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Summer 2008 Newsletter

Firm Happenings

As you know, in March the firm reorganized and began operating under a new name: Waters, Tyler, Scott, Hofmann & Doane, LLC. We are excited about the new incarnation of our firm, and the services we can provide for our clients.
In that regard, we are pleased to announce four new members of our firm family. Chad Smith joined the firm as a litigation associate in February. Chad is licensed in both Indiana and Kentucky, and came to us from the Jefferson County (Kentucky) County Attorney’s office, where he prosecuted misdemeanor criminal offenses. 
Karla Edelen came to us as a legal assistant in May.  Karla has considerable experience as a business legal assistant, and is presently pursuing an associate's degree in paralegal studies.  She will be working with George Budd
On July 1, Les Merkley joined our firm as an Associate. Les has operated in private practice in Jeffersonville, Indiana, since 1997, practicing primarily in the areas of family law, municipal law and zoning. We are excited about the depth his expertise brings to our firm’s practice areas. Les was accompanied by former legal assistant, Amanda Due, who is serving as a paralegal in the firm’s business practice. We are happy to have these four great people aboard.
Scott Tyler attended an Advanced Insurance Fraud Seminar in Indianapolis conducted by the National Society of Insurance Investigators. Topics included forensic accounting; body language and voice analysis; and criminal and civil arson.
Rodney Scott presented a legal update to the physicians and administration at Floyd Memorial Hospital on medical malpractice issues and legal updates on April 15, 2008.
George Budd is excited to announce his engagement to Tammy Ray, an emergency room physician at Jewish Hospital South in Louisville.  No date has been set as of yet.  The whole firm wishes George and Tammy a heartfelt congratulations!
Scott Tyler, Rodney Scott and Tricia Hofmann each recently participated in the “Talk to a Lawyer” program, which conducts a monthly phone bank to make referrals and answer simple legal questions on a pro bono basis. In addition, the firm donated our former multi-line phone system to Legal Associates, which runs the “Talk to a Lawyer” program, to assist them in being better able to serve the public. 
Sandra Heeke is part of a competitive adult United States Tennis Association league team consisting of 18 women from the Louisville area. The team plays three courts of doubles and two courts of singles. She typically plays number one court doubles. The team plays matches throughout the winter. Sandy’s team recently qualified for the Kentucky State tennis tournament, beating out approximately 35 other teams. At the State tournament, Sandy and her partner won all three of their matches, and came within one tie-break point of advancing to the State semi-finals.  Congratulations, Sandy!  
Scott Waters is proud to announce that his daughter Megan Waters was married on May 17, 2008. Megan is a recent graduate of Cedarville University. Scott and his wife Anne have three other daughters, Mallery, Michelle and Molly.
Tricia Hofmann and her husband, John, together with Rodney and Lisa Scott, attended the annual FurBall in Louisville in February. The FurBall is a fundraising event and awards ceremony conducted by Pet Groups United, a non-profit association of pet rescue and animal welfare organizations in the Greater Louisville metropolitan area. More information can be found about Pet Groups United at its website:
Scott Tyler served on the Grants Committee of the Community Foundation of Southern Indiana and assisted in the selection of organizations which will receive grants in excess of $50,000 for local community projects. 
George Budd will soon be completing his term as Secretary/Treasurer of the Floyd County Bar Association. It is anticipated that he will be nominated for Vice President of the organization at its July meeting.
Rodney and Lisa Scott and their family again spent this spring following daughter Emma’s travelling soccer team - Mockingbird Soccer Club - "92 Girls at's team won the Kentucky State Cup for the third straight year and qualified for the Regional Championships in Rockport, Illinois.  Emma was the team captain.
Rodney and Lisa Scott are also pleased to announce that Emma was selected to participate in the Kentucky Governor’s Scholar Program this summer.  She will spend five weeks at Morehead State University studying a variety of subjects with an emphasis in music theory.  She will then enter her senior year pre-qualified for scholarships at several Kentucky schools.
Rick Bartlett recently served as Chairman of the Boys Scouts of America, Clark County, Indiana campaign.  The effort concluded with a luncheon at Papa John’s Cardinal stadium. Other firm members attending the fund raiser were Sandra Heeke, Ken Doane and Scott Waters (himself a former eagle scout).
