Trichilo, Bancroft, McGavin, Horvath & Judkins, P.C.is located in Fairfax, Virginia, and traces it origins to 1980, when two lawyers commenced a small litigation practice. Since then we have experienced gradual and continued growth, now with fi fteen lawyers. Our attorneys have signifi cant and substantial litigation experience and regularly handle matters, throughout the Commonwealth of Virginia and the District of Columbia, involving automobile and premises liability, personal injury, employment law, medical malpractice, professional malpractice, contract and business litigation, products liability, criminal acts liability, fi re and casualty claims, arson defense, insurance law, policy coverage, defamation, workers’ compensation, and government and sovereign immunity law. Collectively, our fi rm has tried thousands of cases since its formation. Our goal is to provide our clients with the highest level of legal service, ethical representation, and expertise in reaching favorable, expeditious, and economic resolution of litigation or anticipated litigation.

First row from left to right: Saundra R. Mastro, Dawn E. Boyce, Melissa H. Katz, Julia B. Judkins, Heather K. BardotSecond row from left to right: Steven W. Bancroft, J. Justin McKenna, Jr., Michael J. Carita, Stephen A. Horvath, Joseph C. Veith III, Michael E. Thorsen, John D. McGavin, Benjamin J. Trichilo.

Not Pictured: John C. Nichols, M. Elizabeth Millette

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Trichilo, Bancroft, McGavin, Horvath & Judkins, P.C.3920 University Drive • Post Offi ce Box 22

Fairfax, Virginia 22030-0022

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Worker’s Compensation

UPDATEBy: Benjamin J. Trichilo, Esquire

1. DON’T FORFEIT YOUR $56,000.00 LIEN!

Payment of a workers’ compensation claim confers upon the insurer subrogation rights against any third party who is legally liable for the injury to the plaintiff. However, the insurer must take certain steps to protect its subrogation rights. Failure to comply can result in forfeiture of the lien. This lesson is dramatically shown by a recent decision of the Virginia Supreme Court that held that a workers’ compensation insurer failed to properly perfect subrogation rights, thereby forfeiting a $56,000.00 lien.

Even though the insurer’s workers’ compensation attorney fi led a Notice of Lien with the court where the third party action was pending, the court said that this action was insuffi cient. The plaintiff settled the claim and signed a Release Agreement prior to the fi ling of the insurer’s motion to obtain its subrogation lien from the settlement proceeds. The court said that the plaintiff’s Release Agreement extinguished the subrogation rights of the insurer, even though the settlement agreement had been entered into without the knowledge or consent of the insurer. One of the questions left unanswered by this decision is whether the settlement releases the workers’ compensation insurer from future liability in the underlying workers’ compensation case. What is unmistakably clear from the decision however, is that the insurer’s $56,000.00 lien cannot be enforced, and the plaintiff receives the full amount of the third party settlement.

Volume 1, Issue 1 December 2003

To provide adequate protection of workers’ compensation subrogation rights, either a court order in the underlying tort action or a written agreement with plaintiff’s counsel will be necessary. The mere fi ling of a Notice of Lien with the court will be insuffi cient to protect the workers’ compensation insurer if the plaintiff enters into a settlement agreement without the knowledge and consent of the insurer. Don’t make a $56,000.00 mistake! The case in question is Yellow Freight Systems, Inc. v. Courtaulds Performance Films, Inc., 266 Va. 57, 580 S.E.2d 812 (2003).

2. ARE THOSE 20% PENALTIES REALLY DUE?The Virginia Workers’ Compensation Act assesses 20% penalties on all benefi ts that are not paid within fourteen days of the due date. However, the benefi ts are not due until the appeal period expires. This means that in most cases, an insurer will have thirty-four days from the date of a Deputy Commissioner’s award to issue payment before penalties can be assessed.

In Ratliff v. Carter Machinery Co., Inc., 39 Va. App. 586, 575 S.E.2d 571 (2003), the Court of Appeals held that the statutory period for payment is controlling even though the terms of a Settlement Order prepared by the parties required payment within ten days following date of entry of the Order. When the insurer did not pay an $85,000.00 settlement within ten days, the claimant requested 20% penalties.

