This is a crazy week. We have been swamped getting ready for two jury settings in June. Thankfully one case settled Wednesday literally an hour before a key deposition so now we have adequate time to prepare for the other case. I think we’re all looking forward to trying it — it is a legal malpractice case and I doubt I will ever have a case with better liability facts than this one. But enough about me. On to the round-up.

I missed this Friday, but a Georgia judge has struck down the state’s medical malpractice caps.

Unfortunately, Tennessee is going the other way. A medical malpractice notice and certificate of merit bill has gone to the Tenn. governor.

Ken Shigley points to an April opinion from a federal judge that, according to Ken, "shells the corn" about preemption.  I had to read the post to figure out what "shells the corn" means.  But then, I had never heard the supposedly key Texan phrase of "all hat and no cattle" until Hillary Clinton told me during the primaries that it was a popular Texas saying.

From me, an Austin doctor talks about the need for medical malpractice protection. Des Moines personal injury lawyer Steve Lombardi also picked up the story.

Texans For Lawsuit Reform has commissioned a study to decry the great benefits of tort "reform." (Also at Point of Law.) The response from the Texas Trial Lawyer’s Association (disclosure — I’m an active member) focuses on the fact that the study’s author won’t disclose his methodology on how he came to these findings. And even some Republicans in the Texas legislature have expressed skepticism about the study. You can read about that from Dallasblog.com.

I’m not sure it’s tort reform related, but John McCain has been talking a lot lately about his choice of judges. I have a hard time remembering when McCain is a right winger and when he’s a moderate "straight talker,"  but I don't think I'll forget where he stands on this issue --- perhaps the most important presidential power for those of us in the legal field. 

North Carolina was in the news a bit this week. Amongst the presidential hype, the North Carolina Medical Board considers transparency by making medical malpractice settlements public. Personally, I think this is a great idea. It is extremely difficult for patients to find out about their potential care givers. While some health insurance companies now provide doctor "rankings," I have to believe that a large portion of those rankings is based on cost of care and not quality of care.

In Arizona, the family of a Border Patrol agent filed a wrongful death suit after his Tahoe rolled over.

Speaking of cars, Toyota is recalling over 90,000 Highlanders.

Moving on to pharma news, the Baxter CEO says Baxter hasn’t had a legal hit on the heparin mess.

When is a $50 million fine/plea bargain not enough? When you don’t tell the victims about the deal. The 5^th US Circuit Court of Appeals rejected the BP plea bargain to pay a $50 million fine stemming from the 2005 Texas City explosion.

And there are more guilty pleas for those interested. In the shipping world, Norwegian Cruise Lines entered a guilty plea following a 2003 explosion at the Port of Miami.

The Washington Injury Attorney Blog has a disturbing post about the danger of movable soccer goals. As a parent of two kids, this was a bit of a concern.

And as the summer approaches, kids are reminded not to chase the ice cream or snow cone trucks.

And to a more grown-up concern, an associate has filed suit against Bingham McCutchen after she was (allegedly*) drugged and raped at a firm holiday party. *You need these types of disclaimers when writing about lawyers.

Virginia Beach personal injury lawyer Rick Shapiro has a post describing an older case, but I thought it deserved a link because it lays out an egregious fact pattern of medical malpractice.

UPDATE: This is the first ever update to my version of the PI round-up, but this is important. Judge Bork settled his $1 million slip and fall case for an undisclosed amount. I can’t say that I’m keeping up with personal injury news if I don’t include news on PI claims brought by from former Supreme Court nominees.

The first post is from January, but I found it on Victoria Pynchon’s blog this week, so I think it technically qualifies. But at the Consensus Building Institute, they describe a mediator’s experience as a juror. I think trial lawyers should read about every jury experience that we can.

I also liked Victoria’s post The Biggest Lie In The Business: It’s Only About Money.

And Eric Turkewitz is not only a superb lawyer, but apparently an athlete extraordinaire.

John Day continues with his great trial lawyer series, but I’m a tad confused by his numbering system. In any event, enjoy "Part 18 What It Takes To Be A Great Trial Lawyer - Part 15."