Scott Tyler served as Ambassador Campaign Chair of the 14th Annual Rotary Community Toast and Benefit Banquet honoring long-time community activist Robert Kleehammer. The Ambassador Campaign generated a record number of the Gold Sponsors for the event and attendance exceeded four hundred. The proceeds will benefit the new downtown New Albany YMCA and Rotary Club of New Albany.
Rodney and Lisa Scott are proud to announce that their son, Dalton Fitzgerald, graduated with a Core 40 diploma from Clarksville High School.  He also played baseball for Clarksville and was one of two senior captains.  He led the team in batting average while playing shortstop.  He also was named the offensive player of the year.
The firm is committed to taking aggressive and proactive steps to reduce the size of its carbon footprint. To that end, last year the firm adopted a “paper-less” system, which employs scanning documents and forwarding documents via e-mail and on-line fax, with substantially fewer paper documents ever generated in the process. This saves considerable paper and toner, and reduces waste. In addition, the firm contracts with Shred-It, a paper-waste recycling business. Virtually all the firm’s paper products are now recycled, and we are proud to report that Shred-It has advised that as of May, 2008, we have saved a total of twelve trees so far this year with our recycling efforts. In 2007, before we operated in a substantially paperless environment, we saved forty-seven trees.

Client Outcomes

Ken Doane and George Budd received a favorable published opinion from the Indiana Court of Appeals in Bailey v. State Farm Mut. Auto. Ins. Co., 881 N.E.2d 996 (Ind. Ct. App. 2008).  Rodney Scott and Ken Doane secured a defense verdict at the trial court level for the client, State Farm, Plaintiff’s underinsured motorist (UIM) insurance carrier.  By way of brief background, Caudill allowed Bailey to drive his car, and they were involved in a single-car accident. Both men were intoxicated. Bailey sued Caudill, who subsequently tendered his liability limits, and then pursued a UIM claim against State Farm. At trial, Plaintiff moved to amend his Complaint to add a claim of negligent entrustment.  The trial court denied this motion and granted State Farm’s motion in limine on the same issue.  After the jury entered a defense verdict, Plaintiff appealed.  The Court of Appeals held, as a matter of first impression, that a voluntarily intoxicated adult (Bailey) does not have a right to maintain a first-party cause of action against the vehicle owner (Caudill) for negligently entrusting the vehicle to him.  The Court of Appeals also held that the evidence at trial also failed to establish Caudill’s actual knowledge of Bailey’s intoxication. The defense verdict was upheld.
Rodney Scott, Rick Bartlett and Chad Smith all contributed to the dismissal of an adult wrongful death action filed by the non-custodial father acting as a personal representative of an Estate opened for that purpose by a personal injury law firm.  To the father and law firm’s surprise, the 20 year-old decedent was a full-time student at Ivy Tech and, therefore, an adult wrongful death action was an inappropriate vehicle to seek recovery for her death.  J. Scott Waters, IV, of our firm, was helping the residential and custodial mother with her plans for a memorial for her daughter when the mother learned of the lawsuit and her ex-husband’s intentions.  We filed a motion to dismiss on her behalf.  The Orange County Circuit Court granted the motion and permitted mother to file an intervening complaint against the tortfeasor and the ex-husband.  The residential and custodial mother, therefore, should be able to proceed with her initial plans.
Sandra Heeke and George Budd successfully defended the appeal of a summary judgment entered in favor of their client in Wagner v. Yates, 884 N.E.2d 331 (Ind. Ct. App. 2008). In this permissive use case, the Court of Appeals agreed that American Family – the Plaintiffs’ UIM carrier – was contractually entitled to set off not only the tortfeasor’s liability limits, but any UIM payments made by the Plaintiff’s employer’s insurer.  Plaintiffs have since filed a petition to transfer this matter to the Indiana Supreme Court, which is currently pending.
Rodney Scott helped Floyd Memorial Hospital defend a malpractice complaint before a Medical Review Panel.  The unanimous opinion of the panel was that the evidence did not support the conclusion that Floyd Memorial Hospital breached the standard of care owed to the patient and further opined that Floyd Memorial's conduct was not a factor in the injuries and damages complained of by the Plaintiff.