The court denied the claimant’s request, holding that the ten day payment requirement was contrary to statute. The insurer is not required to issue payment until fourteen days after the expiration of the twenty day appeal period, and accordingly, penalties could not be assessed unless payment was issued more than thirty-four days from the date of entry of the Order.

We want to congratulate our newest associates, M. Elizabeth Millette and J. Justin McKenna, Jr., on passing the bar.

Inside

About TBMHJ.............................. 8HIPAA Compliance...................... 3 New Judges ................................ 2New Legistation ......................... 4Supreme Court Case Update...... 5Workers Compensation .............. 1Prof. William’s Wise Words ......... 7Bankruptcy: Tips to defend ......... 2

continued from page 6by arguing that customers did not fall within the meaning of permissive users, and even if they did, the customer chose by contract to decline the liability insurance supplement, allowing their own liability policy to accept primary coverage.

The Court ruled in favor of USAA, stating that it was “clear that no portion of the statutory scheme related to the insurance requirements for a self-insuring rental car company permits such a company by contract with its customer to avoid its obligation to assure primary liability coverage by purporting to alter or expand the insurance coverage provided by the customer’s own carrier.” Id. at 458.

“The fellow that agrees with everything you say is either a fool or he is getting ready to skin you.”

– Kin Hubbard

with everything you say is

“He that always gives way to others will end in having no principles of his own.” – Aesop

“A jury consists of twelve persons chosen to decide who has the better lawyer.”

– Robert Frost

TRICHILO, BANCROFT, MCGAVIN, HORVATH & JUDKINS, P.C. (703) 385.1000 • Fax (703) 385.1555 • www.tbmhjlaw.com

New Judges Take The BenchBy: J. Justin McKenna, Jr., Esquire

Because of the retirement of The Honorable Paul F. Sheridan from the Circuit Court of Arlington County and The Honorable J. Conrad Waters, Jr. from the General District Court of Fairfax County, two new judges have taken the bench in the Northern Virginia area.

The Honorable James F. Almand, appointed to the Circuit Court of Arlington County in August 2003, was a member of the Virginia House of Delegates for Arlington County from 1978 until this year. Judge Almand also served as an Assistant Commonwealth’s Attorney for Arlington County from 1974 to 1977. He earned both his Bachelor’s degree and law degree from William and Mary. He is on the Advisory Board of Arlington Hospital, and is a member of the

Arlington Jaycees. In 1999, he was the recipient of the Virginia Sheriff’s Association, Legislator of the Year Award. He also received the William L. Winston Award for long-standing public service to the community from the Arlington County Bar Foundation in 2000. Judge Almand is 55 years old, married, with three children.

The Honorable William J. Minor, Jr. was appointed to the General District Court of Fairfax County in April 2003. Prior to taking the bench, Judge Minor was Staff Counsel at Allstate Insurance Company. He has also worked as a Staff Attorney for Travelers Insurance, an associate for the law fi rm of Godard, West & Adelman, P.C., and an Assistant Commonwealth’s Attorney for Fairfax County. Judge Minor earned his undergraduate degree from the Virginia Military Institute in 1974, then served in the military before attending law school. He earned his law degree from George Mason University School of Law in 1982. Judge Minor is 51 years old, married, with four children.

The vacancy in the Circuit Court of the City of Alexandria is expected to be fi lled by the legislation early next year.

Plaintiff’s Non-compliance with Bankruptcy Laws Can Result in Dismissal of The Case

or Exclusion of Medical BillsBy: Michael J. Carita, Esquire

Under the Federal Bankruptcy Rules, when persons declare bankruptcy, all of their assets including any causes of action which they may have against other people become the property of the bankruptcy estate. Therefore, if a plaintiff declares bankruptcy after becoming involved in an accident, the plaintiff must comply with the relevant bankruptcy laws in order to

have standing to fi le a lawsuit against the tortfeasor. These laws require the plaintiff to declare the potential lawsuit or claim as an asset of his estate, and then to obtain an order from the bankruptcy court excluding the potential lawsuit from the bankruptcy estate and returning the ownership of that lawsuit to the plaintiff.