And finally, I hope none of us ever needs this advice. Though there is this sobering note on the possibility of Texas lawyers going to jail for pleading errors.

Thanks for reading, and have a great weekend.

Brooks Schuelke

I’m going a little out of format today, but I’d like to start by congratulating my firm. Today, our local volunteer legal services organization is awarding us the Judge Joe Hart Award. According to them the award is "presented annually to a law firm that has demonstrated the integrity and dedication to legal services to the poor exemplified by Mr. Hart throughout his legal and judicial career." I hope that we continued to be blessed with the time and resources to continue our VLS work.

Sorry to get off track. Now, over to tort reform issues.......

One of the bigger stories of the week was Obama’s position on tort reform. In a Fox interview, Obama cited his vote on CAFA as an example of him being willing to cross party lines. You can check out posts from Bill Childs, Point of Law, and f/k/a. Obama’s attacked from the left for supporting CAFA and attacked by POL for not supporting enough tort reform. But isn’t that what we should be asking our legislators to do? As they say, a good mediation result is when both sides leave unhappy. Shouldn’t that be the same for legislation? (Disclosure: I was an Obama delegate to our local county convention in what might be the most convoluted voting process in the country.)

Chris Robinette is apparently publishing a book that will be available next month on balanced tort reform. He’s starting a preview on the tortsprof blog.

Overlawyered and Maryland Lawyer Blog both have good posts on the story of a pitcher filing suit after his coach let him throw 140 pitches in a game. Ron Miller has some nice analysis on tort reform issues, but you might be surprised by his take.

In the "lawyers behaving badly" category, a Florida case on behalf of 441 medical providers against Progressive ends up with a massive fee dispute and an ethics report to the Florida bar.

In the same vein, three Kentucky Fen Phen lawyers are being prosecuted for bilking 440 clients out of settlement funds, and, in a bizarre twist, the criminal defense lawyer for one of the lawyers recently admitted to the Ky federal court handling the case that he himself had been suspended from practicing in a Tennessee federal court after being found in contempt of court. I don’t think we could make this kind of stuff up.

In the "wives of Texas Supreme Court justices behaving badly" category, the wife of Texas Supreme Court justice David Medina was indicted a second time for charges connected to their house fire. You may recall that there was outrage earlier this year from the sitting grand jury when the Harris County, Texas DA dismissed a previous indictment against the judge and his wife. I have several posts about it on this blog, but I’m too lazy to cross-post to those. If you’re interested, use the search function.

In New York, an appellate court upheld the jury finding against the Port Authority of New York and New Jersey stemming from the 1993 World Trade Center bombing. There are comments all around the blogosphere, including Turkewitz , MassTorts, Overlawyered, and How Appealing.Ted Frank was busy on this — also posting at Point of Law and writing an op-ed piece in the NY Sun.

In pharma litigation, Rep John Dingell figured out that "citizens can no longer trust" the FDA. No kidding? Who would have thunk it? When the FDA chief counsel is interfering in the heparin probe, I think we’d agree there’s a problem. Of course, personal injury lawyers have always known that the FDA and preemption was a joke.

Speaking of heparin, it appears the heparin contamination was intentional.

Another big story in this week was the concern over Lasik surgery. Last Friday, the FDA urged additional warnings for Lasik patients. This has been addressed by Milwaukee personal injury lawyer Paul Jacquart and NPR, among others.

In California, a hospital settled a medication error suit for $5.1 million.

In a little divergence, NPR has a series of stories about improper care in Army hospitals. Yesterday, they started with a story on a rash of accidental overdoses at Army hospitals. And today, they report that even after the uproar last year, the Army hospitals have a long way to go to provide quality care.

And hot off the presses, the state of Minnesota has agreed to settle cases from the horrible bridge collapse.

Turkewitz laments once again that personal injury blogs aren’t getting any respect.

John Day continues his series with What it Takes to Be A Great Trial Lawyer - Part 14.

