Current Norman, developments in Maine law Hanson & SUMMER 2013 Detroy, LLC Vol. 26, No.2

Sleeping Giants: Defamation Claims and “Personal Injury” Coverage

By Russell B. Pierce, Jr., Esq.

On occasion, a complaint trigger- potentially impose liability on a person ing defense coverage under standard by virtue of the person’s speech, logi- commercial general liability or home- cally this network of First Amendment owners policies may also include a principles will be brought into play. claim for “defamation.” Unless the The network of principles has been ex- defamation claim is the main feature of pounded upon and developed since the the lawsuit, it is also not uncommon to founding of the nation, and continues see defamation claims pleaded as “tag- to undergo reaffirmation and further along” claims, usually appearing near evaluation with nearly every term of the end of the complaint. Just as often, the Court. State courts are bound by

defamation claims appear in this fash- the Constitution to apply these federal Russell B. Pierce, Jr. Esq. ion in cases primarily focused on gen- constitutional principles to state tort erally uncovered events like business claims, like defamation. INSIDE disputes, breaches of contract, or other Hence, what often begins as a Sleeping Giants: Defamation Claims and kinds of “interference” torts. The defa- “tag-along” claim to other more cen- “Personal Injury” Coverage 1 mation claim may also be pled with a tral covered or uncovered occurrences series of related torts, such as “invasion in a complaint, turns into a force of its Emergency in the ED: Complying with of privacy,” the tort of “false light,” the own: we have seen the seemingly in- EMTALA When Patients Refuse Care 3 tort of “highly offensive” publicity, the nocuous defamation claim open up the Recap of 2013 Workers’ Compensation free-standing “infliction of emotional case to a unique and potentially com- Legislation 5 distress” claims, or even a claim for plex mix of law involving federal con- Designation of Retirement Account tortious interference with advantageous stitutional case law and Maine statutes. Beneficiaries: An Integral Part of An economic relations. What all of these Some statutes, like Maine’s so-called Estate Plan 7 defamation and companion tort claims “anti-SLAPP” statute, even have the Feeling Your Pain: Law Court holds that have in common, is that the conduct potential to “take over” a case by de- emotional distress is not a covered “bodily the plaintiff claims caused an injury, is laying all discovery and thrusting an injury” in personal liability insurance speech – written or spoken words. interlocutory appeal into the matter, at policy. 9 Since each of these torts involve the expense of the parties turning to the Norman, Hanson & DeTroy Sponsors speech, each of them forklift into the main crux of the lawsuit. Cases poten- 75th Anniversary of Maine Credit Union case a heavy and complex cargo load tially triggering the “anti-SLAPP” stat- League. 11 of First Amendment law and related ute are those where the complained-of Workers’ Compensation - Law Court statutory law, all to be applied or an- “speech” is speech directed to govern- Decisions 12 alyzed in the context of these unique mental agents or agencies (e.g., po- speech-based torts. The First Amend- lice officers, local municipal officials, Recent Decisions From the Law Court 13 ment of the U.S. Constitution protects planning board members, city coun- New Associate: Sadie Jones 15 against laws “abridging the freedom of cilors, etc.). A recent example here in Kudos 15 speech.” Because defamation cases, State court, in a matter still pending, NHD attorneys honored by Benchmark and any related speech-based claims, involved a business dispute focused Litigation 16 primarily on breach of joint venture ar- necessary that the person suffer bodily damages exposure is evaluated. “Per- rangements and “promissory estoppel” injury as a result of the speech-based sonal injury” in this form is not bodily claims – business disputes not likely to offense, in order to trigger coverage. injury, so there are rarely if ever any trigger any insurance coverage. But Although consequential bodily injury medicals associated with the damages there was a makeweight “defamation” claims can be subsumed in or part of to reputation and/or “mental anguish claim thrown in. The defamation claim defamation injury (usually at least in and suffering” that a plaintiff seeks to was based on somewhat tangential the form of emotional distress) there recover. Sometimes there is an identifi- statements the defendant had made to does not need to be any bodily injury able loss of money, especially in cases State investigators, during an investiga- pled or claimed in order for the “per- where the defamation claim is based on tion that happened to follow an alleged sonal injury” coverage to be otherwise publication to a third person who might unraveling of the parties’ business deal- triggered. Further, the idea of “pub- have conferred an economic benefit of ings. Ultimately, the defamation claim lication” under the definition of the some kind on the plaintiff. But just as was dropped voluntarily by the plain- offense in issue, is the idea that the de- often, the defamation claim rests on tiff, mid-way through the case, because fendant merely have spoken or written damage to reputation, which, in gen- an anti-SLAPP interlocutory appeal to the defamatory words to at least one eral, is the kind of damage that the law the Maine Law Court had threatened to other person (someone other than the recognizes and provides for in defama- postpone resolution of the entire rest of plaintiff) to communicate the slander tion recovery. Damage to reputation the case for at least another year. or libel. No defamation claim requires arising out of a defamation claim is, On the defense side of the issues, a “publication” in the sense of printed by definition, “personal injury” cov- defamation claim raises other concerns, publication, or in the sense of open ered under insurance policies, because not the least