Tag: Court Watch

Supreme Court Deals a Blow to Pharmaceutical Companies; Enriches Private Plaintiff Attorneys Hired by State

Posted on by Hamilton

The Wisconsin Supreme Court on Friday, June 22 issued a decision that will negatively affect pharmaceutical companies doing business in Wisconsin. In the process, the Court enriched outside plaintiff attorneys hired by the State by awarding large attorney fees.

The Court’s decision, State of Wisconsin v. Abbot Laboratories, et al., 2012 WI 62, is the latest in a number of cases pending in state and federal courts involving allegations that pharmaceutical companies reported inflated drug prices, causing states to overpay for Medicaid recipients’ prescription drugs.

In a 4-0 decision authored by Justice Michael Gableman and joined by Chief Justice Shirley Abrahamson and Justices Patience Roggensack and Annette Ziegler, the Court upheld the lower court’s verdict finding the company in this specific case, Pharmacia Corporation, liable for violating Wisconsin’s Deceptive Trade Practices Act (DTPA) and the Medicaid fraud statute. Justices Patrick Crooks, David Prosser, and Ann Walsh Bradley did not participate.

The decision is notable because in 2009 the Alabama Supreme Court overwhelmingly (8-1) rejected a similar lawsuit brought by Alabama Attorney General Troy King and the privately retained attorneys hired by the State.[i] Continue reading “Supreme Court Deals a Blow to Pharmaceutical Companies; Enriches Private Plaintiff Attorneys Hired by State” →

Wisconsin Supreme Court Issues Bad Lemon Law Decision – Allows “Lemon Law King” to Obtain Huge Damages by Thwarting Refund Payment from Auto Manufacturer

Posted on by Hamilton

In a troubling 6-1 decision, the Wisconsin Supreme Court awarded Attorney Vince Megna – the self-proclaimed “Lemon Law King” – a victory that allowed him and his client to walk away with over $700,000 in damages. This despite the fact that Megna and the owner acted in bad faith, therefore making it impossible for the manufacturer to provide a refund payment within the statutory 30-day deadline. The Court’s decision will make it easier for plaintiff attorneys to game the system and obtain large damage awards against auto manufacturers. The case is Marquez v. Mercedes-Benz USA, LLC, 2012 WI 57.

Facts of the Case and Background of Wisconsin Lemon Law

The facts involving the Supreme Court’s decision are important to understand how unfair and damaging the Court’s decision actually is to manufacturers. It is also important to provide a discussion of how Wisconsin’s Lemon Law operates.

The plaintiff, Marco Marquez, purchased a Mercedes-Benz E-series automobile that had mechanical problems triggering Wisconsin’s Lemon Law. Wisconsin law provides that “if a new motor vehicle does not conform to an applicable express warranty,” and the nonconformity is not cured after a “reasonable attempt to repair,” then the consumer may return the vehicle and elect to receive either: 1) a new comparable vehicle, or 2) a refund.[1]

If the auto manufacturer fails to provide a refund or replace the vehicle within 30 days, the law provides harsh penalties. For example, the owner is awarded “twice the amount of any pecuniary loss, together with costs, disbursements and reasonable attorney fees, and any equitable relief the court determines appropriate.”[2] “Pecuniary loss” includes the cost of the vehicle, which means that the plaintiff is awarded twice the cost of the vehicle. The plaintiff is also entitled to pre- and post-judgment interest, which can be large in cases like this that take years to wind through the court system.

After Mercedes-Benz was alerted that the car was a lemon, it began working with the owner and his attorney to provide the owner the proper remedy. Originally the owner sought a new vehicle, but instead of seeking a similar E-series he requested an S-series. Mercedes-Benz notified the owner that the 2007 S-series he requested had not yet been released to dealers, but told him that the company would work with him to get such a vehicle as soon as possible.

With just five days left remaining under the 30-day statutory deadline, the owner notified Mercedes-Benz that he changed his mind and instead of a new vehicle he wanted a refund. This was on the Wednesday (November 23, 2005) before Thanksgiving.

The Mercedes-Benz representative, Wade Messing, was not in the office either Thursday or Friday because of the Holiday, and instead traveled to Wisconsin on Monday, November 28 to issue the refund check to both the owner and his bank, which had issued a loan for the vehicle.

On November 28, Messing contacted the owner’s bank to obtain the auto loan payment information so he could issue the check, but the bank refused to provide the information citing privacy issues. The bank told Messing that if the owner called the bank and authorized the release of the information, it would provide the information to Messing.

Messing then contacted the owner and asked that he call the bank to provide the release. The owner told him he would do so and that he would call Messing back after he contacted the bank. However, the owner neither called the bank nor returned the call to Messing. The owner further withheld from Messing that he had given John Gray, the owner’s loan officer at the bank, permission to release the payout figure to Messing.

