Litigation Issues and Strategic Questions for Clients

SUMMARY

We have been pursuing the rights of our clients through litigation for nearly thirty years. We have accumulated significant experience in the ethical and aggressive use of the Courts to protect our clients’ rights. As “tort reformers” have placed obstacles and impediments in the path of victims, consumers and insureds, the experience, skill and judgment of a victim’s attorney has become even more important in seeking justice.

We believe that our practices and philosophy (as described below) are in line with the highest and most effective standards in our State and profession. Ratings by knowledgeable peer groups, which place us in the highest classification, seem to confirm this; as do repeated requests for us to educate other legal professionals in litigation rules, tactics and strategy.

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LITIGATION ISSUES AND STRATEGIES FOR CLIENTS

Pre-litigation and pre-trial settlement

Virtually every client we represent introduces himself or herself by explaining to us that “I’m not the kind of person who would normally sue someone”. Sadly, insurance propaganda has created the impression that only a litigious and greedy person would look to an insurer for fair compensation when one person causes another person serious injuries. In fact, studies show that only one in eight persons injured by actual medical malpractice, for example, actually initiates a lawsuit or recovers for the injuries suffered. We have found that most clients would greatly prefer a fair and litigation-free negotiation process if it existed: sadly, in most cases it does not.

Insurance companies and adjusters do not succeed by promptly paying claims. They hold millions of dollars in “reserved” claims, tax free, and collect interest on those dollars: the longer the dollars are held, the greater the resulting profits. Even a good adjuster with a good company frequently has become jaundiced by bad experiences and can be cynical about a given claim. In order to avoid criticism, most adjusters feel obligated to investigate claims extensively, and frequently, they are expected to “stonewall” negotiations to see if economic and social pressures will make a victim easier to negotiate with. On top of that, most adjusters have learned that they will be criticized for an early, fair settlement, but that if they delay until someone else places a value on the claim, they will have “cover” for the decision to pay. This means that most settlement decisions are not made until there has been a Case Evaluation, or a Mediation recommendation or a Committee approval. We think that when committees consider claims, the likelihood is that any settlement decision will be substantially influenced by people with less knowledge and greater cynicism. With some policies, a settlement decision by the insurer cannot be acted upon without the approval of the doctor or employer who acted inappropriately, and many defendants simply don’t want to admit error–especially if the outcome is a catastrophic injury or death. Thus, there are all sorts of institutional obstacles within the insurance industry that tend to prevent prompt, fair settlements.

All of these institutional influences have been aggravated and emphasized in recent years since the Chamber of Commerce and the insurance industry have secured control over a majority of the Michigan Supreme Court. . By one recent analysis of the Court’s voting record, victims have not “won” a single significant case before Michigan’s Supreme Court in the past five years: by everyone’s analysis, insurers win more than 95 percent of the cases they take to the Supreme Court. This includes cases that overturn twenty or thirty years of settled law. Even the insurance defense bar has formally criticized the process and sought the reversal of appellate decisions favoring insurers. Literally, insurers in Michigan know that they win before the Supreme Court and other appellate courts, regardless of the facts of the case, and they have become more aggressive and more ambitious as a result.

In response to these forces, we have learned that the only way to achieve a fair result for our clients is to “load for bear” (that is, make sure we have powerful ammunition) in order to negotiate from a position of strength. Just as in playing poker, the injury victim who appears unable or unwilling to compel a fair payment will never be treated fairly: the victim who prepares to assure justice through an outside party (that is, a judge or jury) will be better able to negotiate a fair deal.

There are a number of rules and processes emphasized by the Michigan Courts to compel the parties to compromise and settle claims. We have observed that once in a while a party or their attorney can “bluff” their way through these procedures, without preparing for trial, and still achieve a reasonable outcome. Usually, however, experienced attorneys and claims representatives on the other side can detect the weakness in their adversary’s preparation and refuse to negotiate in good faith. In this settlement process, there is simply no substitute for thorough preparation and a reputation for thorough preparation and steadfast advocacy. In short, attorneys and firms with a “history” of preparing and achieving fair results do not have to continue to prove themselves in every single case and often they can achieve better, earlier settlements.