And this is way off topic, but in Dallas County, Texas an 18th innocent man was cleared by DNA testing. An amazing number for one county.

Thanks again for reading. Have a great weekend.

Brooks Schuelke

In August of 2007, the Texas Supreme Court handed down the decision of Entergy Gulf States, Inc. v. Summers.  In a simplification, the opinion allowed property owners to buy their way out of lawsuits brought by any employees of contractors or subcontractors working on the company's premises by purchasing worker's compensation insurance that covers the employees of the contractors or subcontractors.  After the opinion was handed down, in what may be an unprecedented action, four state legislators (two Republicans and two Democrats) filed an amicus brief asking the Court to reverse the decision on rehearing.  I wrote detailed posts in December when the amicus was filed that described the opinion and had a copy of the brief.  The posts are available here and here. 

The motion for rehearing was granted earlier this month, but legislators are still keeping the pressure on the Court.  Today's issue of the Austin American Statesman has a great article from Kate Alexander that describe hearings this week by both the Texas House and the Texas Senate that are focused on the decision.  The article has the following excerpt that hopefully reflects the sentiment of both chambers:

Rep. Helen Giddings, a Dallas Democrat and chairwoman of the House Business and Industry Committee, said the Legislature has a long history of rejecting the expanded liability protection that should have guided the court's decision.

"It is about legislative intent," Giddings said. "It is about respecting the Legislature and allowing the Legislature to do its job as, obviously, we must allow for the judicial branch to do its job."

And from Senator Jeff Wentworth:  If the Supreme Court doesn't correct its decision, the Legislature will have the opportunity to make it crystal clear.

This issue is extremely important to workers throughout the state, and we'll try to keep regular news posted about it.

Some others who have written on this are as follows:

• Off the Kuff
• Alex Winslow on The Texas Blue
• David White's Law and Insurance Blog (also here)

We have a lot going on today, so we’ll get right to it.

On Wednesday, the U.S. Chamber of Commerce’s Institute for Legal Reform released their survey, "Lawsuit Climate 2008: Ranking the States." AAJ had their press release on Tuesday. There are all kinds of blogs linking to the "study" and the response, but surprisingly few have any real analysis of either. I have two quick points. (1) Clearly there are questions about the methodology (simple interviews of corporate counsel at companies with over $100 million in revenue), but I think the study also shows that those interviewed are out of touch with the realities of litigation. When asked to name the number one thing needed to improve the litigation environment, the most cited item was "speeding up the trial process." I won’t speak on behalf of any of my other plaintiff brethren, but in my almost 15 years of doing this, I cannot remember any corporate defendant doing anything to help speed up the trial process. Indeed, the opposite is usually true. The large defendants, I find, are more likely to engage in more useless discovery fights, file more frivolous motions, and then attempt to continue the trial once we get a trial setting. (2) One admission in the study is startling. The executive summary states:

as we have noted in the past, perception does become linked with reality. If the states can change the way litigators and others perceive their liability systems, we may find considerable movement in their rankings in the future. Once these perceptions change, the overall business environment may be deemed more hospitable as well.

It’s just another example that the Chamber has learned the lessons of the Iraq war: If you repeat the lie enough, then eventually people will believe it.

Also a tort reform issue, Eric Turkewitz notes that New York medical grads are staying in New York and that few are leaving because of malpractice concerns.

On med mal, Kevin MD had an op-ed piece in USA Today on defensive medicine.

And similarly, the Happy Hospitalist goes off on the Feres doctrine.

And Kia Franklin at Tort Deform has a nice roundup of some arbitration articles.

A New York jury poured out the construction worker who filed an assault and battery suit after the hospital performed a rectal exam without his agreement. There are a lot of potential improper comments possible with this post, but I’ll just leave those alone.

But in New Jersey, a jury awarded $10.2 million in an Accutane case.

Atlanta personal injury lawyer Ken Shigley reports that the Federal Motor Carrier Safety Administration is recommending sleep apnea testing for some truck drivers.

