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Personal Injury Lawyer in Bangor, Portland Maine
Medical Malpractice Lawyer in Bangor, Portland Maine
Introduction
If an individual suffers ill effects from taking a legal drug, the drug's manufacturer may be held responsible. A defendant in pharmaceutical litigation may not only be held liable for an individual's losses, but an entire class of users-potentially thousands of individuals-may seek and be awarded damages. In addition, punitive damages, which can greatly exceed actual losses, are sometimes awarded in pharmaceutical cases. Accordingly, pharmaceutical litigation defendants must seek the most zealous and competent representation available in order to minimize their exposure and achieve the best possible outcome.
Pharmaceutical Cases in General
Drugs and medicines are frequently at the center of lawsuits. Manufacturers have a duty to test the drugs and medicines they make before releasing them into the market. The Food and Drug Administration (FDA) has established criteria for the testing of pharmaceutical products before the products are licensed for human use. These criteria are regarded as industry standards, but the fact that a drug was licensed by the FDA is not conclusive on the issue of the manufacturer's liability to an injured plaintiff, should the drug prove otherwise to be defective.
A drug manufacturer has a duty to warn of a drug's side effects when such effects become apparent, but is not expected to warn of unknown dangers. Often the manufacturer discharges this duty to warn by providing the necessary information to the patient's prescribing physician or to the pharmacist. With almost all pharmaceutical products, except for over-the-counter drugs, there is a "learned intermediary" between the drug's manufacturer and the ultimate user. This can be the doctor who prescribes the drug, a nurse who instructs the patient, or the pharmacist who fills the prescription. Often the lines of liability are blurry, and an attorney can help determine who may be at fault for resulting injuries.
The drug manufacturer is considered an expert in its field, and as such it has a continuing duty to keep abreast of knowledge regarding its products and take all reasonable steps to update medical professionals on side effects. There is no duty to warn of possible reactions in unusually susceptible consumers, however, but just because a reaction is rare does not mean the manufacturer has no duty to warn about it or that the persons experiencing the reaction are unusually susceptible.
Some drugs are considered "unavoidably unsafe" products, which means that they cannot be made completely safe no matter how carefully they are manufactured. Such drugs may have potentially harmful side effects, but may be beneficial to the user nonetheless. If these drugs are properly prepared and accompanied by adequate warnings, they usually cannot form the basis of a successful lawsuit.
In some drug-related injury cases, the plaintiff will not be able to identify the precise manufacturer or supplier of the defective product because so much time has elapsed that the evidence is no longer available, such as in cases involving drugs ingested during pregnancy. In those cases, the damages may not become apparent until the later-born children are grown. The burden then shifts to the potential defendants to prove that they could not be responsible or to allocate the damages among a number of potentially liable manufacturers.
Plaintiffs who have claims for damages they suffered as a result of using pharmaceutical products must bring them within the applicable statutes of limitations or their suits will be barred. If their claims are timely and can be proven, however, the plaintiffs will be entitled to monetary damages to compensate them for their losses, and in some cases courts may even award punitive damages to punish a defendant whose conduct was particularly indifferent to the safety of users. On the other hand, defense lawyers can defend manufacturers against unsubstantiated claims and facilitate the quickest possible resolution of the matter.
Contraceptive Products
Contraceptive products, like any other drug or medical device, can greatly enhance the quality of life, eliminate worry, and help life progress as planned. There can also, however, be risks associated with the use of certain contraceptive products-risks that can result in adverse consequences ranging from annoying to grave, and consequences that often require resolution in the courts.
In 1999, for instance, American Home Product Corporation, manufacturer of the Norplant contraceptive implant, agreed to settle claims brought by women who claimed to have suffered adverse consequences from the use of its product. According to the terms of the settlement, more than $50 million was allocated more than 36,000 women who testified that the contraceptive implant negatively affected their health.
Intrauterine devices have also been the subject of litigation, including class action lawsuits. The Dalkon Shield litigation arose from allegations that the intrauterine contraceptive device, introduced into the U.S. market in 1971 by A.H. Robins Co., caused pelvic inflammatory disease frequently resulting in infertility. More than 3.6 million of these IUDs were sold in the United States before the device was removed from the market in 1974 under government pressure. As a result of the flood of lawsuits against it, A.H. Robins sought bankruptcy protection from litigation in 1985.
Oral contraceptive makers, too, have seen their share of lawsuits. Users have sued pharmaceutical companies, arguing that they were not warned of the potential side effects from taking the pill. Attorneys representing the plaintiffs in these lawsuits have argued that the "third generation" pill caused users to develop blood clots that led to long-term damage to their health, and in about 10 percent of the cases proved fatal. The pharmaceutical companies have rejected suggestions that the third generation pill is slightly riskier than its predecessors.
Commentators have noted that while American women continue to demand new contraceptive options, pharmaceutical companies continue to drop out of contraceptive research and marketing, which prevents women from accessing the most current contraceptive methods available. In 1982, a government report predicted that 10 new contraceptives would soon reach the market. In reality, however, only three new methods were approved by the FDA in the anticipated time period: Norplant, Depo Provera, and the female condom. Critics point to one reason why manufacturers are so afraid to get into the contraceptive market: the fear of litigation.
Diet Drugs
Drug companies have been marketing diet pills in various forms for more than 25 years, and during that time have been bombarded with various diet-drug related lawsuits. In 1992, for instance, pharmaceutical companies marketed two diet pills called Fenfluramine ("Fen") and Phentermine ("Phen"), to be used in combination and therefore dubbed "Fen-Phen." Unfortunately, tens of thousands of Americans claim to have suffered serious injuries from taking these diet drugs and similar products. There is said to be evidence that some of the companies involved in marketing and selling Fen-Phen knew that these drugs were causing serious injuries, and that they deliberately concealed that information from the FDA. Although Fenfluramine and dexfenfluramine were removed from the market in September 1997, some commentators continue to maintain that the drugs did not cause the adverse health consequences for which they have been blamed.
The Fen-Phen combination is not the only diet drug or combination thereof to give rise to litigation. Meridia has also been the subject of recent lawsuits, and over-the-counter diet aids and herbal supplements have come under legal scrutiny after users claimed to have suffered ill consequences.
There have been many individual lawsuits seeking diet drug-related damages, and there have been class action lawsuits as well. Accordingly, the defense of these lawsuits requires experienced counsel with proven track records in products liability law, especially with regard to drugs and pharmaceuticals, and possibly class action litigation. Only with experienced defense counsel can litigation result in the best possible outcome for all concerned.
Conclusion
Pharmaceutical litigation is serious business. When a drug manufacturer becomes the subject of allegations of negligence, strict liability, or failure to warn, the first step should be to seek experienced legal counsel. A seasoned pharmaceutical defense attorney can advise a defendant on whether a claim is valid, discuss available defenses, and provide ardent representation throughout the litigation process in order to minimize damages if the defendant is found liable. Perhaps more importantly, however, a good attorney can work proactively with pharmaceutical companies and advise them on the best course of conduct to avoid litigation in the first place.
Introduction
Medical malpractice cases arise when a physician or other health care professional provides unskilled or negligent treatment that injures a patient. If a doctor, nurse, technician, or other health care provider does not meet a reasonable standard of care, he or she may have committed malpractice. If a malpractice suit arises, the health care professionals named as defendants should seek legal counsel at once. An attorney experienced in medical malpractice defense can advise them on how to proceed, inform them of what defenses may be available, and zealously represent them throughout the entire litigation process.
