GJEL Accident Attorneys were once again honored by inclusion in the 2009 Edition of Best Lawyers in America. Below is the cover story about GJEL from the Summer 2009 issue of San Francisco’s Best Lawyers magazine.

Gillin Jacobson Ellis & Larsen’s Well Publicized Fight Against Unnecessary Heart Surgeries

Some years ago in the town of Redding in northern California, an unusually high number of residents were advised by doctors at a local hospital to undergo major heart surgeries including double or triple-bypasses. Hundreds took the doctors’ advice and had the surgery—and many ended up with serious health problems. Rumors began to circulate about the doctors and Redding Medical Center, where the surgeries were performed. Were these operations necessary? Or were they being pushed by the corporation that owned the hospital, Tenet Healthcare Corporation, in order to make higher profits?

Tipped off by a Catholic priest who almost underwent surgery at the hospital before learning from other doctors that his heart was completely healthy, the FBI launched a three-year investigation that culminated in a raid by federal officials of Redding Medical Center. What resulted was a series of legal actions against Tenet and its chief administrators by a number of different groups, including the Securities and Exchange Commission and the United States Department of Justice. In 2003, Tenet agreed to pay a fine of $54 million related to charges of medical necessity fraud; namely, that it billed the government for surgeries that patients did not need. Tenet did not admit any wrongdoing, and the resolution pre-empted any civil or criminal charges against Tenet by the federal government. Tenet also sold the hospital which has since been renamed. According to the New York Times, it was the largest settlement in history for such a cause of action.

As one of the biggest medical fraud cases in U.S. history, the Tenet investigation was featured on a 2003 CBS News 60 Minutes story and also detailed in the 2007 book Coronary: A True Story of Medicine Gone Awry, by former New York Times editor and reporter Stephen Klaidman. Ultimately, a number of top corporate officials left Tenet, which had been the second-largest publicly traded healthcare company in the country. In addition to the government’s actions, civil lawsuits by private law firms were a key part of the effort against Tenet, as hundreds of patients filed cases claiming they’d undergone unnecessary heart surgeries so the corporation could make more money.

For the personal injury law firm Gillin Jacobson Ellis & Larsen in Orinda, California, its role in the Tenet case set a high mark in its 25-year history of helping seriously injured plaintiffs. The firm represented 186 people who claimed unnecessary cardiac operations at Redding Medical Center. A total of about 800 people sued the corporation, with three other personal injury law firms representing the bulk of the rest of the patients.

Most of the civil lawsuits made the same basic claim. “It turns out they were doing unnecessary bypasses. Hundreds of people had their health ruined, and many people died,” says Andrew R. Gillin, one of the firm’s founding partners. “They were doing double or triple the number of cardiac procedures” as normal, he says, but at first no one noticed anything amiss. “Redding is a relatively poor, rural community. Maybe that’s part of the reason that people didn’t question these surgeries as much as they might have in metropolitan area.”

The civil litigation continued for about three years before settling 60 days before trial was to start. The Gillin firm obtained a settlement of $111.7 million for it’s 186 clients, while the other plaintiffs’ firms landed similar enormous settlements for their clients (The cases were not a class action but remained individual lawsuits against Tenet).

It was not the first time the Gillin firm was involved in a case involving public policy and consumer rights. In May of 2002, partner Luke Ellis was one of the lead negotiators in a $1 billion settlement against a medical device manufacturer on behalf of 3,500 people who needed replacement of defective hips. In another case that helped increase safety procedures in the natural gas industry, Ellis obtained a $10.65 million for the family of a pipeline worker killed in an explosion. “whether the amount involved is small or large, our goal is to obtain justice for those who deserve it and heighten standards of corporate responsibility,” says Ellis.

Since the Gillin firm was launched in 1972, it has obtained many recoveries, but the Tenet case stands out. “We’re pretty proud of that one,” says Gillin, who, like other members of the six-lawyer firm, began his legal career as a public service attorney working for low-income people in need, and sees his current focus as an extension of that work. “It is certainly one of the most gratifying cases we’ve done.”

Our Pleasanton office recently changed ownership & is now being managed by US Arts and Design, a professional art institute that also has facilities in Los Angeles.  They’ve recently moved up to Northern California and we couldn’t be happier to get to know them.

The Pleasanton site is run by Omar Morineau, who trained at the Accademia di Belle Arte in Florence, Italy after completing his undergraduate studies with a degree in Fine Art. A couple dozen students, ranging between the ages of 5-18 years old come in for regular programmed instruction.

Omar teaches alongside Hillary Thompson, who earned a Masters in Fine Arts from the Academy of Art University. She loves working with kids and helping them to find a passion in visual arts.

At the younger levels, it’s fun for kids just to learn a few visual arts vocabulary words while building a relationship with creative expression. At that age, High schoolers who attend the programs use the classes as an extra-curricular supplement to art classes at school, or to work on fine-tuning their skills in preparation for college applications. Many universities will request a portfolio of work, and US Art Centers can help build a professional collection that showcases the artist’s talent.

Whatever the age, Omar and Hillary have the technical and interpersonal skills to help young artists grow and find their passion for painting, drawing and design.

