Published By: Maxwell S. Kennerly, Esquire

Philadelphia Lawyer

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It’s a common occurrence: an employee is out on the road as a driver, passenger, or pedestrian as part of their job when they are hit by a car. It’s particularly common for municipal employees like police officers and for delivery drivers and highway workers because they are, of course, out on the road and in danger a lot more than the rest of us.

The next legal step is routine: the injured employee files a claim for workers’ compensation, which will cover some medical expenses and some fraction of their salary, and then files suit against the driver that hit them. The problem, though, is that the Pennsylvania minimum insurance coverage is a mere $15,000 per injured person, so workers’ compensation plus the tortfeasors’ insurance policy limits usually isn’t much. It’s often less than the simple out-of-pocket medical expenses and lost wages, not to mention any sort of pain and suffering or future health care.

That’s where things get complicated. Although Pennsylvania doesn’t require uninsured motorist or underinsured motorist coverage, every employer-sponsored plan I’ve seen includes it. In theory, then, the employee can claim their UM/UIM coverage as well once they’ve exhausted the tortfeasor policy.

And that’s where everyone hits a snag: because the insurance company providing the workers’ compensation is typically the exact same company providing the UM/UIM coverage, the insurers often put into a policy an exclusion that does not apply UM or UIM coverage to any claim also eligible for workers’ compensation benefits. Is that legal?

Let’s pause for an aside: Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL), which replaced Pennsylvania’s prior No-Fault Act, has consumed our courts, particularly our Supreme Court, for a generation now. The Pennsylvania Supreme Court has decided dozens of MVFRL cases over the past twenty years. In my humble estimation, it is the single most-interpreted law in Pennsylvania, which makes sense given how we have about 350 car crashes a day, four of which, on average, result in a fatality.

Back on track, last week the Pennsylvania Supreme Court decided Heller v. Pennsylvania League of Cities, firmly answer the “is that legal?” question with “no”:

We granted review to determine whether it is a violation of public policy to exclude from underinsured motorist (“UIM”) coverage a claim by an individual eligible for workers’ compensation benefits. For the following reasons, we conclude that a workers’ compensation exclusion in an employer-sponsored insurance policy violates public policy and is, therefore, unenforceable.

The court went into a number of reasons why the exclusion was void, but the biggest reason was a simple practical review of the reality of employer-sponsored insurance coverage. If the insurance applied only when an individual was injured in the scope of their employment, yet wasn’t available when workers’ compensation applied, then when, exactly, could employees use the UIM coverage paid for by their employers?
Continue Reading PA Workers Injured In Car Accidents Can Now Recover UIM Benefits

It’s no secret that pharmaceutical companies are among the more litigious businesses in America. Up until 2003, when Congress stepped in, the big drug makers had a good thing going: whenever the patent was about to expire on one of their blockbuster drugs, they would file a new patent for trivial modifications to the medicine, and thereafter would sue generic drug manufacturers claiming that the generic version of the old drug somehow infringed on the new patent.

Here’s the kicker: the big drug makers knew these patent infringement claims were frivolous, so they would enter into a “settlement” in which the big drug company — which nominally brought the case to recover monetary damages — would pay the generic company not to manufacture the generic drug anymore. Crazy, huh?

So crazy and so hopelessly anticompetitive that in 2003 Congress amended the Hatch-Waxman Act to force the major drug companies to report all of these “exclusive-payment” patent settlements to the Federal Trade Commission. The FTC still keeps an eye on them and keeps filing amicus briefs to make sure courts realize how damaging that practice is. As I’ve discussed before, some unions and health plans, stymied by the Illinois Brick decision precluding antitrust claims by indirect purchasers, have tried recovering the inflated health care expenses by filing unfair trade practices lawsuits.

The pharmaceutical companies are also not strangers to deceiving the federal government; over the past decade they’ve paid several billion dollars in qui tam cases, the result of brave whistleblowers exposing the fraud at great personal cost.

So pardon me if I don’t think that pharmaceutical companies deserve a special exception from the basic legal responsibilities we all have to one another just because they claim litigation is expensive or because they claim that always tell the FDA the truth. That sort of special treatment is what they’re trying to get with “tort reform” in the Pennsylvania legislature, and what they’re claiming they’re owed in the courts:

In questioning during oral argument Tuesday in Philadelphia, a state Supreme Court justice characterized the drugmaker Wyeth as asserting that there is enough protection for persons harmed by prescription drugs in federal regulation of the release of drugs onto the market, and limiting plaintiffs to lawsuits for drugmakers’ alleged failures to adequately warn of risks.