It is apparently not a good time to be eating at Chipotle restaurants. In Kent, Ohio, more than 400 people (including many Kent State students) became ill after eating at their local Chipotle. And in San Diego, at least 12 people contract Hepatitis A from their local Chipotle.

In Chicago, Benny the Bull and the Chicago Bulls were sued after a high-five ruptured an oral surgeon’s bicep.

From Pharmalot, drug companies are falling behind in their promises for post-marketing studies.

Virginia personal injury lawyer (and all around good guy) Mike Phelan points to a study showing a link between traumatic brain injuries and increased risk of dementia. It’s good to finally have some literature that we can rely on in making these assertions.

John Day continues his series with How to Be A Great Trial Lawyer, part 13.

And the always top-notch Anne Reed has a very disturbing post entitled Lawyers: So Certain, So Wrong.

Earth Day 2008, Law Firms Going Green

Gas Saving Tips from the Los Angeles personal injury blog.

Happy Earth Day (with tips) from TortsProf.

And Overlawyered has a link to an old Onion story entitled "Earth To Be Made Child-Safe."

Thanks again for reading. I hope all of you have a better weekend than Wesley Snipes.

Brooks Schuelke

Life has returned to normal, and I hope the Round-Up can return to its usual standard of glory (or substandard, as the case may be). But before we move on, congrats to Eric Turkewitz for being named the ABA’s Blawg of the Week.

We’ll start off with tort "reform"....

I suppose the big tort reform story of the week is the story of Sue Easy (TinyURL provided). Turkewitz asks, "Is Sue Easy the Worst Lawyer Idea Ever?" Fellow Texan Luke Gilman has "SueEasy, So Easy It Can’t Be Good, Really." Above the Law has "Only in America:SueEasy.Com." And Walter Olsen has a surprisingly restrained post at Overlawyered.  Generally, I think this might be the worst idea since I thought sueyou.com would be a good URL for a plaintiff's firm. 

Moving on, this is news from March (and I may even have written about it then) but I found a post this week pointing to a study in the March 2008 Journal of Empirical Legal Studies that finds that there is no empirical data to support the assertion that OB/GYNs were relocating due to tort reform or malpractice premiums. It has the thrilling title, "A Longitudinal Analysis of the Impact of Liability Pressure on the Supply of Obstetrician-Gynecologists." With a catchy title like that, I don’t know how I could have missed it.

Subject to Complete Defeasance (new to the round-up this week) has "More Bad News on the FDA Preemption Front" looking at the Colacicco v. Apotex decision.

Four Alabama residents filed suit against Southwest after flying on planes that needed inspections. Miller and Zois have their response. And from the post at Overlawyered and the comments at the Consumerist, you can tell this has the potential to be another poster case for tort reform.

In California, a judge approved the settlement of a Ford Explorer class action. As an attorney that does a fair amount of class action work, I think this is a poor settlement. The plaintiffs in the case claimed that the value of the vehicles decreased due to perceived rollover risks. Under the settlement, class members are eligible to receive coupons of $500.00 for the purchase of a new Explorer or $300.00 for any other Ford vehicle. The attorneys stand to gain up to $25 million in fees and costs. This coupon settlement seems, on its face, to be unacceptable. The National Association of Consumer Advocates Class Action Guidelines contains the following, "Certificate settlements have many disadvantages and should be proposed by class counsel only in the rare case." The NACA guidelines set out the following basic positions:

(1) certificate-based settlements should never require identifiable class members to purchase major, large ticket items as the sole relief.

(2) certificates should have some form of guaranteed cash value.

(3) certificate settlements should never be proposed to the court unless it is apparent that the defendant is providing greater true value to class members than would be available from an all-cash settlement.

(4) a settlement involving coupons should require a minimum level of redemption by the class members within a reasonable period of time, and the defendant should provide other relief if that minimum level is not met.

(5) class counsel and defendants should submit to the court and all counsel detailed information on redemption rates during the life of the coupon so there is a public record to assist in future class action cases.