Here is some of the great work that’s been created in the US Art Center studios:

We’re sure appreciative of Omar and Hillary, and wish them the best of luck in the space! If you’re interested in lessons for yourself or a friend, head to their website to register for classes!

In California wrongful death litigation, today we take for granted that plaintiffs who are entitled to recover for the death of a relative under California Code of Civil Procedure Sections 377.60 et. seq. can recover both economic and non-economic damages.  The distinction, and the right to recovery of both, is set forth in the applicable instruction to the jury, CACI 3921, which first describes recoverable economic damages:

The damages claimed by [name of plaintiff] fall into two categories called economic damages and noneconomic damages. You will be asked to state the two categories of damages separately on the verdict form.

[Name of plaintiff] claims the following economic damages:

1 The financial support, if any, that [name of decedent] would have contributed to the family during either the life expectancy that [name of decedent] had before [his/her] death or the life expectancy of [name of plaintiff], whichever is shorter;

2 The loss of gifts or benefits that [name of plaintiff] would have expected to receive from [name of decedent];

3 Funeral and burial expenses; and

4 The reasonable value of household services that [name of decedent] would have provided.

The same jury instruction then goes on to describe recoverable non-economic damages:

[Name of plaintiff] also claims the following noneconomic damages:

1 The loss of [name of decedent]‘s love, companionship, comfort, care, assistance, protection, affection, society, moral support; [and]

[2 The loss of the enjoyment of sexual relations[; [and]/.]]

[3 The loss of [name of decedent]‘s training and guidance.]

Yet, as recently as 1977, plaintiffs’ entitlement to non-economic damages  (particularly, “the loss of decedent’s love, companionship, comfort, care, assistance, protection, affection, society, moral support”) was disputed, and far from clear.  This entitlement was first set out with some finality in the California Supreme Court’s decision in Krouse v. Graham (1977) 19 Cal.3d 59 [137 Cal.Rptr. 863, 562 P.2d 1022].  Yet this case is best known, and most frequently cited, for an entirely different and unrelated liability proposition: that a spouse who perceived, but did not witness, his wife’s auto-pedestrian accident was entitled to recovery for negligent infliction of emotional distress.  Krouse’s contribution to clarity in the area of recoverable damages for wrongful death is often ignored.

In the Supreme Court’s analysis, one appellate issue related to the propriety of the following instruction to the jury: “that Benjamin [decedent’s husband] could recover ‘reasonable compensation’ for the loss of his wife’s ‘love, companionship, comfort, affection, society, solace or moral support, any loss of enjoyment of sexual relations, or any loss of her physical assistance in the operation or maintenance of the home.’”  The Court noted that the statutory cause of action for wrongful death, created in California in 1862 (California Code of Civil Procedure Section 377, now Section 377.60), provided that “pecuniary or exemplary” damages were to be awarded by the jury in the amount found “just” under all the circumstances. Ten years after its enactment, the statute was amended to remove the words “pecuniary or exemplary,” retaining the language that ‘damages may be given as under all the circumstances of the case, may be just, . . .’ (Code Civ.Proc., s 377.) Yet the Court noted that, in subsequent decisional law, a theory developed that damages for wrongful death were recoverable only for the “pecuniary” losses suffered by the decedent’s heirs.  So the question remained: were these damages for loss of love, affection, and society recoverable or not?

The Court noted that, as early as 1911, decisions had held that damages could be recovered for the loss of a decedent’s ‘society, comfort and protection’ Bond v. United Railroads (1911) 159 Cal. 270, 286, 113 P. 366, though only the “pecuniary value” of these losses was held to be a proper element of recovery. But the Supreme Court then went on to note that thereafter a series of: “cases suggest a realization that if damages truly were limited to ‘pecuniary’ loss, recovery frequently would be barred by the heirs’ inability to prove such loss. The services of children, elderly parents, or nonworking spouses often do not result in measurable net income to the family unit, yet unquestionably the death of such a person represents a substantial ‘injury’ to the family for which just compensation should be paid.”

The Court further noted that, while earlier cases uniformly held that a wrongful death recovery may not include such elements as the grief or sorrow attendant upon the death of a loved one: “…it is both unnecessary and unwise to require a pecuniary loss instruction for the sole purpose of excluding these elements from jury consideration.” The best course was, the Court said: “Instead, a simple instruction excluding considerations of grief and sorrow in wrongful death actions will normally suffice.”

The Court further noted that permitting the recovery of non-economic damages, as it held was appropriate here, was consistent with U.S. Supreme Court’s interpretation of the rights of heirs, in maritime cases, to recover for “love, affection, care, attention, companionship, comfort, and protection” of the deceased.  Moreover, the Court noted that these same elements of recovery clearly would be available in California as “consortium” damages in the usual personal injury action one might bring for a spouse’s injuries. For all of these reasons, the California Supreme Court concluded: “…that the instruction permitting recovery for those nonpecuniary damages herein at issue properly set forth the elements of damage recoverable by Benjamin.”  Krouse v. Graham (1977) 19 Cal.3d 59, 67-70 [137 Cal.Rptr. 863, 866-68, 562 P.2d 1022, 1025-27].