Plaintiffs are arguing in a case that could change the landscape of pharmaceutical products liability law in Pennsylvania that drugmakers can be sued for the negligent design defect of their drugs.

Questioning the plaintiffs’ lawyer, Justice Max Baer also said that Wyeth asserts that Pennsylvania would chill the manufacturing of prescription drugs if pharmaceutical companies can be sued for the negligent design defect of their drugs. He asked the lawyer to address why that may not be so.

The case, Lance v. Wyeth, arises from a primary pulmonary hypertension death allegedly caused by Redux, a hopelessly dangerous diet drug that causes a host of medical conditions which was yanked from the market for causing valvular heart disease. No one credibly disputes that the drug should never have been marketed or sold in the first place: it combined two drugs known to cause cardiovascular problems. Had Wyeth (now owned by Pfizer) properly tested it, they probably would never have sold it. Had they properly warned doctors and patients of the real risks, no doctor would have prescribed it and no patient would have taken it.

If dangerous drugs were automobiles with defective air bags (like Gaudio v. Ford Motor Co.), or rollover-prone all-terrain vehicles (like Smith v. Yamaha Motor Corp.) there wouldn’t be a question of the applicable law. Everybody — you, me, lemonade stands, multinational corporations, and everyone in between — has the same general legal duty to exercise reasonable care not to cause injuries to others. If we don’t exercise that reasonable care, we’re negligent, and we’re responsible to pay for the damage we cause.

That’s how the tort of negligence works. It’s quite simple.

In addition to their responsibility to pay for all negligently caused damages, everyone who sells products — again, from the lemonade stand to the multinational corporation — has “strict liability” for all damages caused by defective products. Consider that defective air bags case above:

[W]e will briefly review the history of products liability law and the crashworthiness doctrine in this Commonwealth. Our Supreme Court first adopted section 402A of the Restatement (Second) of Torts in Webb v. Zern, 422 Pa. 424, 220 A.2d 853 (1966). To state a section 402A products liability claim in Pennsylvania, the plaintiff must prove that the defendant sold a product “in a defective condition,” that the defect existed when the product left the defendant’s hands, and that the defect caused the plaintiff’s injuries. See, e.g., Hadar v. AVCO Corp., 886 A.2d 225, 228 (Pa.Super.2005). A product is “in a defective condition” when it lacks “any element necessary to make it safe for its intended use or possessing any element that renders it unsafe for the intended use.” Azzarello v. Black Bros. Co., Inc., 480 Pa. 547, 559, 391 A.2d 1020, 1027 (1978). Because the key inquiry in all products liability cases is whether or not there is a defect, it is the product, and not the defendant’s conduct, that is on trial. See, e.g., Hutchinson v. Penske Truck Leasing Co., 876 A.2d 978, 983 (Pa.Super.2005), affirmed, 592 Pa. 38, 922 A.2d 890 (2007).

Gaudio v. Ford Motor Co., 976 A. 2d 524 (Pa. Super. Ct. 2009)(remanding for trial a crashworthiness claim).

But Section 402A of the Second Restatement of Torts has a pesky “comment k” for defective drug cases which says:

There are some products which, in the present state of human knowledge, are quite incapable of being made safe for their intended and ordinary use. These are especially common in the field of drugs. . . .  Such a product, properly prepared, and accompanied by proper directions and warning, is not defective, nor is it unreasonably dangerous.  The same is true of many other drugs, vaccines, and the like, many of which for this very reason cannot legally be sold except to physicians, or under the prescription of a physician. . . .  The seller of such products, again with the qualification that they are properly prepared and marketed, and proper warning is given, where the situation calls for it, is not to be held to strict liability for unfortunate consequences attending their use, merely because he has undertaken to supply the public with an apparently useful and desirable product, attended with a known but apparently reasonable risk.

Defense lawyers contend that comment k promises pharmaceutical companies total and complete immunity from all potential theories of liability except for a narrow class of “failure to warn” claims. Wyeth argued that the sole question is “whether the risk information conveyed to prescribing physicians was sufficient to permit them to conduct an individualized risk-benefit analysis.”

Nonsense.

The plaintiffs in Lance were smart to hire Howard Bashman, friend of the blog, for their appeal, and his excellent opening brief and reply are both online. So, too, is the joint American Association for Justice and Pennsylvania Association for Justice amicus brief.