After not hearing from the owner, Messing called Attorney Megna, who conveniently was not in the office and could not be reached. Moreover, Megna’s office did not inform Messing that it had the payout number from the bank.

Because Messing did not have the requisite information to issue a refund check to both the owner and the bank, Mercedes-Benz did not issue a refund check to the owner within Wisconsin’s statutory 30-day statutory deadline. As a result, the owner’s attorney filed a lawsuit the next day alleging Mercedes-Benz violated Wisconsin’s Lemon Law.

The complaint was actually dated November 28, 2005, meaning that Attorney Megna was getting ready to seek the damages the very same day that he and his client were withholding information and failing to respond to Messing’s phone calls.

Lower Court Decisions

The case started in Waukesha County Circuit Court, where a judge ruled in favor of the owner. The case was appealed to the court of appeals, which reversed the lower court. The court of appeals held that a consumer who intentionally thwarts a manufacturer’s efforts to provide a refund within the 30-day statutory period cannot recover the Lemon Law’s stiff remedies. The court remanded the case back to the circuit court for the jury to determine whether the owner intentionally thwarted Mercedes-Benz’s attempt to provide a statutory refund within the 30-day period by failing to provide the requisite bank information.

On remand, the jury found in favor of Mercedes-Benz. The jury determined that the owner and his attorney, Megna, acted in bad faith by failing to call the bank so that Mercedes-Benz could access the bank account information.

The circuit court judge, however, overturned the jury’s verdict by issuing a directed verdict in favor of the owner. The judge determined there was no credible evidence that the owner (or his attorney) intentionally thwarted Mercedes-Benz’s efforts to provide a refund.

The case went straight to the Supreme Court, which affirmed the judge’s directed verdict in favor of the owner.

Wisconsin Supreme Court Decision

Authored by Chief Justice Shirley Abrahamson, and joined by Justices Patrick Crooks, Ann Walsh Bradley, David Prosser, Annette Zielger, and Michael Gableman, the majority upheld the circuit court judge’s decision and swept aside the jury’s verdict.

Despite the overwhelming evidence pointing to the owner and his attorney acting in bad faith, the majority found that the “jury’s verdict impermissibly rest[ed] on ‘conjecture and speculation.’”

According to the majority decision, the “jury’s finding that on November 28 the consumer intentionally prevented Mercedes-Benz from complying with the Lemon Law was impermissibly speculative.” The majority further stated that the record contained no evidence of any such intentional conduct by the owner or his lawyer to bar the manufacturer from the Lemon Law’s remedies.

Justice Roggensack’s Dissenting Opinion

Justice Patience Roggensack wrote a separate dissenting opinion arguing that the Court should have upheld the jury’s verdict in favor of Mercedes-Benz. According to Justice Roggensack, there was “credible evidence to sustain the jury’s finding that [the owner] did not act in good faith in his dealings with Mercedes-Benz.”

Justice Roggensack cited to all the evidence in the record that proved that the owner was not acting in good faith when dealing with Mercedes-Benz’s representative, who attempted to provide the owner the refund within the statutory deadline. Justice Roggensack noted that the owner told Messing that he would call his bank to release the loan payment information, however, the owner neither called the bank nor called Messing back. Furthermore, the owner failed to tell Messing that the owner had given his loan officer, John Gray, permission to release the payout figure of his auto loan.

Moreover, Attorney Megna conveniently couldn’t be reached the very last day that the refund payment was due and never called Messing back. Megna’s paralegal also failed to tell the Mercedes-Benz representative that Megna’s law office had the payout number from the bank.

Despite all of the credible evidence demonstrating that the owner (and his attorney) did not act in good faith, the majority still upheld the lower court’s directed verdict and swept aside the jury’s verdict in favor of Mercedes-Benz.

Practical Effect of Decision for Automobile Manufacturers in Wisconsin

Justice Roggensack explained that he majority’s decision has effectively eliminated manufacturers’ affirmative defense when an owner has acted in bad faith by intentionally preventing the manufacturer from refunding the owner.

Under the majority’s reasoning, no affirmative defense of thwarting a refund will be allowed unless the manufacturer can prove that the owner had knowledge of the legal effect of his conduct on the statutory obligations that the Lemon Law places on the manufacturer.

For example, in its decision, the majority held that the manufacturer had to prove that the owner knew that the statutory remedies would be triggered if the manufacturer did not pay him the refund on or before November 28. That was the day that the Mercedes-Benz representative called the owner and tried to get the auto loan information. According to the dissent, if this is indeed the new standard, it will be all but impossible for manufacturers to prove the owner acted in bad faith because most automobile purchasers are not attorneys and do not have knowledge of the Lemon Law’s requirements and statutory deadlines.