Subsequent to Krouse, California law had clarity.  Judicial council approved jury instructions have been created to incorporate this right to recovery.  What remained unclear for over one hundred years was finally a matter of law.

When considering representation and suit as to a client’s losses arising from wrongful death in California, there are several initial issues to explore: (1) is your client’s relationship to the decedent such that your client has a claim at all; (2) who else has a claim; (3) what damages can be sought by whom; and (4) what are the causes of action to be pleaded in the Complaint?

Wrongful death actions are strictly statutory.  Code Civ. Proc. § 377.60.  In a wrongful death action, economic and non-economic damages are recoverable.  But there is no recovery under this statute for punitive damages, and no recovery for damages that the decedent sustained or incurred before death.  Code Civ. Proc. §  377.61.

The decedent’s surviving spouse, children, dependent stepchildren (and dependent minors residing in the household for at least six months), and dependent parents can always state a claim for wrongful death. Code Civ. Proc. § 377.60 permits recovery for these categories of relationship in all circumstances, notwithstanding any intestacy laws. If there are none of these heirs, the law of intestate succession governs.  Code Civ. Proc. § 377.60(a); and Probate Code  § 6402.

Where there are numerous persons with statutory entitlement to a potential recovery for wrongful death, not all of whom you can represent without conflict, consider the alternative of setting up an estate and filing an action in the name of the personal representative as plaintiff.  A wrongful death action may be brought by either a statutory claimant or by the personal representative of the decedent. Code Civ. Proc. §  377.60.  When proceeds are ultimately obtained, they may be distributed to persons not necessarily sharing in the estate according to the laws of succession.  See Estate of Waits (1944) 23 Cal.2d 676, 680. The appropriate distribution of any verdict or settlement among various heirs can be determined either by settlement or by the Court’s allocation. Code Civ. Proc. § 377.61.

Having a personal representative as plaintiff can avoid problems – for example, one need not then name, as a defendant, any heirs who do not desire your representation. Cf., Code Civ. Proc. § 382.  Bringing the action in the name of the personal representative also eliminates the possible need to consolidate various actions which, in the absence of such a filing, might be separately brought by separately represented relatives.

It is important to consider claims for damages beyond potential statutory recovery for decedent’s wrongful death.  If there are claims for punitive damages, medical bills, lost earnings, property damage, or other losses incurred by the decedent before death, then decedent’s personal representative (or successor in interest) should plead a separate cause of action seeking compensation for such losses.  Code Civ. Proc. § 377.30; and Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256, 1264.

Prior to 1992 legislation, pursuing such an action required establishing a probate estate in order to have a personal representative appointed. Code Civ. Proc. § 377.32 now permits (where the estate is not the named plaintiff) the filing of a declaration by one or more successors in interest, setting forth their entitlement to proceed on the decedent’s behalf.  This declaration should be filed with the Complaint, with a copy of the death certificate attached.

Damages for the decedent’s pain and suffering are ordinarily not recoverable at all. See Code Civ. Proc. § 377.34.  But such damages are expressly recoverable in a survivor action under the Elder Abuse Act.  Quiroz, 140 Cal.App.4th at p. 1265.

A separate distinction determines whether punitive damages can be recoverable in the surviving cause of action.  Under Probate Code  § 573 and Code Civ. Proc., § 377.34, punitive damage claims can survive the death of the injured party: but, in most situations, that is true only if the decedent survived the accident, however briefly, or if property of the decedent was damaged or lost before death. Grimshaw v. Ford Motor Co. (1981) 119 Cal.App.3d 757, 829.  So it is a good idea to allege, affirmatively, that the decedent survived for an interval of time, and/or that he sustained a loss of property before his death.  Otherwise, the Complaint may be subject to demurrer for failure to plead a necessary element of the cause of action.

Considering these issues as you decide whether to accept representation will maximize the possibility of success, and help achieve a successful relationship with your clients.

by Ralph L. Jacobson^[1]

When considering whether you can be compensated for losses arising from the death of another in California, there are several threshold issues to explore: (1) is your relationship to the decedent such that you have a claim at all; (2) who else has a claim; (3) what damages can be sought by whom; and (4) what claims do you make in the lawsuit?

One possible start to answering these questions is to reference the five rules set forth below. These rules are not intended to handle every fact situation – e.g., unusual cases such as those involving “living together” unmarried spouses, or the rights of adopted children where the biological parent dies, etc.  But they will guide you through most typical fact situations.

A. Wrongful Death Actions
Wrongful death actions are strictly statutory.  In a wrongful death action, economic and non-economic damages are recoverable as may be just; but there is no recovery under this statute for punitive damages, and no recovery for damages that the decedent sustained or incurred before death.  Code Civ. Proc. §  377.61.  Some rules that apply to these claims are:

Rule 1: The decedent’s surviving spouse, children, dependent stepchildren (and dependent minors residing in the household for at least six months), and dependent parents can always state a claim for wrongful death.

