KPDE Bolsters SIU Insurance Defense Practice with Addition of HaneyKopka, Pinkus, Dolin & Eads is pleased to announce the addition of Steve Haney as a member of its Farmington Hills, Michigan office.

Haney arrives to the firm as a veteran trial attorney with an extensive background in a variety of Special Investigative Unit (SIU) insurance defense matters. In 2007, Haney was appointed as the lead attorney of the Michigan Attorney General’s Office Auto Theft Division, where he prosecuted a number of high profile racketeering cases, involving multiple parties charged with Insurance Fraud and Racketeering. Since his departure as an Assistant

Attorney General, Haney has imparted his law enforcement experience and investigative information to vigorously defend insurance companies in a number of complex SIU matters.

A 1999 graduate of Thomas Jefferson School of Law in San Diego, California, Haney has been a member of the State of Michigan Bar since 2002. As the former Jackson County, Michigan Drug Prosecutor, his court room experience includes trying over 100 cases before Michigan juries. While serving as the felony drug prosecutor, Haney concurrently worked under the direction of the Commander of the Michigan State Police as Chief Counsel in all matters relating to Drug Asset Seizure and Forfeiture.

The hiring of Haney bolsters an already prominent Insurance Defense practice at the firm, which represents a diverse group of clients, including many of the nation’s largest insurance companies.

Steve Haney, Senior Attorney,

Farmington Hills, MI

IN THIS ISSUE:

1 | Finding Balance in Life

2 | Indiana High Court Upholds Punitive Damage Caps

2 | Smart Act Takes Effect

3 | Auto No-Fault Fraud

4 | Workers on the Go

Newsletter Q2 2013

Finding Balance in LifeBy Robert J. Kopka, Managing Partner, KPDE& Lisa Abram, Senior Counsel, J.C. Penney

As seen in Litigation Management, Summer 2013

Technology has changed the nature and the location of the workplace. Using computers, cameras, interactive software and social

media, many employees telecommute. A growing body of research demonstrates that people are more productive and

motivated to exceed expectations when they can take advantage of flexible work arrangements. Companies derive great cost savings and society benefits by reducing gas emissions and commuter congestion. Still, this phenomenon can pose unique challenges to managers and it may not be right for every company.

Yahoo’s new Chief Executive Officer, Marissa Mayer restricted employees from working remotely. Mayer recognized that workplace camaraderie, creativity and interaction may suffer when many employees work from home. Here are challenges to managing telecommuters successfully. Continued on page 6

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Indiana High Court Upholds Punitive Damage Caps By Randy Graff

The Indiana Supreme Court has upheld caps on punitive damages and the

procedure for allocating punitive damage awards. In State v. Doe, 987 N.E.2d 1066 (Ind. May 14, 2013), the Court upheld the statute capping punitive damage awards at the greater of three times the amount of compensatory damages or $50,000. Ind. Code § 34-51-3-4. The Court also upheld the statute requiring the plaintiff receive 25% of the punitive damages award while 75% goes to the violent crime victims compensation fund. Ind. Code § 34-51-3-6. The punitive damages statute also provides that the jury not be apprised of the caps or the 25-75 allocation. Ind. Code § 34-51-3-3.

The suit alleged childhood sexual abuse by a priest affiliated with the Archdiocese of Indianapolis. The jury awarded the plaintiff $5,000 for compensatory damages and $150,000 in punitive damages. The Indiana Supreme Court ruled the punitive award should be reduced to $50,000 (which was the maximum amount recoverable for punitive damages because it was greater than three times the $5,000 compensatory award) and that the plaintiff receive 25% of the $50,000 ($12,500). By

upholding the punitive damages statute, the Indiana Supreme Court determined the plaintiff’s recovery would be $5,000 + $12,500 = $17,500. The punitive damages statute obviously results in the plaintiff recovering far less than the $155,000 verdict. This may explain why the Marion County trial court judge ruled the punitive damages statute violated the Indiana Constitution’s right to a jury trial and separation of powers doctrine (i.e., the legislature’s enactment of the punitive damages statute impermissibly infringed on the judiciary’s power to control the court system).

However, a unanimous Supreme Court reversed the lower court’s ruling and thereby upheld the punitive damages cap

and the 25-75 apportionment. The Court relied on its earlier decision upholding caps in medical malpractice cases and noted it had previously upheld the allocation of punitive damages to the victim compensation fund when the allocation was attacked on a different legal theory.

The State of Indiana intervened in the case to protect the allocation to the victim compensation fund and thus the Archdiocese was not involved

in the appeal. This unanimous decision shows that the Indiana Supreme Court gives great deference to statutes enacted by the General Assembly and that punitive damages will be capped in Indiana for the foreseeable future.