Elements of a Medical Malpractice Claim
A plaintiff in a medical malpractice case must establish the same four elements as are required in nearly every professional malpractice case: duty, breach, injury, and proximate cause. In order to establish the duty element, the plaintiff must prove that a doctor-patient relationship existed. A doctor-patient relationship is usually formed by agreement between the doctor and the patient. If there is no such agreement, doctors usually have no obligation to provide treatment. For instance, if a doctor is shopping at the local mall and sees another mall patron who appears to have fainted, the doctor may have no obligation to render medical aid. In other situations, however, such as when the doctor is an emergency room physician, the doctor may be required to treat any person who comes into the emergency room with a life-threatening condition, no matter how "undesirable" the patient may be.
If a doctor does choose to render emergency care, such as to a motor-vehicle accident victim he or she passes on the highway, the physician may be protected from malpractice claims by various state statutes called "Good Samaritan" laws. These laws usually insulate a doctor from liability for rendering emergency medical care outside of a doctor's office, hospital, or other medical facility. In these cases, the doctor generally had no duty to the victim but rather volunteered in good faith to help without being paid. A doctor can still be sued for gross or severe negligence, however, even in Good Samaritan situations. In some jurisdictions there is a legal requirement that, once aid is rendered, it is rendered in a non-negligent manner; in other words, even in emergency situations, and even when the doctor is working for free, he or she must exercise the same degree of care as in a normal setting, subject to the limitations of the emergency situation.
Once a doctor-patient relationship is established, the doctor has a duty to provide good care. Expert testimony from another health care professional is usually necessary to prove the requisite standard of care. The necessary standard of care used to be measured by the customary practice in a particular locality. As the practice of medicine has become increasingly uniform and national in scope, most states have modified the locality rule. Now, the standard of practice in the same or a similar locality is considered in combination with the state of development of medical science at the time of the incident. Specialists in a medical field, like dermatologists or heart surgeons, are held to higher standards than general practitioners. Also, any doctor performing procedures usually done only by a specialist will be held to the level of performance required of that specialty.
Generally speaking, a health care professional breaches his or her duty to a patient if he or she fails to use the same level of care another reasonably competent professional would use in similar circumstances. Breach can be difficult to prove because competent physicians may disagree on the best course of treatment for the same patient. Medicine is an inexact science. Even if Doctor A would have recommended surgery and Doctor B chose to treat the patient with medicine, there may have been no malpractice if either option was an acceptable choice. If, however, the patient's appendix was about to rupture, for example, and Doctor A rejected the surgical option, the malpractice would be quite evident.
Unlike breach of duty, which is hard to establish, injury is fairly easy to prove in a medical malpractice case. If a patient dies or is left with chronic illness or pain as a result of a health care professional's actions, an injury is established. Proximate cause, however, the final element, is another tough one, because a bad result does not necessarily point to malpractice. Even with the best treatment, a patient may die or not fully recover. Also, a doctor may have made a mistake, but the resulting damages may be so far removed in the chain of events from that mistake that no liability should attach to the doctor's conduct. Say, for example, a plastic surgeon performs a face-lift that could have been done more skillfully and, as a result, the patient does not look as young as she and her husband had hoped. If the patient's husband ultimately leaves her for a younger woman and the patient gets little property in the divorce settlement, she cannot go back to the plastic surgeon and claim that her dire financial straits are the result of his malpractice and that he must financially compensate her.
Informed Consent
A medical professional may also face liability in a medical malpractice suit for failing to obtain a patient's informed consent. Informed consent means that the doctor or other health care provider has told the patient about the nature of the treatment or procedure that will be performed, the risks of that treatment or procedure, the risks of refusing the treatment or procedure, and any alternatives to the treatment or procedure, and that, after considering all of that information, the patient agrees to the prescribed course of action. Consent may be oral or written, or it may be implied if the patient's conduct indicates a willingness to undergo the treatment or if the patient is unconscious and there is no family member available to provide consent in a timely manner. Some health care providers use standard forms that their patients must sign, indicating that they have been given the required information and consent to treatment. Patients should not sign these forms unless they have in fact been fully informed and agree with the prescribed therapy.
If the patient is a minor, a parent or guardian must consent to the child's treatment unless an emergency situation makes time of the essence and a parent is unavailable. Also, if a minor seeks treatment for a sexually transmitted disease, alcohol or drug treatment, or an abortion, the parent or guardian's consent may not be required. Some states do, however, require parental consent in order for a girl under 18 to have an abortion. If a health care provider fails to obtain the patient's or a parent or guardian's consent and provides treatment nonetheless, the patient may be able to sue to recover damages.
Damages
A health care provider that has committed medical malpractice may be liable for both actual and punitive damages. Actual damages consist of any additional medical expenses the patient incurred as a result of the malpractice, any future medical expenses necessitated by the malpractice, lost earnings, future lost earnings, and damages for pain and suffering. Punitive damages are not intended to compensate the victim for actual losses, but are awarded to punish a defendant whose conduct has been intentional, willful, or reckless, rather than merely negligent. Punitive damages are in some cases much greater than actual damages, particularly when the defendant's breach of duty is especially egregious and the plaintiff's harm is very serious.
In cases in which the plaintiff is able to prove that the doctor or other health care provider failed to obtain informed consent for the treatment, the plaintiff may be able to recover damages, even if the treatment was successful. Also, on rare occasions, a plaintiff may be able to prove that the doctor promised a certain result if the patient underwent medical treatment or a procedure, and that the promised result was not obtained. In such cases, the plaintiff may be able to recover the value attributed to the loss of the successful treatment.
In some states, the legislatures have enacted statutes that put a limit on the amount of damages that can be recovered in medical malpractice cases. Plaintiffs in such states have argued, with limited success, that those statutes are unconstitutional.
Defenses
A defendant in a medical malpractice action may admit that there was some negligence, but argue that other factors excuse his or her conduct. Perhaps the most frequently asserted defense is consent, which means that the physician or other health care professional told the plaintiff about all of the risks associated with a particular treatment and the plaintiff agreed to that treatment, fully aware that the outcome that was experienced and is complained about was a possibility.
Often doctors and hospitals will attempt to prove that the patient consented to the treatment, with its known risks, by showing that the patient signed a standard consent form. These forms often include language warning patients that medicine is an inexact science and that the patient must assume all risks of the procedure or treatment. Even if the patient has signed such a form, he or she still retains the right to sue if the doctor has not actually fully informed the patient about the risks of or alternatives to the treatment, has gone beyond the agreed-upon procedure, or fails to adhere to the recognized standard of care. A patient can also sue a hospital or doctor if someone other than the health care professional named on the consent form performs the procedure.
Another affirmative defense raised in medical malpractice cases is conflicting legal duty. This defense applies in cases involving a breach of the doctor's duty to maintain client confidentiality. Although a doctor is ordinarily liable for such a breach, there is no liability if the doctor's disclosure was mandated by law. Doctors and other health care workers are required to report cases involving gun shot wounds, communicable diseases, and known or suspected child or vulnerable adult abuse. In those cases, there is no breach of duty, and thus no malpractice, as a result of the disclosure.
In most cases, however, the health care professional will not admit negligence, and will instead argue that his or her conduct met the applicable standard of care.
Conclusion
Medical malpractice cases are serious business. When a health care professional becomes the subject of malpractice allegations, his or her first step should be to seek experienced legal counsel. A seasoned medical malpractice defense attorney can advise a defendant on whether a claim is valid, inform him or her about available defenses, and provide ardent representation throughout the process in order to minimize damages if in fact malpractice is found to have occurred. Perhaps more importantly, however, a good malpractice attorney can work proactively with health care professionals and advise them on the best course of conduct to avoid malpractice claims in the first place.
