West Virginia Business Litigation Lawyer & Attorney : Law Office of Jeffrey V. Mehalic : Charleston, Huntington, Parkersburg

     A West Virginia state court judge has awarded sanctions of $1.3 million against Camden-Clark Memorial Hospital, located in Parkersburg, West Virginia, and its lawyer for their conduct before and during a 2006 medical malpractice trial. Chief Judge Robert A. Waters of the Circuit Court of Wood County found that the hospital and its lawyer engaged in extensive misconduct in several areas.  A copy of the Court’s 54 page order is here. 

    The Court found that the hospital had:

• defrauded the plaintiff, as found by the jury by clear and convincing evidence;
• violated multiple court orders, as found by the Court on December 19, 2005 (at an earlier hearing);
• made numerous material misrepresentations of fact and law to the plaintiff and the Court, both before and during the trial of the action;
• concealed important evidence until the commencement of trial and even in the middle of trial, including the very documents the hospital had been ordered to produce by the Court;
• destroyed, concealed or altered material evidence in advance of trial, including cardiac monitor strip times and nurse's notes;
• advanced frivolous defenses before the Court; and
• wasted countless hours of the Court's time, as well as that of the plaintiff and his counsel, through all of the above misconduct.

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     The Supreme Court of Appeals of West Virginia has rejected a claim for negligent spoliation of evidence against an insurance company in Mace v. Ford Motor Company, No. 33080 (May 25, 2007).

    In February 2002, Terry Mace was in an accident involving the rollover of her Ford Explorer. Her insurance company, Liberty Mutual Insurance Company, declared the Explorer to be a total loss, paid Mace, and sold it to a salvage company in April 2002.

     Mace and her husband filed suit in January 2004 against Ford Motor Company and the dealership where she bought the Explorer, alleging product liability and negligence claims.  At that point, however, she could not obtain some necessary parts of the Explorer because they had been removed as part of the vehicle’s salvage.  The plaintiffs then amended their complaint to assert a claim against Liberty Mutual for negligent spoliation of evidence. 

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    I learned about an interesting case from Ohio that resolved earlier this month.  The State of Ohio imposes a 40% cap on annual health insurance rate increases for small employers, defined as employers with not less than two nor more than fifty employees.  Ohio R. C. § 3924.04.  The statute is intended, presumably, to provide some stability to employers' health care costs and to prevent large rate increases from jeopardizing their employees' coverage.

    The statute doesn't always work, however.  Earlier this year, United Healthcare raised the premiums for CBG Biotech, a manufacturer of industrial and laboratory solvent recyclers with 26 employees, by more than 100% on the grounds that a CBG employee had failed to disclose several of his wife's illnesses, such as gout, cirrhosis, and an ulcer.  The employee's wife became ill and was hospitalized and subsequently died, at which point UHC became aware of the omissions from her application.

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    A couple of weeks ago, I wrote about the rehearing petition filed by the plaintiffs regarding the Supreme Court of Appeals of West Virginia's decision in Schrader, Byrd & Companion, P.L.L.C. v. Marks, 2007 WL 1039070 (W.Va.).  The Court had held that the plaintiffs' lawyers could collect a contingency fee on the royalty payments received by their clients under a coal lease, even though the amount and durations of the clients' payments, and hence, the fees, were unknown. 

    The Court considered the petition yesterday, and rejected it 3-2, with Justices Maynard and Benjamin voting to rehear the case.  Both of them dissented from the original decision. 

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    In 2004, the Daily Gazette Company, publisher of the Charleston Gazette (the morning newspaper), purchased the Daily Mail  (the afternoon newspaper), from MediaNews Group, Inc.  Yesterday, the United States Department of Justice filed an antitrust lawsuit against the Daily Gazette Company and MediaNews Group, Inc., seeking to overturn the sale.  According to the Associated Press, the DOJ contends that the sale violated  three provisions of antitrust law:

    "The first argues the transaction resulted in a monopoly over the sale of daily papers and advertising in Charleston. The second argues the transaction eliminated the incentives and ability of MediaNews to compete with the Gazette. The third argues the Gazette will continue to maintain unlawful monopoly power."