Rodney Scott tried a breach of contract and UCC action for Sellersburg Volunteer Fire Department against Shane Williams Enterprises, Inc., Wolverine Fire Apparatus and American Fire Apparatus in Clark Circuit Court in May of 2008.  As it turned out, it was Judge Daniel F. Donahue’s last trial.  Indeed, he signed the judgment entry on his last day on the bench.  The dispute arose after Sellersburg VFD purchased a used ladder truck from the defendants.  It was purchased to increase the ability and capacity to fight fires and decrease the community’s insurance ratings for premium purposes.  As agreed, the fire truck was sold “as-is except for a pump test, ladder certification, pump cooler repair and a full complement of (USED) ground ladders (85’).”   After delivery, Fire Chief Greg Dietz noted several defects and questioned whether the “ladder certification” was legitimate.  He had the vehicle inspected by an independent testing company that concluded that it failed the certification standard in multiple respects.  Rodney, on behalf of Sellersburg VFD, offered to rescind the transaction and return the truck.  Defendants refused.  Accordingly, Sellersburg VFD made the necessary repairs at the cost of $27,400.  After a two day bench trial, the Judge granted Sellersburg Volunteer Fire Department its damages of $27,400 and ordered specific performance compelling the title transfer that had not yet occurred.  Interestingly, the Judge also granted sanctions including mediation costs and attorney’s fees because Defendants failed to appear in person at the mediation without notifying Rodney, the mediator or the court. 
Ken Doane and George Budd successfully defended an appeal to the Indiana Court of Appeals in McClanahan v. Mason, 881 N.E.2d 103 (Ind. Ct. App. 2008). Previously, Rodney Scott had defended the case at trial and the jury returned a defense verdict.  Plaintiff appealed the jury’s verdict and requested a new trial.  The Court of Appeals held that the evidentiary issues claimed by Plaintiff's counsel were, at most,  harmless error.  It further determined that the jury’s defense verdict based exclusively upon Plaintiff's failure to meet his burden of persuasion on the medical causation issue was justified by the evidence.
Rodney Scott successfully mediated Gentry v. Zingg.  The injury claim was catastrophic.  In addition to $134,000 in medical billings, Plaintiff had been unemployed since the date of the accident with no prospects of returning to his employment because of the significant and permanent injuries sustained in the accident.  While Rodney’s client definitely had significant liability and damage exposure, he believed that it should be shared by Plaintiff and, most significantly, by Harrison County. Both parties had accident reconstructions performed which agreed that both Plaintiff and Defendant were across the centerline, that Defendant may have been 4 inches further across the centerline, that both Plaintiff and Defendant were about equal distances from their respective edges and that both vehicles were travelling within the speed limit.  After the suit filing, Rodney asked the defense accident reconstructionist to revisit the scene and analyze the road design.  The Defendant’s accident reconstructionist concluded that the maximum advisable speed for the roadway – based upon its design – was more in the range of 20 mph than the posted 55 mph limit.  Additionally, the road lacked any necessary warnings or advisoriesto notify traffic of the narrowness of the roadway and the visibility limitations at the location of the accident.  Harrison County, therefore, was named a non-party to the action and Rodney successfully argued that his 16 year-old client, in particular, needed warnings and advice about speed and visibility and that, as such, Harrison County bore at least 50% of the total fault, for settlement purposes, for the accident and the parties each bore no more than 25% of the fault. The case was settled well within the insured’s available liability limits.


Legal Updates

Submitted by George Budd and Chad Smith
Reciprocity required for trigger of IC 27-7-5-6 thirty-day deadline to advance funds
In Hornberger v. Farm Bureau Insurance, 868 N.E.2d 1149 (Ind. Ct. App. 2007), a Farm Bureau insured, Brewington, was struck by Hornberger, an insured of Citizens Insurance Company. On November 13, 2003, Citizens informed Brewington and Farm Bureau of its intentions to make a policy limits offer and provided a copy of the policy coverage limits as required by I.C. 27-7-5-6. Brewington refused the offer due to the contingency that he accept 50% fault for the accident. Nonetheless, Farm Bureau notified Brewington of its intention to advance the money and reserve its subrogation rights against the tortfeasor, Hornberger.
On March 23, 2004 Brewington decided to accept Citizens’ offer, and advised Farm Bureau. On April 2, 2004 Farm Bureau advanced payment to Brewington. After suit was filed, Hornberger moved for summary judgment on the grounds that Farm Bureau had waived its subrogation rights by failing to advance the money within thirty days of the initial offer, conveyed on November 13, 2003. The trial court denied his motion.