It’s apparent that this proposed settlement violates the first guideline, and I haven’t been able to determine if any of the other safeguards were provided in the settlement. I’ll also add that in Texas, the settlement likely couldn’t go forward. Our version of Rule 42 requires that if any portion of a settlement is in the form of coupons then the attorneys’ fees awarded must be awarded in cash and noncash amounts in the same proportion to the class’s recovery. (Though I’ll add that it appears that the lawsuit in California pre-dates this version of the statute). Anyway, I’ll get off my soapbox and move on.

Probably the biggest litigation story in the blogosphere this week was the JAMA and NYT articles on Merck using ghostwriters in their Vioxx studies. There was commentary from Injuryboard, Mass Torts Lit, Pharmalot, the WSJ health blog, and HealthLaw Prof Blog, among others.

From Virginia lawyer Dan Frith, a Baltimore jury awarded $1.75 million in a lead paint case.

From Bill Childs at TortProfs, there’s a new danger in plastics, including sippy cups.

In the "this is never good category," the Illinois Nursing Home Abuse Blog reports that police arrested assisted living facility staff for using the facility as a drug front. (You don’t really need to click the link, that’s about all the details in the sketchy story.)

From Pharmalot, the Pharma industry continues to lobby for off-label rights.

In car wreck litigation, we’ve written a lot about the dangers of cell phones while driving. Now, Des Moines lawyer Steve Lombardi takes it one step further and asks whether the IPOD is causing more auto accidents.

And a new phenomenon in the medical malpractice arena is insurance companies providing ratings for doctors. SURPRISE, maybe the insurance companies are not giving the highest ratings to the best doctors, but to the cheapest. (Via KevinMD) (Kevin also has a link to problems with patients rating doctors. I do wonder who can rate doctors.)

And on to the miscellaneous....

John Day has How to Be a Great Trial Lawyer Part 12.

And if you’re into reading about presentation skills, the Presentation Zen website continues to provide excellent examples of speeches with a link to a new Steve Jobs keynote and The Story of Stuff.

Well....that’s it for this week. Thanks again for reading, and have a great weekend.

Brooks Schuelke

In a topic near and dear to my heart, local attorney Judy Kostura has a very nice editorial in this morning's Austin American Statesman that discusses, in plain language, the issues concerning personal injury subrogation. 

Subrogation is a problem in almost all personal injury cases, and it's something we've discussed in the following posts:

• Personal Injury Subrogation Primer
• Personal Injury Subrogation In the News
• Personal Injury Subrogation In the News Again

Anyone interested in personal injury cases should take a few minutes to read all of the above links.

The April 13 issue of the Sacramento Bee had a great article on the rapid rise of nail gun injuries.  Nail gun injuries have been on the rise for two primary reasons.  First, the industry refuses to adhere to a safe design.  There are two types of nail guns: contact and sequential.  Contact nail guns fire when the trigger is pressed and the muzzle comes in contact with the target.  The safer type is the sequential nail gun.  To fire, these guns require that the nose muzzle be in contact with the target before the trigger is pressed.  This safety feature makes it far less likely that a user will experience accidental discharge. The Centers for Disease Control estimates that 65 to 69% of the injuries with contact guns would have been prevented if the gun being used was a sequential gun.  Unfortunately, there is a belief in the industry that sequential guns are slower than contact guns.  As a result, manufacturers continue to make contact guns despite the clear safety concerns.

Additionally, consumer nail gun injuries are rising due to the increase in weekend warriors.   Nail guns used to be a specialty tool used by experienced carpenters, but now any consumer can go to their local hardware store and choose from any number of nail guns.  These users, having no experience or training, are often a hazard to themselves and to those around them.

For more information on nail gun safety, check out:

• Safety Issues Magazine:  Use Nail Guns Safely
• Nation's Building News safety checklist
• The Texas Dept of Insurance Nail Gun Fact Sheet
• The Centers for Disease Control Nail Gun Statistics

Sorry for the delay in posting. I was in Florida at a seminar most of last week, and after taking the family on a weekend detour to Disney World, we didn’t return until after midnight last night. So this week’s version won’t be a complete round-up, but a short highlight of what’s going on. I’d like to promise that I’ll do better next week, but looking at this week’s schedule, who knows what I'll have next go round.

