons when approaching a claim for insurance arising out of any incident.

  • An insurer that disclaims a duty to defend without a reservation of its rights and without seeking a declaration as to its coverage obligations under the policy, cannot rely on the policy’s terms or exclusions, which might otherwise allow it to avoid coverage of the underlying claims if it has disclaimed its duty to defend.
  • When an insurer breaches its duty to defend, it is liable to the insured (and his or her assignee) for, at least, the full amount of the policy’s limits, to cover the liability resulting from the underlying lawsuit.
  • It is important to assert any defenses to coverage (terms and exclusions) in the policy at the outset, even while agreeing to provide a defense.
  • It may be wise to seek a second-look coverage opinion from able counsel to determine what strategies are advisable.  Here, the underlying complaint alleged malpractice.  Regardless of the suspicious nature of the underlying transaction involved, the insurer would have been wise to provide a defense under a reservation of rights and then seek a declaration of its rights from an independent source (usually the filing of an declaratory judgment action in court, although there may be alternate ways to resolve the dispute).
  • It is also advisable to consider whether any evidence of fraud or collusion might exist between the parties in the underlying dispute (as the court noted in this case, the transaction itself was rather curious and although it pointed out there was no evidence of it, the court made sure to note the possibility that intentional wrongdoing, fraud or collusion might have absolved the insurer from having to defend the claim).
  • Presumably, the insurer in this case could have paid the $450,000 settlement offered and would have been done with the case.  Not to say that concession is always advisable.
  • From a practical perspective, I believe the insurer was rightly skeptical of the nature of the transactions underlying this case; however, agressive claims handling rather than simply disclaiming a duty to defend may have been the wisest choice in this case.

If you would like more information about this case contact Carson J. Tucker, Chair of the Appeals and Legal Research Group at Lacey & Jones, LLP

Continuing its tradition of providing highly specialized and unique legal services to an exclusive clientele, Lacey & Jones, LLP works with insurance companies and businesses to develop comprehensive insurance coverage strategies for all lines of coverage.  From the simplest review (second look) of an in-house counsel’s coverage determination to complete coverage analysis involving high-exposure, multi-party, multi-jurisdiction, multi-claim events, the firm is capable of assisting its clients in making valuable choices and advising them on the proper course of action.  The firm’s coverage counsel and litigation team is also capable of pursuing coverage determinations and indemnity or subrogation in courts by filing declaratory judgment actions or indemnity and subrogation actions, respectively.

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Michigan Supreme Court Grant Oral Argument to Consider Causation and Speculative Injury Claim in Medical Malpractice Action

The Supreme Court has granted oral argument on an application in a medical malpractice case to consider the Court of Appeals’ majority ruling that speculative injuries can be the basis for damages in a medical malpractice case.  The Court specifically requests the litigants to brief and address whether the Court of Appeals’ majority ruling is contrary to the rule enunciated by the Court in Henry v. Dow Chemical, 473 Mich 63 (2005), which held that residents could not recover for damages associated with environmental contamination, where future injuries from such contamination were, at best, speculative.

The Court also requests the parties to consider whether the Court of Appeals’ majority properly applied Sutter v. Biggs, 377 Mich. 80 (1966), which addressed the foreseeability of damages in a medical malpractice action.  In the latter case, the Court held that a doctor’s mistaken and negligent removal of one of the plaintiff’s fallopian tubes when she was 10 during an appendectomy could not serve as the basis for a claim where the plaintiff’s other fallopian tube was intentionally removed in a surgery when she was 19.  The plaintiff’s cause of action against the first doctor was based on the theory that had he not negligently performed the appendectomy, at least one of her fallopian tubes would have been present after the second sugery was performed years later.  The Court of Appeals’ majority here dismisses the view that in cases where there are dual functioning organs, a doctor’s removal of one does not give rise to a cause of action because of the potential for greater future harm due to the additional risk associated with having only one functional organ.

The Court of Appeals majority and dissent agreed that insufficient expert testimony was provided to establish the standard of care against the defendant hospital concerning the standard applicable to delivery of radiology results.

The Supreme Court appears to be only concerned here with the issues concerning speculative damages and causation.

The Court has invited amicus briefing from the Michigan Association of Justice and Michigan Defense Trial Counsel.

Here is the Supreme Court’s Order:  Supreme Court Order OA on App in Huddleston

Read the COA’s Opinion here: Huddleston