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Sunday, September 03, 2006

Ind. Courts - More on: $18 million Marion County jury verdict against local law firm

More on Wednesday's story about the Indianapolis law firm hit with an $18 million malpractice judgment. John Ketzenberger, Indianapolis Star business columnist, writes today:

But what happened this week to the folks at Fillenwarth, Dennerline, Groth & Towe is no joke. The future of this venerable labor-law firm is in question after a jury decided it alone was liable for the spectacular demise of a health insurance trust fund in 2002.

The tab: $18 million.

"There but for the grace of God go I," said Brian Burke, chairman of the Baker & Daniels law firm.

If that's what goes through the mind of a lawyer in one of the city's largest firms, you can imagine what those in smaller firms think.

"It's the worst, most god- awful thing I've ever seen," said Bill Hurst, a partner with Mitchell Hurst Jacobs and Dick.

Fillenwarth Dennerline was on the hook because everyone else involved in the collapse of the Indiana Construction Insurance Trust already had settled with the Indiana Department of Insurance.

When the state liquidated the trust, it collected $7 million to pay back the medical claims of 8,200 Hoosiers.

Frederick Dennerline III wanted the law firm's insurance company to settle for $1 million, too, according to a separate lawsuit. He was the attorney for the trust, which was a medical insurance collective of union contractors.

The insurance company refused to settle, the case went to trial and, last week, the law firm and ProNational Insurance Co. were hit with an $18 million judgment.

"Guys like me lose our jobs when we don't settle for $1 million, and then it turns into $18 million," said Jeffrey Goode. He's an attorney and vice president with XL Select Professional in Dallas, which writes malpractice insurance for attorneys.

ProNational rolled the dice when it decided not to settle for the policy's $1 million limit. The gamble left Fillenwarth Dennerline's fate in the hands of a six-person jury, which showed no mercy. It could have spread liability over 50 other people or entities. But the jury put the blame squarely on Dennerline. Snake eyes.

As noted in the earlier Star story:
If the $18 million judgment stands, Hoosier policyholders won't get all the money. Administrative and legal fees must come out of the judgment. [Irwin] Levin and his Indianapolis firm, Cohen & Malad, received 30 percent of the earlier settlements.
Cohen & Malad, apparently rather than the Attorney General's office, represented the state Department of Insurance in this lawsuit. Here is the release from their website:
Cohen & Malad, LLP wins $17,991,043 jury verdict for 8200 Hoosiers who had health care coverage through the Indiana Construction Industry Trust (ICIT).

ICIT became insolvent and was placed into liquidation by the Indiana Department of Insurance in 2002. The Department of Insurance retained Cohen & Malad, LLP to bring claims against those responsible for millions of dollars of claims for health care coverage that had not been paid by ICIT.

Cohen & Malad previously resolved claims against dozens of defendants, but was unable to reach agreement with ICIT’s former counsel, Frederick Dennerline, III and the law firm of Fillenwarth Dennerline, Groth & Towe. Cohen & Malad’s managing partner, Irwin Levin and his partner, Richard Shevitz, presented testimony from Dennerline’s former client, along with testimony from experts, as well as from Mr. Dennerline. At the conclusion of a six day trial before the Honorable Theodore Sosin, a Marion County jury returned a verdict against Dennerline and his firm in the amount of $17,991,043, and completely rejected the defendants’ attempts to apportion fault for those damages among dozens of non-parties.

Irwin Levin explained that “as I said in my closing argument to the jury, I am sad to have to bring a legal malpractice claim against ICIT’s former counsel, but I am sadder for the thousands of Hoosiers who are struggling to pay health care bills as a result of such negligence. We hope this victory will help ease those burdens.”

Posted by Marcia Oddi on September 3, 2006 08:49 AM
Posted to Indiana Courts