Introduction
If a lawyer or other professional person makes a mistake and someone or something is injured, professional malpractice may have occurred. Professional malpractice law deals with the negligence or misconduct of people in the dental, legal, and medical fields, as well as many other professionals. A lawyer experienced in malpractice law can help a client determine whether malpractice has occurred, and can represent the client throughout the entire litigation process. A defendant in a legal malpractice case must seek the most zealous and competent representation available, because plaintiffs' lawyers have a duty to fervently represent their clients, even lawsuits against other lawyers, or they themselves could be subject to a claim for malpractice.
Legal Malpractice Occurs When a Lawyer Breaches a Duty to a Client and the Client Suffers Losses as a Result.
A lawyer commits legal malpractice if he or she fails to provide quality legal services to a client. A plaintiff suing for legal malpractice must establish four elements in order to prove the case: duty, breach, injury, and proximate cause. A judge or jury will determine whether all four elements have been established and, if one or more of them has not, the plaintiff will not be able to recover.
A lawyer has the duty to act honestly and with good faith, fairness, and integrity in all dealings with his or her clients. A lawyer's duties to clients include the duties of undivided loyalty and confidentiality. In addition, a lawyer must possess the skill and knowledge that is ordinarily possessed by other lawyers. No lawyer can be expected to know all laws off the top of his or her head, but lawyers are expected to know how to find answers to the client's questions through legal research and when to refer the client to another lawyer with expertise in the relevant area.
There can be confusion as to when an attorney-client relationship is established such that a duty arises. In many cases, a potential client may have a preliminary consultation with a lawyer without officially retaining him or her; in such cases, the lawyer should make it clear to the client whether it is intended that there be a continuing attorney-client relationship.
A Minnesota case is often cited on the subject of when an attorney-client relationship exists. In that case, the plaintiff claimed that her attorney had negligently advised her, after less than one hour of consultation, that a medical malpractice claim that she wanted to bring had no merit. The claim was later barred because the statute of limitations had expired, and the plaintiff then sued her lawyer. The lawyer defended on the ground that an attorney-client relationship was not created by his discussion with the plaintiff. The jury, however, disagreed with the lawyer and found that an attorney-client relationship did exist. The Minnesota Supreme Court upheld the verdict, finding that an attorney-client relationship can arise even in the absence of a formal retainer agreement or any other contractual factor when a party seeks an attorney's advice and relies upon that advice. In that instance, the relationship gave rise to a duty to at least obtain and review the medical records in the underlying case, or for the attorney to explain his lack of expertise and refer the plaintiff to another lawyer.
Other states apply different standards than in the Minnesota example, however, and find that an attorney-client relationship exists only when there is an express contract between the parties for the rendering of legal services and the payment of fees. In any jurisdiction, lawyers would be well advised to establish their relationships in a formal, written agreement in the event a dispute later arises.
A lawyer's duty of care may extend to persons who are not his or her clients, but rather are intended third-party beneficiaries of the relationship with a client. If, for instance, a lawyer incompetently drafts a will such that the testator's intent that his children inherit is not carried out after his death and the testator's children lose their intended inheritance, the children may have a legal malpractice claim against the lawyer who drafted the will, even though they never directly entered into a relationship with that lawyer.
If a lawyer makes an error that would have been avoided by a competent lawyer exercising a reasonable standard of care, the breach element of a legal malpractice claim is satisfied. A claim may also arise if the lawyer is unprofessional in his or her relationship with the client, such as violating a confidence or engaging in a conflict of interest; when a third person claims injury as a result of the attorney's conduct, as in the will example given above; or as a defense if the lawyer sues the client to recover fees, i.e., the lawyer sues to recover unpaid legal fees, and the client argues that no fees are owed because the lawyer did an unsatisfactory job.
Breach is often the hardest element for the plaintiff to establish in a malpractice case because most professionals can make mistakes and not be considered negligent. The law is not an exact science, and there is often room for disagreement on the best course of action in a particular case. Even if a client can establish that another attorney would have made a different decision or chosen a different strategy, he or she may not be able to establish a breach of duty.
If the plaintiff can prove a breach, he or she must next show that the breach caused an injury. If, for example, a lawyer files an appellate brief late and the client loses the appeal, there is no injury if the court subsequently granted the lawyer an extension and accepted the brief. If, however, the appellate court dismisses the appeal due to the late filing, the client may be able to recover damages. Even so, the client will probably have to establish that the appeal would have been successful, which may be hard to prove.
Lastly, the plaintiff in a legal malpractice case must prove that the lawyer's breach proximately caused the plaintiff's injuries. As most lawyers are aware, the issue of proximate cause essentially asks the question, "Is the lawyer's conduct sufficiently responsible for the client's damages that the lawyer should be held accountable?" Proximate cause is fairly easy to establish in a simple case, such as when the lawyer misses a critical deadline and loses the case, but it is harder to prove in more nebulous cases, such as when the client claims that the lawyer pursued the wrong course of action at trial. In the latter case, the client will need to show that had a different strategy been employed, he or she would have won the case, or that the damages awarded would have been significantly higher.
If the plaintiff establishes all four elements, the lawyer will be held liable for direct economic losses, such as the cost of hiring a new lawyer to correct the first lawyer's errors and any fees or penalties paid. It is usually more difficult, however, to recover more speculative damages, such as amounts for what might have been the outcome if a different lawyer had handled the case, for emotional damages, or for the costs of the lawyer handling the malpractice case. Sometimes punitive damages are awarded, but only if the attorney's breach was willful or especially malicious.
Conclusion
Generally speaking, an attorney can be liable for damages if he or she had a duty to a client, the duty was breached, the client was injured, and the breach caused the injury. Attorneys, like doctors, are, unfortunately, frequent targets of malpractice suits. A lawyer experienced in professional malpractice law can help a potential defendant determine whether he or she has committed malpractice, determine what defenses may be available, and provide representation throughout the entire litigation process. Lawyers experienced in professional malpractice law can also advise attorneys on preventing malpractice in the first place through good professional practices.
Introduction
Perhaps you were in a motor vehicle accident in which someone sustained injuries or a tenant was injured when she fell in a stairwell of your apartment building. You reported the accident to your insurance company and now you have been served with documents initiating a lawsuit against you. What happens next?
What Happens When You are Sued?
The adversarial process is intended to draw out the truth. Parties to a lawsuit present their arguments to an impartial judge or jury who resolves the case by examining the facts, applying the relevant law, and issuing a decision or verdict. In insurance litigation, the plaintiff must prove his or her theory of liability and the amount of damages by a preponderance of evidence, which means that he or she must present more persuasive evidence than the defendant.
After the plaintiff starts the lawsuit by serving a summons and complaint on you and by filing the complaint with the court, you, as the defendant, must answer the complaint within a short time period, either by responding directly to the issues raised in the complaint or by filing a motion to dismiss the claims. It is very important to notify your insurer immediately when you are served with the summons and complaint so that an attorney can prepare the answer or seek dismissal in a timely manner.
In most cases, your insurance company will hire an attorney to represent you and will pay the attorney's fees. The company usually selects your attorney from a group of attorneys who have satisfactorily represented the company's insureds in the past in similar types of cases. Although some of the plaintiff's claims against you, such as intentional acts, may not be covered under your insurance policy, your insurer generally is obligated to pay for your attorney if even one claim is covered. The insurance company may notify you that it is reserving its rights to discontinue paying the attorney or to not pay a judgment against you if your insurance policy does not cover the claims for which you are found liable.
