West Virginia Business Litigation

    Two pension plans have sued International Coal Group Inc., alleging that the corporation falsely claimed to be able to mine coal safely and profitably, which has caused its stock to lose value and thereby harmed its shareholders.

    The City of Ann Arbor (Michigan) Employees' Retirement System and the Iron Workers of Western Pennsylvania Pension Plan filed suit in United States District Court in Charleston, West Virginia on April 5, and seek class action certification on behalf of "all persons who acquired ICG common stock in connection with and traceable to the Company's 11/05 and 12/05 Registration Statements."  The plaintiffs have also named several officers and directors of ICG, including its founder and chairman, New York billionaire Wilbur Ross, and its president, Bennett K. Hatfield.  USB Investment Bank and Lehman Brothers, which were the leading underwriters of ICG's IPO, were also named as defendants.        

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    An article in BusinessWeek.com suggests that UniSys may have West Virginia's Medicaid program at a financial disadvantage.  UniSys designed the system used by West Virginia to process its Medicaid claims, and is the only company trained and certified to use the system.  Consequently, West Virginia Department of Health and Human Resources officials may not have had much choice when UniSys negotiated an increase that more than doubled its monthly per-member processing fee, from $2.08 to $5.82.

    Some members of the Legislature question whether the relationship is beneficial for West Virginia or whether the DHHR even had the authority to agree to the increase without legislative approval.  But the Secretary of DHHR defends the increase, and points out that West Virginia can offset its costs by using its system to process claims from other state departments or other states, although no such agreements have been negotiated to date.

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    In an earlier post at www.health-insurance-litigation.com, I had written about a putative class action filed on behalf of all California hospitals against Blue Cross of California, Blue Cross Life & Health Insurance Company, and their parent company, WellPoint Health Networks Inc., alleging that they routinely violate California law by cancelling their policyholders’ medical insurance, which leaves the hospitals in the unenviable position of writing off the costs or attempting to recover them from their patients.

    There has been another development in the case, as described in the press release issued by the plaintiffs' law firm.  The California Hospital Association, on behalf of its 450 members, and the California Medical Association, on behalf of its 35,000 members, have joined the lawsuit as plaintiffs. 

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    In response to the Supreme Court of Appeals' decision in Morris v. Crown Equipment Corp., 633 S.E.2d 292 (W.Va. 2006), the West Virginia Legislature has amended the venue statute, West Virginia Code § 56-1-1 and created § 56-1-1a, which is entitled "Forum non conveniens."  The new statute enables the trial court to decline to exercise jurisdiction under the doctrine of forum non conveniens and to stay or dismiss the action or dismiss any plaintiff if the court finds that in the interest of justice and for the convenience of the parties, the claim or action would be more properly heard in a forum outside West Virginia. 

    The statute also provides that a plaintiff's choice of forum is entitled to great weight, but the plaintiff's preference may be diminished when the plaintiff is a nonresident and the cause of action did not arise in West Virginia.   The statute identifies eight factors for a court to consider when deciding whether to grant a motion to stay or dismiss an action or to dismiss a plaintiff from an action.  

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    In Shamblin v. Nationwide Mutual Insurance Company, 396 S.E.2d 766 (W.Va. 1990), the Supreme Court of Appeals created a "hybrid negligence-strict liability" standard of proof to be used in actions by insureds against their insurers for failure to settle third-party liability claims against them within the insureds' policy limits. 

    But in Strahin v. Sullivan, 2007 WL 559219 (W.Va.), the Court revisited its decision in Shamblin and concluded that an insured's personal assets must actually be at risk in order for an insured to recover  an excess verdict: "We now hold that in order for an insured or an assignee of an insured to recover the amount of a verdict in excess of the applicable insurance policy limits from an insurer pursuant to this Court's decision in Shamblin, the insured must be actually exposed to personal liability in excess of the policy limits at the time the excess verdict is rendered."

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    This is a topic that has intrigued me for some time, namely, the phenomenon of firms that have traditionally represented only defendants or insurance companies deciding to represent plaintiffs, sometimes on a contingency fee basis, which has been limited previously to plaintiffs' firms.  In a post last month, the Wall street Journal  Law Blog wrote about a "traditional" Minnesota defense firm that received a contingency fee in excess of $100 million for its work on the Exxon Valdez litigation.

    Obviously, the fees can be huge in contingency fee cases.  But more than that, many defense firms are realizing that their business model no longer works.  A friend of mine who excels at business development and practices law in what remains a more or less traditional defense firm told me that defense firms, including his own, began representing plaintiffs, purely business proposition, and not based on any change in philosophy. 

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    In some cases, a client's recovery involves payments that will be received on a periodic basis.  While an attorney's fees generally can be calculated in advanced and paid in full, what happens if the amount of the client's payments varies and the duration of the payments is unknown?  How much does the attorney receive and for how long?  The Supreme Court of Appeals of West Virginia recently addressed these issues in a case involving attorney's fees on royalty payments under a coal mining lease. 

    In Schrader, Byrd & Companion, P.L.L.C. v. Marks, 2007 WL 1039070 (W.Va.), the clients appealed the summary judgment in their attorneys' favor as to the applicability of a contingency fee arrangement to royalty payments under a coal mining lease.  In affirming the judgment, the Supreme Court of Appeals of West Virginia held: "an attorney fee arrangement whereby the attorney receives a percentage of funds as they are periodically received by the attorney's client is not, as such, either suspect or impermissible."

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