The briefs quite adequately cover Pennsylvania law on the subject, all the Incollingo v. Ewing, 444 Pa. 263, 282 A.2d 206 (1971)(a Jim Beasley case), Baldino v. Castagna, 505 Pa. 239, 478 A.2d 807 (1984), and Hahn v. Richter, 543 Pa. 558, 673 A.2d 888 (1996) a drug liability law nerd could ask for.

Personally, I think two arguments should decide Lance v. Wyeth.
Continue Reading Pennsylvania’s Defective Drug Design Laws Hang In The Balance

Updated June 11, 2019

During the Iran-Contra hearings, Brendan Sullivan, a senior partner at Williams & Connolly (I wrote more about them here) who represented Oliver North, famously responded to Senator Daniel Inouye’s criticism of Sullivan’s repeated objections during the Congressional hearings with “Well, sir, I’m not a potted plant. I’m here as the…

[UPDATE: Complicating matters, on June 29th, 2011, a Third Circuit panel ruled in the Tristani v. Richman case (PDF) that Medicare / Medicaid has the right to assert liens, and that the default medical expenses apportionment scheme under 55 PA. CODE § 259.2 is appropriate. Expect more litigation and appeals to follow, likely…

One of the great things about being a lawyer is that, like a sports fan watching a play unfold, you can foresee lawsuits before they’re even filed.

Nutella is delicious, creamy, and chocolaty, but one thing it is not: healthy. That didn’t stop Ferrero, the makers of Nutella, from starting up a healthy-for-kids advertising campaign last year in Europe, as profiled by the nutrition researchers at Obesity Panacea:

Although this may surprise some of our readers, I really like junk food. I eat far too much pizza, I love chicken wings, and Nutella, the original chocolate hazelnut spread, is one of my favourite breakfast condiments (it’s tasty on a bagel, but its unbeatable inside a fresh crepe with whipped cream and bananas). The interesting thing about Nutella is that its commercials seem to suggest that it is some sort of health food.

…

Now that commercial implies several things. First off, it implies that Nutella is a great source of energy, especially for kids. Well it should be a great source of energy – the first ingredient is sugar. In fact, in a 19 gram serving of Nutella, 11 grams are sugar. Of course that energy won’t last very long before an insulin spike kicks in and makes the kids lethargic, so they are likely to need something more substantial if they plan to "discover the world" for more than an hour or so.

The commercial also implies that Nutella is mainly hazelnuts and milk. However, hazelnuts only make up 13% of Nutella, and skimmed milk makes up less than 7%. …

Many Nutella ads, including those on their American website which can be found here, suggest that Nutella is not only a great source of energy, but is also a nutritious way to start your day. What type of nutrients? After sugar, the second most common ingredient in Nutella is palm oil. The same palm oil which is high in palmitic acid, a fatty acid which the World Health Organization claims is convincingly linked to increased risk of cardiovascular disease (see the report here, and skip to page 98 for the info on palmitic acid). In fact, roughly half the calories in Nutella are from sugar, and the other half are from fat. Only about 4% of the calories are from protein. The Nutella website also suggests that Nutella is healthy because it "is made with hazelnuts which are a great source of vitamins." Note that they don’t say that Nutella is a great source of vitamins, because it’s not – a single serving has 0% of the recommended daily intake of Vitamins A and C, and just 10% of the recommended intake of Vitamin E.

 

It didn’t take long for the campaign to come to the United States. Sure enough, watching The Weather Channel one morning (admit it, that’s how you start the day, too), I saw one of these Nutella commercials, started laughing, and told my wife: "they’re going to get sued." Those sort of ridiculous claims are bread and butter — or should I say hazelnuts and milk sugar and palm oil? — to consumer class action attorneys.

Sure enough, the consumer class action was just filed:

The maker of Nutella is the target of a consumer class action filed on Tuesday alleging the company falsely markets its hazelnut spread as healthy for children even though the product is loaded with saturated fat and processed sugar.

Filed in the U.S. District Court for the Southern District of California, the lawsuit alleges that Ferrero USA Inc. violates California consumer protection laws by representing that the spread is a healthy, nutritious and balanced breakfast for children. The name plaintiff, Athena Hohenberg, is the mother of a four-year-old child.

The lawsuit claims violations of California’s laws pertaining to unfair competition and false advertising. It also alleges breach of warranty and seeks injunctive relief and compensatory and punitive damages. The purported class comprises all consumers who purchased Nutella beginning in January 2000.