Code of Civil Procedure section 377.60 permits recovery for these categories of relations in all circumstances, notwithstanding any intestacy laws.

Rule 2: If there are none of the heirs described in Rule 1, the law of intestate succession governs: parents (irrespective of dependency) may commence a wrongful death action; if there are none, siblings (or children of a deceased sibling) may; if none, grandparents may; if none, children of a predeceased spouse may; if none, the next of kin may.

In the absence of any of the heirs described in Rule 1, Code Civ. Proc. § 377.60(a) states that a wrongful death action may be brought by: “… the persons … who would be entitled to the property of the decedent by intestate succession.”

Probate Code § 6402 governs intestate succession. It provides: “… the part of the intestate estate not passing to the surviving spouse under [Probate Code section] 6401, or the entire intestate estate if there is no surviving spouse, passes as follows: [¶] (a) To the issue of the decedent …. [¶] (b) If there is no surviving issue, to the decedent’s parent or parents equally. [¶] (c) If there is no surviving issue or parent, to the issue of the parents or either of them …. [¶] (d) If there is no surviving issue, parent or issue of a parent, but the decedent is survived by one or more grandparents … to the grandparent or grandparents equally [etc.]….”.

This Rule, and reference back to the applicable statutes, will help you quickly ascertain if you have a money claim for wrongful death of the decedent.

Rule 3: In whose name should the action be brought: where there are numerous persons with statutory entitlement to a wrongful death recovery, not all of whom you are able to represent without conflict, consider the alternative of setting up an estate and filing a single action in the name of the personal representative as plaintiff.

A wrongful death action may be brought by the personal representative of the decedent. Code Civ. Proc. § 377.60.  When the proceeds are ultimately obtained in that manner, they may be distributed according to the wrongful death statute, for the benefit of persons not necessarily sharing in the estate.

The appropriate distribution of any verdict or settlement among the heirs can later be ascertained, either by settlement or, if necessary, by the Court. Code Civ. Proc. § 377.61.

B. Survival Actions

Rule 4: If there are claims for punitive damages, or for medical bills, lost earnings, or other losses incurred by the decedent before death, or for property damage, then decedent’s personal representative (or successor in interest) should make a separate survival claim seeking compensation for such losses.

Rule 5: If a survival action is included in your Complaint and there is no personal representative appointed for the decedent’s estate, you must declare that you are the successor in interest, see Code Civ. Proc. § 377.32.

Unlike wrongful death claims which belong to the affected heirs, claims for punitive damages, medical bills or lost earnings incurred before death, or for property damage, belong to the decedent, and must be pursued by either his personal representative or successor in interest. Code Civ. Proc. § 377.30.

Code Civ. Proc. § 377.32 permits, where there is no estate proceeding, the filing of a declaration by one or more successors in interest, wherein they essentially set forth their entitlement to proceed on the decedent’s behalf.  This declaration should be filed with the Complaint, with a copy of the death certificate attached as an exhibit. See Code Civ. Proc. § 377.32. In such circumstances, if hypothetically the successor in interest is also individually pursuing a wrongful death claim, the case might be captioned: “Carl Claimant, individually and as successor in interest of decedent John Smith, plaintiff.”  At least two claims would then be set out in your Complaint: one seeking damages for wrongful death and one seeking damages recoverable in a survival action.

Damages that a decedent incurs after his injury, but before his death, including (for example) medical expenses and lost earnings, are thus recoverable in such a survival action, not in a wrongful death action. Damages for the decedent’s pain and suffering are, of course, ordinarily not recoverable at all. Code Civ. Proc. § 377.34.

A separate special distinction applies to punitive damages. If the decedent survived the accident, however briefly, or if the property of the decedent was damaged or lost before death, the decedent’s estate (in a survival action) can seek to recover punitive damages, assuming the defendant’s conduct so warrants.

C. Conclusion

While these suggested rules will not prove to be sufficient to cover every factual situation which might arise, they should provide useful guidance in the most frequently occurring circumstances involving potential claims for the death of a relative.

Beware of the “Fine Print”: Settlement Agreements in FEHA Cases

by Ralph L. Jacobson and Kristin Lucey

The Fair Employment and Housing Act (FEHA, Government Code Section 12940 et seq.) permits claims of sexual harassment, sex discrimination, racial discrimination, retaliation, and other related assertions. When such an action is settled, the tendency of claimant’s counsel may be to view the subsequently prepared written release and settlement agreement, execution of which will almost certainly be a condition of the settlement, to be a mere formality.

However, agreement upon a monetary settlement to resolve an FEHA case is, for better or worse, only the beginning of the necessary settlement negotiations between the claimant’s counsel and the employer’s counsel. Matters of importance to the claimant’s vocational, financial and even personal life lurk in that settlement agreement.

Discussed below are some “transactional” issues that typically arise in, and become terms of, written settlement agreements in FEHA cases.

Confidentiality

The employer almost always strives for total confidentiality, from virtually everyone, of everything about the case, including both the underlying assertions, and the settlement itself.