Even if the plaintiff has successfully applied for an exemption of the cause of action and has properly brought the lawsuit, any debts, including medical bills arising from the accident which were discharged by the bankruptcy, will not be collectible in the lawsuit and can be excluded from damages. The discharge of a debt under bankruptcy is separate from the “collateral source rule.” Because the bankruptcy court has eliminated the debt and there is no obligation to pay it by any person or third-party, the debt does not exist anymore and that item of damage has not been incurred by the plaintiff.

Even though bankruptcy may not be a common phenomenon, our offi ce has handled several cases this year in which the plaintiff either failed to list the accident or potential claim as an asset of his bankruptcy estate or sought to wrongfully recover medical expenses discharged by the bankruptcy. The successful resolution of each case resulted in either dismissal of the case where the plaintiff had no standing to bring the action because of his failure to list the claim as an asset of the estate or a severe curtailment of plaintiff’s special damages. This is an issue that should be explored both during the initial adjusting of any loss or preliminary discovery in any case in active litigation.

“A jury consists of twelve persons chosen to decide who has the

Professor William’sWise Words

“The sounder your argument, the more

satisfaction you get out of it.” – Edward Howe

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motion to dismiss for plaintiff’s failure to serve the defendant within one year of the filing date of the lawsuit precluded plaintiff’s right to take a non-suit.

Plaintiff must recommence her action, after taking a non-suit, within the original statute of limitations or the six months period following the entry of the non-suit by the court. The statute of limitations is not tolled while the first action is pending. The Court affirmed a trial Court’s decision that the plaintiff did not timely re-file her second action. See Simon v. Forer, 265 Va. 483, 578 S.E.2d 792 (2003).

PUNITIVE DAMAGES

A drunk driver who allowed his equally drunk companion to drive his car and urged him to “go faster” must pay punitive damages on a negligent entrustment theory to three persons who were injured in another vehicle which was struck head-on by the drunk driver. In that case, the plaintiff driver’s insurance carrier entered an appearance pursuant to Va. Code §38.2-2206 (F) and sought, unsuccessfully, to have the trial court instruct the jury that it would be paying any punitive damage award instead of the defendants. The Court affirmed the trial court’s decision not to disclose who would actually be paying any punitive damage award. The Court reasoned that punitive damages were not only designed to “punish” but also served to protect the public and provide warning to deter others. See Allstate Insurance Co. v. Wade, 265 Va. 383, 579 S.E.2d 180 (2003).

In Woods v. Mendez, 265 Va. 68, 574 S.E.2d 263 (2003), the Court reversed a trial court’s ruling dismissing a statutory and common law punitive damage claim arising out of a car accident. The defendant argued that the certificates of analysis which measured the defendant’s blood alcohol content ( BAC) after the accident were conclusive of the defendant’s BAC at the time of the accident. The results fell below the minimum level necessary to support a statutory punitive damage claim pursuant to Va. Code Section 8.01-44.5.

Prior to the trial court’s ruling on this issue, the plaintiff proffered that her expert witness, a forensic toxicologist, would testify that the defendant’s BAC at the time of the accident was far in excess of the statutory minimum but that the level had decreased until the time that he was tested. In rejecting the defendant’s argument that the certificates of analysis were controlling on the level of the BAC, the Court stated “we hold that Va. Code Section 8.01-44.5 does not establish any evidentiary presumption regarding

the results of a chemical analysis conducted on a sample of a driver’s blood or breath taken after his arrest under Code §18.2-266 for driving under the ifluence of alcohol.” Mendez, 265 Va. at 75. Therefore, a plaintiff is not precluded from using a toxicologist to prove that a defendant’s BAC at the time of an accident is equal to or greater than the statutory minimum level of .15 percent even if the certificate of analysis shows a BAC less than the statutory minimum.