One of the lead stories of the week was the Washington Post’s pseudo-editorial encouraging "comprehensive tort reform." Of course, the editorial’s only real criticism of the civil justice system involves unscrupulous plaintiff’s attorneys (and they don’t even offer solutions to that problem). They wholly ignore unscrupulous defense lawyers or adjusters. All in all, it’s just another fluff, knee jerk reaction to the latest news story of the day without any real analysis of the situation.

Another lead tort reform story was the Wall Street Journal’s story on the use of arbitration by nursing homes. The WSJ law blog has a related post with its usual cast of interesting comments.

Staying with arbitration, on Tort Deform, Kia posts that San Francisco has filed suit against the National Arbitration Forum for its bias against consumers.

In Florida, Allstate says that it is releasing the so-called McKinsey documents. (Via TortBurger). This might actually be old news, but it’s just getting around to me.

Also on tort reform, the Southeast Texas Record talks about a snail mail letter debate on the pros/cons of tort reform between a Texas federal judge and an Austin lawyer that represents Texans for Lawsuit Reform. (Via Chris Robinette at TortsProf).

Virginia reached settlements with 21 families for the Virginia Tech shootings.

W.R. Grace has announced a settlement of all pending and future asbestos-related personal injury claims.

The deaths continue to mount in the Heparin mess.

And the always thoughtful Deliberations had a link to a new jury website, Jury Experiences, which (you might be able to tell from the name) invites jurors to write in about their experiences on juries. This is a site that is really worth taking a little time to read. For example, the first post for today is from a juror in a car wreck case who explains why the plaintiff’s lawyer should have asked what the jurors thought of chiropractors.

And John Day continues with What it Takes To Be A Great Trial Lawyer, part 11.

Thanks again for reading.

Brooks Schuelke

It’s been a crazy week here in Austin so this week’s offer is a little slim. I don’t know how Eric Turkewitz has time to pull of the biggest April Fool’s Day joke in the history of the blogosphere, but I’m jealous.

I will add that the fierce T-Ball Diamondbacks have their first game tomorrow (with yours truly as coach). So given that, it’s important to note that April 2008 is Sports Eye Safety Month. Given that our team is all 4 and 5 year olds, I think we should be okay. The DC Metro Area Personal Injury Blog also says that April is Alcohol Awareness Month. (I dare say anyone trying to teach the game of baseball to a bunch of 4 and 5 year olds will be aware of alcohol.)

I hate to link to my own post, but one tort reform story of the week is How the Paulson Plan Will Affect Personal Injury Claims. Eric Turkewitz and Steve Lombardi also commented on the story.

Along the same lines, the Washington Times reported on preemption — The Silent Tort Reform.  I’ve said it before, and I’ll say it again: At a time when you have stories in the press literally every day about the CPSC or the FDA being overworked and not having the resources necessary to carry out their most basic responsibilities, why would you think it’s a good idea to have them preempt state tort laws? This is simply the most blatant form of pandering to big business and insurance companies possible.

Over at TortDeform, they report that the US Chamber of Commerce is attacking the arbitration fairness act. This is truly shocking news.

And all tort "reformers" favorite "journalist," John Stossell is back. He’ll be on 20/20 tonight again espousing the dangers of lawsuits. How he can condemn lawsuits after filing his own personal injury suit stemming from one of his interviews is beyond me. Just another example of a tort reform hypocrite, I suppose.

One of the big litigation stories has been Wal-Mart’s continued prosecution of its subrogation interest against Deborah Shank. Wal-Mart finally bowed to the publicity and has announced that it’s dropping its claim. Now, if the rest of us can get the New York Times and the Wall Street Journal to cover our subrogation nightmares, we’ll all be better off.

I’m not sure if this is personal injury or criminal law, but Ben Glass has the story of a nurse arrested after infecting patients.  I have to think that having criminal charges brought against the defendant helps the liability claim.