Agreements to render a settlement confidential are generally permissible. A claimant’s agreement to confidentiality is a “bargaining chip”, not readily calculable in monetary terms. Cf., Barella v. Exchange Bank (2000)  84 Cal.App.4th at 801: “ … the value to a particular plaintiff of public vindication (or, conversely, the negative value of confidentiality) is so highly subjective and elusive that no court can determine its monetary worth.”

An initial question in the usual FEHA settlement agreement negotiation is the proposed scope of confidentiality. Of course, publicly filed court documents (i.e., filings outside of a protective order) are not confidential, and new Rules limit the circumstances under which court documents may be filed under seal. See Calif. Rules of Court, Rules 243.1 and 243.2.

But as to the details of the settlement itself, which would not generally be disclosed in a public court filing, the employer may seek to keep confidential not just the terms (the amount paid, the provisions of the settlement agreement, etc.), but also the allegedly actionable conduct that underpinned the claimant’s causes of action.

Some claimants will be unsympathetic to proposed restrictions on their ability to relate to others their account of  how they were wronged. Such a restriction has “real world” implications to the claimant beyond those of social conversation – for example, when she is inevitably asked in the future why she left her last job, the answer the claimant is free to give can depend on the language of the settlement agreement.

Another frequently arising issue, where confidentiality in whatever scope has been agreed upon, is whether there are exceptions to the obligation of confidence.  Typical exceptions to any agreed confidentiality might include permitting claimant’s disclosure to his attorneys, accountants, and  health care providers (where applicable), and certainly permitting disclosure to a court or administrative agency upon proper order.

Negotiation may be required, however, as to proposed restrictions concerning the claimant’s disclosure of the settlement amount to his parents, spouse, or cohabitant. A typical negotiated resolution of this issue would be to identify, in the settlement agreement, a limited universe of persons (spouse, parents, adult children) with whom the claimant already shares an ongoing financial relationship, and to permit disclosure of the amount of settlement, and perhaps also the other terms of the settlement agreement, to such persons. That disclosure might be conditional upon each disclosee agreeing, informally, to retain the confidence of the disclosure.

Part and parcel of any discussion of confidentiality is that the employer will usually raise the issue of  the consequences of breach of confidentiality by the claimant. The employer will frequently suggest a provision incorporating a fixed or “liquidated” damages clause. Such provisions are governed by Civil Code Section 1671(b), which provides that liquidated damage clauses are valid unless the party seeking to invalidate the provision establishes it was unreasonable under the circumstances existing at the time the contract was made. A typical form of agreement prepared by employer’s counsel will recite a sum of liquidated damages per incident of unauthorized disclosure.

If such a provision is agreed to, there are numerous details for negotiation and resolution: what is the amount of liquidated damages per event of breach; is there a “cap” as to liquidated damages regardless of the number of breaches, and (if so) what is that amount (e.g., three to five times the “per event” damage sum); is the issue of breach to be decided by a Court or an arbitrator; is the obligation bilateral, in that the employer shares an obligation of confidentiality as well; should the evidentiary standard be altered to “clear and convincing evidence”, in recognition of the “he said, she said” nature of the inquiry?  While careful efforts to educate the client as to his obligations of confidentiality will hopefully render moot the “real world” consequences of these clauses, these matters must still be carefully negotiated.

Also, to anticipate another “real world” problem, the following clause is often useful: “It is not a violation of confidentiality for claimant to respond to an inquiry concerning the matter by stating that the case was settled or resolved.”

As to hypothetical future subpoenas served upon the claimant by other litigants, the agreement should make clear that the claimant is not in breach if she complies with a lawful subpoena or court order, or testifies truthfully.

Non-disparagement Obligations

The employer may seek an agreement that the claimant refrain from disparaging the employer and its employees. A claimant’s agreement to a non-disparagement clause has a “real world” impact on everything from what he may state in future employment applications and interviews, to what he may say in casual conversation with friends and relatives, to what he may say if subpoenaed to testify, at deposition or trial, in another matter.

If included, a non-disparagement obligation should mutually bind the officers, managing agents, and perhaps particular named supervisors of the employer. It should also bind all individual defendants who are being dismissed. Finally, it should contain exceptions for truthful testimony given in compliance with a lawful subpoena or court order.

Scope Of The Released Claims

There may be claims the claimant possesses related to pension benefits, disability or health care benefits, wage claims, stock options, and/or other employee benefits, the entitlement to which is in no way related to the FEHA settlement. For the claimant’s protection, the language of the settlement agreement should precisely define the scope of claims being released.

Mutuality Of Release

Typically, the employer’s counsel will draft a written settlement agreement with the claimant as the Releasor, releasing all claims against the employer, as Releasee. In such circumstances, claimant’s counsel must consider whether there are any known, or even potential, claims by the employer, or individual defendants, against the claimant. If there are, then mutuality of the release is required for the claimant’s protection.

Job Retention; And Disclosures To Prospective Employers And Others

While it is almost a given that job retention will be a subject of the settlement negotiation, often overlooked is what will be reported to legitimate inquirers (prospective future employers, prospective mortgage lenders, etc.) after the claimant leaves her employment. Claimant’s counsel should seek agreement that those making such inquiries shall be informed of the claimant’s job title, duration of employment, rate of pay, satisfactory job performance, and voluntary resignation; and shall be further informed that the employer’s internal policies preclude further discussion.