Initial phase

Investigation: If a client hopes not to incur the expense and risk of a trial, work toward that goal must start immediately. First, the basic factual investigation must be completed before evidence is lost, so that the victim has the capacity to establish a claim in court. The insurer will know from public records and activities whether an injury victim is husbanding the evidence he or she needs. Furthermore, one ill-advised admission, statement or misunderstanding occurring when the victim talks to the insurer’s representative can become an enormous stumbling block down-the-road.

Reserve: It is far easier to secure a fair settlement from an insurer who has placed a proper reserve on a file. The initial investigation process for the insurer includes assessing fault and the extent of injury in order to determine the amount of money to be set aside for settlement. If, as a result of an initial mistake, the reserve is set improperly low, even a well-intentioned adjuster who recognizes the mistake may be unable to overcome the low Reserve by obtaining authorization for a fair offer. It is imperative that the information provided to the insurer be controlled so that the victim’s injury is seen in the proper light.

Invasion of Privacy: Typically insurers seek unfettered access to the victim’s medical, social and employment history. This may take the form of “authorizations” that are not directed to any individual, have no termination date, and can be used by virtually any person who possesses a Xerox copy of the document. Furthermore, boiler plate “releases” may be demanded, and if executed, they can have the impact of waiving all future claims–even though neither party intended that result. Finally, even a restrictive endorsement on an ancillary benefit check may unintentionally wipe out the victim’s right to known benefits. To be safe, a reasonable victim should have input from an experienced attorney through this process (perhaps on an hourly basis) to assure that settlement negotiations are not waylaid by ignorance and that the necessary invasion of privacy is minimized and controlled.

We have also run into several situations where an insurance representative has used legitimate medical authorizations and access to an injury victim’s treating physicians in an attempt to improperly influence the doctor negatively. An insurance-appointed “case worker” may schedule an appointment with a physician, without the patient being present, and then denigrate the patient’s effort in therapy or in rehabilitation. Fortunately, most doctors are highly skeptical of this behavior, however, it can still unfairly interfere with care and trust. In some other situations, the insurance representative has insisted on attending all physician appointments and then occupied the physician’s time so that the patient cannot obtain normal advice and help. In all of these situations, the injury victim needs a knowledgeable advocate to intervene before matters can get out of control.

Timing

The earlier the persons working for the victim can secure control of the process, the better. There are some notice requirements that require informing the Defendant of the injury within months of the incident. There are statutes of limitation and contractual limitation clauses as short as one year. Obviously, missing one of these formal deadlines could significantly impair any settlement efforts, even if the blown deadline can later be overcome. More importantly from the vantage point of settlements, victims must understand the basic inertia of insurance companies and recognize that in most cases an “early” settlement won’t occur for months or years. If investigation and negotiation are delayed, it is possible that the victim will be compelled to file suit without completely exploring settlement, simply because the time for talking has been exhausted by lack of focus from the insurer. Furthermore, the settlement amount will ultimately be earning interest for the wrong party (the insurer) during the pendency of negotiations and litigation: if all other factors are equal, an early settlement is better than a late settlement.

Working against the above principle, however, is the fact that the injured party bears the burden of proof with respect to proving damages and must prove the extent of her or his injuries and damages to a “probable” standard or to a “reasonable medical certainty”. Physicians with good bedside manner often are reticent to offer a negative prognosis until healing has run its course–or had time to run its course–so victims may not know for a period of months or even years, what future damages they are likely to suffer. Even if they think they know where their condition is “plateauing,” their physician may not be ready to acknowledge that fact. NO SETTLEMENT SHOULD EVER BE ENTERTAINED OR ACCEPTED BY A VICTIM WHO DOES NOT THOROUGHLY UNDERSTAND HIS OR HER PROGNOSIS. Many times, this means careful analysis of the medical chart and interviews with the treating specialists. In turn, to obtain meaningful answers, this often requires the passage of time and may even require the issuance of a subpoena or retention of additional consultants. Defendants do not make substantial settlement offers to victims on the basis of what “might” happen or on the basis of problems that “could” develop: victims and their attorneys must document the probable future course with credible evidence.