Wrapping up the Erin Brockovich story, PG&E has agreed to pay $20 million to settle the final toxic tort claims filed against it.

In tractor-trailer news, almost a quarter of the trucks inspected in a Dallas, Tx surprise safety inspection failed the test. Having driven on I-35 here in Austin, I’d hazard a guess that most of those failed trucks had driven through town at some point or another.

And this is bound to end up on Overlawyered, but it appears that a Texas suit might be filed based on a teen being shot while playing the video game God of War. And the boy was in Marble Falls, less than 30 minutes from Austin.

Over at LexBlog, Kevin O’Keefe had an interesting post entitled Some Personal Injury Lawyers Continue Abuse of Legal Blogs. In the comments, Kevin promised to write a post about what content he thought a personal injury lawyer blog should have. I’m still waiting (Are you listening/reading Kevin?)

Back at work, John Day has What It takes to Be a Great Trial Lawyer, Part 9 and 10.

For those of us trying to fight inertia and move to a paperless office, the Illinois Trial Practice Weblog has the paperless office wiki.

That’s it for now. Thanks again for reading, and have a great weekend.

Brooks Schuelke

It’s hidden away, but one key plank of Treasury Secretary Henry Paulson’s plan to save the economy is the introduction of federal regulation of the insurance industry. That could be potentially disastrous to many personal injury claims.

Currently, the insurance industry is regulated by the states. Many states have adopted rules or laws that protect the states’ citizens from abuses by insurance companies. For example, here in Texas, the Insurance Code regulates how insurance companies can negotiate first party claims — those brought by a policy holder directly against his or her own insurance company. Here, the Insurance Code sets out timelines for when an insurance company can respond to claims and protects consumers against specified unfair practices in the negotiation and settlement of claims. In the personal injury context, these limits usually only apply in underinsured/uninsured motorist claims. The regulations also apply to any other claims brought by consumers against their insurance companies for failing to pay claims, including claims against life insurance and homeowners’ insurance companies. In other states, their regulations often apply to the typical third party personal injury claims.

Texas law also has regulations, established by years of case law, relating to subrogation claims. Specifically, Texas has adopted the common fund doctrines and the made whole rule that provide some measure of protection for consumers when their insurance company has a subrogation clause. These rules provide that an insurance company can’t just take all the money recovered in a claim. Under the made whole doctrine, if the defendant doesn’t have enough coverage to make the plaintiff whole, then the plaintiff is entitled to recover before he has to reimburse the insurance company. And under the common fund doctrine, the subrogation amount is reduced to reflect that the insurance company pays its portion of attorneys’ fees and expenses incurred in obtaining the money from the defendant.

The danger of Secretary Paulson’s plan is that any federal regulation would preempt the state laws that currently protect consumers. Observers can already see the potential results when looking at the Employee Retirement Income Security Act. ERISA, as it is known, was passed in 1973, and it was designed to protect employees who received benefits as part of their jobs. But now, the insurance industry uses it as a sword. For example, when a personal injury victim has health insurance through his or her job, insurance companies argue that ERISA preempts any state regulation that protects consumers from overreaching subrogation clauses. In Texas, that means that insurance companies argue that ERISA preempts state law regarding the common fund doctrine and made whole doctrines, and that personal injury victims must reimburse insurance companies for the whole amount of their claim instead of partial reimbursement. We now often spend more time fighting with insurance companies over subrogation claims than fighting about the underlying case.

If the federal government expands its regulation of the insurance industry, these problems will only multiply. Now, the federal government could put in any legislation that they are not preempting state regulations, but given this administration’s history on trying to use preemption as a way to prevent lawsuits, the odds of that happening are slim and none.

For more on Secretary Paulson’s plan, read here:

• White House Unveils Wall Street Overhaul
• Insurance Industry Split Over Paulson Plan
• Winners and Losers in Paulson’s New Regulation Plan

For more of my thoughts on subrogation, read here:

• A Subrogation Primer
• Texas Supreme Court Votes Against Personal Injury Claimants
• Personal Injury Subrogation, continued