September 18, 2018

Archives for July 2013

#5 Forge a consensus early on regarding strategy, defense, etc.

Get everyone on the same page regarding key aspects of defending the product liability claim — the insurance claims rep, defense counsel and especially the policyholder.

Consensus

 

  • Are you determined to take the case all the way through trial?
  • Are you open to settling if you can get a Release?
  • Are there damaging documents don’t want to produce?
  • Is there a codefendant present that is a key customer or business partner that you would like to handle with kid gloves, even if it makes sense to play hardball or point the finger at them?

Revisit these issues.

Reconfirm periodically that you and the policyholder are in accord.

In product liability litigation, memories are often short. Some members of the defense triumvirate can become fickle. Nail down consensus and revisit this from time to time during the life of the claim.

Investing this time is useful if you get close to trial and get an 11th-hour demand from the policyholder to pay policy limits …”or else.” (HAMMER TIME!!)

Or, maybe you as the claims representative want to settle but the insured says DON’T DO IT due to its potential negative business impact.

Or, perhaps you and the insured are prepared for trial, and the excess carrier starts arm-twisting for you to cough up your full policy limits so it won’t be exposed.

It helps if you can speak with one voice with the policyholder. Lock this down early and reconfirm throughout the claim’s life. There is no way to guarantee or totally prevent nasty surprises in handling product liability claims. However, you may lower the odds of nasty surprises if you forge a consensus on key points at the outset of the case and reaffirm those with the insured at various stages throughout the life of the claim.

Practice Tip #4: Watch for Coverage Issues on Product Claims!

Added to the fun and challenge of handling product liability claims is the fact that they are not exempt from posing coverage issues for the claims person to be aware of and to act on.
At least six types of coverage issues here include:

Ins Coverage

#1. Date of loss/occurrence (especially in claims against implants or long-term exposure to a drug); with the date of loss that they the implant was inserted, the patent symptoms arose or the date that the patient became aware of the link between the symptoms and the implant?

#2. Late notice; perhaps the insured didn’t feel that the claim was going to amount to anything and therefore neglected to reported promptly to the insurance company. Later, it morphed into a lawsuit. Probably time to send the claim to the insurance company and let the adjuster

#3. Evidence spoliation; The insured took possession of the ventilator, for example, but then lost or discarded it. If the insured’s spoliation compromises the insurer’s ability to defend the claim, a coverage question may exist.

#4. Coverage (or non-coverage) for punitive damages;

#5. Policyholder “do-it-yourself” claims-handling. DIY is great for Home Depot. It’s not so great for life science companies sometimes trying to “self-handle” their own product liability claims. XYZ Medical made a well-intentioned but ill-advised offer to pay an injured patient. The patient declined it and now, thinking that the corporation has conceded liability, runs to the office of a personal injury attorney. Now this is YOUR problem.

#6. Coverage for recall expense, etc.

Moral: Be attuned to emerging coverage issues. Keep your antenna tuned. Do not fall asleep at the wheel in spotting potential coverage issues and defenses.

If and when they arise, quickly reserve rights.

Communicate with the insured the existence of a coverage issue and explain the nature of that issue.

SPLIT the claim file. Have a separate adjuster handle coverage with a separate file and erect a proverbial “Chinese wall.“

Product liability claims have sufficient exposure on the liability side, particularly when you’re dealing with products in the medical device and pharmaceutical realm. When things go bad here, they tend to go bad in a big way. When a product does not work or function as intended, you can have death or permanent injury, birth defects or paralysis. There is little margin for error.

Do not complicate or compound the challenges by overlooking potential coverage issues that from time to time service on such claims and to react appropriately in space of those issues. It’s not just a matter of issue-spotting, it’s a matter of issue spotting and responding an appropriate way.

Podcast Interview: Why Adjusters Need to Write Right – In Conversation with Gary Blake

Even in this hyper-wired age, adjusters write.

We write reservation of rights and coverage denial letters. We prepare claim reports for clients, reinsurers and upper management.

We write letters to claimants, insureds, witnesses and attorneys.

(And don’t even get me started on email!)