Coverage limits

One important consideration in timing litigation is the Defendant’s insurer’s willingness to confirm its insurance resources. Prior to suit, there is no means to confirm the Defendant’s coverage limits. If the insurance will not document its coverage limits, it is frequently necessary to file suit in order to compel it to disclose this information. Once the Complaint is filed, a victim has the right to obtain this information under oath through Interrogatories.

Filing suit

At some point, the victim will be faced with a decision about filing litigation. Attorneys prefer to make this decision well in advance of the expiration of the statute of limitations, if possible, since there are often unanticipated developments and difficulties with achieving Service of Process or in naming all responsible parties, and the victim and attorney hope to retain enough time to correct any problems that might possibly be encountered. Obviously, many times the problems cannot be anticipated.

Litigation is formally commenced with a Complaint, and at this point the “victim” becomes the “Plaintiff”. In medical malpractice claims the Complaint is anticipated and directed by the filing of a highly specific Notice of Intent. If a settlement has been offered, the victim will have to decide between accepting this compromise or pressing a lawsuit to seek a more fair recovery. The attorney will always provide her or his client with advice on this issue, based on the subtleties of the case and the history of similar claims and parties, however, THIS DECISION IS ALWAYS ONE FOR THE CLIENT TO MAKE, ULTIMATELY. If the client is a child or mentally incompetent, the Court will have to approve his representative’s decisions. It is a serious breach of ethics for an attorney to make settlement decisions independent of the client’s will, and an attorney who vehemently disagrees with the client’s proposed decision must decide whether to facilitate the outcome the client has chosen or to withdraw from representation.

If the potential case involves a wrongful death or the injury to a minor or otherwise incapacitated person, even a negotiated settlement must be approved by the courts. It may be necessary to open a Probate Estate and appoint a Personal Representative. An adult may need to be formally designated as the Next Friend or Guardian at Litem for an involved child or children. It may also be necessary to appoint a Conservator to receive and manage settlement monies for children, if they will exceed $5,000.00. Basically, the Probate Court must approve settlements where no litigation has been filed, and the Circuit Court must approve pending cases. The Probate Court will then assume jurisdiction of any money awarded to legally “incompetent” persons (i.e., children or persons with diminished mental function).

Scheduling Orders

If the victim decides to institute a lawsuit, the attorney will file the formal Complaint in the proper County and complete service of process on the wrongdoer or his attorney. They have from 21 to 28 days in which to file a formal Answer, however, most Defense attorneys insist on a brief extension of that time period. Despite this delay, the Answer actually filed is usually devoid of detail and does not illuminate the Defendant’s actual theory or strategy of defense. The formal Complaint and Answer “define” the case for the Trial Judge who will issue a Scheduling Order soon afterward. In well-managed Circuits that aren’t overwhelmed by criminal and domestic litigation, the scheduling order may set a trial date within 8 or 10 months of filing suit. The victim’s attorney must take this short time frame into account in deciding when to file suit, since the litigation process no longer allows adequate time for the prognosis of many severe injuries to be assessed.

Discovery

After the Complaint and Answer are filed, the parties engage in a process called “discovery”. Using formal questions called Interrogatories, Requests to Produce, Subpoenas, and Depositions under oath, the parties formally investigate and establish the facts that are relevant to the injury event and the damages suffered. Sometimes discovery is literally a “fishing expedition” to learn things that the adversary may be hiding and which cannot be uncovered in any other way. Other times, discovery is utilized to preserve known evidence so that it cannot be lost before a trial. There are occasions when the discovery process to preserve evidence has a significant impact on the timing of filing suit, because of the potential unavailability of witnesses or parties.

Even during the “discovery” process, informal investigation continues. Where it is ethical for the attorney to do so, he or she will seek out relevant information without making use of formal civil procedures. The latter procedures are expensive and they also inform the adversary of every step taken by the attorney. The attorney may be compelled to seek the assistance of an Investigator, both to take advantage of his or her special skills and so that there will be a witness to confirm the information obtained in the event the matter goes to trial.

Discovery usually commences with a demand for relevant documents such as the medical chart of the injured person, and of the documentation relating to the incident. It may include Personal Injury Protection files from an insurer or Social Security records, as well as diaries, journals, criminal records, employment records and any other documents that “might lead to relevant evidence”. Confidential issues in a party’s past history need to be discussed carefully with the party’s attorney so that privacy can be protected as much as possible.