Decision Allows Plaintiff Attorneys Ability to Game the System

The majority’s decision will make it that much easier for the Lemon Law King and his plaintiff attorney cohorts to use Wisconsin’s Lemon Law as a way to win huge damage awards by stringing out the 30-day statutory deadline requiring the manufacturer to provide a new car or refund.

That’s because under Wisconsin’s Lemon Law, an owner can elect to either seek a similar vehicle or a refund. As in this case, Attorney Megna will simply run out the clock by having his clients seek a vehicle that can’t be obtained within 30 days, and then tell the client at the last second to seek the full refund. Once the owner seeks the full refund, the owner (through his attorney’s advice) will make it next to impossible to get the payment issued and therefore trigger the huge damages.

In this case, the cost of vehicle was roughly $58,000. Had the owner acted in good faith and provided the manufacturer the correct bank loan information, the owner would have been given a check for the vehicle, plus other costs. However, by acting in bad faith and preventing the manufacturer from issuing the refund of the vehicle, the owner and the Lemon Law King will walk away with damages totaling over $700,000.

The Lemon Law King is pictured on his website with his fancy yellow Corvette complete with “LEMN LAW” license plates. Imagine how many more new shiny Corvettes Attorney Megna will be able to purchase with this outrageous damages award handed down by the Wisconsin Supreme Court.

In his free time the Lemon Law King (Attorney Megna) makes strange YouTube videos where he uses obscene language and gestures taunting the Governor.

[1] Wis. Stat. § 218.0171(2)(a)-(b).

[2] Wis. Stat. § 218. 0171(7).

Wisconsin Supreme Court Decides Neither Employees nor Employers Have a Right to Cross Examine State Appointed Physician in Worker’s Compensation Cases

Posted on by Hamilton

The Wisconsin Supreme Court last week issued a little noticed decision (Aurora Consolidated Health Care v. Labor & Industry Review Commission, 2012 WI 49) involving worker’s compensation that could negatively affect Wisconsin’s employers.

In a 5-1 decision – authored by Justice Ann Walsh Bradley, joined by Chief Justice Shirley Abrahamson, and Justices Patrick Crooks, Annette Ziegler and Michael Gableman – the Court held that Wis. Stat. § 102.17(1)(d) did not allow Aurora Consolidated Health Care (Aurora) the right to cross-examine a physician appointed by LIRC who determined that the injured employee was permanently and totally disabled as a result of a work injury. Justice Patience Roggensack authored a lone dissenting opinion, and Justice David Prosser did not participate in the case.

Facts of the Case

The case involved a long set of facts describing the numerous physical ailments of the employee in this worker’s compensation case. The employee, Jeffrey Schaefer, had a preexisting back injury, and necrosis of both hip joints, for which he had hip replacement surgery. The back injury was directly attributed to a work-related slip and fall. However, it was not clear whether his other injuries were work related.

At a Department of Workforce Development (DWD) hearing Schaefer was the only witness. However, pursuant to Wis. Stat. § 102.17(1)(d), both Schaefer and Aurora submitted written reports from medical experts opining on the extent of Schaefer’s disability that was work related.

The case was subsequently reviewed by Labor & Industry Review Commission (LIRC), which remanded the case back to DWD and ordered that the agency appoint an “impartial” physician, pursuant to Wis. Stat. § 102.17(1)(g), to assess what portion of Schaefer’s disability was due to his hip condition and hip surgery.

The DWD-appointed physician issued a report opining that Schaefer could stand, sit, or drive for one half hour before changing positions. The state-appointed physician also said that Schaefer should not lift more than 10 pounds on a frequent basis, with 20 pounds being his maximum. The physician also attributed all of the restrictions on Schaefer’s work related injury.

Schaefer argued that the physician’s report was incomplete, and therefore LIRC remanded to DWD a second time and ordered the state appointed physician to answer a number of questions. The state-appointed physician determined that Schaefer could work eight hour days if he remained within the restrictions of the first report. The physician further noted that Schaefer should given approximately two brief 10-minute breaks per day. In addition, the physician stated that the chronic back pain could flare up from time to time and in those circumstances the pain would be so severe that no work would be possible. The physician estimated that this could happen about two times a month.

Based on the state-appointed physician’s report, Aurora requested a remand to DWD to allow it to rebut the physician’s opinion by questioning him. However, LIRC denied Aurora’s request. Both the circuit court and court of appeals affirmed LIRC’s decision and held that neither the statute nor the Wisconsin Constitution gives a party the right to cross-examine a state-appointed physician’s report in a worker’s compensation case.

Supreme Court Decision

The Supreme Court affirmed LIRC’s decision and the two lower court decisions. The case involved the proper statutory construction of the laws allowing administrative law judges to appoint independent physicians in worker’s compensation cases.

Specifically, at issue was whether Aurora had the authority to “rebut” the state appointed physician’s report by cross-examining the physician. The majority decided that “rebut” does not mean that parties involved in a worker’s compensation case can cross-examine the state appointed physician.