of which is a set of unique broadcast on television or broad cir- it is injury “arising out of” the particu- insurance coverage considerations. In culation in the newspaper. (There are lar offenses involving “oral or written many standard homeowners insurance related speech-based torts – like the tort publication of material that slanders or policies, “personal injury” coverage of “highly offensive” publicity – which libels a person or organization” under will be provided as an additional cov- do, however, require widespread pub- the policy definitions. erage, often by separate endorsement licity as an essential element.) In most Jury verdicts in defamation cases such as that provided by ISO form HO lawsuits the defamation claim indeed are as wide-ranging and to large degree 24 82 04 02. In turn, in typical com- takes the form of much more limited unpredictable as the variety of cases mercial general liability policies, the types of “publication,” like e-mail cor- themselves. What makes them more coverage is provided under the “per- respondence, letters, social media pub- unpredictable than the usual assessment sonal and advertising injury” coverage lication to limited groups, or just oral of “general damages” in a tort case, is forms. In both cases (CGL and home- conversations – even private conversa- that there are often no guidelines for owners) it is important to note that the tions. the particular jury hearing a case in the “personal injury” coverage is treated Often one of the most difficult as- form of any special damages; and even separately from “bodily injury” cover- pects of a defamation claim to the de- when there are some form of special age, and the two are not the same. This fense, whether it is based on spoken damages, they could be extremely low type of injury – “personal injury” – is “slander” or written “libel,” is how or logically bear absolutely no relation defined separately from bodily injury, to the damage to “reputation” that is the and in both CGL and homeowners poli- Norman, Hanson & Detroy, LLC main driver of the plaintiff’s claim. cies consists of injury arising out of In practice, this jury verdict valu- “oral or written publication of material ation problem is addressed overall by that slanders or libels a person or or- the more subjective assessments of the ganization or disparages a person’s or is published quarterly to inform you of recent developments in the law, particularly Maine law, and plaintiff himself or herself. To evalu- organization’s goods, products or ser- to address current topics of discussion in your daily ate the case exposure, the defense will vices.” Personal injury can also arise business. These articles should not be construed as legal advice for a specific case. If you wish a copy ask questions like whether the plaintiff out of claims such as false arrest or of a court decision or statute mentioned in this issue, is simply “likable” to a jury; whether malicious prosecution, among the list please e-mail, write or telephone us. the plaintiff had a “good reputation” of other specific offenses in this part of Stephen W. Moriarty, Editor to begin with; and if the plaintiff’s the insurance policy, including “oral or Lorri A. Hall, Managing Editor reputation was strong in the beginning, written publication of material that vio- Norman, Hanson & DeTroy, LLC whether in theory it has really endured lates a person’s right of privacy.” P.O. Box 4600, Portland, ME 04112 any harm by being subject to dispar- Telephone (207) 774-7000 In this definition, “slander” means FAX (207) 775-0806 aging speech. Inevitably, the subjec- spoken defamation; and “libel” means E-mail address: [email protected] tive questions veer to the nature of the written or printed defamation. It is not Website: www.nhdlaw.com Copyright 2012 by Norman, Hanson & DeTroy, LLC speech, too, so that damages start to be- come “guesstimated” naturally in rela- 2 Norman, Hanson & DeTroy Newsletter / Summer 2013 tion to the precise conduct in issue: Was But if it is any consolation to the claim, if at all, is on summary judg- the defamation prolonged, repeated, or defense, because a defamation claim ment, relying on all the important prin- relentless? Or was it a brief, one-time imports “freedom of speech” princi- ciples of the First Amendment. On the mention? What did the listener or the ples, a defamation claim can often be other hand, plaintiffs have experienced receiver of the message think? Was the significantly narrowed before trial, and how a defamation claim will throw the speech laced with rhetoric or figurative quite often successfully defeated with- doors of discovery “wide open,” intrin- language that no one really takes seri- out a trial (through summary judgment sically folding into the case aspects of a ously, or was the speech conveying a or other dispositive motion). In the plaintiff’s personal and public life, and provably false fact about the plaintiff end, however, what most often appears what other people really think about in a way in which that falsity might be at the beginning of the case as a quiet that, in a fashion not always truly in- believed? The difficulty in valuing the claim “tossed into the mix” of a much tended by the plaintiff when the case exposure in defamation claims is that more fundamental or paramount dis- began. In either case, “personal injury” there is no objective rule of thumb, no pute between parties, becomes a claim insurance coverage is likely triggered if objective measures, and only subjective that is more than either party bargained there are CGL or deluxe homeowners impressions to guess at an outcome. It for in the handling of the case through policies in place, making defamation seems that every defamation case is discovery and trial. and related speech-based claims the “one-of-a-kind,” and very rarely can For the defense, sometimes the only potential “sleeping giants” of complex the facts of one case inform the out- way to defeat a legitimate defamation litigation. come of another. Emergency in the ED: Complying with EMTALA When Patients Refuse Care