(The WSJ Law Blog also picks up on it here.) 

The key word is California. A quick review of some consumer fraud class action cases over the past few years show them being dismissed, time and time again, for one reason: "justifiable reliance."

Like Hunt v. US Tobacco Co., 538 F.3d 217 (3d Cir. 2008):

We believe the Pennsylvania Supreme Court has effectively answered the question presented in this case. That Court has categorically and repeatedly stated that, due to the causation requirement in the Consumer Protection Law’s standing provision, 73 Pa. Cons.Stat. § 201-9.2(a) (permitting suit by private plaintiffs who suffer loss "as a result of" the defendant’s deception), a private plaintiff pursuing a claim under the statute must prove justifiable reliance. See, e.g., Schwartz v. Rockey, 593 Pa. 536, 932 A.2d 885, 897 n. 16 (2007) (stating that "the justifiable reliance criterion derives from the causation requirement which is express on the face of section 9.2[, the statute’s private-plaintiff standing provision]"); Toy, 928 A.2d at 202 ("[A] plaintiff alleging violations of the Consumer Protection Law must prove justifiable reliance."); Yocca v. Pittsburgh Steelers Sports, Inc., 578 Pa. 479, 854 A.2d 425, 438 (2004) ("To bring a private cause of action under the [Consumer Protection Law], a plaintiff must show that he justifiably relied on the defendant’s wrongful conduct or representation and that he suffered harm as a result of that reliance."). It has not recognized any exceptions, and has applied this rule in a variety of situations. These include, in Yocca, a claim— like Hunt’s claim here—under the post-1996 catch-all provision. See Plaintiffs[‘] Third Amended Class Action Complaint in Civil Action at 18-19, Yocca, No. GD XX-XXXXXX (Pa.Ct.C.P.2001) (accusing defendant of, inter alia, "[e]ngaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding"). The Pennsylvania Superior Court has applied the Supreme 222*222 Court’s standing rule to the post-1996 catch-all provision, see Debbs v. Chrysler Corp., 810 A.2d 137, 156-58 (Pa.Super.Ct.2002); Sexton v. PNC Bank, 792 A.2d 602, 607-08 (Pa.Super.Ct.2002), and our Court has interpreted the rule to apply to all Consumer Protection Law subsections, see Santana Prods., Inc. v. Bobrick Washroom Equipment, Inc., 401 F.3d 123, 136 (3d Cir. 2005). Given this significant authority on statutory standing, we think the Pennsylvania Supreme Court would require justifiable reliance where a private plaintiff alleges deceptive conduct under the post-1996 catch-all provision.

That’s not a problem by itself, except that many courts have held that you simply can’t have a class action where the claims include justifiable reliance as an element. I think those rulings are crazy — of course you can show, by a preponderance of evidence, that members of a class relied on false advertising, it’s just a question of degree and thus a question for the jury — but it’s the law in a lot of places.

But not California, which has a lot of exceptions to the rule, including an exception that presumes consumers rely, to some extent, on written advertising. Hence the Nutella suit being brought in California first; California’s one of the best places to file it.

Which really makes you wonder about the quality of other state’s laws. Those state’s technically make false advertising illegal, but it’s a hollow remedy, since it’s never enforced. Without the ability to create a class action, no consumer class action lawyer would spend thousands of hours and dollars fighting a case worth no more than a single jar of Nutella.Continue Reading Inevitable Consumer Class Action Lawsuit Filed Against Nutella’s “Healthy” False Advertising

The Limited Scope Of Inventors’ and Creators’ Rights Under Copyright, Trademark, and Patent Infringement Law

The business lawsuits actually filed, and defamation lawsuit not filed, surrounding Mark Zuckerberg and Facebook have inspired some of my more popular posts. But there is one litigious part of the Facebook story that I did not cover,…

Insurance-Funded Congressional Representatives Again Try To Deny Justice For Patients Injured By Medical Malpractice

Some bad ideas just will not go away. A few days ago The Pop Tort noted that the new, anti-patient Congress was holding hearings on medical malpractice liability. If they had listened to the excellent testimony of Joanne Doroshow, Executive Director of the Center for Justice & Democracy, they would have realized that injured patients need more, not less, legal protection.

But the “hearings” were a sham anyway, and a few days later the insurance-backed members of Congress introduced a new plan to strip away the rights of medical malpractice victims.