Randy Graff is a Shareholder/Partner and works in the Indianapolis, IN office.

aNNouNcemeNt:

Smart Act’s Statute of Limitations Takes Effect Clarifying

Prior UncertaintiesBy Sheri Bradtke McNeil

On January 10, 2013, President Obama signed the Strengthening Medicare and Repaying Taxpayers (“SMART Act”) into law, which provided a three year statute of limitations on when Medicare could bring a claim for reimbursement for Medicare recipient’s medical costs, beginning on July 10, 2013. Suit against another responsible party (such

as an insurance company) must now be filed three years from the date of reporting to CMS under the Mandatory Insurer Reporting rules, (See Section 111 Medicare Medicaid SCHIP Extension Act of 2007.2)

As with any statute of limitations, we now have the ability to put an exact date of when these claims are out of the proverbial woods and can be disposed of accordingly. Previously, this issue was one of the many uncertainties that have been plaguing companies learning the nuances and applications of the Medicare Secondary Payer Act. Further provisions of the SMART Act will continue to be implemented through 2014.

Sheri Bradtke McNeil is a Shareholder/Partner and works in the Crown Point, Indiana office

“a unanimous Supreme Court reversed the lower court’s ruling and thereby upheld the punitive damages

cap and the 25-75 apportionment”

Shelice has accepted the National Bar Institute’s invitation to be a speaker on ethics for the Merrillville seminar on Sophisticated Deposition Strategies on October 31, 2013.

Shelice R. tolbertPartner/Shareholder

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Auto No-Fault Fraud Reaching Unprecedent-ed LevelsBy Robert Abramson As seen in DRI’s “The Whisper” - July 2013

Oklahoma Insurance Commissioner John Doak recently purchased a Chevrolet Tahoe. According to the Tulsa World, the message on the back window, in bright white lettering, reads: “This car was paid for by fraud funds not at taxpayer expense.”

The anti-fraud unit also purchased high-tech shotguns, bulletproof vests and seven police-package vehicles to combat criminal insurance fraud.

Welcome to the Wild, Wild West of auto no-fault insurance fraud.

Oklahoma just passed Senate Bill 1439, which goes into effect July 1, 2013. The new law makes insurance fraud a felony, allows a prosecutor to group several smaller thefts together, and charge the perpetrator with a more serious crime. Punishment ranges from a $1,000 fine to a maximum of five years in prison.

New York recently cracked down on arguably the single largest no-fault insurance fraud case in U.S. history: $279 million. Mikhail Zemlyansky, the mastermind behind the operation, created a scheme encompassing more than one hundred clinics, thousands of patients, ten corrupt doctors and three law-breaking lawyers, which was verified via a release provided by the FBI’s New York field office on February 15, 2013:

• Runners were paid $2,000 to $3,000 each to recruit the patients and coach them on how to fake their injuries to maximize medical treatment.

• In order to mislead New York authorities

and private insurers, some of the defendants in this case who were the true owners of these medical clinics (“No-Fault Clinic Controllers”) paid licensed medical practitioners, including doctors, to use the practitioners’ licenses to incorporate the professional corporations through which the medical clinics billed the private insurers for the bogus medical treatments.

• The No-Fault Clinic Controllers also instructed the clinic doctors to prescribe excessive and unwarranted referrals for various “modality treatments” for nearly every patient they saw.

The scheme came to a crashing halt when two undercover New York police officers posed as accident victims and witnessed the

operation first-hand. Thirty-six defendants were charged with conspiracy to commit mail fraud and health care fraud. Ten of those defendants, including a licensed doctor and an attorney, have pled guilty.

Likewise, it is not surprising that Michigan, the only state in the country with unlimited and lifetime no-fault medical benefits, is dealing with its fair share of no-fault fraud. State Farm filed a federal RICO lawsuit against four Michigan doctors and two physical therapy facilities, asserting damages in the amount of $1.9 million.

The complaint alleges that the doctors and clinics submitted hundreds of bills and related documentation that were fraudulent because the services either were not performed, or were performed pursuant to a fraudulent predetermined protocol of treatment (“Predetermined Protocol”), rather than to address the unique needs of the individual patients.

Remarkably, Michigan is one of the few states in the country that does not have an

anti-fraud bureau to investigate insurance crimes. That may change in short order. House bill 4612 was recently introduced, which would create an automobile fraud authority focused on crash rings and other auto-insurance crimes.

Nationally, more and more insurance companies are creating specialized units to investigate suspected shady doctors and facilities. Defense lawyers are front-line fraud busters in this fight, and by alerting insurance companies and state investigators to what they uncover through depositions and discovery in their no-fault cases, the exposure of insurance fraud and accompanying RICO lawsuits may become a routine headline in the morning newspaper. Robert Abramson is a Shareholder/Partner and works in Farmington Hills, MI office.

caSe HIGHlIGHtS

“Welcome to the Wild, Wild West of auto no-fault insurance fraud.”