The deposition process, in particular, is very expensive. The attorneys for all parties attend, and the parties, themselves, have the right to attend (although they rarely attend any depositions other than their own). A Court Reporter is hired by the attorneys to administer the oath to the deposed witness and to transcribe every question and answer. A typical deposition transcript will cost from $200.00 to $500.00 dollars, not including witness fees. It is not uncommon for medical specialists to charge $1500.00 for giving a two hour deposition. Attorneys and their clients need to make good choices about how and where money is spent–particularly if relevant insurance limits are low–so that a limited recovery is not squandered in witness and court reporter fees. On the other hand, one cannot be “penny wise and pound foolish”–that is, the lawyer and client must be prepared to invest a substantial sum in a case which has a large potential value or to decide where to “cut corners’ if the case is risky. Defendants who observe that an injured person is not engaging in discovery may well conclude that the victim and his attorney do not believe in their case or are unwilling to prepare it for trial.

If the victim/Plaintiff is to give a deposition, his attorney will need to meet with him in advance to prepare him to undergo this stressful experience. It is our experience that with proper preparation and guidance, a client with a legitimate claim has nothing to fear from giving a deposition under oath.. Nevertheless, mis-statements or mistakes in this procedure can undercut the entire litigation claim, so careful preparation is required. If there is a “wart” on the case, i.e., some problem that must be addressed, it must be carefully considered and honestly addressed early, since committing perjury or being caught in a lie will usually destroy a case faster than any other problem.

Once the basic facts are known, the parties will work with forensic experts to put the client’s “best foot forward” in pursuing a claim. This may mean retaining an accident reconstruction expert to demonstrate that the physical facts corroborate the client’s account of how the accident occurred (or to document how it occurred in the absence of a client’s testimony). Other experts frequently consulted include toxicologists, physicians (including the treaters, usually), accountants or economists, and persons with substantial experience in the Defendant’s profession or occupation.

Offer of Judgment

Often, during the discovery process, one side or the other will file an Offer of Judgment, essentially offering to compromise the litigation for a specific sum. The other side then has a limited time within which it may accept that offer or counter with a higher or lower sum. Later, if there is no unanimous case evaluation in this particular litigation, an offer of judgment can be the basis for awarding and computing sanctions, consisting of attorneys fees and costs, if the party rejecting the offer or the average of offer and response, does not improve on the offer or average by ten percent at the time of judgment. Care must be taken in responding to any offer of judgment extended by the adversary because of this risk of sanctions.

Facilitation or Mediation

Usually near the end of the discovery period, the parties are compelled to attend a court-ordered Facilitated Mediation. Mediation can take a number of forms, however, in its essence, it involves making the parties and their attorneys meet with an independent expert to explore avenues of compromise. Where the parties are willing to negotiate, this can be a very effective process, since neither side of the dispute is tainted by “seeking” an opportunity to settle. On the other hand, it can also be an obstacle to settlement if it is mismanaged by incompetent persons. All discussions occurring at facilitation or mediation are confidential and cannot be formally addressed in later litigation, however, if negative or unhelpful factors or admissions surface during this process, they will not be “forgotten” by the adversary, and some approach will be identified downstream to make use of the information learned. The attorneys must guard against these court-mandated procedures being utilized as a tool for discovery or investigation and for that reason most attorneys exercise careful control over their clients’ participation. .

Case Evaluation

If a case is not resolved through informal talks or mediation, the Court sends it to Case Evaluation prior to trial. Some very efficient courts actually assign Case Evaluation and Trial dates in the initial Scheduling Order. There is some name confusion in Michigan Circuit Courts because the process now called “case evaluation” was for twenty years described as “mediation”. Pursuant to the current Michigan rules, case evaluation involves presenting the ripe-for-trial lawsuit to three experienced attorneys for their recommended settlement figure. In an attempt to assure a fair and balanced panel, the Courts try to assign one insurance attorney, one victim’s attorney [sometimes called a trial lawyer] and one neutral attorney to the three-member panel. Despite the court’s best efforts, these panels can present with a bias in particular cases, either because of the strength of the evaluators, or because of one or more of the evaluators’ relationship(s) with a party, an attorney or an issue. Obviously, a serious conflict of interest would disqualify a proposed evaluator, however, human nature being what it is, we find that many evaluators are influenced by factors that do not rise to the level of a challenge-able conflict of interest.