    The DOJ seeks to restore the competition between the newspapers by reversing the sale and returning the papers (and their parent companies) to their prior positions.

    Lawrence Messina, another AP reporter, posted about the lawsuit on his blog, Lincoln Walks at Midnight, and has links to the stories appearing in today's editions of the Gazette and the Daily Mail.

    Under the purchase agreement, MediaNews no longer shares in the Daily Mail's profits, but provides "management and supervision" for a fee. The newspapers operated under a Joint Operating Agreement from 1958 until the sale in 2004.

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    This is an update to a post last November on www.health-insurance-litigation.com about allegations of patient-dumping by Kaiser Permanente in Los Angeles.  The Los Angeles Times reported on Wednesday that Kaiser has agreed to a settlement of civil and criminal charges brought by the Los Angeles City Attorney.  The first-of-its-kind settlement "requires the HMO to establish new discharge rules, provide more training for employees and allow a well-known former U.S. attorney to monitor its progress."

    Under the proposed settlement, Kaiser will pay a small civil fine and some investigative costs to the city, and make a larger contribution to a charitable foundation.  The pending criminal charges will be dismissed, and Kaiser's compliance will be monitored on an on-going basis. 

    I said it in November, and I'll say it again: you have watch the patient, Carol Reyes, being dumped to believe it.  YouTube has the tape recorded by the "dumping cam" installed by the homeless mission where Reyes was dumped.  The camera was there because the area was such a popular place for hospitals and police departments outside Los Angeles to dump people,

   

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    I was sitting in a doctor's office yesterday and happened to read a copy of Fortune Small Business from December 2006, which contained an article about a small Connecticut mortgage lender that says a much larger competitor stole its employees and its trade secrets.  Even though the story is a few months old, its significance remains current. 

    Charter Oak Lending Group, LLC of Danbury, Connecticut alleges that CTX Mortgage Company induced several of its employees to leave and to take confidential proprietary information with them.  As a result, besides the loss of employees and information, Charter Oak lost about 150 pending loans, which represented $1 million in fees.  Charter Oak alleges that its business was decimated in a matter of weeks due to the departures and losses.
   
  In December 2004, Debra Killian, Charter Oak's president, sued CTX and the employees who left, and alleged causes of action including unfair trade practices, misappropriation of trade secrets, breach of fiduciary duty and computer-related offenses.  Last fall, the Connecticut Attorney General sued CTX for corporate raiding and misappropriation of trade secrets.  

    Ms. Killian was kind enough to talk with me, and said the lawsuit remains scheduled for trial in April 2008.   Mandatory mediation must be completed by February 2008.  Because the lawsuit has been classified as complex litigation, the parties will have a bench trial.  She also told me that CTX has since closed its Danbury office, which it had staffed with the employees raided from Charter Oak.   Ms. Killian said her company has never rebounded from the effects of the defections, but remains in business, and she is committed to seeing the lawsuit through to its conclusion.  I hope she is successful.

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    I have written previously about litigation involving Blue Cross of California and its parent, Wellpoint Health Networks, Inc., for their practice known as "use it and lose it," where a policyholder's health insurance coverage is rescinded or cancelled once the policyholder has filed a claim. 

    Now the Los Angeles Times reports that Blue Cross has agreed to stop that practice, and will not cancel coverage unless it can prove deception (meaning an intent to defraud) by a policyholder in applying for insurance.   One paragraph in the Times' article summed it up:

    "The deal is expected to send shock waves through an industry that had stood together in defense of insurers' ability to retroactively rescind coverage for any application omission, even honest mistakes. Blue Cross is by far the largest insurer in California's individual market, and its corporate parent, Indianapolis-based WellPoint Inc., is the nation's largest provider of health benefits."