The majority also rejected Aurora’s argument that it has a constitutional right to cross-examine the state appointed physician under Art. I, § 1 of the Wisconsin Constitution. According to the majority:

We acknowledge the important role that cross-examination plays in the adversarial system, in which the goal is a search for the truth. Nevertheless, it does not rise to the level of a due process right in all instances.

The majority further determined that “given our determinations that Aurora had no statutory or constitutional right to cross-examine Dr. Ebert, LIRC’s decision to decline Aurora’s request was discretionary.”

Dissenting Opinion – Justice Roggensack

Justice Roggensack authored the lone dissenting opinion. In it, Justice Roggensack focused on the word “rebut” and determined that it “encompasses more, not less, than a provision providing only for cross-examination.” According to Justice Roggensack, the “statute affords the parties the opportunity to present additional evidence at a future hearing, which evidence may be presented by direct examination and by cross-examination.”

Justice Roggensack further found that in this case Aurora’s due process rights were violated because the state-appointed doctor’s opinion “could not be explored and it was the basis for LIRC’s decision.”

Supreme Court Issues Split Decision Expanding Liability of Physicians

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The Wisconsin Supreme Court on Tuesday, April 17, issued a split decision which greatly expands the liability of physicians in medical liability cases. The case involved the scope of a physician’s duty to inform a patient, often referred to as “informed consent.”

The three-Justice majority decision was authored by Chief Justice Shirley Abrahamson, joined by Justice Ann Walsh Bradley and Patrick Crooks. Justice David Prosser, Jr. authored a concurring opinion. Justice Patience Roggensack, joined by Justices Annette Ziegler and Michael Gableman, dissented.

As explained by the dissent, the majority decision greatly expands liability for physicians. According to the dissent, the three-Justice majority decision, along with Justice Prosser’s concurring opinion, imposes strict liability for a missed diagnosis through the informed consent law. The dissenting opinion argues that this is contrary to the controlling statute (Wis. Stat. § 448.30) and long-standing precedent.

See below for a discussion of the relevant facts and multiple holdings of the Supreme Court.

Facts

The plaintiff, Thomas Jandre, was hospitalized after coffee he was drinking began coming out of his nose, and after he began drooling and slurring his speech. The left side of Jandre’s face also drooped.

Jandre was evaluated in the emergency room by the defendant, Dr. Therese Bullis. Dr. Bullis diagnosed Jandre with having Bell’s palsy. Dr. Bullis’s full diagnosis also included the possibility of a stroke. After arriving at her diagnosis, Dr. Bullis ordered a CT scan, which could rule out a hemorrhagic stroke and brain tumors. The results of the scan were normal; however, the CT scan could not detect an ischemic stroke.

Dr. Bullis listened to Jandre’s carotid arteries with a stethoscope in an effort to detect whether Jandre suffered an ischemic stroke event. Dr. Bullis had the option of also ordering a carotid ultrasound to assess Jandre’s carotid arteries, but she chose not to. This is typically more reliable than listening with a stethoscope.

Based on Jandre’s symptoms and tests performed, Dr. Bullis ruled out an ischemic stroke event and came to a final diagnosis of a mild form of Bell’s palsy. Dr. Bullis informed Jandre of this diagnosis, prescribed medication, and sent him home with instructions to see a neurologist for follow-up care.

Eleven days later, Jandre suffered a full blown stroke. A carotid ultrasound performed at the hospital revealed that Jandre’s right internal carotid artery was 95 percent blocked.

Jandre sued Dr. Bullis alleging she negligently diagnosed Jandre as having Bell’s palsy, when he had initial symptoms of a stroke. Jandre also sued Dr. Bullis for negligently failing to inform him about the possibility of having a carotid ultrasound to diagnose whether he had a blocked carotid artery that had caused a stroke.

Trial Court and Court of Appeal Decision

The jury issued a verdict finding that Dr. Bullis was not negligent in her diagnosis of Jandre’s ailment. However, the jury then determined that Dr. Bullis was negligent in fulfilling her duty to obtain informed consent. Specifically, the jury found that Dr. Bullis was negligent in failing to inform Jandre of the availability of a non-invasive diagnostic tool (a carotid ultrasound) that had the potential to rule out a stroke.

The court of appeals affirmed the circuit court decision.

Supreme Court Decision

As noted above, Supreme Court was divided, evidenced by the three differing opinions. Below is an analysis of the three opinions.

First is a discussion of the three-Justice decision authored by Chief Justice Abrahamson, joined by Justices Bradley and Crooks. This is followed by a summary of Justice Prosser’s concurring opinion. Last is a discussion of Justice Roggensack’s dissent, joined by Justices Ziegler and Gableman, sharply criticizing the three-Justice majority decision.