The Indiana Court of Appeals affirmed. In doing so, the Court concluded that Hornberger’s argument – that only the fact of an offer and proof of policy limits is necessary to trigger the statutory thirty-day period – was against the clear language of the statute. The Court determined that the thirty-day period does not been to run until there is clear evidence of a reciprocal agreement between the tortfeasor and the insured plaintiff to settle for the tortfeasor’s liability limits. There was no reciprocity in November of 2003, as Brewington did not consent to the settlement terms. Farm Bureau’s deadline to advance funds did not expire until April 22, 2004, after it had tendered payment.  
As a practical matter, when notifying UIM carriers of a limits tender, insurers must be careful to clearly demonstrate the plaintiff’s willingness to accept the offer and release the tortfeasor. It would be helpful to secure written confirmation of such agreement from plaintiff’s counsel. If this is not possible, the notice should clearly indicate that plaintiff’s counsel has expressed a willingness to accept the funds, and copy plaintiff’s counsel on the letter. Without evidence of such reciprocity, notice of a limits tender will not trigger the thirty-day period established by the statute.
Breach of insurance contract and failure to submit to second EUO
In National Athletic Sportswear, Inc. v. Westfield Insurance Company, 2008 WL 2345019 (7th Cir. 2008), National Athletic (“NAS”) sued Westfield for breach of contract and bad faith after Westfield denied NAS’ burglary claim. Westfield filed an answer and counterclaim for declaratory judgment based on NAS’ refusal to submit to a second examination under oath (“EUO”), in violation of its post-loss duties under the contract.
Westfield’s insurance contract contained a provision which read, “We may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an insured’s books and records.” The contract also required insureds to fully comply with their contractual duties before filing an action against the company. NAS timely reported the underlying theft and loss of property to Westfield, and Westfield promptly tendered payment to NAS for its loss of business income. Approximately two months later, an attorney for Westfield conducted a lengthy EUO of the president of NAS. The exam was recessed so that NAS could provide additional documentation to Westfield. After receiving numerous documents, Westfield sought to reconvene the EUO to discuss them. Although both parties originally agreed to conduct a second EUO after the documents were provided, NAS subsequently objected and refused to participate. It also sought to limit the length of a second EUO, if one was ordered. 
The Court rejected NAS’ argument that the Federal Rules of Civil Procedure limited EUOs to seven hours, noting that nothing in the insurance contract so limited an EUO’s duration. As this was a contract dispute, the federal rule was “at best, only persuasive or analogous.” There was no legal basis for NAS’ argument that Westfield’s attempt to reconvene the EUO was unreasonable. While conducting repeat EUOs in an attempt to harass or burden an insured could be unreasonable in some situations, that was not the case here. By refusing to submit to a reasonable resumption of the EUO, NAS breached the contract. 
The Court also rejected the bad faith claim. There was a rational basis for Westfield’s questioning of NAS’ president. In addition, the underlying disagreement centered around value, not the claim-handling process. A good-faith dispute about value is not grounds for a bad faith claim.
Compliance with post-loss duties precursor for recovery under the policy
In Allstate Insurance Company v. Fields, 885 N.E.2d 728 (Ind. Ct. App. 2008), Allstate insured the Fields, who were involved in an auto accident with Jimmy Woodley. The Fields’ Allstate policy contained medical payments coverage, UM coverage and UIM coverage. The Fields filed a lawsuit against Woodley, alleging negligence and loss of consortium, and submitted medical bills to Allstate, which paid the medical payments coverage limits under the policy. After Woodley’s insurance carrier became insolvent, the Fields notified Allstate that they were pursuing a UM claim. Allstate acknowledged this claim, but requested that the Fields complete medical/wage authorizations and proof-of-loss forms. The Fields responded by sending a list of medical bills to Allstate and acknowledging that the submission was incomplete. At the same time, the Fields made a policy limits demand. Allstate responded by sending a second set of forms and iterated that no offers of settlement could be made until they were completed and returned. The Fields claimed that they had provided complete medical records to Allstate and reiterated their policy limits demand, while also stating that Allstate’s continued refusal to pay policy limits was in bad faith. Allstate responded by stating that it still had not received the completed forms. 
The Fields moved for leave to amend their complaint to add Allstate as a party defendant and allege a bad faith claim. The court denied Allstate’s subsequent motion for partial summary judgment on the bad faith claim. Ultimately, after several years’ worth of discovery disputes, interlocutory appeals and other procedural hurdles, a jury awarded the Fields $2,000.000 in compensatory damages and $18,000,000 in punitive damages. Allstate, of course, appealed.