The parties present their claims to the Evaluators by a written submission which can be supplemented with a very brief oral presentation. The evaluators are not allowed to hear testimony. Parties may attend the evaluation, however, most choose not to. The parties’ briefs are “due” two weeks before the evaluation date, however, it has been our experience that insurance attorneys rarely file their briefs in a timely manner, and usually file only a day or two prior to the hearing. As a result, we often delay our filing and incur the court-ordered late fee, so as not to allow the Defendants a ten-day time period to evaluate our brief and then file a last-minute response that attempts to attack our claims {and which we have been unable to prepare for in advance).

After due consideration, the three evaluators will make a settlement recommendation, and they usually try very hard to reach unanimity in their decision. The parties then have 28 days to privately inform the court that they accept or reject the evaluation If either side rejects the evaluation, the case goes forward. If both sides accept, the attorneys must prepare formal documents resolving the claim and either dismissing the claim or entering judgment. Acceptance by the Defendant is not a promise to pay the mediated amount; it is merely acceptance of the entry of a judgment. On the other hand, the “reform” courts have suggested that acceptance by the victim of a case evaluation award may preclude the injured person from collecting other, undisputed benefits, such as no fault PIP benefits. This process can also be a minefield when there are multiple defendants and separate awards to be accepted or rejected, since acceptance against one party may result in the dismissal of another.

If a party rejects the proposed evaluation, that party exposes her or himself to the payment of sanctions if the case ultimately results in a verdict or judgment that is less favorable than a unanimous case evaluation. By court rule, if the rejecting party does not improve his or her position by ten percent, she or he must pay the other party’s actual fees and costs from the acceptance deadline (28 days after Case Evaluation) through the culmination of litigation. This can amount to tens of thousands of dollars, either reducing the victim’s award, or in the form of a punitive money judgment against a “losing” victim. Case evaluation awards and potential sanctions must be seriously considered by the injured victim, his or her spouse, and the attorney.

Mock Trial

As an aid in evaluating our settlement posture in significant cases, we will sometimes present our client’s claim to a private jury. A confidential process is utilized to assess the opinions and attitudes of persons situated similarly to the actual jurors. While this process is not binding on the adversary (who does not participate and is rarely informed of the mock trial or its outcomes), obviously, it does help the victim and her attorney see their case from the perspective of the ultimate fact-finders. This may help in assessing settlement positions and in deciding trial tactics. Frequently, after a mock trial, we have recognized the need to shift our emphasis or to bolster a particular aspect of the victim’s presentation.

Trial

If the parties cannot achieve a reasonable compromise, the matter will be presented to a jury for trial. The possibility of trial should not intimidate any injury victim for several reasons. First, literally 95 percent of all injury claims do, in fact, settle. The Michigan courts, in particular, have institutionalized a number of procedures to encourage or force compromise and these procedures have teeth. Second, while no one can predict what a jury will actually decide, a party who reaches trial, almost by definition, has never been provided any reasonable alternative. With the help of an experienced attorney, the victim should be able to achieve justice in his “day in court”. That does not mean that any person can accurately predict the actual outcome, however.

Michigan civil juries are composed of six persons plus a number of alternates determined by the likely length of trial. Sometimes the judge and the lawyers agree to allow the alternates to participate in deliberations. Barring an agreement by the judge and attorneys to the contrary, a verdict is achieved when five of the six jurors agree: unanimous verdicts are not required in Michigan civil actions. We have observed,. and most knowledgeable people agree, that allowing verdicts based on the agreement of only five jurors results in less predictable and more variable outcomes. If a larger number of jurors were required to deliberate until they achieved a unanimous verdict, the process of achieving that broad agreement would be likely to result in greater consistency.