Written communication is still the lifeblood of claim file documentation. Tweeting, texting and cell phones haven’t made written communication go the way of the dodo bird.

But some might say that writing skills have degraded.

Whether your reaction to this is LOL or WTF, the reality is that claims people still do a huge amount of communicating through the WRITTEN word.

As a result, our latest podcast features Gary Blake, the Director of The Communication Workshop, a company that helps business and claim professionals improve their writing. I’ve known Gary for years, have enjoyed and benefited from his commentary and now share with you his insights on why it’s important for claims people to WRITE RIGHT!

Gary Blake Podcast

Practice Tip #3: Prepare to spend more than in “usual” product liability cases.

[This is the third installment of a planned ten-part series of short and sweet “practice tips” for claim professionals handling product liability claims against medical device and pharmaceutical products.]

As a steak-lover and carnivore, if I dine at Morton’s, Ruth’s Chris or the Capital Grille, I know the meal tab will be substantial. (Please don’t share these dining preferences with my cardiologist!) Such trips are reserved for special occasions. Graduations. Engagements. Job milestones, etc. I know the meal cost will be higher than if I go to, say, Golden Corral.

Budgets

When you handle drug and device product liability claims, you are often paying the higher-end of defense costs.
Drug and device product liability claims aren’t run-of-the-mill cases. You won’t have run-of-the-mill legal bills. Issues are often more complex. Defense involves massive document production and e-discovery. Multiple depositions are needed. Multiple experts may be needed to defend attacks on design, warnings and manufacturing.

You’ll need to recalibrate expectations as to what’s a “normal” legal bill.

This DOESN’T mean handing a blank check to defense counsel. No one suggests that. Adjusters still have a duty to monitor and manage expenses.

It DOES, however, mean we’ve got to be realistic.

If our frame of reference is automobile, slip and fall or other, more “stock” liability claims, we’re in for a rude awakening.

1. Require budgets. Make this a part of your written litigation guidelines for outside counsel. Have defense counsel complete a Litigation Plan and Budget within at least 90 days of case assignment.

2. Have them updated regularly. Budgets can become outdated quickly. They have a limited shelf-life. After the initial budget, have counsel do an updated assessment whenever there are case developments that materially change (up or down) projected defense costs.

3. Consider having counsel develop different budgets for different scenarios, such as Budget A, assuming we win the Motion for Summary Judgment versus Budget B if we take the case through trial. Counsel m ay sometimes say, “It’s impossible for me to budget — it could be $XXX if the case goes to trial but $YYY if we win our Summary Judgment Motion.” Fine. Understood. Then, do a separate budget for each scenario. The adjuster can then decided what to do next.

4. Don’t be afraid to push back on grandiose budgets. If the budget is eye-pooping, don’t be afraid to diplomatically push back. What, you estimate a $50,000 tab to work up a case that is valued at around $25,000? Does that make sense? “Sharpen your pencil and see where we can trim the cost without compromising the quality of the defense effort.”

5. Assess case value and settlement options in light of projected transaction costs. Actually, if it will cost $50,000 in legal and related fees to defend a $25,000 case, maybe you should think again about settling the case.

6. Keep an eye on that Expense Reserve. Budgets aren’t provided in a vacuum. Whenever you receive a budget for these cases, reassess your Expense Reserve. Is it adequate? Does it need to be increased? Can you lower it?

7. Allow counsel to bill time for preparing budgets. Do not expect counsel to do the analytical work to formulate a budget on a drug or device case and to do it on a pro bono basis.

8. Consider sharing the budgets with the policyholder. This keep[s the policyholder in the loop. It sensitizes the insured to the financial investment involved in the defense. It is a figure that enters into the insured’s future loss ratio. Further, in cases of “self-eroding” or defense within limits policies, it shows the insured the diminished dollars available to pay claims.

Of course, if you win the case or leverage a terrific settlement, consider a celebratory dinner.

May I suggest Morton’s, Ruth’s Chris or The Capital Grille?

Product Liability Claims Practice Tip #2: Hire a Specialist

As a geezer-jock playing racquetball regularly, if I have a rotator cuff shoulder problem, I’m not heading to a cardiologist. If my blood pressure is skyrocketing, I won’t book an appointment with a dermatologist.