Tax Characterization Of Settlement Proceeds

While detailed discussion of income tax issues is beyond the scope of this article, how the settlement proceeds of an FEHA action are characterized may have profound implications for the claimant’s income tax and  FICA obligations, and withholding obligations related thereto. See, for example, Lisec v. United Airlines (1992) 10 Cal.App.4th 1500, holding that where award of damages in a wrongful termination case did not include any sought after redress for deprivation of wages earned, payroll tax withholding on the damages award was improper.

Additional issues might arise, in a contingent fee situation, related to the tax consequences of the claimant’s attorney’s entitlement to a share of the proceeds of the settlement. There may also be issues as to whether part or all of the settlement proceeds arise from claims for “personal physical injuries or physical sickness”, in which case such amounts are excludable from gross income under 26 U.S.C. Section 104(a)(2). Additionally, the nature and timing of the employer’s tax reporting of the payments to be made should be clearly stated in the agreement.

Claimant’s counsel should consider retaining tax counsel during the settlement process.  The claimant should certainly be urged to obtain professional tax preparation assistance to make sure that there is appropriate tax reporting of the settlement proceeds in the proper tax year.

Referral Of Issues As To Breach Of The Settlement Agreement To Arbitration

The parties may wish to empower someone to resolve disputes related to the scope or interpretation of, or alleged breach of, the written settlement agreement. What happens if that person is unavailable should be stated as well.

Conclusion

Those issues set forth above are typical of the recurring issues that arise in FEHA settlements. Claimant’s counsel should  give these issues due consideration, and – where appropriate – include language in the settlement agreement which resolves them appropriately.

Under California law, registered domestic partners are “two adults who have chosen to share one another’s lives in an intimate and committed relationship.” Family Code Section 207(a).  The California Domestic Partner Rights and Responsibilities Act of 2003 required that registered domestic partners be provided the same rights, protections, and benefits as spouses; and that they also be subject to the same responsibilities, obligations, and duties under law.  Family Code Section 207.5.

Just a year later, the California Insurance Equality Act (Ins. Code, § 381.5, etc. hereafter referred to as “The Equality Act”) was enacted, effective in 2005, stating: “(a) Every policy issued, amended, delivered, or renewed in this state shall provide coverage for the registered domestic partner of an insured or policyholder that is equal to, and subject to the same terms and conditions as, the coverage provided to a spouse of an insured or policyholder. A policy may not offer or provide coverage for a registered domestic partner if it is not equal to the coverage provided for the spouse of an insured or policyholder. This subdivision applies to all forms of insurance regulated by this code.

(b) A policy subject to this section that is issued, amended, delivered, or renewed in this state on or after January 1, 2005, shall be deemed to provide coverage for registered domestic partners that is equal to the coverage provided to a spouse of an insured or policyholder.

(c) It is the intent of the Legislature that, for purposes of this section, “terms,” “conditions,” and “coverage” do not include instances of differential treatment of domestic partners and spouses under federal law.”

The Equality Act also amended Ins. Code, § 10121.7 to read:

“A policy of group health insurance that provides hospital, medical, or surgical expense benefits shall provide equal coverage to employers or guaranteed associations, as defined in Section 10700, for the registered domestic partner of an employee, insured, or policyholder to the same extent, and subject to the same terms and conditions, as provided to a spouse of the employee, insured, or policyholder, and shall inform employers and guaranteed associations of this coverage. A policy may not offer or provide coverage for a registered domestic partner that is not equal to the coverage provided to the spouse of an employee, insured, or policyholder.”

Prior law had required group health care insurance plans and policies of group disability insurance to offer coverage for the domestic partner of an employee or insured to the same extent as coverage provided to a dependent.  Cal. Health & Safety Code § 1374.58(a): that statute was amended by The Equality Act as well.  This prior definition seemed to be at odds with the statutory definition of “dependent,” which was: “Dependent” means the spouse or child of an eligible employee, subject to applicable terms of the health benefit plan covering the employee, and includes dependents of guaranteed association members if the association elects to include dependents under its health coverage at the same time it determines its membership composition pursuant to subdivision (z).”  Ins. Code, § 10700(e).  On its face, this definition did not even seem to encompass the domestic partner.[1]

According to at least one commentator citing legislative history, this ambiguity caused “real world” problems for domestic partners: “Without a uniform definition, confusion often resulted in the area of health insurance and domestic partners were routinely denied benefits and coverage, or were forced to pay higher premiums.”  Meredith A. Felde, California Insurance Equality Act: Providing Equal Insurance Coverage to Domestic Partners (2005) 36 McGeorge L. Rev. 917, 920.

Did The Equality Act bring about real change, or was it mere window dressing? While only time and reported data will give us the true answer, these statutory changes do seem to remove significant factual ambiguity surrounding dependent status that has been present in existing law.