Trials begin with Jury Selection or voir dire. During this process, jurors with an apparent bias are discharged by the Court, and the parties enjoy the opportunity to excuse a limited number of persons whom they perceive would be hostile to their claim. In order to make their decisions about jurors, the attorneys are given the right to ask questions of the jurors and usually the names of the potential jurors and their juror questionnaires are made available to the parties in advance. Judges participate in this process also, and some judges will interrogate potential jurors extensively. Different judges allow the attorneys more or less latitude to question potential jurors, however, most experienced judges give the attorneys ample opportunity to expose bias, provided the attorneys do not abuse the process.

After Jury Selection, the attorneys each present an Opening Statement, explaining to the jury the evidence they expect to be presented. At this stage, the attorneys are not allowed to “argue” the merits of their case, but only to anticipate the content of the evidence: that is a rule frequently breached and a line of distinction that can be difficult for the lawyers to draw and for the court to enforce. At this and all stages of the trial, the Plaintiff [or victim] attorney starts the process because the Plaintiff has the burden of proof–or the risk of non-persuasion. At the end of the trial the jury is informed that if the evidence is “even” and it cannot weigh one side’s evidence above the other, the Plaintiff must lose.

At the conclusion of the opening statements, the Plaintiff presents his or her witnesses and evidence [again, because the plaintiff bears the burden of proof]. The Defendant’s attorney has the right to cross-examine these witnesses. If the plaintiff’s case is adequate to support a verdict, the trial continues and the Defendant is allowed to call witnesses whom the Plaintiff’s attorney may cross-examine. The court has the discretion to allow either party to call a limited number of witnesses to respond to new claims raised in the adversary’s previous presentation. These witnesses are called rebuttal witnesses.

When all of the evidence has been submitted, the attorneys meet with the Judge to confirm the Jury Instructions to be given to the jury. Normally, the jury instructions come primarily from the Supreme Court-approved list of Standard Jury Instructions and few are created specifically for the case-at-hand. After the attorneys are made aware of the final content of the instructions, they are allowed to give Closing Arguments where they explain to the jury what they believe the evidence has shown. During this process, the lawyers are not allowed to invoke passion or prejudice or to reference matters such as insurance coverage, which are either inadmissible or not part of the evidence introduced. Again, the Plaintiff makes the first Argument and Plaintiff’s attorney also has the right to a brief Rebuttal of matters addressed by the Defense attorney in closing. The Jury is then read its instructions and retires to deliberate. It reaches a Verdict which will ultimately be reduced to an enforceable Judgment.

After the verdict is announced, the parties haggle over those adjustments which must be made before Judgment is entered. Among the adjustments to be considered in Michigan are:

1. “Caps” or statutory limitations on recovery. In most cases, the legislature has precluded the Plaintiff’s attorney from informing the jury of the existence of a cap (which in most cases limit non-economic damages such as “pain and suffering” or “loss of society and companionship”.

2. Collateral sources, or payments already received by the victim from another source. This may include No fault PIP benefits, workers compensation, Medicare or Medicaid, third-party insurers or ERISA plans. If the third-party source has a lien on the judgment, the amount of the lien will be determined at this time and the Judgment will include the amount of that payment due to a third-party. If the third-party does not exercise a lien, the Judgment will be reduced by the amount of the collateral source payments, adjusted by premiums expended by the victim. In other words, the wrongdoer or “tortfeaser” will gain the benefit of insurance privately purchased by the victim.

3. Reduction to present value: Jurors make a single award that must last the victim for his or her lifetime; this is the victim’s “one day in court” and he or she cannot return later to allege a change or deterioration in circumstances. After the jury has determined what damages the Plaintiff is likely to suffer throughout the Plaintiff’s lifetime, the Court must normally reduce those future awards to their present value. In other words, $1,000.00 of pain compensation paid ten years from today could be funded with less than $500.00 paid today and the court uses complex accounting principles and statutory direction to compute the present value of the verdict.

4, The plaintiff may be forced to purchase an annuity or structured settlement if the judgment exceeds $250,000.00. Victims above age 65 are exempt from this requirement, and if managed properly, the purchase of a structured settlement or annuity may have significant tax and management advantages for the Plaintiff.

5. The verdict will be adjusted to include interest, taxed costs [which are only a sliver of actual costs] and any court-imposed sanctions will be added or deducted. Adjustments may also be in order if there were previous settlements with other parties or if there was a confidential high-low agreement.

Email: info@tovlaw.com