Chicago Partner Joel D. Groenewold represented a grocery chain in a “slip and fall” incident where the

plaintiff alleged that she slipped on the floor of the coffee aisle. Photographs showed that the coffee trail ran almost the entire length of the aisle. The spill was undeniable, but Joel did not concede liability, arguing lack of notice. Counsel asked the jury for $20,000 but received $1,800, which was substantially less than her specials.

Farmington Hills, MI Partner John Eads, completed a successful trial result for Philadelphia Insurance

involving multi-counts of business dispute/defamation. This case was taken over from another law firm following a negative Michigan facilitation. John prevailed on all counts and, under Michigan law, is able to recover attorney fees.

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Workers on the Go:Do Workers’ Compensation Benefits Go with Them?

By Tricia Bellich, Bob Kopka and Lori ZoblerAs seen in Litigation Management, Spring 2013

It was so easier back in the day: Dad went to work from 9 am to 5 pm, sat at his desk all day, clocked out for his lunch hour, clocked in and finished his work day. He was usually home by six for dinner with the family. No after hour calls, no virtual office, no emails, no flying to a meeting and no weekend work. In turn, the compensability of an alleged work injury was usually clear-cut. With certain exceptions, injuries occurring off work premises, or not during work hours, or to and from an employee’s place of employment were not compensable.

Jump forward into the tech world of 2013! The above scenario describes a rapidly declining number of employees in the workforce. The work environment is now vastly different than what it was 30 years ago, which raises several workers’ compensation related issues.

tHe FactSNearly half of U.S. companies have employees working from home or on the road. And while accurate statistics are hard to wrangle since the term telecommuting covers a broad spectrum of workers, it is estimated that 40 percent of employers now offer some form of telecommuting. A 2012 US Census Bureau study entitled Home-based Workers in the United States: 2010 highlighted that the percentage of all workers who worked at least one day at home increased from 7 percent in 1997 to 9.5 percent in 2010. In the 1960s, the vast majority of home-based workers were primarily self-employed family farmers and professionals such as doctors and lawyers. As of 2010, professional and scientific industries, and education and health services made up the bulk of work-at-home individuals.

State workers’ compensation statutes, however, have not changed to reflect today’s working world. This leaves a gray area as to what is and isn’t compensable. By its nature case law in each state varies and companies are left to follow trends to guide them as to what meets the criteria for a covered workers’ compensation injury.

cateGoRIeS oF telecommuteRSA uniform categorization of employees who work outside a

traditional office environment does not exist. Technology and policies are moving at a rapid pace with unclear dividing lines. What appears most logical is separating workers into three different groups. The first group are the work-at-home employees who work in a home office the majority of the time. The second group is a mixed category of employees who sometimes report to an office, sometimes work from home and may travel as part of their work duties. The third is road warriors, who do not have a stationary office. This group works in a multitude of locations.

at-Home woRKeRSAt its basic level, compensability asks whether an injury arises out of or during the course of employment. To test this, the causal connection between a workers’ compensation injury and a risk connected with the employment is examined. To determine if the injury occurred during employment, a variety of factors are considered, including the location of the injury and whether the worker was reasonably fulfilling employment duties. Although some of the scenarios in the case law seem farfetched and fact specific, a consistent theme is a survey of reasonable expectation and an examination of the risk involved.

Continued on page 5

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One of the most cited cases on this topic involves a claimant who is a custom decorator who works at home one day a week and kept her samples in a van to regularly take on her customer calls. While the decorator was walking out her back door to her garage to change fabrics to the new line, she tripped over her dog and fractured her wrist. In that case, Sanberg v. JC Penney Co., the Oregon Court of Appeals looked at a work connection test and weighed facts such as the claimant regularly worked out of her home and was required to store the samples as a condition of her employment. The Court found that the home environment was the work environment meaning the risks of the home became the risks of the claimant’s work.

tHe RoaD waRRIoRFor road warriors, compensable injuries follow wherever the job takes them. Many states apply the continuous coverage doctrine. Under this doctrine, an employee is in the course of employment when the injury has its origin in a risk created by the necessity of being away from home, except when a distinct departure on a personal errand is shown. Cases involving road warriors have provided death benefits for the next of kin when a worker drowned during a layover and covered injuries sustained by a long-haul truck driver in a bar fight during a layover.