In another punitive damages case, Doe v. Isaacs, 265 Va. 531, 579 S.E.2d 174 (2003), the Court addressed a hit-and-run car accident. The defendant rear-ended two plaintiffs, then spoke to them in slurred speech and asked them not to call the police. When the driver of the struck vehicle crossed the street to call an officer to the scene, the John Doe returned to his vehicle and fled the scene. The trial court allowed the jury to consider punitive damages based on the fact that the John Doe defendant left the scene.

The Court reversed, holding that the John Doe defendant’s actions did not rise to the level of willfulness or a conscious disregard of the rights of others necessary to support a punitive damage claim. The Court explained that the purpose of punitive damages is for deterrence and punishment, and although “this conduct amounts to gross negligence, which shocks fair-minded people; it is less than willful recklessness.” Id. at 538.

RENTAL COMPANIES PRIMARY LIABILITY

In USAA Casualty Ins. Co. v. The Hertz Corp., 265 Va. 450, 578 S.E.2d 775 (2003), the Court addressed a standard rental car contract issued by Hertz, which provided that the renter’s own automobile liability insurer would be primarily responsible in the event of an accident, if the renter opted not to purchase Hertz’s liability insurance supplement. The renter, Hess, was insured under an automobile policy issued by USAA which had an “other insurance” provision stating that any insurance provided to Hess would be excess over any other collectible insurance.

Hess was involved in an accident, after which USAA paid his damages and filed a subrogation action against Hertz. A declaratory judgment action was filed, and counsel for USAA argued that since a rental car customer is a permissive user of a vehicle owned by a self-insured rental car company, the company is required under Virginia code to provide primary liability coverage on such vehicles at all times. Hertz responded

continued on page 7

Are You Complying With HIPAA?By: Heather K. Bardot, Esquire

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was signed into law by former President William J. Clinton on July 21, 1996. One of its purposes was to protect patients from disclosure of information regarding their health without proper consent, authorization or legal process. Although HIPAA was signed into law in 1996, it did not go into effect until April 14, 2001. States had until April 14, 2003 to bring statutes into compliance with HIPAA. This is the reason that there has been a flurry of activity surrounding HIPAA since the spring of 2003.

Virginia brought its statutes into compliance with HIPAA in March of 2003. One of the main changes was to Virginia Code §32.1-127.1:03 which is the section that governs privacy of health records. This section sets forth how a subpoena for health records may be issued and what information must be contained therein. One of the most significant changes in the statute is that a notice to providers must be embodied in any subpoena seeking health records and the notice must inform the person to whom it is directed that he may not release health records until he receives a certification from the issuing party that no motion to quash has been filed or any motion to quash which has been filed has been resolved. This certification may not be sent to the person from whom the health records are sought until fifteen (15) days after the subpoena has been issued. There are other important changes in the statute, as well, and it is worthwhile to peruse the statute.

HIPAA has also impacted Medical Authorizations or Releases. There are very specific items which must be in Medical Authorizations or Releases for them to be valid. They include: • a specific description of the information to be used

or disclosed;• the identity of the person authorized to make the

disclosure; • the identity of the person authorized to receive the

disclosure;• a description of the purpose for which the disclosure

is being made;• an expiration date; • a notice that the person signing the Medical

Authorization or Release may revoke it in writing; • a notice that the person being requested to endorse

the Medical Authorization or Release may refuse to do so and that his treatment, payments, enrollment or eligibility for benefits may not be conditioned on his refusal;

• a notice that the entity receiving the health records is not a health care provider or health plan and the information may be subject to re-disclosure by the recipient and no longer protected by HIPAA rules;

• a signature; and • a date.

If you would like to obtain a copy of a HIPAA compliant Medical Authorization or have any questions regarding HIPAA, please email me at hbardot@tbmhjlaw.com or call me at (703) 385-1000.