Phil Gingrey (R-GA11) ran unopposed last election, but that did not stop health services companies, HMOs, hospitals, pharmaceutical companies, medical device companies, and insurance companies from contributing nearly $500,000 to his “campaign.”

It seems like he is ready to pay them back. As his press release trumpets:

Senior Health Subcommittee Member Phil Gingrey, M.D. (R-Ga.), House Judiciary Committee Chairman Lamar Smith (R-Texas), and Congressman David Scott (D-Ga.) today introduced The HEALTH Act (H.R. 5), a bill that includes meaningful medical liability reforms to lower the cost of health care while strengthening the doctor-patient relationship.

The press release has little by way of facts, except for this whopper: “According to the Harvard School of Public Health, 40% of malpractice suits filed in the U.S. are ‘without merit.’”

That’s funny, since I actually read the Harvard study on medical malpractice, and it said:

The researchers analyzed past malpractice claims to judge the volume of meritless lawsuits and determine their outcomes. Their findings suggest that portraits of a malpractice system riddled with frivolous lawsuits are overblown. Although nearly one third of claims lacked clear-cut evidence of medical error, most of these suits did not receive compensation. In fact, the number of meritorious claims that did not get paid was actually larger than the group of meritless claims that were paid. …

“Some critics have suggested that the malpractice system is inundated with groundless lawsuits, and that whether a plaintiff recovers money is like a random ‘lottery,’ virtually unrelated to whether the claim has merit,” said lead author David Studdert, associate professor of law and public health at HSPH. “These findings cast doubt on that view by showing that most malpractice claims involve medical error and serious injury, and that claims with merit are far more likely to be paid than claims without merit.”

…

Most claims (72%) that did not involve error did not receive compensation. When they did, the payments were lower, on average, than payments for claims that did involve error ($313,205 vs. $521,560). Among claims that involved error, 73% received compensation. “Overall, the malpractice system appears to be getting it right about three quarters of the time,” said Studdert. “That’s far from a perfect record, but it’s not bad, especially considering that questions of error and negligence can be complex.” The 27% of cases with outcomes that didn’t match their merit included claims that went unpaid even though the injury was caused by an error (16%); claims that were paid but did not involve error (10%); and claims that were paid but did not appear to involve a treatment-related injury (0.4%).

The title of the study’s own press release was “Study Casts Doubt on Claims That the Medical Malpractice System Is Plagued By Frivolous Lawsuits.” Who are you going to believe, a paid-for Congressman or your lying eyes?

The study did not find that 40% of medical malpractice lawsuits were without merit. The study found that one-quarter of medical malpractice victims did not recover compensation, while, at most, only one-tenth of successful claims involved injures not caused by medical malpractice — and the plaintiffs in those cases received far less than the plaintiffs who had injures which even a panel of doctors thought were caused by medical malpractice.

The system works imperfectly, but so does every system — including our medical system, which costs the economy a minimum of $20 billion just in treating medical (iatrogenic) injuries. When you recognize that our entire medical malpractice liability system costs under $5 billion a year, you realize that, all in all, our medical malpractice liability system is downright cheap, and is compensating victims of medical negligence for only a fraction of their damages.

Even if we put aside the fact that, for every dollar spent on compensating the victims of medical negligence, more than $5 dollars in damage was caused by medical negligence, it bears repeating that the overall costs of compensating injured patients is so small that it the medical malpractice liability system does not restrict access to health care. Similarly, malpractice lawsuits have not been shown to change of physician behavior — so-called “defense medicine” — even in high-risk, high-liability cases like obstetricians’ decisions to perform c-sections when the baby shows signs of fetal distress.

I could go on — like how Gingrey’s proposal of “non-economic caps” would slam the courthouse doors shut on all but a few injured patients, and even then only those patients who were earning high incomes when they were injured or died — but I think the burden of proof here should lie with the people, like Gingrey, saying there’s a “medical malpractice crisis.” So far, he can’t muster anything more than a lie about the Harvard study.Continue Reading New Medical Malpractice “Tort Reform” Just Another Pack of Lies

Last week a Grand Jury in Philadelphia County returned its report on Kermit Gosnell, M.D., recommending he, and several of his employees, be charged criminally with multiple counts of murder (including murdering an adult patient through excessive anesthesia and obstructing emergency treatment), infanticide, violations of the Controlled Substances Act, obstruction of justice, perjury, illegal…