The Court stressed that a good-faith dispute as to the amount of a valid insurance claim is not a breach of the duty to exercise good faith. Also, any conduct on the part of an insurance company after a lawsuit has been filed is not evidence of bad faith. Ultimately, the Court of Appeals concluded that there was no evidence of bad faith on the part of Allstate in the handling of the Fields’ claim and that the trial court erred in its denial of Allstate’s motion for partial summary judgment. Specifically, the Court stated that Allstate did not act with ill will by delaying any payments to the Fields, as it was still seeking full compliance with the terms of the insurance contract. 
Interpretation of one-year suit clause
In General Casualty Insurance Company v. Bright, 885 N.E.2d 56 (Ind. Ct. App. 2008), Diana Bright and her spouse maintained a homeowner’s insurance policy with General Casualty. The policy itself contained a provision that read: “Suit Against Us. No action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of the loss.” According to the policy, “us” referred to General Casualty. In June of 2003, the dwelling burned down, and the Brights submitted a claim to General Casualty.
In September of 2005, General Casualty filed suit against the Brights and alleged that they had caused the fire and had fraudulently submitted an insurance claim regarding the same. Bright eventually filed a motion to dismiss, alleging that General Casualty had failed to file its complaint within one year after the house had burned down. The trial court agreed and dismissed General Casualty’s complaint with prejudice. General Casualty appealed. 
On appeal, General Casualty argued that the contractual provision limiting the time for filing lawsuits applies only to insureds. In turn, Bright argued that if the policy was intended to have this meaning, it would have been specifically iterated. The Court of Appeals agreed with General Casualty. The Court determined that the suit limitation clause was clear and only applied to suits filed by insureds against the insurer. General Casualty was free to proceed with its suit against the Brights.
Hospitals may have duty to protect patients from external harm after discharge
In McSwane v. Bloomington Hospital & Healthcare System, 882 N.E.2d 244 (Ind. Ct. App. 2008), Vandeede presented to the emergency room with lacerations and a deep puncture wound sustained when she allegedly fell from a horse. She was accompanied by her visibly controlling ex-husband. Noting that Vandeede appeared intimidated by him, one nurse presented her with a domestic abuse form, which she refused. Even in the ex-husband’s absence, Vandeede maintained she fell from her horse. After she was treated, Vandeede insisted on being released to her ex-husband, and the staff repeatedly questioned her about her safety. Vandeede’s mother told the staff that her daughter was the victim of domestic violence, but Vandeede told her mother to mind her own business and left with her ex-husband. Shortly after being released, the ex-husband killed Vandeede and then committed suicide.      
In the mother’s resulting lawsuit, the surgeon and the hospital moved for summary judgment, which the trial court granted. The Court of Appeals upheld the summary judgment as to the surgeon, as Plaintiff waived her argument against him by failing to properly present it at the trial level. 
In reversing the summary judgment for the hospital, the court first held that a hospital’s general duty of care to a patient may include a duty not to discharge that patient to a suspected abuser.    A hospital has a duty to safeguard the welfare of its patients, and this can include a duty to protect them from external circumstances if the hospital observed or unreasonably ignored events that could lead to a risk of harm. The Court cautioned that such risks must be reasonably foreseeable. The Court determined there were genuine issues of material fact as to whether the hospital ignored such events in Vandeede’s case. 
The Court also declared the hospital may have violated a statutory duty to report the abuse of an endangered adult. It defined “endangered adult” as someone who, by virtue of a physical or mental ailment, is incapable of making decisions in his or her own interest. Given that Vandeede’s treatment consisted of extensive use of narcotics and anesthesia, the Court determined there was a genuine issue of material fact of whether she was an “endangered adult.” 
One judge penned a strong dissent, arguing that the Court had imposed an unreasonably broad duty on hospitals. He emphasized the facts that Vandeede was fully coherent prior to discharge, and that the hospital suggested on several occasions that she not leave with her ex-husband. She voluntarily chose to do so.   
Presence of surgical sponge is evidence of medical malpractice
In Chi Yun Ho v. Frye, 880 N.E.2d 1192 (Ind. 2008), Plaintiff underwent a hysterectomy. Following the surgery, nurses performed a sponge count and advised the surgeon that all the used sponges were accounted for. Over a year later, plaintiff learned that a sponge had been left in her abdomen, and underwent a second operation to remove it. A medical review panel found that the surgeon failed to meet an adequate standard of care.