Three-Justice Majority Decision

In a lengthy 76-page decision, the Chief Justice Abrahamson ultimately concluded that:

“applying the reasonable patient standard, we conclude that under the circumstances of the present case Dr. Bullis had a duty to inform Jandre…of the availability of an alternative, viable means of determining whether he had suffered an ischemic stroke event rather than an attack of Bell’s palsy.

…

A jury could have determined under the facts and circumstances of the present case that Dr. Bullis should have known that information about another available non-invasive diagnostic tool was information a reasonable patient in Jandre’s position would have wanted in order to decide intelligently whether to follow Dr. Bullis’s recommendations.”

Justice Prosser Concurring Opinion

In a separate concurring opinion, Justice Prosser writes that although the “lead opinion provides a trenchant argument for affirmance… I am unable to join the opinion because of the reservations I have about the direction we are going.”

Ultimately, Justice Prosser recommends that it’s time for a “thorough review” of current administrative rules implementing Wis. Stat. § 448.30 by “a blue ribbon committee, including but not limited to medical professionals, so that physicians are given clear guidance as to their obligations under this statute.”

Dissenting Opinion

Justice Roggensack, joined by Justices Ziegler and Gableman, penned a strongly-worded dissenting opinion attacking the majority’s decision.

According to the dissent, the lead decision “when combined with Justice Prosser’s concurrence that affirms the court of appeals decision, holds a physician strictly liable for a missed diagnosis, contrary to the legislative directive in Wis. Stat. § 448.30 and or long-standing precedent.”

Justice Roggensack further notes that the three-Justice majority decision failed to garner the necessary four votes to carry out its ultimate reasoning. According to the dissent, the three-Justice majority attempted to expand the statute by:

“requir[ing] that whenever there is a claim that the correct diagnosis of a patient’s ailment was not made, a physician would be liable for failing to tell a patient about all potential diagnoses and all potential tests that could have been employed to evaluate whether different ailment were the source of the patient’s symptoms.”

According to the dissent:

[the majority’s reasoning] “would be an entirely new concept that the legislature did not codify when it enacted § 448.30. Accordingly, I conclude that § 448.30 is not implicated in this malpractice action because there was no failure to inform the patient about the risks and benefits of the treatment and procedures that the physician employed.”

The dissent further explained the jury’s first finding, that Dr. Bullis was not negligent in her care and treatment of Jandre, was inconsistent with its second finding that Dr. Bullis was negligent in regard to her duty to obtain informed consent from Jandre. As a result of the jury’s inconsistent verdicts, the dissenting opinion would remand the case for a new trial on whether Dr. Bullis was negligent in her care and treatment of Jandre.

The case is Jandre v. Wisconsin Injured Patients and Families Compensation Fund, et al., 2012 WI 39.

Wisconsin Supreme Court Rules that Default Judgment Was Void Due to Plaintiff’s Failure to Name Proper Corporate Defendant

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The Wisconsin Supreme Court today issued its decision in  Johnson v. Cintas Corp. No. 2, et al., 2012 WI 31, which is the latest in a number of recent cases accepted by the Court dealing with default judgments. (Oral arguments can be viewed on WisconsinEye.)

The issue is in the case was whether a default judgment is void because the summons and complaint names the wrong corporate defendant and thus personal jurisdiction is not obtained over the correct corporate entity.

The Wisconsin Supreme Court ruled that default judgment was void because the complaint was “fundamentally defective” because it failed to name the proper defendant in the summons and complaint. As a result, the Supreme Court ruled that the circuit court lacked personal jurisdiction over the incorrectly named defendant.

Facts

Robert Johnson, an employee for Cintas Corporation No. 2 (“Cintas No. 2”), was injured in a car accident resulting in permanent injury. Johnson was a passenger in the vehicle, which was being driven by a friend. Johnson was required to use his vehicle during the course of his employment and held auto liability insurance through Cintas No. 2. Johnson sought treatment coverage from Cintas No. 2 through its health insurance provider. When Cintas No. 2 refused to pay benefits, Johnson filed suit.

Johnson’s attorney filed the original summons and complaint naming “Cintas Corporation” as the defendant, instead of Cintas Corporation No. 2. Cintas Corporation No. 2 is a wholly-owned subsidiary of Cintas Corporation. Cintas Corporation No. 2 is a foreign corporation registered with the State of Wisconsin, whereas Cintas Corporation is a foreign corporation not registered in Wisconsin and does not do business within the State of Wisconsin.

Neither Cintas Corporation No. 2 nor Cintas Corporation responded to the complaint, and Johnson moved for default judgment. Cintas Corporation filed an Emergency Motion to Strike and Dismiss for Lack of Personal Jurisdiction. At the default judgment hearing Johnson was allowed to amend the summons and complaint. The trial court then granted default judgment against Cintas Corporation No. 2.

