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In California Lawyer-Client Sex Will Soon Be A No-No

Posted on: May 14th, 2018

By: Greg Fayard

In California, lawyers can have consensual sex with their clients as long as it is not based on coercion or in exchange for legal services. That will change this Fall.  On May 10, 2018, the California Supreme Court approved comprehensive changes to the lawyer Rules of Professional Conduct—the first major change in 29 years.  Under the new rules, California lawyers cannot have consensual sex with their clients—except in one of two situations: 1) the client is the lawyer’s spouse or domestic partner; or 2) a sexual relationship existed prior to the lawyer-client relationship.  This means California lawyers can be disciplined by the State Bar for having consensual sex with clients.

The sex ban has been divisive even though at least 17 other states have adopted a similar ban. Supporters of the lawyer-client sex ban argue the relationship between a lawyer and client is inherently unequal, so any sexual relationship is potentially coercive. Others claim the blanket ban is an unjustified invasion of privacy.

The new Rule is 1.8.10 and goes into effect November 1, 2018.

If you have any questions or would like more information, please contact Greg Fayard at [email protected].

Insurance Company Adjuster May Be Liable for Bad Faith

Posted on: May 14th, 2018

By: Joyce Mocek

Recently a Washington Court of Appeals held that an insurance adjuster, employed by an insurance company, could be held personally liable for bad faith and violation of the Washington Consumer Protection Act (CPA) in the context of adjustment of a claim. (Keodalah et al. v. Allstate Ins. Co., et al., No. 75731-8-I (Wash. Ct. App. Mar. 26, 2018).

In this case, an insured sought uninsured/underinsured motorist benefits under its auto policy with Allstate.  Allstate’s claim adjuster determined that the insured was 70% at fault.  The insured argued the accident was due 100% to the uninsured motorist, not him.  However, Allstate refused to change its position that its insured was 70% responsible for the accident-offering the insured only $5,000.  At the trial a jury determined the insured was not responsible for the accident, and awarded the insured $108,868.

The insured then filed a second lawsuit against the insurance adjuster and its insurer for bad faith, claims under the Insurance Fair Conduct Act and the CPA.  The trial court granted the defendants’ motion to dismiss, and the insured appealed.  The appellate court held that the adjuster was engaged in the business of insurance and acting as an Allstate representative had a duty to act in good faith, and could be sued for bad faith individually.  On the CPA issue, the Court rejected prior decisions that had held there must be a contractual relationship to be liable under the CPA.  Thus, the Court determined the insured could sue the adjuster individually for bad faith and CPA violations.

This decision may have far reaching implications as it opens the door for insureds to sue the insurance adjuster handling their claim, and/or any claims personnel, including supervisors, experts, or consultants.  Claims personnel may also be joined to defeat diversity.  There is also the potential for conflict between the claims professionals and their employer that may further complicate issues.   This case emphasizes the need to act in good faith, and engage in careful consideration of all issues involved in the claims process, and consider seeking legal counsel if any potential issues arise.

If you have any questions or would like more information please contact Joyce Mocek at [email protected].

Cybersecurity in Georgia Hits a Roadblock

Posted on: May 14th, 2018

By: Ze’eva Kushner

On May 8, 2018, Georgia’s Governor Nathan Deal made a controversial decision to veto a cybersecurity bill.  Issued in the wake of the massive data breach of Atlanta-based Equifax, among other data breaches across the country, the cybersecurity bill would have made logging into a computer without permission illegal, even if no information was stolen.  The recent ransomware attack on the City of Atlanta serves as a reminder of the potential significant costs of not having computer systems protected adequately.

However, the bill included multiple exemptions, one of which would have permitted individuals to engage in active defense measures aimed at preventing or detecting unauthorized computer access.  In the industry, this is often referred to as “hacking back.”  The defensive actions could have included techniques such as using beaconing technology to determine the location of a hacker or leaving one’s network to track down stolen data.  The legality of these cyber defense measures is murky.

Google and Microsoft both urged Governor Deal to veto the bill, explaining that the active defense exemption would have authorized the hacking of other networks and systems under the pretext of cybersecurity and potentially lead to anticompetitive behavior.  According to Governor Deal, the end result of the bill would have hurt organizations’ ability to secure their computer systems.

If you have any questions or would like more information, please contact Ze’eva Kushner at [email protected].

“Lien On Me, When You’re Insured …”*

Posted on: May 11th, 2018

*Apologies to Bill Withers.

By: Zach Moura

On May 8, 2018, the Court of Appeal, Second District, upheld a trial court’s decision that an insured plaintiff who chooses to receive treatment from providers who are outside of his private health insurance plan is not prohibited by Howell v. Hamilton Meats & Provisions Inc. (2011) 52 Cal.4th 541, from introducing the full charged amount of his medical bills into evidence for the purpose of determining his economic damages in Pebley v. Santa Clara Organics, LLC (May 8, 2018, No. B277893) ___Cal.App.5th___ [2018 Cal. App. LEXIS 409.)