At trial, Plaintiff moved for a partial summary judgment on the issue of liability, which was denied. Following the entry of a defense verdict, Plaintiff filed various post-trial motions, seeking a new trial. After the trial court ordered a new trial, the surgeon appealed, and the Plaintiff cross-appealed the denial of her partial summary judgment motion.
Ultimately, the Court affirmed denial of Plaintiff’s motion, and reinstated the jury’s verdict. Citing Funk v. Bonham, 204 Ind. 170, 183 N.E. 312 (1932), it explained that a surgeon has a duty as a matter of law to ensure that all sponges are removed after a procedure is completed. Even if a surgeon delegates the task of counting sponges to an assistant, a failure to remove all of them is evidence of medical negligence and will support a jury’s finding of liability on the part of the surgeon. He or she cannot escape liability for such a failure by delegating the duty to another.
The Court noted that a provider “is only required to produce expert evidence refusing the panel’s opinion” to avoid summary judgment in a medical malpractice case. Even without any concrete facts supporting the opinions, the very existence of conflicting expert opinions on whether the standard of care was met is sufficient to preclude summary judgment. As the surgeon introduced evidence of a conflicting opinion, summary judgment was inappropriate.
Grant of new trial based on newly-discovered evidence
In Speedway SuperAmerica, LLC v. Holmes, 885 N.E.2d 1265 (Ind. 2008), Gerald Holmes claimed that while at Speedway’s truck stop, he slipped and fell on a black spot he believed to be diesel fuel. He promptly changed his pants, which he claimed were at least partly covered in diesel fuel. Ten days prior to trial in their suit against Speedway, one of the Holmes’ attorneys asked his clients whether they still had the clothes Mr. Holmes wore on the date of his alleged injury. One day before trial, the Holmes told him that they had located the jeans and boots, which they put in the trunk of their car. The attorney did not physically examine the jeans or boots. 
On the day of trial, Holmes’ attorney advised defense counsel for the first time that the Holmes were in possession of the clothing and that the items might be introduced into evidence. Speedway’s attorney did not inspect the items. When the Holmes’ attorneys attempted to introduce the clothing, Speedway objected on the basis the evidence was highly prejudicial, and that the substance had not been identified as diesel fuel via any scientific testing. The trial court allowed the clothing to be admitted, but prohibited any testimony or inferences as to whether the stain was derived from diesel fuel. 
The Holmes subsequently testified that the stains on the boots and jeans were present before the accident and appeared as a result of the fall. They explained that they put the clothing in their barn after the accident and had subsequently forgotten until just before trial. Ultimately, the jury found in favor of Mr. Holmes and awarded him $1,125,000 which, after a 50% fault apportionment to him, was reduced to $562,000. 
Speedway moved for a new trial and also filed a motion to preserve and test the clothing, the latter of which the trial court granted over the Holmes’ objection. A chemist concluded that the jeans did not contain diesel fuel, turpentine or mineral spirits. In addition, Speedway learned that the jeans had not been manufactured until 2000 and were not available for sale until April or May of 2001, long after Mr. Holmes’ June, 2000, fall. Nonetheless, the trial court denied Speedway’s motion for a new trial, specifically stating that Speedway had not established intentional misrepresentation on the part of the Holmes or their attorneys. 
A majority of the Court of Appeals affirmed the trial court’s ruling, stating that Speedway could have requested a continuance to have the clothing tested. The dissent reasoned that although Speedway would have had an advantage by requesting a continuance to obtain testing, this was a clear case for a new trial due to the post-verdict discovery of new evidence. 
The Indiana Supreme Court concluded that Speedway was entitled to a new trial based on the chemist’s report and the timeline of the jeans’ manufacture. The Court concluded that Speedway met the nine elements required for granting a new trial due to newly-discovered evidence, that: 1) the evidence has been discovered since the trial; 2) it is material and relevant; 3) it is not cumulative; 4) it is not merely impeaching; 5) it is not privileged or incompetent; 6) due diligence was used to discover it in time for trial; 7) the evidence was worthy of credit; 8) it can be produced upon a retrial of the case; and 9) it will probably produce a different result at retrial. 
The only element Supreme Court questioned was whether Speedway exercised due diligence in obtaining the test results. In the end, the Court found that the Holmes ultimately created the underlying procedural problem by failing to report the existence of the jeans and boots to counsel for Speedway until the morning of trial. The Court concluded that although Speedway could have requested a continuance during trial, failure to do so did not result in failure to exercise due diligence during post-trial testing of the jeans. 