Cintas No. 2 then contacted the trial court and filed its answer to the original and amended complaints, but the court refused to hear Cintas No. 2’s motions because it had already granted default judgment against Cintas No. 2.

Cintas No. 2 filed a motion for relief from judgment, which the court granted and then vacated the default judgment. Johnson filed a motion for reconsideration and argued that newly obtained information proved that Cintas No. 2 effectively held itself out as Cintas Corporation. The trial court granted Johnson’s motion and reinstated the default judgment.

Court of Appeals Decision

The court of appeals reversed the trial court. The court held that because Johnson’s summons failed to accurately name the proper defendant (Cintas Corporation No. 2), the service of process failed to confer personal jurisdiction over that defendant.

The court further explained that regardless of how Cintas Corp. No. 2 held itself out to the public, the amendment of the summons and complaint had the effect of bringing a new party into the action. According to the court, added parties must be served with the summons or voluntarily appear. The court further noted that strict compliance with the rules of statutory service upon amendment naming a new corporate entity is consistent with Wisconsin’s policy viewing default judgments with disfavor.

Wisconsin Supreme Court Affirmed Court of Appeals

In a 4-2 decision, the Wisconsin Supreme Court on Tuesday, March 27, 2012 affirmed the court of appeals’ decision. According to the Supreme Court:

We conclude that service in this case was fundamentally defective because Johnson failed to name Cintas No. 2 as a defendant in his summons and complaint, contrary to Wis. Stat. §§ 801.02(1) and 801.09(1). Therefore, the circuit court lacked personal jurisdiction over Cintas No. 2, regardless of whether or not the defect prejudiced Cintas No. 2 and regardless of the manner in which Cintas No. 2 held itself out to the public or to Johnson specifically.

The opinion was authored by Justice Annette Ziegler, and joined by Justices Patrick Crooks, Patience Roggensack, and Michael Gableman. Justice David Prosser did not participate in the case.

Dissent

Justice Ann Walsh Bradley, joined by Chief Justice Shirley Abrahamson, dissented. In their dissenting opinion, Justice Bradley argues that the “summons and complaint contained a mere misnomer – a technical defect that does not deprive the circuit court of jurisdiction.” Specifically, the dissent argues that the omission of “No. 2” was a misnomer, and as a result, did not deprive the circuit court of personal jurisdiction.

According to the dissenting opinion, the majority reached “the wrong result by dodging the applicable standards for mere misnomers” and “craft[ed] an unreasonable and unnecessary rule.”

Andrew Cook is an attorney and Director of Legal Services for the Great Lakes Legal Foundation.

Current and Former Justices Discuss Judicial Turmoil

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The Wisconsin Supreme Court has been in the news lately, not for its opinions, but for its inner workings and interpersonal conflicts. Former Wisconsin Supreme Court Justices Janine Geske and Jon Wilcox were recent guests on Wisconsin Eye’s Legally Speaking, where they offered their opinions on many issues facing the courts. Current Justice Michael Gableman published an article in the latest issue of Wisconsin Policy Research Institute’s Wisconsin Interest providing his opinions on many of the same issues.

The first subject broached by the former justices was the Judicial Commission’s decision-making process generally and as it relates to the recent charges filed against current Justice David Prosser. Both former justices expressed their concerns about how the existing Commission processes will play out when a sitting justice is the subject of investigation.

Next, the former justices discussed the allegations that Justice Gableman has a conflict of interest when the firm that represented him in the past appears before the court. Geske said she assumed there would be a complaint filed with the Judicial Commission in the future. Wilcox agreed, lamenting that the justices are operating in a “gotcha world.”

The interview also included a discussion of the court’s recent decision to limit open judicial conferences. Wilcox indicated he respected the court’s judgment in closing the conferences, while Geske disagreed expressing her disappointment in the court’s decision.

The former justices touched on the topics of court management, the legislative effort to amend the Chief Justice selection process, and the funding and propriety of judicial elections.

Throughout the interview, both former justices expressed concern about the public perception of the court, and expressed their desires that the court move forward and work to improve its reputation in the eye of the public.

Sitting Justice Michael Gableman addressed many of the same issues as were discussed in the Legally Speaking interview in a recent piece he authored for the latest issue of Wisconsin Policy Research Institute’s Wisconsin Interest.

The Legally Speaking video is available from Wisconsin Eye. The article by Justice Gableman is available on the Wisconsin Policy Research Institute’s website.

High Court Rules that Owners of Property Destroyed by a Forest Fire Are Entitled to Double Damages

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In a 6-1 decision authored by Justice Annette Ziegler, the Wisconsin Supreme Court held that if an owner’s property is destroyed by a forest fire that is caused by negligence of another person, then the property owner automatically is entitled to double damages. Chief Justice Abrahamson, along with Justices Crooks, Prosser, Roggensack, and Gableman joined the majority. Justice Bradley dissented from the majority decision. The case is Heritage Farms v. Markel Ins. Co., 2012 WI 26.

