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Supreme Court Hears TCPA Case on Autodialer Definition

Posted on: January 22nd, 2021

By: Matthew Foree

The Supreme Court of the United States recently heard an important Telephone Consumer Protection Act (“TCPA”) case concerning the statutory definition of “automatic telephone dialing system” (“ATDS”). Whether a person used an ATDS can be a basis for liability and severe penalties. We previously reported on this matter here. The oral argument audio is available here and a transcript of the hearing is available here.

The argument centered around the definition of ATDS, which has created confusion among the courts, resulting in a patchwork of inconsistent decisions throughout the country. ATDS is defined in the statute as “equipment which has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” The Supreme Court is considering whether the definition of ATDS in the TCPA encompasses any device that can store and automatically dial telephone numbers, even if the device does not use a random or sequential number generator.  

The argument necessarily involved statutory interpretation and the rules of grammatical construction. Facebook argued, among other things, that the statute should be read according to its text, including that the phrase “telephone numbers to be called, using a random or sequential number generator” applies to both verbs, “store” or “produce.” This argument raises the difficult concept that something can be “stored” using a “random or sequential number generator.” Facebook argued that a contrary reading covers any device that can store and dial numbers without the use of a “random or sequential number generator.” This raised the idea that a smartphone could be considered an autodialer. 

Interestingly, given the grammatical nature of the dispute, Bryan Garner, of legal writing fame, argued for Duguid. He began by underscoring the Congressional purpose of privacy in enacting the TCPA. He also argued that rules of grammar permit a reading of the statute where the phrase “telephone numbers to be called, using a random or sequential number generator” can apply to only the verb “produce,” which precedes the phrase, and not the verb “store.” He argued that Facebook’s interpretation reads the statute “into oblivion,” with the impact being the unwanted proliferation of robocalls.

So, to over-simplify, on one side we have an argument that could promote the proliferation of robocalls and on the other one that could drastically reduce them. The hearing underscored the continuing confusion surrounding the ATDS definition. In 1991, when the statute was enacted, cellular telephones were in their infancy (and the size of bricks) and text messages did not exist as they do today. The parties and the Justices struggled with fitting today’s technology into the statutory language and some seemed to consider other ways to get around the problem. Perhaps the most interesting example was Justice Thomas asking why a text message is considered a call under the TCPA at all.

This confusion has driven the split among the U.S. Circuit Courts of Appeal, which have interpreted the statutory language inconsistently. Some courts, like the Eleventh Circuit, interpret the language literally with a restricted approach, while others have expanded the definition.  Most notably, the U.S. Court of Appeals for the  Ninth Circuit in Marks v. Crunch San DiegoLLC concluded that the “statutory definition of ATDS is not limited to devices with the capacity to call numbers produced by a ‘random or sequential number generator,’ but also includes devices with the capacity to dial stored numbers automatically.”    

Practitioners and their clients are eagerly awaiting the Court’s decision on this matter so that it can be put to rest, hopefully.  A ruling is expected by summer of 2021.    

For more information, please contact Matt Foree at [email protected].

Obligation to Medicare when Plaintiff Is at Fault

Posted on: January 22nd, 2021

By: Jennifer Adair

You have a slam dunk case. Perhaps you have already won your case at trial or on summary judgment. Once the celebrations subside, defendants and insurers in such situations began to evaluate the fastest and most cost-efficient way to bring final closure to the matter. Frequently, that involves entering into a nominal settlement agreement with the plaintiff to foreclose appeals or future litigation costs.

But, when that plaintiff’s medical treatment was paid for by Medicare, who receives the funds? The answer may surprise you. The Medicare Secondary Payor Act requires insurers to reimburse Medicare for its payments made, even when there is a dispute as to liability and the payment is insufficient to cover the entire amount claimed. 

Under 42 USC § 1395y the insurer’s responsibility to reimburse Medicare is triggered “by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.”

This is true even when the settlement amount is only a fraction of the amount paid by Medicare. Litigants and insurers should report the settlement to Centers for Medicare & Medicaid Services (“CMS”), and obtain a conditional payment letter. The plaintiff or claimant will then have the opportunity to attempt a compromise of the amount claimed by CMS.

Because of the interest and penalties that can attach when a party fails to comply with this requirement, insurers and self-insured defendants would be wise to consult with counsel when in doubt as to whether a payment must be reported.