By Jonathan W. Brogan, Esq. and Kristina M. Balbo, Esq.

Jonathan Brogan, assisted by Kris- tina M. Balbo, recently conducted a seminar at a local hospital regarding the federal Emergency Medical Treat- ment and Labor Act (“EMTALA”), 42 U.S.C.A. § 1395dd. This presentation raised a number of questions regarding some of the thornier issues with respect to hospital responsibility under the stat- ute, particularly in instances in which Jonathan W. Brogan, Esq. Kristina M. Balbo, Esq. a patient refuses examination or treat- ment against medical advice. medical screenings be administered and individual physicians found in vio- EMTALA was enacted by Con- even-handedly. Under EMTALA, a lation of the statute could be subject to gress in 1986 as a response to a prac- hospital is obligated to provide these civil monetary penalties up to $50,000 tice known as “patient dumping,” in services regardless of an individual’s (or, in the case of hospitals with fewer which hospitals would refuse to pro- ability to pay and without delaying to than 100 beds, $25,000). In instances of vide emergency medical treatment to inquire about an individual’s method of flagrant or repeated conduct, they could individuals who were unable to pay for payment or insurance status. also face exclusion from participation their care, or would transfer patients in EMTALA applies to all hospitals in Medicare and state healthcare pro- unstable medical conditions to public with emergency departments that par- grams. Individuals may also bring pri- hospitals in an attempt to avoid finan- ticipate in the Medicare Program, and vate rights of actions against hospitals, cial burden. The goal of EMTALA is it is enforced by the Centers for Medi- and the nature of recoverable damages to ensure that all patients, regardless care and Medicaid Services (“CMS”) will be governed by applicable state of their perceived ability or inability and the Office of the Inspector General law. to pay, be given consistent emergency (“OIG”) for the U.S. Department of EMTALA provides that all indi- medical attention and that emergency Health and Human Services. Hospitals viduals who request assistance for a