Facts

The case involved a forest fire that extensively damaged nearby property owned by Heritage Farms, Inc. The fire started by the defendant was extinguished, but weeks later flared up and escaped the defendant’s property and entered onto Heritage Farms’ property.

Heritage Farms’ owners were awarded $568,422 in compensatory damages in a previous decision after it was determined that the defendant’s negligence led to the forest fire.  Heritage Farms then brought a separate motion against the defendant seeking double damages, along with costs for legal representation.

Decisions by the Trial Court and Court of Appeals

The issue before the trial court was whether Heritage Farms was automatically entitled to double damages, or whether the statute grants the court discretion when deciding whether to award double damages.

The statute states that an owner “whose property is injured or destroyed by forest fires, may recover, in a civil action, double the amount of damages suffered, if the fires occurred through willfulness, malice or negligence.” (Wis. Stat. § 26.21(1)).

The trial court held that the statute allowed the court to exercise discretion in deciding whether to award double damages. The trial court decided that the defendant’s conduct did not warrant punishment, and therefore did not grant Heritage Farms double damages.

The court of appeals upheld the lower court, ruling that the decision to award double damages under the statute is subject to the circuit court’s discretion. The court noted that the legislature used the permissive word “may” in the statute in describing the property owner’s right to recover double damages in the event that a forest fire result from willfulness, malice, or negligence.

Wisconsin Supreme Court Decision – Statute Mandates Double Damages

The Wisconsin Supreme Court reversed, holding that property owners are entitled to double damages. The court reasoned that, “once it is determined that the forest fire occurred through willfulness, malice, or negligence, the property owner is entitled to double damages as a matter of course.”

The court further held that their ruling should apply retroactively, not prospectively, thereby ensuring that Heritage Farms received the full double damages.

Interest on Judgments

The court further held that the plaintiff was entitled to interest on the double damages from the date of the jury’s verdict (October 13, 2006). At the time the lawsuit was brought, the interest on judgments was 12 percent.

The defendant argued that the 12 percent interest was unconstitutional because the high interest rate is so severe and so far removed from the national prime lending rate that it tends to “chill” defendants from properly defending their claims on appeal.

The court rejected this claim and said that the legislature was the proper branch of government to determine the proper interest rate. The court noted that the legislature this session in fact changed the interest on judgments from 12 percent to the federal reserve prime rate, plus one percent. This law, 2011 Wisconsin Act 69, was championed by the Wisconsin Civil Justice Council and was introduced by Gov. Walker as part of his numerous civil justice reforms.

Dissent

Justice Bradley dissented, arguing that the legislature did not intend that the award of double damages in these types of cases be mandatory. Instead, the legislature’s use of the word “may” signaled its intent that the courts are to exercise discretion when deciding whether to award double damages.

Wisconsin Supreme Court Confirms that Plaintiffs are Entitled to Phantom Damages

Posted on by Hamilton

On Wednesday, March 7, the Wisconsin Supreme Court issued an opinion adding to the line of cases involving the collateral source rule.

Specifically, the court held that the collateral source rule applies to cases involving underinsured motorist claims. Therefore, the court held that the plaintiff is entitled to the full amount of past medical expenses, even those amounts that were written off by the medical providers as a result of a contractual agreement between the medical provider and health insurer.

These expenses are often referred to as “phantom damages,” because no one ever paid the medical expenses, yet the plaintiff receives the full sticker price.

Typically, the plaintiff’s insurer has negotiated rates with the the health care provider. The health care provider submits a bill for the full price, but due to these contractual rates, the health insurer pays less than the full price. Yet, as the court held in this case and numerous other decisions, the defendant has to pay the full sticker price even though this was not the amount actually paid.

Facts

The plaintiff (Linda Orlowski) was injured in an automobile accident caused by an underinsured driver. Orlowski recovered damages up to the limits of the underinsured driver’s insurance. Orlowski also had health insurance coverage which paid a portion of her medical expenses. In addition, Orlowski had an automobile insurance policy with State Farm, including underinsured motorist (UIM) coverage.

Orlowski submitted a claim to State Farm to recover under her UIM coverage. An arbitration panel awarded Orlowski $11,498.55 for the medical service provided to her as a result of the accident. This amount ($11,498.55) was the amount that was actually paid to the health care provider, rather than the full amount billed by the medical provider ($72,985.94).

The arbitration panel did not include in its award to the amount of Orlowski’s medical expenses that had been written off by her medical provider because of discounts through her health insurance coverage with United Healthcare. The amount that was written off by the medical provider was $61,487.39. No one paid this amount, yet the plaintiff was seeking the full value of the medical expenses.