For more information, please contact Jennifer Adair at [email protected].

Northern District of Georgia Finds Waiver of Coverage Defenses Not Specified in Denial Letter

Posted on: January 13th, 2021

By: Kristin Ingulsrud

In Hoover v. Maxum Indemnity Co., the Supreme Court of Georgia held that an insurer had waived a defense by failing to raise it in its initial letter denying the claim. The standard applied by the court in Hoover is that an insurer responding to a Georgia policyholder’s claim must (1) afford coverage; (2) defend under a reservation of rights; or (3) deny coverage. Hoover v. Maxum Indemnity Co., 730 S.E.2d 413, 416 (Ga. 2012). And, if the insurer denies coverage, it must state in the letter each specific ground for denial. In Hoover, the court held that because the insurer’s denial letter did not list the insured’s failure to comply with the policy condition governing notice, the insurer was barred from later relying on such failure as a defense to coverage. 730 S.E.2d at 418.

The Northern District of Georgia recently relied on Hoover in a dispute over defense cost coverage for alleged False Claims Act violations.  SavaSeniorcare LLC v. Starr Indemnity & Liability Co., No. 1:18-CV-01991-SDG, 2020 WL 5820643 (N.D. Ga. Sept. 29, 2020). In their initial denial letters, both the primary and the excess insurers relied on a single policy exclusion to deny above a $1 million sublimit in the primary policy. After litigation commenced, the insurers asserted additional grounds to deny coverage, including late notice of claim. 

Relying on Hoover, the insured moved for partial summary judgment on the insurers’ defenses not asserted in their respective denial letters. The court rejected the insurers’ argument that Hoover should be limited to the duty to defend, and not to indemnity policies that reimburse defense costs. The court also rejected the insurers’ argument that they did not deny coverage but rather only limited coverage to the $1 million sublimit, finding that a limited recognition of coverage constitutes a denial of any other coverage.

The Hoover and SavaSeniorcare rulings provide insurers with an incentive to complete their investigations and to specify all coverage defenses in their denial letters.

If you have questions about this topic please contact Kristin Ingulsrud at [email protected], or any member of FMG’s Insurance Coverage and Extra-Contractual Liability Practice Group. The firm provides these services nationally with more than 50 insurance coverage attorneys across the country. If your inquiry is COVID-19 related, please contact our Coronavirus Task Force Team for more information.

No Control, No Duty Owed

Posted on: January 13th, 2021

By: Thomas Hay

In a Massachusetts trial court action, Timothy Lyons v. Phillip C. Farmer Development, Inc., Docket No. 1781-cv-01156, Freeman, Mathis & Gary, LLP prevailed on a motion for involuntary dismissal following the conclusion of the first civil bench trial held in Middlesex County Superior Court since the courts closed in March 2020 due to Covid-19.

The matter involved plaintiff, a thirty-five-year-old experienced framer, who brought a claim for negligence against the defendant, general contractor, resulting from an injury he sustained while performing framing work at a residential construction site. Plaintiff, an employer of the framing subcontractor, alleged the defendant owed him a duty of care to supervise the framing and safety measures utilized by his employer. Specifically, plaintiff claimed the defendant had a non-delegable duty to inspect, supervise, and ensure all appropriate safety regulations and OSHA standards were being utilized, including those set forth in 454 CMR § 10.00 (the “State Regulation”).

The plaintiff, an experienced carpenter and framer, severely injured his left foot and knee after stepping off the end of a saw-horse scaffold (the “scaffold”) while marking the roof’s ridge beam for the installation of the single-family home’s roof. The plaintiff alleged permanent disability preventing him from any meaningful employment. The scaffold was constructed a day or days prior by the plaintiff’s employer and stood no more than six feet above the floor below. The scaffold, which met the definition of a scaffold under the Occupational Safety and Health Administration’s regulations,[1] had no guard rails and the plaintiff was not using fall protection. Fall protection, however, was made available by the plaintiff’s employer who also supplied all tools and equipment necessary to frame the home.

No Duty Owed Through Contract or Control

Under Massachusetts case law, a general contractor has a duty to its subcontractor’s employees if it “retains the right to control the [subcontractor’s] work in any of its aspects, including the right to initiate and maintain safety measures and programs[.]” Corsetti v. Stone Co., 396 Mass. 1, 10 (1985)(adopting the Restatement (Second) of Torts § 414). Thus, only by retaining sufficient control over the subcontractor’s framing work, or the safety of that work, would the defendant owe a legal duty to the plaintiff.