With the expanding global economy, employers are sending their workers abroad. These “special missions” may or may not be covered by the standard workers’ compensation/employers liability policy. This standard policy was meant to cover only the U.S., its territories and Puerto Rico. A special policy can be bound

if an employer has a large percentage of employees traveling outside the US Borders. mINImIZING RISKSThe best advice for minimizing risks is to keep lines of communication open. Knowing where, when and how your workforce is tackling the world is a company’s best bet for minimizing risks. Comprehensive employee policies that include no texting and driving rules, or outline forbidden activities can guide a mobile workforce while minimizing an employer’s workplace risk. Workplace accidents will happen, but they can be minimized. Work with purely home-based workers to establish a designated area, specific work hours and resources necessary to further their job so the employee does not create solutions that create risks for the employer. For hybrid employees, employment contracts that

specifically outline job duties may reign in the zone of risk. For road warriors, consider pairing them up to keep them more engaged in the company and choose employees who are keen on travel, safety and possess common sense. Set a uniform standard of conduct to dissuade employees from unnecessary

activities. Don’t forget to conduct traditional in-person meetings or teleconferencing with telecommuters to create face-to-face interaction, which can be invaluable in minimizing risk.

While new technology brings with it new challenges, companies should be proactive with policies and procedures to manage their mobile work forces. Trends show the mobile work force is on the rise and precaution is necessary to avoid increased workers’ compensation costs.

Bob Kopka is the Managing Partner of KPDE. Tricia Bellich is an partner with KPDE. Lori Zobier is the Director of Claims for BerkieyNet.

“The court found that the home

environment was the work environment meaning the risks

of the home became the risks of the

claimant’s work.”

Workers on the Go Continued from page 4

caSe HIGHlIGHtS

Chicago Partner Andrew D. Ellbogen, completed a four day trial in Cook

County where there was a verdict of not-guilty de-termined in less than 20 minutes. The judge agreed to a special interrogatory, which asked the jury if the plaintiff was more than 50% at fault in the manner in which he crossed the roadway. The case involved a pedestrian (the plaintiff) being struck on Clark Street in Chicago, about 5 blocks south of Wrigley Field. At the time of the ac-cident, there was a torrential downpour, and the plaintiff claimed he was struck as he was proceeding eastbound across Clark Street. He testified that he was struck within the pedestrian cross-walk, just as he reached the northbound lanes of traffic. Our contention was that the plaintiff was at least 30 feet north of the crosswalk. To support our position, we called two eyewitnesses who were traveling together in a car. The vehicle of the two witnesses was stopped in traffic heading south on Clark, and they saw the plaintiff running in and out of vehicles. The plaintiff’s attorney re-quested $413,000 in damages at the close of the trial.

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Done well, telecommuting can benefit the company, employee and society.

We have observed that remote workers rarely take a break. They often go back to their computers after dinner and it is not uncommon to see emails and reports drafted past midnight. To maintain their health and happiness, people need time off from work. People need time to relax and rejuvenate, and they need time with family and friends outside of work. The same technology that enables the flexible work arrangements that can make employees happier and more productive, can also encourage employees to work too much. Studies show that people who work from home work more hours in an average week than people who work exclusively in an office. How ironic that the very flexibility that allows employees the freedom to seek balance in their lives, can drive employees to work to excess.

This should concern the successful leader, because vacation and time off reduces stress and improves and maintains employee productivity. Good leaders will recognize the need to balance work and personal commitments, and encourage their employees to practice discipline to limit their work during what should be personal time. Successful leaders today make the health and well-being of their employees a professional priority.

Telecommuting is a win-win in terms of cost savings. IBM estimated that it saved $100 million per year when 42 percent of its workforce became telecommuters. The telecommuters themselves also save both time and money by eliminating their commute.

StayING coNNecteDUnless properly managed, telecommuters can become isolated and feel disconnected and under-appreciated. Th %is presents a challenge for managers of employees working remotely. Good managers of remote employees should stay connected on a daily and, at times, hourly basis. Short, frequent contact allows the remote employee to feel connected, mentored and appreciated. Frequent communication effectively replaces the water cooler chats and hallway encounters. Managers should make a special effort to publicly acknowledge and reward remote employees. Without a strong connection to the company culture through frequent contact, telecommuters may become isolated and disillusioned.

Frequent performance evaluations with specified goals and metrics become more important because the informal accolades are often missing. Social networking may assist the remote employee to feel connected. It may seem counter-intuitive to encourage the use of social media during company time, but informal chats on social media such as LinkedIn, Facebook and even inter-company blogs may replace the informal interaction that generates camaraderie and positive attitudes. Access to audio and video conferences, blogs and newsletters is a critical component to keeping remote employees connected. Empowered employees with a higher sense of connection to the company exhibit the highest levels of commitment and engagement.

There are many benefits to telecommuting, both for the employee and the employer. It may not fit every corporate culture. If it is right for your company, take special care to manage the telecommuters. Good leaders will think outside the box, encouraging proper lifestyle balance, use of social media to stay connected and nontraditional ways to keep remote employees connected to the company and their remote peers.

Robert J. Kopka is the Managing Partner of Kopka, Pinkus, Dolin & Eads, P.C. Lisa Abram is Senior Counsel for J.C. Penney.

‘Finding Balance’ continued from page 1