Orlowski appealed the arbitration panel’s decision to the Milwaukee County Circuit Court, which modified the award. The judge awarded the plaintiff the full amount billed by the medical provider ($72,985.94), instead of the amount actually paid ($11,498.55). As a result, the plaintiff was awarded $61,487.39 in damages that was written off and never paid to the medical provider.

Wisconsin Supreme Court Decision

The case was appealed to the court of appeals, which certified the case to the Wisconsin Supreme Court. In a 7-0 decision authored by Justice Patrick Crooks, the court upheld the trial court’s decision and awarded Orlowski the full amount billed by the medical provider rather than the amount actually paid; therefore, handing the plaintiff a windfall of $61,487.39 in damages that neither she nor anyone else paid to the medical provider.

The court cited its previous decisions, all of which have held that the plaintiff is entitled to the full amount of medical expenses, even those amounts that were written off by the medical provider.

According to the court:

“We reaffirm what our prior precedent has clearly established: an injured party is entitled to recover the reasonable value of medical services, which, under the operation of the collateral source rule, includes written-off medical expenses.”

The case is Orlowski v. State Farm Auto. Ins. Co., 2012 WI 21.

Wisconsin Supreme Court Rules that Insurance Policy Does Not Cover Losses Caused by Bat Guano

Posted on by Hamilton

On Tuesday, March 6, the Wisconsin Supreme Court held (5-2) that an insurance policy’s “pollution exclusion” clause excluded coverage for the loss of the plaintiff’s home that resulted from the accumulation of bat guano, or bat waste.

The plaintiff, a lawyer representing himself in the case, sued Auto-Owners Insurance Company for breach of contract and bad faith. The plaintiff alleged that his vacation home became uninhabitable and therefore was unable to sell the home due to accumulation of bat guano in the house’s siding and walls. As a result, the plaintiff argued that the insurance company was liable for the total loss of the home.

The trial court ruled in favor of the insurance company. The court of appeals reversed the trial court. The Wisconsin Supreme Court reversed the court of appeals and held in favor of the insurance company.

The specific issue was whether the insurance company’s pollution exclusion clause excluded coverage of the loss of the plaintiff’s home due to the bat guano.

The pollution exclusion clause excluded from coverage any “loss resulting directly or indirectly from: … discharge, release, escape, seepage, migration or dispersal of pollutants…” The policy further defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot fumes, acids, alkalis, chemicals, liquids, gases and waste.”

First, the court held that the bat guano fell within the policy of pollutant. Second, the court held that the damage to the plaintiff’s house was in fact caused by the “discharge, release, escape, seepage, migration or dispersal” of the bat guano. Therefore, the court held that bat guano fell within the policy’s “pollution exclusion” absolving the insurance company for the loss of the home.

The case is Hirschhorn v. Auto-Owners Insurance Co., 2012 WI 20. Justice Annette Ziegler authored the opinion and was joined by Justices Patrick Crooks, Patience Roggensack, David Prosser, Jr., and Michael Gableman. Chief Justice Shirley Abrahamson authored a dissenting opinion, and was joined by Justice Ann Bradley.

Justice Gableman Denies Recusal Motions Seeking to Force Him Off of Cases

Posted on by Hamilton

Justice Michael Gableman on Friday denied motions by attorneys in three separate cases asking the Justice to recuse himself from pending cases. The parties sought his removal after it was determined that Justice Gableman received contingency fee representation from an attorney with a law firm that had cases pending before the Court. The three cases are Adams v. State, Ozanne v. Fitzgerald, and Clinard v. Brennan.

In denying the motions, Justice Gableman explained that under Wisconsin law a Justice must recuse him or herself if they cannot “act in a fair and impartial manner” and by participating in the case they would “give the appearance that they were not able to act in a fair and impartial manner.”

Wisconsin law also provides that only the Justice him or herself can determine whether to decide whether to participate in the case and that other Justices on the bench cannot remove another Justice from a case.

Justice Gableman also cited U.S. Supreme Court Chief Justice John Roberts from an end of the year report on the judiciary in which the Chief Justice addresses recusal matters:

A “Justice…cannot withdraw from a case as a matter of convenience or simply to avoid controversy. Rather, each Justice has an obligation to the Court to be sure of the need to recuse before deciding to withdraw from a case.”[i]

Chief Justice Roberts further noted in the report that a judge “should not be swayed by partisan demands, public clamor or considerations of personal popularity or notoriety, nor be apprehensive of unjust criticism. Such concerns have no role to play in deciding a question of recusal.”

Justice Gableman determined that based on the law and the motions by the parties that “recusal is neither justified nor warranted.”

[i] See John G. Roberts, Jr. 2011 Year-End Report on the Federal Judiciary, available at http://www.uscourts.gov/Libraries/Statistics_PDFs/2011Year-EndReport.sflb.ashx.