Bifurcation not allowed absent showing of actual prejudice
In Shafer & Freeman Lakes Environmental Conservation Corp. v. Stichnoth, 877 N.E.2d 475 (Ind. Ct. App. 2007), the Plaintiff went to his parent’s property near Lake Shafer. Upon arrival, Plaintiff’s father warned him that there was a newly installed dredge pipe near their dock. Despite this knowledge, Plaintiff dove into the water – like he had done many times in the past – and struck his head on the dredge pipe. Plaintiff fractured several vertebrae and was paralyzed. 
Prior to trial, Defendant moved for summary judgment on liability and also moved to bifurcate the liability and damages portions of the. The trial court denied both motions. Following a trial, the jury returned a verdict for the Plaintiff totaling $3,398,000, but attributed 50% fault of the to the Plaintiff, 20% to the Plaintiff’s father (who was named as a non-party) and 30% to Defendant. Defendant appealed the denial of its motions.
The Court of Appeals held that the Plaintiff was an invitee at the lake and, as such, was entitled to a greater degree of protection than if he were merely a licensee. Defendant tried to argue that since a person could only access the lake by crossing private property, requiring permission, anyone at the lake must be a licensee. The Court concluded that lake visitors are invitees, as the lake was open to the public for everyone’s enjoyment. As such, Defendant owed a higher duty of care, and summary judgment was properly denied.
The Court also upheld the trial court’s denial of bifurcation. With the benefit of hindsight, the Court noted that the jury apportioned 50% of the fault to Plaintiff, despite the severe nature of his injuries. This suggested that the jury did not improperly conflate emotion with its liability assessment, and that no actual prejudice occurred. It rejected Defendant’s speculation that, if the case had been bifurcated, Plaintiff would have been assessed more than 50% at fault. Relying on a recent Supreme Court decision, State Farm Mut. Auto. Ins. Co. v. Gutierrez, 866 N.E.2d 747 (Ind.2007), the Court explained that the mere possibility or speculation of prejudice is insufficient to require separate trials on liability and damages. 

Our Perspective

Admissibility at Trial of Evidence of Medical Billings --
Amounts Billed Versus Amounts Paid
By Tricia Kirkby Hofmann
Indiana law provides that a prevailing plaintiff is entitled to recover the “reasonable value” of the treatment he or she receives as a proximate cause of a defendant’s negligence.  Sikora v. Fromm, 782 N.E.2d 355, 359 (Ind. Ct. App. 2002)(abrogated on other grounds, Willis v. Westerfield, 839 N.E.2d 1179 (Ind. 2006)).  The question then is what is the “reasonable value” – the amount billed for the services, or the amount the provider accepts in full satisfaction of those bills?  There have been four relevant Indiana cases which touch on this issue.
The first case, Chemco Transport, Inc. v. Conn, 506 N.E.2d 1111, 1115 (Ind. Ct. App. 1987), affirmed in relevant part and reversed on unrelated grounds, 527 N.E.2d 179 (Ind. 1988), said that the reasonable value of medical services could be determined either by looking at the amount billed or the amount paid.  However, this case did not expressly address insurance write-offs. Nonetheless, in several cases we have tried, our firm has been able to persuade the judge to allow both figures to be introduced.
Next came Brumfiel v. U.S., 2005 WL 4889255 (S.D. Ind. 2005).  Brumfiel is a federal case, and is not binding authority on an Indiana state court.  In this case, Defendant sought to introduce evidence of insurance write-offs, reducing the amount of medical damages claimed by Plaintiff.  Plaintiff objected, arguing that the introduction of such write-offs would violate Indiana’s collateral source rule, codified at I.C. 34-44-1-2.  The collateral source rule, which abrogated the common law rule, allows collateral source evidence to be admitted, unless it is evidence of a collateral source payments from sources for which the plaintiff or his/her family pays directly or benefits received from the government.  The judge in Brumfiel concluded that the reason Indiana abrogated the common law rule was to reflect a change in public policy.  Instead of focusing on holding a defendant fully accountable (the policy behind the common law rule), the Indiana legislature sought to prevent plaintiffs from receiving a double recovery.  He therefore rejected Plaintiff’s citation to cases from states which retained the common law rule, noting they were not relevant to addressing the Indiana statute.  The Brumfiel court ultimately concluded that the collateral source rule did not even apply, as it applies to “payments,” and a write-off is not a “payment.”  Accordingly, Plaintiff was prohibited from seeking to recover the substantial insurance write-offs in that case.
