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Wednesday, August 30, 2006
Ind. Courts - $18 million Marion County jury verdict against local law firm
The Indianapolis Star reports today, in a story by Jeff Swiatek:
More than 8,000 Hoosiers stiffed by their health plan could share in an $18 million malpractice judgment made Monday against the Indianapolis law firm that represented the plan.Here is a news item from the Cohen & Malad, LLP website.The verdict, by a Marion Circuit Court jury after a six-day trial, amounts to a potentially crippling financial blow for the 43-year-old Eastside firm Fillenwarth Dennerline Groth & Towe, known for its labor law practice. * * *
The jury found Fillenwarth Dennerline liable for failing to notify the health plan's trustees of its growing financial losses. The now-defunct plan, the Indiana Construction Industry Trust, was set up by about a dozen construction-related companies to cover their nonunion employees. * * *
The verdict equals the unpaid medical claims the plan's 8,200 members faced as a result of its 2002 insolvency. It was the costliest bust of an Indiana health plan.
Fillenwarth Dennerline suggested it would appeal the judgment. "We strongly disagree with the jury's decision and intend to pursue all of our legal options," the law firm said in a statement issued by one of its outside attorneys.
The statement said the health plan "failed due to gross mismanagement by (its) executives and others. Nevertheless, the jury decided to hold one lawyer responsible for these business decisions."
The plan's top two executives have gone to prison for embezzling money from the former Indianapolis plan. Neither Fillenwarth Dennerline nor its attorneys face criminal charges.
The state Department of Insurance, which brought the civil lawsuit against Fillenwarth Dennerline, already has collected more than $7 million in settlements from other parties it sued over the collapse, including trustees of the nonprofit plan.
Fillenwarth Dennerline was the only defendant to fight the insurance department all the way to trial. The law firm sued its malpractice insurer, in a separate lawsuit, for refusing to let it settle with the state for $1 million, which is the firm's malpractice coverage limit.
A multimillion-dollar malpractice judgment is "obviously a seriously bad day for a law firm," said David Millard, vice chairman of the business department at the Indianapolis law firm of Barnes & Thornburg.
But it may be hard for the state to collect the $18 million if the law firm's insurance doesn't cover claims that large, Millard said.
Going after the firm's attorneys individually to collect the judgment "is never an easy thing to do. It's a very messy process," he said. "Oftentimes such matters get settled on appeal" for a lower amount, he said.
Irwin Levin, an attorney for the Insurance Department, said the verdict means "8,200 Hoosiers who got stuck with medical bills they had paid premiums to have covered will now have additional funds to pay their doctors and hospitals."
Levin showed the Circuit Court jury evidence that plan attorney Fred W. Dennerline III had a copy of a fraudulent balance sheet, created by executives to hide the plan's growing losses, months before trustees saw it.
The balance sheet included nearly $3 million in leased jewels, which were listed as an asset but should have been accounted for as a liability, the Insurance Department has said.
If the $18 million judgment stands, Hoosier policyholders won't get all the money. Administrative and legal fees must come out of the judgment. Levin and his Indianapolis firm, Cohen & Malad, received 30 percent of the earlier settlements.
Posted by Marcia Oddi on August 30, 2006 10:26 AM
Posted to Ind. Trial Ct. Decisions