It is critical that you cooperate fully with your insurer and your attorney. Your attorney will discuss the complaint with you to gather information regarding the facts. In addition to preparing the answer, your attorney may determine that a third party is responsible for some or all of the plaintiff's damages and should be brought into the lawsuit. For instance, if you were driving the car that struck the plaintiff's car but your car was struck from behind first and was pushed into the plaintiff's car, the person driving the vehicle that hit you may be at least partially responsible and should be involved in the lawsuit.
After your attorney prepares and files an answer to the issues raised by the plaintiff's complaints, you and the plaintiff-and any other parties-will engage in discovery, a procedure that allows each side to obtain factual evidence concerning the other party's arguments. You may be asked to respond to written questions called interrogatories and your attorney may submit interrogatories to the other parties. Your attorney will work with you to respond to the questions and, if the questions are improper, may choose to object to the question rather than provide a response. The attorneys also usually conduct formal, recorded oral question-and-answer sessions, known as depositions, of the named parties and important witnesses. Your attorney may also retain one or more expert witnesses, paid for by the insurance company, to refute the plaintiff's damage claims or theory about how the accident happened or to explain why a third party is responsible. For example, if the accident occurred because the brakes on your car suddenly failed, an expert may be needed to testify about a faulty design or repair of the brake system.
Most courts establish a timeline during which discovery occurs and set a time for trial. Some states also require that the parties pursue alternative dispute resolution prior to trial to avoid full-fledged litigation. With or without private alternative dispute resolution, most cases do settle prior to their court dates. Your control over the decision to settle or try the case depends on the terms of your insurance policy, but ordinarily the insurer may decide to settle. Even if you oppose settlement and if there is no risk that the judgment may exceed the policy limits, the insurer may decide not to settle.
If the case proceeds to trial, you will be expected to attend the trial, where you will sit with your attorney at the counsel table. During the trial, the parties first present opening statements, and then the plaintiff presents its case by examining witnesses. You may be required to testify as part of the plaintiff's case. The defense may cross-examine these witnesses on their testimony, followed by re-direct examination by the plaintiff if necessary. When the plaintiff rests its case, you have your opportunity to present your version of events, and your attorney offers your side of the case through witness testimony. Throughout the testimony, the parties may object to unfavorable evidence or questions based on the court's rules of evidence. The judge decides whether to sustain (or agree with) the objections or to overrule them and allow the evidence or question. After testimony, both sides present closing arguments and the finder of fact, usually a jury, deliberates and reaches a verdict.
The plaintiff may appeal the verdict if he loses and you may appeal if you lose. The structure for appellate review varies from state to state, but all states have at least one level of appellate review. On appeal, the reviewing court does not hear additional witness testimony and only considers whether the trial court committed a legal error or did not apply the relevant law properly.
Your insurance company will continue to provide an attorney to represent you on appeal. Usually, the same attorney who represented you at trial will handle the appeal, but sometimes the insurance company will select a different appellate attorney. Like settlement, your control of the decision to appeal depends on the terms of the insurance contract, but insurance companies ordinarily reserve the right to make the final decision whether to appeal in most circumstances.
When Do You Need to Hire Your Own Attorney?
Although the attorney provided by the insurance company to represent you must represent your interests rather than those of the company, there are circumstances in which you may need or want to hire a separate attorney to represent you. If the plaintiff's claimed damages exceed the limits of your insurance policy or if the plaintiff seeks damages that are not covered under your policy, such as punitive damages (damages that are intended to punish especially bad acts rather than to compensate the plaintiff for his or her injuries) or damages resulting from intentional acts, it may be advisable to retain your own attorney to monitor the case. In addition, if the insurance company denies coverage outright and refuses to provide a defense, you will need to hire an attorney to represent you in the lawsuit. If the insurance company has deliberately failed to deal fairly with you in denying coverage or in failing to settle the case within the policy limits, you may have a claim against them and your attorney can advise you regarding how to proceed.
Conclusion
If you are sued for something that is covered by insurance, your insurance company is contractually obligated to act in your best interest. You generally are entitled to the professional services of an experienced attorney to represent your interests, and the attorney will guide you through the process and will serve as a strong advocate for you. The costs involved in most insurance litigation, and any resulting judgment, are fully covered by the insurance company, but you should make sure that you understand any exclusions or exceptions.
Introduction
Your company, an agricultural testing laboratory, was successful in procuring a U.S. government contract to provide the Department of Agriculture with crop testing services. You commenced performing under the contract, measuring the yields of various crops under different herbicide and fertilizer application conditions, and provided preliminary test results to the government. Unfortunately, a disgruntled laboratory technician destroyed the final test result data, rendering you unable to provide the required final report. When you press the government for payment for the preliminary data provided under the contract, the government asserts that you are not entitled to payment and, citing an insurance requirement in the contract, inquires as to your insurance coverage for the loss of data.
A lawyer experienced in government contract law and insurance coverage law can help you determine whether your insurance policy provides coverage for your loss sustained as a result of the lost data, as well as whether you met the government contract's insurance requirement and whether the insurance policy provides coverage for any potential liability to the government for failing to provide the final report. In addition, the lawyer can assert your claim for payment for the services performed and data provided.
To help ensure payment and protect against the risk of loss and liability, it is advisable to consult with an attorney with insurance and government contract experience to ensure the most advantageous contract possible and to make sure that the contract's insurance requirements adequately address the circumstances. Likewise, the attorney can assist in ensuring timely performance under the contract and interpreting the contract as the need arises.
Federal Regulations Concerning Government Contracts must be Consulted
The federal regulations concerning government contracts are known as the Federal Acquisition Regulations (FAR). These regulations are issued by the General Services Administration of the federal government. Attorneys practicing in the area of government contracts are familiar with the complex and arcane provisions of the FAR, which have applicability both in the formation of a government contract and in disputes arising from nonperformance or nonpayment.
An example of the degree of complexity of the federal regulations dealing with government contracts is the Department of Defense's applicable procurement regulations. Under these regulations, which are fairly typical of federal procurement regulations, a government contractor must first deal with a procurement contracting officer in charge of awarding contracts. Then the government contractor must work with an administrative contracting officer during performance of the contract. Then, if an issue arises that brings the contract's termination provisions into play, the contractor must address those issues with the government's termination contracting officer. The extent to which these government agents communicate with each other varies from agency to agency and person to person. It is important that a government contractor communicate with the correct government agent in acquiring a government contract, performing under the contract, and addressing any termination issues. Unlike most private contracts, the government will not be bound by contracts or concessions made by a government officer who does not have authority to act. An experienced government contract attorney can ensure that contracts and other required documentation is in the proper form, drafted as advantageously as possible, and executed by the proper government officer. A government contractor should not rely on the government for advice on how to proceed in addressing these issues.
Government Contract Cases Are, with Important Distinctions, Similar to Those Involving Other Contracts.
Breach of contract cases arise when a part to a contract breaches the contract and the other party to the contract suffers damages as a result of the breach. A breach of contract case can arise from a government contract just as easily as it can result from any other kind of commercial contract. However, complications can arise from the unequal resources and bargaining position between the government and the government contractor in negotiating the terms of the contract, the large size of many government contracts, and the insurance coverage provisions of the contract. In addition, government contract provisions which appear to be "boilerplate" often have received distinct meaning from the results of past contract litigation. Also, disputes under government contracts follow a different procedural route than those arising under private contracts because of the government's special status.