The Virginia Association of Defense Attorneys (“VADA”) will be holding its annual meeting and convention on October 28-29, 2004 at the Jefferson Hotel in Richmond, Virginia. Claims adjusters and representatives are welcome to attend. John D. McGavin, Esquire is President-Elect. VADA is a voluntary bar association comprised of over 800 attorneys whose practice is primarily focused on the defense of civil actions.

TRICHILO, BANCROFT, MCGAVIN, HORVATH & JUDKINS, P.C. (703) 385.1000 • Fax (703) 385.1555 • www.tbmhjlaw.com6 3

2003 Virginia Supreme Court Case UPDATE

By: Melissa H. Katz, Esquire and Saundra R. Mastro, Esquire

The following are some of the cases which have been decided by the Virginia Supreme Court since January, 2003 and pertain to either some aspect of personal injury or insurance law.

CLOSING ARGUMENT - $60 MILLION DOLLAR VERDICT REVERSED.

Because the plaintiff’s counsel made improper closing arguments in a personal injury action involving catastrophic injuries to his client, the Court reversed a $60,000,000.00 verdict in plaintiff’s favor. Plaintiff’s counsel wrongfully asked the jury to put themselves in the position of the plaintiff, who could no longer care for himself, and to consider the type of life care plan plaintiff would have if he was a Bill Gates or Howard Hughes. The prejudicial impact of these improper arguments was also illustrated by the jury’s verdict which was grossly in excess of plaintiff’s own life care plan calculations. See Velocity Express Mid-Atlantic v. Hugen, 266 Va. 188, 585 S.E.2d 557 (2003).

INSURANCE LAW

A. PERSONAL LIABILITY UMBRELLA POLICY - NO COVERAGE FOR PERSONAL INJURIES TO INSURED IN CAR ACCIDENT. A husband, who was the named insured under his personal liability umbrella policy with GEICO, was injured in a car accident because of his wife’s negligence. GEICO paid all claims under their auto policy, but sought a declaratory judgment that it was not liable under the umbrella policy. GEICO appealed the trial court’s finding that it was liable under the umbrella policy. The Court reversed and entered judgment for GEICO, finding that the umbrella policy provided general liability coverage and was not a policy issued upon a motor vehicle as contemplated by the omnibus clause (Va. Code §38.2-2204). The Court also held that the policy exclusion for personal injury to any insured was valid. See GEICO v. Moore, 266 Va. 155, 580 S.E.2d 823 (2003).

B. MATERIAL MISREPRESENTATION

In Montgomery Mutual Insurance Co. v. Riddle, Record No. 021271, Supreme Court of Virginia, 2003 LEXIS 104, October 31, 2003, Decided, the court reiterated that when an insurance carrier seeks to void a policy for alleged material omissions or misrepresentations on the application pursuant to Va. Code §38.2-309, “the insurer must show, by clear proof, two facts: (1) that the statement or omission on the application was untrue; and (2) that the insurance company’s reliance on the false statement or omission was material to the company’s decision to undertake the risk and issue the policy.” Thus, proof of falsity is not enough; in order for an insurer to successfully void a policy, it must prove reliance on the misrepresentation in issuing the policy.

NON-SUIT - WHEN IT CAN AND CANNOT BE TAKEN.

Va. Code §8.01-380 permits a plaintiff to take one non-suit as a matter of right. However, the non-suit must be taken before a motion to strike the evidence has been sustained or before the jury returns or before the action has been submitted to the court for decision. In Ford Motor Co. v. Jones, Record No. 030008, Supreme Court of Virginia, 2003 LEXIS 99, October 31, 2003, Decided, the Court held that a plaintiff may take a non-suit even after a judgment that confirmed a jury verdict had been reversed and remanded to the circuit court for a new trial. Since the plaintiff requested a non-suit before the start of the new trial, the Court held that none of the exceptions precluding plaintiff’s right to one non-suit as a matter of right applied.