Pebley was injured in a motor vehicle accident caused by an employee of defendant Santa Clara Organics, LLC (Santa Clara).  Pebley initially sought treatment through his medical insurance carrier, Kaiser Permanente (Kaiser). Then, after filing a personal injury action against defendants, Pebley obtained care from a specialist outside the Kaiser network. While Pebley testified he was referred to the doctor by “members of his men’s group”, defendants drew the court’s attention to an internet article co-written by one of Pebley’s attorneys, noting that while “[t]ypically, medical liens in personal injury cases have been used where the plaintiff is uninsured” (or the carrier will not authorize recommended medical care), the attorney authors proposed that insured plaintiffs use the lien form of medical treatment to allow them “to sidestep the insurance company and the impact of Howell, Corenbaum and Obamacare” because treating on a lien basis increases the “settlement value” of personal injury cases. And indeed, Pebley’s post-Kaiser medical treatment was provided on that basis.

The trial court granted plaintiff’s motions in limine to exclude: evidence that Pebley was insured through Kaiser; arguments concerning Pebley’s decision not to seek medical treatment through his insurance; evidence of the amounts an insurance company may pay, or what a medical provider may accept, for medical services; and evidence that Pebley obtained most of his medical treatment on a lien basis. The trial court denied defendants’ motion in limine to exclude evidence of unpaid bills from health care providers under Howell.

The Court of Appeal held that Pebley was to be considered uninsured (or non-insured) for purposes of proving the amount of his damages for past and future medical expenses.  The consequence of that, under Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1336, was that Pebley could instead rely on an expert to “competently testify that the amount incurred and billed is the reasonable value of the service rendered”, and “the defendant may then test the expert’s opinion through cross-examination and present his or her own expert opinion testimony that the reasonable value of the service is lower”, leaving the jury to “best decide the reasonable value” of the medical services.

Defendants presented expert testimony that the reasonable and customary value of the services provided by the various medical facilities was substantially less than the amounts actually billed, and defendants’ medical expert opined that 95% of private pay patients would pay approximately 50% of the treating professionals’ bills. The jury rejected this expert evidence and awarded Pebley the billed amounts.

The Pebley decision will likely lead to an increase in the prevalence of insured plaintiffs seeking treatment outside their insurance networks on a lien basis.

If you have questions or would like more information, please contact Zach Moura at [email protected].

A House of Cards: Stacking Inferences to Prove Liability

Posted on: May 10th, 2018

By: Melissa Santalone

A Florida appellate court recently reaffirmed Florida’s state law prohibition against stacking inferences in personal injury cases with a reversal of a $1.5 million verdict in a slip-and-fall case against Publix.  In Publix Super Markets, Inc. v. Bellaiche, 2018 Fla. App. LEXIS 4233 (March 28, 2018), the Third District Court of Appeal reversed a trial court’s denial of a directed verdict to Publix at the trial of a case involving slip-and-fall accident at a Miami-Dade County store, holding that proof of liability via the stacking of inferences is impermissible, in contrast to federal case law.

The plaintiff in the case, a 70-year-old woman, alleged she slipped and fell on water in an aisle at a Publix store that she did not observe before the fall.  After she fell, she testified she saw a Publix employee holding a mop nearby, but no evidence was offered that the mop was wet or that water from the mop ever made contact with the ground.  The manager of the store testified the employees at the store used dry rayon mops to clean the floors, and not pre-soaked cotton ones.  Video evidence also showed the only janitor on duty at the time, the only employee whose duty it was to mop the floors, was using a broom and dust pan just prior to the plaintiff’s fall.  The Third DCA noted in its decision that the plaintiff had the burden to prove that Publix either created the dangerous condition that caused her fall or had actual or constructive knowledge of it, an opportunity to correct it, and it failed to do so.  At trial, the plaintiff acknowledged she was not proceeding on a constructive knowledge theory, but on the theory that Publix created the dangerous condition or had actual knowledge of the water on the floor via its employee with the mop.  The jury sided with the plaintiff at trial and awarded her more than $1.5 million, and the trial court denied Publix’s motion for a directed verdict.  In Bellaiche, the Third DCA reversed the lower court’s denial of the motion for directed verdict.  The Third DCA held that “[a] jury may not stack inferences to determine that a party had actual knowledge of a dangerous condition, nor is the mere possibility of causation sufficient to establish liability.  If the only way that a jury can find that a party was negligent is by stacking inferences, ‘then a directed verdict is warranted.’”

In other forums, however, the stacking or pyramiding of inferences is permissible, including in the courts of the Eleventh Circuit, the federal courts in Alabama, Georgia, and Florida.  In Daniels v. Twin Oaks Nursing Home, 692 F.2d 1321 (1982), the Eleventh Circuit found that “[a]ccording to federal law there is no prohibition against pyramiding inferences; instead all inferences are permissible so long as they are reasonable.”  Moreover, in Daniels, the Eleventh Circuit further noted that a directed verdict is not required in instances where the jury may choose between allowable inferences including instances where the inference championed by the plaintiff is no more likely than other possible inferences.  The takeaway here is that litigants in personal injury cases must consider the inferences they or their opposition will ask a jury to draw and whether their chosen forum will allow the stacking of inferences to prove liability.  In some venues, like in Florida state courts, more concrete proof of liability is required.

If you have any questions or would like further information, please contact Melissa Santalone at [email protected].