The typical breach of government contract case alleges that the government contractor breached the contract or was negligent. In some cases, breach of contract claims and negligence claims are both asserted. A breach of contract arises when a party to a government contract breaches the contract and the breach results in damages to the other party to the contract. For the government to prevail on a negligence claim, it generally must establish four elements in order to recover. First, the government must show that the party being sued owed a duty to the government. Second, the government must prove that the other party breached that duty. Third, the government must then show that it was damaged. And fourth, the government must establish that the breach was the proximate cause of the damages.
Generally, it is easier for the government to prevail on a breach of contract claim rather than on a negligence claim. This is because the contract ordinarily sets forth the contractual duty in black and white, and because it is difficult to establish a duty owed by the contractor to the government apart from the duty owed pursuant to the contract. Importantly however, insurance policies procured under requirements of government contracts are likely to provide coverage against negligence claims but not against breach of contract claims. This is because of the general policy of the law that a party to a contract is liable for breaches thereof, as well as insurance policy provisions disclaiming coverage for breach of contract claims.
State agencies, municipalities, and public authorities operating under state law are subject to government contract regulations similar to those applicable to the U.S. government. However, these are imposed under state law rather than federal law. An attorney with experience in the area of federal government contracts is likely to have experience in the area of state or municipal contracts as well.
Conclusion
If you contemplate entering into a contract with the U.S. government or, to a lesser extent, with a local or state government agency, you can expect that a breach of the contract on your part can result in substantial liability. It is important that you negotiate the best contract possible and protect yourself to the extent possible through insurance coverage. To the extent an insurance policy can protect you against the potential loss, insurance coverage should be obtained. In any event, you can expect that the contract will contain provisions imposing insurance requirements on you. In most cases, a failure to obtain the required insurance will itself constitute a breach of the government contract.
When seeking an attorney to represent you in negotiating a government contract and responding to any loss or claim of breach, it is important to inquire as to his or her background in government contracts and insurance law. Ask questions about his or her training and experience so that you can make an informed decision about whether this is the right person to zealously represent your interests in negotiating the contract, asserting your claim for payment under the contract, or defending you against any breach of contract claim asserted by the government. A lawyer experienced in insurance and government contract law can help a contractor determine whether it has breached the government contract, assess insurance coverage, determine what defenses and counterclaims may be available, and provide representation throughout the entire litigation process. Lawyers experienced in insurance and government contract law can also advise government contractors on preventing liability through good business practices.
Introduction
It is a little-known fact that organizations such as corporations and closely-held businesses can be found guilty of crimes. Both the organization itself and key employees responsible for crimes can be punished for such violations. Corporations can be heavily fined and barred from carrying on certain types of business, while responsible individuals within the company may be jailed or fined. Most corporate crimes involve violations of regulatory regimes that relate to business activities. No matter how small your business, there are many criminal laws that apply to it that must be carefully followed.
The last two decades have witnessed an increase in these types of violations by corporations. These corporate missteps include violations of import and export procedures, accounting and securities rules, and hazardous material disposal, among others. The perceived upswing in violations and the inconsistency in penalties for organizational crimes caused the federal government to harmonize the consequences for businesses and their key employees. In 1991, the U.S. Sentencing Commission, an independent panel of the federal court system, promulgated the Organizational Sentencing Guidelines (also referred to as the Federal Sentencing Guidelines), which help government agencies and courts determine the appropriate penalties for violations of federal criminal laws impacting businesses.
The guidelines increase the consequences of criminal activity by a corporation or by employees in the course of employment. In order to protect your company from severe consequences, and in order to get the most from your insurance coverage, you need to understand the impact of the sentencing guidelines and how the U.S. Sentencing Commission recognizes corporate efforts to avoid problems in the first place.
The Guidelines' "Carrot and Stick" Approach
The sentencing guidelines present a very real "stick" threatening non-compliant businesses. The commission established a uniform sentencing structure for organizations in violation of federal criminal statutes, with penalties sometimes greatly exceeding those generally imposed prior to 1991. There is, however, also a "carrot" incorporated into the guidelines. If a business demonstrates due diligence in attempting to avoid violations, then that organization's liability is reduced. This special dispensation for corporations that try their best to comply led to the development of compliance training programs. Such programs can help demonstrate a corporation's due diligence, even if a violation does occur.
The U.S. Sentencing Commission identified seven hallmarks of an effective compliance program to prevent criminal activity.
Several state and federal courts upheld the sentencing commission's list. In those cases, corporations with effective compliance programs that met the seven hallmarks were able to use those programs as proof that they made a good-faith effort to avoid violations. The courts have held that such programs are an affirmative defense to criminal charges against the corporation. In other words, corporations have avoided criminal liability for actions that they tried to avoid through a well-documented compliance program.
One example involved Caremark, a corporation accused of mail fraud and other state and federal crimes. The members of the board of directors were individually implicated in the case, but avoided possible criminal sentences and personal fines because the company had a compliance program designed to avoid criminal violations by training employees.
Because of the importance of an effective compliance program under the guidelines, it is essential to not only develop such a program, but to document the program in great detail. No program will be useful to your company if it is simply buried in the employee manual and not actively pursued. A good compliance program can only help ameliorate the consequences of the sentencing guidelines if it meets the commission's requirements and if participation, communication, and implementation are carefully recorded.
A corporate attorney with experience applying the guidelines or in dealing with organizational crimes can best help your company build a program to work with the guidelines' compliance incentives. The U.S. Sentencing Commission is continuously evaluating the guidelines and its rules for effective compliance programs, so it is necessary to remain apprised of developments and to receive solid legal advice about how to incorporate changes.
Conclusion
If your company is facing a government investigation, or if you want to head off such problems in the future, it is important to understand the sentencing guidelines and their impact on your business. When seeking an attorney to advise you how best to proceed, be sure to investigate his or her background in corporate compliance. Ask questions about his or her training, experience, and track record so that you can make an informed decision about whether this is the right person to help you design a program that dovetails with the requirements of the guidelines - or to help you deal with an ongoing problem that might lead to federal sentencing issues for your company. An experienced attorney with corporate compliance knowledge and an in-depth understanding of the sentencing guidelines is the clear choice for proactive businesses.
The most common dispute in construction cases involves construction defects. The issues involved in construction defect defense litigation are difficult and challenging because the law is unsettled in many areas. In addition to having an attorney who is familiar with construction law, the best defense to claims of construction defects is to keep the claim from arising in the first place. Construction professionals need to know how to balance the contingencies of risk with their specific contractual, financial, operational and organizational requirements.
In order to achieve this balance, proper risk identification and risk analysis is required. The risk management process entails identifying construction risks and exposures, and formulating an effective risk management strategy to mitigate the potential for loss.
And although some number of lawsuits is inevitable, through this process, contractors, subcontractors, architects, engineers, and developers can take steps to make the successful defense of these claims more likely. Once a suit is underway, however, the representation and counsel of an attorney knowledgeable in construction defense - as well as the support of your insurance company - can prove to be invaluable.
Construction Defect Claims
Almost any condition that reduces the value of residential or commercial property can be a construction defect. Construction defects can arise from a variety of circumstances, with some of the most common including:
Construction defect cases arising from these and other situations are even more varied, with claims encompassing:
A court may find liability on the part of the construction team if the specific condition under review:
These possible liabilities are daunting, but even if liability appears obvious, there are many procedural defenses to a construction defect claim. An experienced construction defense attorney is absolutely necessary to give you the benefit of these procedural rights.