Here, the defendant had no written contract with the plaintiff’s employer and the oral agreement between the parties did not establish any obligation on the defendant to direct or control subcontractor’s work or the safety of that work. Moreover, the evidence at trial established the defendant did not retain control, by contract or in practice, the work of plaintiff’s employer. The defendant did not give direction to the plaintiff, his employer, or any of its employees. In sum, the framing subcontractor was responsible for the means, manner, and methods of its work as well as the safety measures employed.  

Nondelegable Duty?

The plaintiff additionally argued the defendant, as general contractor, had a nondelegable duty of care for the overall safety of persons on the jobsite under the State Regulation. However, the State Regulation applies in the context of the employer-employee relationship. Accordingly, the State Regulation cited by the plaintiff, at Section 10.03(9), is inapplicable as the plaintiff was not an employee of the defendant. Thus, the court found the State Regulation did not impose a duty of care for supervision of safety on the defendant general contractor.

The Superior Court’s decision reaffirms the principle set forth in Corsetti and its progeny that a general contractor may only be held liable to a subcontractor’s injured employer where it exercised or retained meaningful control through contract or its actions on the jobsite.

[1] Additionally, the court, agreeing with the defendant, found the State Regulation governing safety requirements for scaffolds to be in conflict with the applicable OSHA scaffold safety regulation, 29 C.F.R. § 1926.451(g)(1) (the “OSHA Regulation”). The court found the State Regulation, requiring guardrails to be used for scaffolds more than four feet above the floor below, was in conflict with the OSHA Regulation that only required guardrails or fall protection for scaffolds at heights greater than ten feet above the floor below. The court reasoned that the OSHA Regulation, a federal standard, addresses the same safety and health issues as the State Regulation. Because the State Regulation directly, clearly, and substantially conflict with OSHA standards, the court found the State Regulation was preempted by the OSHA Regulation. 

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

New COVID-19 Notice Requirements for California Employers

Posted on: January 12th, 2021

By: Chelsea Whelan

The new year ushers in new rules for California employers receiving notice of potential COVID-19 exposure in the workplace. California Labor Code section 6409.6 became effective January 1 this year following the passage of Assembly Bill 685 and will sunset on January 1, 2023. Section 6409.6 requires employers provide written notice within one business day to employees potentially exposed to COVID-19 in the workplace. 

What Constitutes “Notice of Potential Exposure”?

Section 6509.6 defines notice of potential exposure as exposure to a “qualifying individual”. A “qualifying individual” is defined as an individual who has been diagnosed, tested positive for or died from COVID-19, or anyone subject to a COVID-19-related order to isolate by a public health official. (Cal. Lab. Code section 6509.6(d)(4).) Accordingly, section 6509.6(d)(3) defines notice of potential exposure to COVID-19 as notice either that an employee is a qualifying individual or that an employee was exposed to a qualifying individual at the workplace. 

Written Notice Requirements

In order to comply with section 6509.6, employers notified of potential exposure to COVID-19 in the workplace must provide written notice to all employees, as well as the employers of subcontracted employees, who were on the premises at the same worksite as a qualifying individual within the infectious period. The notice can be sent via email, text or personal service if it can reasonably be anticipated to be received by the employee within one business day of sending. Also, the notice must be in English or the language understood by the majority of employees. The following must be included in a written notice:

  • Information regarding COVID-19-related benefits an employee might be entitled to under federal, state or local law, including, but not limited to workers’ compensation and options for exposed employees, including COVID-19-related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions.
  • Notice of antidiscrimination and antiretaliation protections for employees disclosing a positive COVID-19 test or diagnosis.
  • Notice of the disinfection and safety the employer plans to implement and complete per the guidelines of the federal Centers for Disease Control.

As described in the notice requirements above, section 6409.6 contains antiretaliation and antidiscrimination protections for workers disclosing a positive COVID-19 test, diagnosis or order to quarantine or isolate and allows for the Department of Labor Standards Enforcement to issue citations and penalties for violation of the statute.

Section 6409.6 also requires employers to report a COVID-19 outbreak to the State Department of Public Health within 48 hours. What constitutes an outbreak is defined by the State Department of Public Health.

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

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

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