    There are three million Californians with individual health insurance, as opposed to coverage in group health plans, so the impact of Blue Cross' decision is potentially enormous.

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    Associated Press reporter Lawrence Messina has a post this morning about the feds' lawsuit against Massey Energy Company and Massey's other troubles. 

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    The Environmental Protection Agency filed suit against Massey Energy Company on May 10 in United States District Court in Charleston, West Virginia for violations of the federal Clean Water Act that could cost Massey as much as $2 billion in fines, according to an article in the Charleston Gazette.  The case is United States of America v. Massey Energy Company, et al., Civil Action No. 2:07-00299 and has been assigned to Judge John T. Copenhaver. 

    The EPA alleges 4,633 violations of the Act by Massey and several of its subsidiaries, which amount to nearly 70,000 days of non-compliance.  Each day of non-compliance carries a fine of $27,500 or $32,500, depending on when the violation occurred.  Here's the complaint.
   
    Bloomberg.com reported today that the price of Massey's stock dropped sharply based on the news.  Massey's market capitalization is roughly equivalent to what it's facing in fines, which could account for investors' concern.

    Massey, which has denied that the suit would have a material impact on its operations, was fined $1.5 million last month by the United States Mine Safety and Health Administration for 25 violations resulting from a fire in January 2006 at a mine in which two miners were killed.   Massey is also facing a federal criminal investigation and civil litigation from the miners' families as a result of the deaths.

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    This is an update to a post from last month regarding the Supreme Court of Appeals of West Virginia's decision in Schrader, Byrd & Companion, P.L.L.C. v. Marks, 2007 WL 1039070 (W.Va.), which upheld the application of a contingency fee contract to royalty payments due the client under a coal lease, even though the amount of the payments, and thus the fees, and the duration of the payments are unknown.

    Christopher Riley (my law school classmate), whose firm has represented the plaintiffs, asked the Supreme Court of Appeals on May 7 to rehear the case.  As I will explain, Chris is in a somewhat unenviable position. 
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    Chesapeake Energy Corporation created a stir last month when its support of a campaign to promote the use of natural gas over coal in Texas became public.  There's nothing surprising about Chesapeake's interest in promoting natural gas; it's the third largest independent producer of natural gas in the U.S., according to its website.  What is surprising is the approach of Chesapeake's ad campaign: Coal is DIrty.  One of the ads is pictured to the right.  The company defends the campaign on the grounds that natural gas is a "clean" fuel, compared to coal, which is, to say the least, not clean.

    But the campaign is also surprising for another reason.  Chesapeake is still reeling from a $403 million dollar verdict returned against it in a West Virginia state court in January, following a trial in which gas well owners had alleged that Chesapeake systematically cheated them out of royalties.  Here's a post about the verdict and Chesapeake's CEO's reaction to it. 

    Chesapeake is entitled to promote natural gas and to compare its advantages to those of other fuels, in this case, coal.  But it doesn't make much sense to do so in a way intended to antagonize not only the coal mining industry, but the many residents of West Virginia who depend for their livelihoods on coal mining and related industries.

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    Kmart is on the verge of having an age discrimination lawsuit against it remanded to West Virginia state court, according to a decision entered on April 18 by United States Magistrate Judge John S. Kaull for the Northern District of West Virginia at Elkins.  Judge Kaull gave both sides ten days to file any objections to his order, which will then go to District Judge Robert E. Maxwell for a final decision.

    The plaintiffs sued Kmart and a manager, Melinda Hart, on the grounds that they were discriminated against because of their ages (more than 40 years old), and alleged that Hart played a role in their terminations. 

    Kmart removed the action on the grounds that Hart, a West Virginia resident, was named only to defeat diversity and thus was fraudulently joined.  Judge Kaull disagreed with Kmart's position and recommended that the plaintiffs' motion to remand be granted, but also recommended that the plaintiffs' motion for sanctions for improper removal be denied.  The case is styled Barkley v. Kmart Corporation and Melinda Hart, Civil Action No. 2:07CV13.
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