Standing
Due to the many different parties who may be involved in a construction defect suit, it is necessary to determine whether the person bringing the suit has proper "standing." Only parties who are damaged or stand to suffer a loss as the result of another's actions have "standing" to bring a lawsuit; being able to show existing or imminent damages is a perquisite of starting a lawsuit. When an individual property owner brings a suit, the issue of standing is straightforward and usually not an issue. When numerous owners or homeowners associations bring the suit, the issue of standing is more complicated. Class actions and homeowners association actions are very similar. They involve persons or entities suing on the behalf of others. Such actions are allowed as exceptions to the usual rules governing standing. Homeowners associations may also have direct standing under covenants, conditions, and restrictions. The capacity of the homeowners association's standing to sue requires careful consideration.
Class actions involve plaintiffs who are all a member of a class whose claims are typical of each other. A construction defect case is fundamentally different from a typical class action where all class members have sustained the same damage or been the recipient of a uniform misrepresentation. Defendants in a construction defect suit may be able to prevent the certification of a class action if the defects affecting the various homes in a particular project are all different and do not have the requisite similarity of claims to become certified.
Statute of Limitations
Another preliminary consideration in a construction defect case is whether the claim has been brought within the time limit allowed for a lawsuit to be brought. The period of limitation does not typically begin to run until the defects are discovered or reasonably should have been discovered. Consequently, the potential liability of a builder or developer can continue for an extended period of time, but in most states not longer than 10 years from the completion of the project. The courts will not allow a lawsuit to proceed if a plaintiff fails to bring a suit within the applicable statute of limitations period.
Assignment of Liability
In addition to opposing the actual defect claims, most construction defendants will refer to the various contracts involved in the construction to assign liability for the work being criticized. For example, a contractor sued for roof leaks may claim that the roofing subcontractor is responsible for the damage caused by the leakage. As a result, numerous cross-complaints are filed in almost every construction defect case. The indemnification clauses contained in subcontract agreements and certificates of additional insurance that have been provided to the developer and general contractor are the primary materials used to determine financial responsibility among the parties.
The successful defense of a construction defect suit will depend on a variety of elements, including:
Conclusion
Individuals and businesses involved in construction can do a number of things to minimize their damages in the event of a construction defect lawsuit. Although familiarity and compliance with the building codes is important, it is also important to discourage unreasonable expectations in buyers and to document deviations from plans. Professional advice is warranted; if a potential problem arises during construction, most insurers and construction attorneys will welcome the opportunity to provide risk management advice.
Alternative Dispute Resolution
Introduction
Alternative dispute resolution (ADR) consists of various methods of resolving legal disputes in less formal, less expensive, and less time-consuming ways than full-blown litigation. ADR methods, like arbitration and mediation, are often more expedient than litigation, yet they offer many of the same advantages, not the least of which is producing a final and legal resolution of the conflict. If you are involved in a lawsuit, your attorney can advise you on whether ADR may be right for you.
ADR Can Be Individualized to the Particular Parties and Their Dispute.
Although some ADR methods, like mediation and arbitration, are well established and frequently used, ADR has no fixed definition, and there are no limits to the methods that may be used to resolve a conflict. Clients, lawyers, and judges are continuously adapting ADR methods or devising new ones to meet the unique needs of particular legal disputes. Also, ADR is not always a total replacement for traditional litigation, but can be used in conjunction with litigation when the parties wish to explore other options while retaining the right to return to the traditional court processes at any time. The one requirement for making any of the available methods work is that the parties and their attorneys understand and agree to the same process.
All ADR processes motivate the parties and their lawyers to prepare for resolution of the conflict before them. As with traditional litigation, the parties have their day in "court," or a hearing in which they have the opportunity to present their perspectives and their ideas of a fair resolution. Possibly for the first time, the parties witness a capable presentation of the other side's case, and then have an opportunity to identify common interests and points of agreement, which can lead to mutually acceptable settlement options. Many people prefer ADR because they view it as a more creative process that is focused on problem solving, unlike litigation, which can foster an adversarial relationship.
ADR is most effective when both sides are in comparable bargaining positions (i.e., they are approximately equally sophisticated and financially situated), and when the parties respect each other and are relatively objective and open-minded. ADR may be preferable when time is of the essence; when an inexpensive resolution is desired, such as when the costs of litigation would exceed the amount at stake; or when confidentiality is important and publicity should be avoided, because the issues are sensitive and personal or could involve divulging trade secrets or competitive information.
In some states, courts have adopted rules that require lawyers to inform their clients of the alternative methods for resolving their conflicts. Clients must now decide how to proceed and choose the type of ADR that will be most effective in resolving their disputes. ADR decisions can best be made, however, with the advice and counsel of the parties' lawyers, whose enthusiastic participation is an essential element of any successful dispute resolution process.
Specific Kinds of ADR
Mediation is a very popular form of ADR. It involves intervention in a dispute or negotiation by an impartial and neutral third party who has no ultimate decision-making authority. The objective of the intervention is to assist the parties in reaching their own mutually acceptable resolution of the issues in dispute. A mediator makes procedural suggestions regarding how parties can reach agreement, and may also occasionally suggest some substantive options in order to encourage the parties to expand the range of possible resolutions under consideration. A mediator usually works with the parties together, but he or she may also work with the parties individually to explore acceptable resolution options or to develop proposals that may move the parties closer to resolution.
Perhaps the other most widely used form of ADR is arbitration. In arbitration, a neutral decision maker-the arbitrator-reviews the evidence, hears arguments, and makes a decision to resolve the dispute. Often, a case that could take a week to try in court can be heard by an arbitrator in a matter of hours because evidence can be submitted in documentary form rather than through live testimony. Arbitration may be best for cases in which the parties want a decision without the expense of a trial, and it can be better than mediation when the parties have no relationship except for the dispute. Arbitration may not be a good idea, however, when the parties want to decide the outcome of their dispute themselves, in which case mediation may work better.
A third method, Early Neutral Evaluation (ENE), employs a neutral third party to provide an objective evaluation of the strengths and weaknesses of a case. The parties using ENE will usually make informal presentations to the neutral party to highlight their respective positions. This process may lead to a settlement or at least help the parties prepare to resolve the dispute later on. If the neutral evaluation does not resolve the dispute, the parties may go to court or try another form of ADR. Neutral evaluation, like mediation, can come early in the dispute and save time and money. It can be most effective when one or both parties have an unrealistic view of the dispute, when the only real issue is what the case is worth, or when there are technical or scientific questions to be worked out.
Minitrials, yet another option, involve a structured settlement process in which both parties present abbreviated summaries of their case before the other party and their representatives, who have the authority to settle the dispute. The summaries include specific information about the legal basis and merits of the case. The minitrial process generally follows more relaxed rules for discovery and case presentation than might be practiced in a court, and the parties usually agree on specific limited periods of time for presentations and arguments.
High-Low Agreements
Parties may be reluctant to agree to some forms of ADR in which they give up their right to a trial by jury. As an incentive to agreeing to binding ADR, counsel in such cases may suggest that the parties pre-agree to the high-end and low-end limits of the potential damage awards. The guarantee of at least some minimal recovery can convince the plaintiff to enter into arbitration, and capping the damages affords the defendant at least some protection.
To determine the high-low range, defense counsel usually works with the defendant's insurance company to come up with the settlement value of the lawsuit. The low value typically approximates the settlement value minus defense costs. The plaintiff, too, often has significant input in determining the range. The parties in an arbitration can agree that the arbitrator may know that a high-low agreement is in place, but will not know the precise figures.