An insurer (like any other party to a contract) owes a general duty of good faith and fair dealing. Seaman’s Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752, 768–769. Moreover, because of the “special relationship” inherent in the unique nature of an insurance contract, the insurer’s obligations attendant to its duty of good faith are heightened. Such obligations have been characterized as akin to fiduciary-type responsibilities. Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136.

But that has not removed “gray areas” as to the contractual standard of what constitutes a “dependent” in a health insurance contract.  Most revealing in that regard is Prudential Ins. Co. of America, Inc. v. Superior Court (2002) 98 Cal.App.4th 585, 600, which concerned whether or not a college student daughter of an insured was, or was not, a “qualified dependent” under her parents’ health insurance policy at the time she suffered catastrophic injuries.  Under the policy, “qualified dependent” status was defined to include children of the insured over the age of eighteen who were full-time students.

In this case, the insured’s daughter had chosen not to enroll in school for the quarter following her freshman year due to personal problems, but she had retained the right to seek re-admission.  Evidence from the school indicated that this was not an unusual circumstance; and the parents and student asserted that she should be deemed a “qualified dependent” in light of her continuing relationship with her school at the time of the accident.  But the appellate Court, citing out of state cases on the same subject, held that: “…the plain meaning of “full-time student” is “attending classes on a substantial basis.”  Since the daughter had not met this requirement for the quarter in question, the Court granted summary judgment in favor of the insurance company, and denied the daughter’s claim, finding that she was not a “qualified dependent.”

Fortunately, prior to The Equality Act, there were no appellate cases which had to construe the factual permutations of a partner’s status that might arise during a domestic partnership (part-time residency, lack of financial dependency on the other partner, etc.), in conjunction with this sort of murky notion of “dependent” status.  The outcome would have been less than predictable, had such cases arisen.  Under The Equality Act, there is now a “bright line” test: the domestic partner is indeed entitled equal coverage as the named insured, without condition or the need for interpretation of dependency status.  For this reason, if nothing else, The Equality Act has served its purpose: premiums can be calculated based upon the known status of a domestic partner; and domestic partners can be assured of the right to insurance contract health benefits purchased by them, or by their employer on their behalf.

[1] Even more confusing, as pointed out in the Felde article cited below, was that the same term is defined differently (and more inclusively) elsewhere in California statutory law: see Lab. Code § 3503 (defining dependent as “a member of the family or household of the employee” including spouses, children, step-children, parents, and mothers and fathers in-law).

Summer is the best season for motorcycle riders. The unusually consistent sunny weather enables longer rides with better conditions throughout California. Of course, more motorcycles on the road increases the likelihood of a motorcycle accident, but there are a few simple steps that riders can take to improve motorcycle safety by avoiding unnecessary risks. These actions involve wearing all appropriate safety equipment, attending summer motorcycle events that stress safe rides, and encouraging teens to stay safe on their motorcycles. We’ve developed this motorcycle safety resource to address each of these issues for the summer and fall months.

Motorcycle Helmet Debate

Earlier in the summer, we rounded up some of the arguments for and against a motorcycle helmet law in California. In general, proponents say that helmets have been proven to save hundreds of lives each year and opponents say they should be able to decide whether they want to take the risk or not. Here are some highlights from our post on the California motorcycle helmet debate.

Pro-Motorcycle Helmet Law

• Helmets saved nearly 2,000 motorcycle riders in 2008 alone.
• The National Highway Traffic Safety Administration predicts that a helmet law could have saved an additional 822 lives.
• Helmet use saved the government about $3 billion in 2008, and could have saved an additional $1.3 billion with a helmet law.

Anti-Motorcycle Helmet Law

• Helmet laws have reduced the number of motorcycle riders by approximately 40 percent since 1992, the California DMV predicts.
• Motorcycle deaths have not decreased since the helmet law was enacted.
• Motorcycles are dangerous, and a helmet is not likely to thwart death following a high-speed accident.

Visit our post on the motorcycle helmet debate in California for more statistics and the complete arguments for and against stricter laws. And whether or not you support a statewide law, consider wearing a helmet on long motorcycle rides this summer.

Summer Motorcycle Events in California

A number of popular motorcycle groups and organizations have organized long motorcycle rides or events all summer long. Some of these events raise awareness and funds for an important cause, while others are just intended to get everyone out on the road to witness California’s stunning scenery. Take a look at our California summer motorcycle event calendar for events through August:

Teen Motorcycle Safety Information

More teens are getting on motorcycles as a fun alternative to cars. Motorcycles are appealing because they are less clunky, they save gas, and in many states, they can zoom between cars in traffic. But as with other motor vehicles, teens are the demographic most susceptible to motorcycle accident injuries and fatalities. So to prevent teen motorcycle accidents, it could be useful to share the following statistics with teen drivers to encourage them to be extra safe while zooming down California streets and highways.

• In 2009, motorcycle accidents led to 205 deaths and 5,000 injuries of riders 15-20.
• Of the teen motorcycle death victims in 2009, 26 percent were not wearing helmets.
• 39 percent of the teen motorcycle riders killed in 2009 were unlicensed or driving with an invalid license.

Visit our blog post on teen motorcycle safety information for more statistics on teen riders and requirements for getting motorcycle permits and licenses.