Specialist

If you have a need, you want a specialist.

The realm of life science defense — representing manufacturers of drugs, medical devices or biotech products and the like — is no different. When an adjuster is faced with a product liability lawsuit against an insured involving a socialized product like a appetite suppressant drug or a surgical robot, this is no area for generalists.

As a result, when suit is filed against your insured and you need a defense lawyer, look for attorneys who have a pedigree and a track record of success in defending medical device and pharmaceutical manufacturers. Here are five tips:

1. Start the process long before you need to hire counsel. This should be a fundamental part of the due diligence process in selecting candidate counsel in different parts of the country, preferably long before you’re faced with making a decision to assign a lawsuit.

2. Ask for drug/device-specific references. When considering candidates or receiving proposals, ask for names of references in the drug and device realm, examples of pharmaceuticals and devices that the attorneys have defended.

3. Ask them for their track record in defense. Also, ask them to evaluate their success in case defense. What is their batting average?

4. Be aware of policyholder wariness about insurer counsel selection. One big knock on insurance companies is that their panels are often comprised of generalists, not specialists, and that insurance companies make price-driven counsel selection decisions. Put bluntly, that we hire cheap lawyers and saddle insureds with under-powered defense efforts.

5. Make a strong merit-based case for YOUR counsel. Thus, to overcome this stigma and conventional wisdom, be prepared to demonstrate to policyholders and prospects that you higher seasoned attorneys who are skilled in the specialty and that you are not engaging in a gasoline price war, throwing legal case assignments to the low bidder.

Q: What tactics have you found that have worked and served you well when hiring defense counsel for specialized product liability cases?

Practice Tips for Drug & Device Defense: Seek Collaboration Over Confrontation

Mother said, “Don’t do drugs,” but that advice was lost on me.

The truth is, I did drugs.

Practice Tips

I also did medical devices … for product liability claims for about a 25-year stretch.

Drawing on those years, I will join other panelists on a CLM webinar at noon (EST), Wednesday, July 10th on, “Extreme Claim Makeover: Building Successful Defense of Pharmaceutical and Medical Device Cases.”

Please visit CLM’s website (www.theclm.org) to register. Join us then for this FREE one-hour webinar, packed with practice tips for attorneys and claims people and to hear commentary on a recent Supreme Court decision that rocked the world of generic product liability.

One thing I like about these webinars is that it forces me to crystallize my own thoughts on an area of product liability that I’ve worked in for a quarter-century.

So with that backdrop, the Claims Coach begins a multipart series, starting this week, with practice tips for claims people who handle product liability claims involving medical devices and pharmaceutical products. The lessons and tips may apply to other realms of product liability claims handling as well, but that has been my specialty for the bulk my career.

Let’s begin with tip number one, seek collaboration on choice of counsel issues.

It’s common in this area of claims for policyholders to have strong opinions on who they want to defend them in a product liability suit. Moreover, the lawyers they have in mind may not be on our “typical” panel of approved defense counsel. In fact, they may be much higher price tag, at eye-popping billing rates of $300, $400 or even $600 an hour. They may rarely do insurance defense work.

1. Consider the insured’s reputational risk. Corporate reputations as well as well as market share are at stake here.

2. Set the ground rules up-front. Make sure that when the insurance coverage is placed, there’s a clear understanding about who selects defense counsel. Hammer this issue out at the front and of the insurance relationship.

3. If you can’t address this when coverage is placed, address it BEFORE lawsuits arrive. Do not leave it for a contentious dispute to address when everyone is under stress and the clock is ticking for filing an Answer on a recent lawsuit.

4. Seek areas of compromise on hourly rates and counsel selection.

5. Beware of “winning” the counsel selection battle but losing the war.
Win your choice of counsel but lose the account, which is ticked off at being denied its use of preferred attorneys. You can “win” the issue and later face a bad-faith claim down the road from the policyholder who maintains that its success was compromised or botched because of a penny-pinching insurer which shoved its counsel choice down the throat of a reluctant policyholder.

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