A high-low agreement often describes the arbitration procedure that will be employed. In order to save on expenses, for instance, the parties can agree that the arbitrator has the authority to decide disputes about how the arbitration will be conducted. Other cost-saving measures are to agree to witness testimony by written affidavit, rather than personal appearances and presentations by the parties directly to the arbitrator in a narrative manner.
Some commentators have noted that arbitrators are less swayed than juries by emotional arguments and tangential issues. Juries may be more sympathetic to plaintiffs than are arbitrators. The decision on whether to arbitrate must be a personal one based on all of the circumstances in the case, but if arbitration is chosen, the parties may want to consider a high-low agreement.
Conclusion
Although it may not be essential for a lawyer to directly participate in certain forms of ADR, like mediation, lawyers are still essential to the overall process. In most cases, an attorney should be consulted before a party commits to ADR in order to discuss the legal consequences of that commitment and possible settlement terms. ADR agreements can also be conditioned on approval by the parties' attorneys.
In selecting an attorney, it is important to determine whether he or she is "ADR-friendly." Prospective clients should ask questions such as whether the lawyer has ever worked with clients going through ADR, what the lawyer thought of the process, and whether it was successful for the clients. The way lawyers talk about their prior experiences with ADR often reveals whether they support and respect the process or think of it as a waste of time. If a lawyer boasts that "I told my client it wouldn't work, but he wouldn't listen," he is probably not a good choice. Fortunately, many lawyers view ADR with an understanding and respect for the process.
When you hire a lawyer, be sure to inquire about his or her training and experience in ADR and make sure that you have a clear understanding about how fees will be computed. Most attorneys charge their normal hourly rate to assist with ADR, but often far fewer hours are required to resolve a dispute using these less traditional methods, so the total fees may end up being less. More importantly, the overall emotional and financial toll of resolving the dispute can be far less by using an alterative dispute resolution procedure.
Introduction
If a doctor, lawyer, accountant, or other professional person makes a mistake and someone is injured, professional malpractice may have occurred. Professional malpractice law deals with the negligence or misconduct of people in the dental, legal, and medical fields, as well as many other professionals. Accountants, for instance, may be sued if they fail to comply with generally accepted accounting principles or generally accepted auditing standards and someone suffers economic losses as a result. A lawyer experienced in professional malpractice law can help an accountant determine whether malpractice has in fact occurred, and can represent the accountant throughout the litigation process.
Accountant Malpractice Cases Are Similar to Those Involving Other Professions.
Professional malpractice occurs when a person practicing his or her profession improperly performs the duties of that profession, and someone is injured as a result. A professional malpractice suit can be brought against any type of professional, including accountants, architects, clergy persons, dentists, doctors, engineers, lawyers, and psychologists, although malpractice suits most often involve members of the medical and legal professions.
The typical malpractice suit alleges that the professional defendant was negligent. Negligence is conduct that falls below a legally established standard of care that must be met in order to protect others from an unreasonable risk of harm. The plaintiff in a malpractice case must show that the negligent defendant violated a reasonable standard of care, which usually means the level of care that is the customary or usual practice of other members of the profession. If, for example, an accountant fails to file a client's tax returns on time, that accountant has, through his or her carelessness, violated a basic standard of care. Similarly, if a lawyer fails to file a client's lawsuit within the time limits prescribed by law, the attorney may be charged with negligence and be subject to malpractice allegations. Few malpractice claims are, however, as clear as these examples.
Although there are certain distinct features in cases involving the different professions, there are also some elements common to nearly all professional malpractice cases. For instance, the plaintiff in a malpractice case generally must establish four elements in order to recover. First, the plaintiff must show that the professional being sued had a duty to him or her. Second, the plaintiff must prove that the professional breached that duty. The plaintiff must then, third, show that he or she was injured. And fourth, the plaintiff must establish that the professional's breach was the proximate cause of the injury.
Proximate cause is a legal concept that poses the question, "Was the breach of duty sufficiently responsible for the injury so that the professional should be held accountable?" Consequences that are so remote from the breach that they could not have been anticipated may be deemed not proximately caused by the breach. If, for instance, as in the example above, an accountant fails to file a client's tax return on time and the client becomes very agitated and stressed as a result, goes to a bar, gets drunk, and gets in a fist fight with someone twice his size, it is unlikely that a court would conclude that the accountant's breach of duty proximately caused all of the client's injuries sustained in the bar-room brawl.
In an accountant malpractice case, the defendant may be able to establish freedom from liability by showing that he or she complied with written rules of conduct for the accounting and auditing professions. The "generally accepted accounting principles" and "generally accepted auditing standards" are frequently used in accounting malpractice cases to measure the defendant's performance. Although compliance with the rules is not a complete defense, it is harder for the plaintiff to prove a breach of the standard of care by a professional whose conduct fell within these guidelines.
The following example of professional standards applicable to certified public accountants is illustrative of the types of principles that guide professionals in the course of performing their duties.
The public interest - Persons using the CPA title shall accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism.
Integrity - To maintain and broaden public confidence, persons using the CPA title shall perform all professional responsibilities with the highest sense of honesty.
Objectivity - Objectivity is to be maintained by persons using the CPA title. Specifically, persons using the CPA title shall:
(1) Avoid rendering professional services where actual or perceived conflicts of interest exist;
(2) Be independent in fact and appearance when providing auditing or other attestation services.
Due care - Persons using the CPA title shall comply with state law and the profession's technical and ethical standards, maintain competence and strive to improve the quality of services, and discharge professional responsibility to the best of the CPA's ability.
In addition to these general principles, many specific standards more precisely define the professional's responsibilities to his or her clients.
Accountant malpractice cases may also be based on violations of state or federal securities laws. Accountants frequently issue financial statements that are used in connection with securities offerings and submitted with annual reports or other filings that are required of publicly traded companies by the Securities and Exchange Commission. If the statements are erroneous and cause a negative impact in the market, investors may sue the accountants in an attempt to recover their losses.
Conclusion
Generally speaking, any professional can be liable for damages if he or she had a duty to a client, the duty was breached, the client was injured, and the breach caused the injury. Accountants are no exception. A lawyer experienced in professional malpractice law can help a potential defendant determine whether he or she has committed malpractice, determine what defenses may be available, and provide representation throughout the entire litigation process. Lawyers experienced in professional malpractice law can also advise accountants on preventing malpractice through good professional practices.
Suggestions for Maintaining Workers' Compensation Coverage Without Losing the Shirt Off Your Back
Undoubtedly, one of the major goals of any employer is to make a profit. Sometimes, it may become tempting to cut corners in order to make more money. One thing that should never be sacrificed is workers' compensation insurance coverage. Given the price that many employers must pay for workers' compensation premiums, is there any way that they can keep the costs down? You bet. Here are ten of them.
Check Your Policy for Accuracy
1) If you are a very small employer, check the number of individuals on your payroll. Many states have an exception for employers who have fewer than a certain number of employees (usually three or five). These very small employers are not required to carry workers' compensation insurance. If you have recently had an employee or two leave your employ, it is possible that you could now qualify for the exception.
2) Review your payroll. Has overtime been included in your calculations for purposes of computing your premium? Some states allow workers' compensation premiums to be calculated on regular payroll figures, excluding overtime. If overtime has been included in your premium calculation, ask if it can be removed. The less payroll you have, the less your premium will be.