However, in Atkins v. Rice, 266 Va. 328, 585 S.E.2d 550 (2003), the Court held that the plaintiff cannot take a non-suit after a motion to dismiss had been presented to the trial court for its decision. This was after both parties presented written and oral arguments to the court. Pursuant to Va. Code §8.01-380 (A), a non-suit must be taken before an action is submitted to the trial court for decision. Thus, plaintiff’s counsel’s attempt to wait to see how the court ruled on defendant’s

NEW LEGISLATION IN 2003

By: John C. Nichols, Esquire

The General Assembly continued to modify and enact new legislation this year. There are some noteworthy changes in Virginia law which impact the insurance industry and personal injury litigation. This article outlines some of the relevant changes effective July 1, 2003.

These amendments include some significant changes to the insurance code. In handling motor vehicle property damage claims, insurers who recommend a repair shop to their insured are now required under Va. Code Section 38.2-517 to inform their insured that there is no obligation to use the recommended shop. An insurer must also disclose any financial interest it has in the recommended shop. If the insured chooses a different shop, the insurer is not required to pay more than the prevailing competitive rate for repairs within a reasonable geographic area.

In the wake of recent terrorist threats, Va. Code Section 38.2-2105 has been revised to take into account the Terrorism Risk Insurance Act (TRIA). If an insured with a commercial property and casualty policy refuses coverage offered pursuant to TRIA, the standard fire policy will not extend to cover losses caused by certified acts of terrorism.

Prior to the 2003 amendments, insurers sending notices of cancellation were required either to use certified or registered mail, or obtain a mailing receipt from the post office noting the name and address of the insured. Insurers now may simply obtain a master receipt from the post office containing the date of mailing and the number of items mailed, provided the insurer creates a corresponding mailing list. This mailing list should contain the names and last-known addresses of the insureds, along with a signed statement that the mailing list corresponds with the post office receipt. If these procedures are followed, an insurer no longer needs to obtain itemized receipts from the post office in order to

make an effective policy cancellation. The receipts and mailing lists should be retained, however, for at least one year after mailing. See Va. Code Sections 38.2-231; 38.2-2113; and 38.2-2208.

In civil matters, infant settlements can now be approved up to $15,000.00 without a bond requirement under Va. Code Section 8.01-606. Before the amendment, a bond was required for any settlement over $10,000.00.

Va. Code Section 8.01-53 designates the statutory beneficiaries entitled to shares of a recovery for wrongful death. Previously, only the spouse, children, grandchildren, parents and siblings of the deceased, and other dependent relatives living in the deceased’s home, had claims to a share. In the event the decedent is survived by none of these individuals, however, this year’s amendment extends the class of potential beneficiaries so that all lineal relatives of the decedent, no matter how far removed, may claim a share. If the decedent has no living relatives, his or her late spouse’s closest lineal relatives may recover.

Title 8.01, Article 7.1 adds ambulance services and nursing homes to the long list of health care providers qualified to place liens for their services on an insured’s recovery for personal injury.

New legislation includes Va. Code Section 8.01-225.01 which provides immunity to hospitals and health care providers for injuries resulting from abandonment of care in response to certain man-made disasters. The specified disasters include a broad range of emergencies, from power failures, transportation accidents and resource shortages to environmental contamination, terrorist attack and war. This immunity is available only in the event that a state or local emergency is declared by the appropriate authorities.

A relevant change in the traffic laws pertain to bicyclists who are now required to yield to pedestrians in shared-use paths and carry no more persons on their bicycle than it was designed to carry. See Va. Code Sections 46.2-904 and 906, respectively.

Finally, condominium owners and their insurers should be aware of new subsection (C) of Va. Code Section 55-79.81. The revised section now imposes strict liability on condo unit owners to pay the deductible under the master casualty policy in the event of damage to a second unit, where the cause of damage originated or simply passed through the first unit. Because of the broad liability imposed by the amendment, it may come under attack in the next year.

TRICHILO, BANCROFT, MCGAVIN, HORVATH & JUDKINS, P.C. (703) 385.1000 • Fax (703) 385.1555 • www.tbmhjlaw.com

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