Photo credit: El Caganer.

Teen drivers throughout the country are faced with countless dangers on city streets and highways. Teens are the demographic most likely to cause car a accident, technology poses the temptation for distracted driving, and scientific studies have even shown that the teen brain may not have developed the motor skills and emotional maturity to drive safely. As California teens hit the road more during the summer holiday, they should take precautions to stay safe and aware at all times. And since California teens receive their restricted license at 16 and their unrestricted license at 18, they can take the summer to boost their knowledge of state driver laws and practice safe driving techniques.

This resource is designed to raise awareness about the increased danger of summer driving for California teens and suggest methods to improve driving skills during the summer months. Take a look, and share your teen driving stories on our Facebook page.

Summer Driving Statistics

Each year, the National Organizations for Youth Safety host May as National Youth Traffic Safety Month, to raise awareness about the increased dangers of teen driving during the summer months. Here are some important statistics to keep in mind throughout the summer:

• There are nearly twice as many car accident deaths during the summer months than the rest of the year combined, according to the NHTSA Fatality Analysis Recording System.
• Teenagers have been responsible for almost 50 percent more drunk driving accidents during the summer months than the rest of the year, according to the Washington Regional Alcohol Program.
• In the summer of 2008, nine teens between the ages of 16 and 19 died each day, according to the Centers for Disease Control and Prevention.
• The NHTSA and AAA report that in Northern California, the 101 days between Memorial Day and Labor Day are the deadliest for people under 20. Teen car accidents begin to rise in May and reach their peak in July and August.
• An average of 104 drivers aged 16 and 17 are killed in both July and August, a 20 percent increase over other monthly teen car accident deaths, reports AAA.

Where to Get your License in California

There are many ways to prepare for the written and driving tests required to receive a California drivers license. First of all, visit the California Department of Motor Vehicles website for information on how to receive a license at any age. The CA DMV publication section also includes handbooks on California road laws and safety suggestions. For teens who learn better with audio and visual resources, the DMV provides an audio California Driver Handbook and videos on rules of the road, sharing the road, and the dangers of distracted driving.

If you feel that you would prepare more successfully for the drivers license tests in a classroom setting, most high schools will refer students to local, quality drivers education courses throughout California. Make sure the course has at least 30 hours of classroom instruction, and includes at least 6 hours of real driving experience. If you’re still having trouble, refer to this AAA guide on choosing a great driving school.

Once you’re ready for the test, call ahead to make an appointment with your local California DMV office. Refer to our interactive map below for address and phone number information of DMV offices throughout California:

View California DMVs in a larger map

California Summer Safety Events For Teen Drivers

Summer is the perfect time to brush up on your driving skills, because you’re free from the pressures of school work, after-school athletics practice, and other extra curricular activities. But there are plenty of opportunities to get involved outside of classroom education courses. Each year, a number of safety organizations in California and throughout the country support auto safety events designed to increase awareness and make drivers of all ages safer. June, for example, is National Safety Month, which includes Teen Driving Safety week and “On the Road, Off the Phone” week. View our full California motor caution calendar for more summer safety events:

For more teen driver safety resources, visit our Parent-Teen Safe Driving Contract and our checklist for what to do after a car accident.
Photo credit: Amanda Wagner

Orinda, CA May 19, 2011

As part of National Bike Safety Month, GJEL Accident Attorneys, a catastrophic injury and wrongful death law firm in the San Francisco Bay area, is reminding cyclists of the importance of practicing bike safety while on the road.

“Bicycling has become more than just a sport or family fun; commuters have taken to cycling paths to get to and from work. As the price of fuel increases, more people will engage in this mode of transportation, and it will become more important to adopt proper safety measures, as well,” said Andy Gillin, managing partner, Gillin Jacobson Ellis & Larsen. “In our firm, we care about the safety of everyone sharing the nation’s roadways, and during Bicycle Safety Month our education programs place that emphasis on cyclists.”

GJEL Accident Attorneys has created a resource center on its website for cyclists that includes a guide to state bicycle laws and a map of popular bicycle trails in the Bay Area.

GJEL is also conducting a survey on its website about helmet usage and also blogging about national efforts to increase cycling safety.

The number of cyclists in the Bay Area has been increasing, according to the City of San Francisco 2010 Bicycle Count Report, published by the San Francisco Municipal Transportation Agency (SFMTA). From 2009 to 2010, the number of observed cyclists increased 3.2 percent. The same study showed that, cyclists wearing helmets increased from 69 percent to 71 percent in 2010. Both the number of cyclists and number of cyclists using helmets have increased steadily since 2006, when the SFMTA first counted.

The most recent National Highway Traffic Safety Administration report also showed a 9.2 percent decrease in bicycle fatalities related to crashes from 2008 to 2009.

About GJEL Accident Attorneys
Gillin Jacobson Ellis & Larsen (GJEL Accident Attorneys) is a San Francisco Bay Area personal injury law firm established in 1972. The firm represents plaintiffs injured in California auto accidents and wrongful death incidents, and was recently named one of the best law firms in America by Best Lawyers/US News & World Report.