Although the Brumfiel opinion was not binding on it, the Indiana Court of Appeals relied on it in Butler v. Ind. Dep’t of Ins., 875 N.E.2d 235 (Ind. Ct. App. 2007), the third relevant pre-Stanley case.  Butler involved substantial Medicare write-offs.  Like the judge in Brumfiel, the Butler court limited Plaintiff to only seek the actual payments.  The court emphasized that no one will ever be paying for the write-offs, and if Plaintiff were allowed to recover them, it would result in a windfall to him.  This is contrary to the public policy behind the collateral source statute.  Unfortunately, the Indiana Supreme Court recently granted transfer in this case, and it may not be cited as binding authority. 
Since transfer was granted in Butler, the Court of Appeals issued anopinion in Stanley v. Walker, 2008 WL 2246994 (Ind. Ct. App. 2008).  The Stanley court reached a conclusion wholly opposite to Butler and Brumfiel.  While it referenced Butler in a footnote as a case yielding a different result, it did not mention Brumfiel at all.  Stanley is slightly different from Butler, in that it featured write-offs made by a private insurance payor.  We believe the Stanley court is problematic largely because it reached its conclusions solely by applying case law from states which retained the common law rule.  As stated earlier, the policy objectives of the common law rule are different than the objectives behind the Indiana statute.  The Stanley court noted that the statute abrogated the common law rule, and noted specifically that to abrogate means “to do away with” and “to destroy.”  It also noted the different public policy goals involved.  Then, with no authority, the Court stated that it allowed to follow the policy objectives of the common law rule.  It ignored case law from jurisdictions which have statutorily abrogated the common law rule, even though all of them that have addressed the issue have prevented plaintiffs from recovering the written-off amounts.  While we disagree with the conclusion of a number of cases, it is unusual to find one with such a profoundly troubling and unreasonable analysis. 
We anticipate transfer will likely be granted in Stanley, and that the Supreme Court will rule in both cases together.  Until transfer is granted, however, Stanley is the law and is binding precedent.  Due to briefing schedules, it will be some months before this issue has been resolved.
In the interim, a footnote located at the end of Stanley offers some direction.  The court noted that nothing in its ruling should be construed as preventing defendants from challenging the reasonableness of medical billings.  Such evidence could be introduced via a defense expert or other evidence.  In appropriate cases, with sizeable differences between the amount billed and the amount paid, it may be worth considering hiring an expert in medical billings.  This individual would be qualified to testify about how billing works:  how providers set their rates; how contracts between providers and insurance companies or Medicare work; how adjustments and write-offs are handled; and the fact that, as part of those contracts, providers are not allowed to pursue written-off amounts from the patients.  This could then be introduced at trial as evidence of what constitutes the “reasonable value” of the services.
In some cases, a treating provider may be willing to candidly testify about these issues and how he/she/it handles write-offs in practice.  In those cases, a defense expert would likely be unnecessary. However, many providers, as you well know, are such advocates for their patients that they would not admit anything harmful to the patient’s case.  It is in those cases where a defense medical billing expert may be appropriate.

Featured Trial Report

  Janice and Danny Coffman v. Christy Mitchum
Cause No.:
  Clark Superior Court No. 1
  Hon. Vicki Carmichael
  State Farm Mutual Automobile Insurance Company
Damages Awarded:
  None – Defense Verdict.
Incurred Medicals:
Last Demand:
  Policy Limits of $100,000.00.
Last Offer:
WT&S Attorneys:
  Rodney L. Scott and Tricia K. Hofmann
Synopsis:   This case arose out of a four-car accident that occurred on the off-ramp of I-65 northbound in Clark County, Indiana, at the Sellersburg exit.  Plaintiff was a passenger in a vehicle being driven by his wife, Janice Coffman.  Plaintiff was partially reclined and dozing off when his vehicle was struck by the vehicle behind it.  Our client was three cars behind Plaintiff’s, and had bumped the car in front of her, causing a four-car chain-reaction collision to occur.  Although a vehicle was stopped in front of Plaintiff’s car, no contact was made with this vehicle.  While our client’s vehicle suffered significant damage, Plaintiff’s vehicle sustained no visible damage whatsoever in the accident.  Plaintiff’s wife and son, who were also in the vehicle, were not injured.