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Wednesday, August 26, 2015

Ind. Decisions - 7th Circuit decides one Ind. toxic tort case today and a tax case of interest

In C.W. & E.W. v. Textron, Inc. (ND Ind., Simon), a 21-page opinion, Judge Kanne writes:

Government regulators and scientists agree: exposure to vinyl chloride poses serious health risks to humans. Vinyl chloride is a known carcinogen, mutagen, and genotoxin. But in what quantity and for how long must a human—in this case, two infant children—be exposed to vinyl chloride before those health risks materialize? The experts for C.W. and E.W., the minor children of Jason and Adele Wood, attempted to answer these difficult questions in this toxic-tort case.

Unfortunately for the Woods, their attempts fell short. The district court excluded each of the appellants’ experts, observing they did not use reliable bases to support their opinions. Having excluded the appellants’ experts, the district court then granted summary judgment in favor of Textron. It found that, without the experts’ opinions, the appellants could not prove general and specific causation— required elements under Indiana law in a toxic-tort case. Although we disagree with the district court’s rationale regarding causation, we nevertheless affirm. * * *

For the foregoing reasons, the district court properly applied the Daubert framework to the appellants’ experts. It did not abuse its discretion in excluding their testimony. Without expert testimony to prove general and specific causation, the appellants could not prove their case. Although we disagree with the district court that differential etiology can never be used to establish general causation, we nevertheless AFFIRM its final judgment.

In Craig Patrick v. Comm. Internal Revenue (US Tax Ct), a 7-page opinion, Judge Williams writes:

This case concerns the proper tax treatment of nearly $7 million that the government paid Craig Patrick for uncovering a Medicaid fraud scheme where the government paid in excess of $75 million in phony billings. Patrick and an associate filed a qui tam suit under the False Claims Act against Kyphon, Inc. alleging that the company induced hospitals to file claims for Medicare reimbursement “for unnecessary inpatient hospital stays.” The United States intervened and settled the case. For his role in initiating the suit Patrick received a relator’s share of the government’s recovery, totaling $5.9 million. Patrick also received $900,000 from the settlement of related qui tam actions against hospitals that overbilled Medicare.

Patrick and his wife, Michele, filed joint tax returns for 2008 and 2009 reporting his share of the qui tam recoveries as capital gains. The Commissioner of Internal Revenue issued deficiency notices, notifying the Patricks that the relator’s shares must be reported as ordinary income. The Tax Court upheld that determination. We agree with the Commissioner and the Tax Court that the relator’s share of a qui tam recovery is not the result of a “gain from the sale or exchange of a capital asset.” Rather, Patrick’s relator’s shares are a reward for filing the suit against Kyphon and the hospitals and must be treated as ordinary income.

Posted by Marcia Oddi on August 26, 2015 01:55 PM
Posted to Ind. (7th Cir.) Decisions