3) Confirm that your experience rating is correct. Employers who pay more then $5,000 per year in workers' compensation premiums automatically receive an experience rating which compares their claims history to the claims histories of other firms within the same industry. The more claims you have, when compared to the industry as a whole, the more risky you are considered to insure and the higher your premiums go. Make sure that yours has been correctly calculated.
4) Ensure that you are classified as the right type of employer or employment field. Employers who have heavy machinery or hazardous materials in their everyday workplace will likely have a higher premium than employers who have employees who work only with telephones and computers. Make sure that your premium is being calculated under the right classification for both the type of work you perform and the number of employees you have in "high-risk" positions.
Consider Some Changes
5) If you are a participant in an assigned-risk pool, gather information on how much your premium would be if you were not a participant. Many times, the premiums that are charged in pools are higher than they would be if you were insured by yourself. If your premiums would be lower outside of the pool, consider taking steps to head off on your own. This may take some time to accomplish, particularly if you have been placed in the pool due to your claims history. You may have to show that your workplace is now a lot safer than it was at the time you got pushed into the pool.
6) Do some research and consider whether self-insurance might be right for your business. Generally, in order to be self-insured you have to have a large workforce and be able to show that you are clearly solvent. Self-insurance is not a good solution for every employer, and it is not allowed in every jurisdiction, but it might be right for you.
7) If you are not already, consider whether you want to pay a deductible toward workers' compensation coverage. A number of states allow employers to reduce their premiums through the payment of deductibles.
8) Consider whether you want to use managed medical care, such as an HMO, to treat workers injured under your employer. The majority of states allow managed medical care providers to handle workers' compensation claims. While you may not win the hearts of your employees by switching to managed care, you will save money in insurance costs.
Help Your Employees Help You
9) Return your injured workers to work as soon as possible. The longer injured employees sit at home or in therapy recuperating, the more money your insurance company is paying them. Of course, no employee can be forced to return to work before they are physically ready. However, they may be able to work in a different position, or a light-duty job, if they cannot return to their pre-injury employment.
Make Safety A Top Priority
Get serious about safety. Initiate safety programs and protocols to try to, as much as possible, prevent workplace injuries. The fewer claims you have, the lower your premiums will be.
Understanding Workers' Compensation Fraud and Noncompliance
In many cases, a workers' compensation claim proceeds through the system with every involved party cooperating and playing by the rules. However, in an increasing number of cases, someone tries to cheat the system and commits "fraud" or fails to comply with the laws in an effort to get more benefits, receive a bigger reimbursement, or save money. Contrary to popular belief, it is not only the employee who can commit workers' compensation fraud and it is not only the employer who can fail to comply with the laws. The following is an overview of the types of workers' compensation fraud and noncompliance which can be committed and the toll which they have on the system.
The Laws
Employee Fraud
Employer Fraud
Medical Provider Fraud
Penalties
Directors' & Officers' Insurance
Businesses often hear that they should buy directors' and officers' (D&O) insurance, but they don't always understand what it is or why they may need it. Below is a primer on what D&O insurance is, and how to acquire it.
D&O insurance protects corporate directors and officers for certain claims made against them, and reimburses the business for the cost of indemnifying its directors and officers. A typical D&O policy covers officers and directors for claims made within a stated period for actions they or the corporation took or failed to take in their official capacity. D&O insurance is primarily intended to cover claims brought by shareholders, including securities fraud claims, and employment-related claims. A corporation can also add coverage for some additional claims against the business itself, which is called "entity coverage."
Until recently, a typical D&O policy did not cover corporate liability. Instead, it merely reimbursed the expense the business incurred in indemnifying officers and directors. However, D&O insurers now offer separate entity coverage for securities claims made against the corporation itself. Some broader coverage may also be available for an additional fee.
Most large corporations can pay large judgments or settlements even if they are uninsured. However, D&O insurance provides some additional protection. First, it will cover officers and directors for claims that the business will not or cannot indemnify, such as damages in a securities fraud case. Further, companies may dispute if or how much they must indemnify a director or officer, which can cripple a defense until an agreement is reached. This is especially important if a director's or officer's interests and the corporation's are in conflict. Second, the limit on D&O insurance may help cap the amount a corporation will have to pay a plaintiff; plaintiffs' attorneys usually recognize when they will not be able to obtain a larger settlement than the available insurance, and will be motivated to settle for that amount or less.
The amount of insurance must be tailored to each company, but a rule of thumb is that no public corporation should have less than $10 million in coverage. The amount of coverage needed should be discussed with your business's insurance broker and attorney.
The price, terms, and conditions of D&O insurance policies are always negotiable. A knowledgeable insurance broker who specializes in placing D&O policies can help get a good deal for your business by canvassing the market to determine which insurers will offer it, and can work with corporate counsel to negotiate the best price and terms possible. Your business' lawyer should have some ideas about appropriate terms, and information about which insurers are easiest to deal with when claims are made.
All D&O policies contain certain terms - 1) promises to provide certain insurance to covered persons and entities, 2) the amount of retention per claim, 3) the coverage limit, 4) the time period in which claims must be made in order to be covered, 5) exclusions limiting the scope of covered claims, and 6) the terms and conditions that govern how claims will be handled. Reviewing these areas will help the business understand its current policy status, and where it may be lacking.
Almost all D&O policies make at least two promises: (A) to cover officers and directors directly for certain claims based on actions they took or failed to take in their official capacity if the corporation does not indemnify them ("A-Side Coverage"); and (B) to reimburse the corporation for the expense incurred to indemnify officers and directors for the same claims ("B-Side Coverage"). A-Side Coverage usually will not apply unless the corporation is financially unable to pay for the indemnification. For an additional fee, all D&O insurers will cover the corporation itself for securities law actions.
A retention is like a deductible that applies to each claim. The company must first pay the retention amount before the insurer's coverage will apply. A common retention amount is in the range of $250,000. It is important to ensure that there is no retention with respect to A-Side Coverage; although it is reasonable for a corporation to pay the first $250,000 in expenses associated with a claim, this kind of retention would severely burden individuals entitled to A-Side Coverage in case of the corporation's financial incapacity.
All D&O policies state the policy coverage limit, including costs of defense. While other types of policies can include a duty to defend as well as a duty to indemnify up to a stated amount per claim, D&O insurance policies do not impose any duty on the insurer to defend the claim. Paying the costs of defending the claim therefore diminishes the amount available to pay a settlement or judgment.
D&O insurance is "claims made" insurance, which means it covers only claims actually made during the period stated in the policy.
D&O coverage is sharply restricted by exclusions narrowing the scope. A policy will usually contain at least a dozen exclusions in its basic form, and additional exclusions added by endorsement. For example, an exclusion included in every D&O policy is the "actual fraud" exclusion. This does not run contrary to the major reason that companies purchase D&O insurance, which is protection from securities fraud claims. While it is generally against the law to indemnify people for deliberate fraudulent or criminal acts, it is not against the law to advance to those accused of fraud the costs of defending themselves, or to settle claims where fraud is alleged but not proven. Therefore, the typical D&O policy excludes coverage for fraud claims after there has been a final liability determination for actual fraud. Your business' broker and attorney can advise you about how to try to narrow the exclusions.
Most D&O policies have many other provisions. They should expressly require the insurer to advance defense costs after the retention is exhausted. Other common provisions that should be negotiated away where possible include arbitration clauses or other procedural hurdles preventing an insured from prompt recourse to the courts.
Briggs and Counsel
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Rockport, ME 04856-4243
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