Norman, Hanson & DeTroy Newsletter / Summer 2013 3 possible emergency medical condition For example, in Reynolds v Maine- and not the hospital, that wishes to leave must, at a minimum, receive an appro- General Health, 218 F.3d 78 (1st Cir. before an adequate medical screening priate medical screening by a qualified 2000), the estate of deceased patient, can be performed? EMTALA provides medical professional (“QMP”) and, if William Reynolds, sued MaineGen- that a hospital meets the statutory re- needed, receive medical stabilization eral after it allegedly failed to diagnose quirements if it (i) offers an individual and an appropriate transfer to a differ- and treat Mr. Reynolds for a deep vein further medical examination, treat- ent medical facility. thrombosis (“DVT”) following a motor ment, or transfer under EMTALA; (ii) An emergency medical condition vehicle accident. Mr. Reynolds arrived informs him of the risks and benefits of (“EMC”) means “a medical condition at the emergency room with fractures examination, treatment, or transfer; and manifesting itself by acute symptoms to his leg and toes, and was given a (iii) the individual nonetheless refuses of sufficient severity (including severe screening for these lower extremity in- to consent to such offered care. A hos- pain) such that the absence of immedi- juries. No inquiry was made into Mr. pital must also take all reasonable steps ate medical attention could reasonably Reynolds’s family history of hyperco- to secure written informed consent of be expected to result in” placing the agulability, and he was not screened for such a refusal from either the individ- health of an individual or, in the case DVT or given any prophylactic treat- ual or a person acting on his behalf. of a pregnant woman, an unborn child ment to prevent the formation of blood Patients who leave against medi- in serious jeopardy or serious impair- clots in the ED or at any time during his cal advice, particularly under circum- ment to bodily functions or serious dys- stay at the hospital. Five days after his stances where they leave before they function of any bodily organ or part. In discharge from the hospital, Mr. Reyn- are seen by a QMP or where written the case of a pregnant woman having olds died as a result of a massive pul- informed consent cannot be obtained, contractions, an EMC encompasses in- monary embolism that emanated from pose particular challenges to hospitals stances in which there is “inadequate a DVT. The court ruled in favor of the trying to meet EMTALA requirements. time to effect a safe transfer to another hospital, finding that it had no duty to In these tricky situations, it is vital that hospital before delivery” or that such screen for DVT because there were no hospitals keep detailed and accurate re- a transfer “may pose a threat to the symptoms of the condition manifest in cords of the steps they took to comply health or safety of the woman or the the ED, and, in fact, the plaintiff ac- with EMTALA. In the case where an unborn child.” 42 U.S.C. § 1395dd(e) knowledged that it was unlikely that individual leaves without being seen by (1). Mr. Reynolds could have developed anyone, for example, a hospital should: DVT so soon after the motor vehicle When a patient requests emergency • Document the fact that the individ- accident. medical treatment, EMTALA requires ual was in the ED; Why did the court rule in favor of that a medical screening procedure be- • Retain triage notes or any other re- the hospital when this death arguably yond initial triage be performed by a cords; and QMP. This procedure must be reason- could have been avoided? EMTALA is • Document the time it was discov- ably calculated to identify critical med- not concerned with potential medical ered that the patient left, and any ical conditions that may be afflicting negligence; its goal is simply to ensure other relevant circumstances sur- symptomatic patients. The screening equal dealings for ED patients, not to rounding his departure. does not need to be perfect, and it does ensure that their care meets any pro- not necessarily need to be accurate or fessional standards of care. Plaintiff’s These issues become even more successful at identifying medical is- argument that Mr. Reynolds received complicated when a patient leaving sues; it simply needs to be adminis- disparate treatment because he was not against medical advice may not have tered uniformly among patients, and be asked about his family history for blood the capacity to make such a decision. If comparable to exams offered to other clots was unavailing because the hospi- a patient is incompetent, then he is in- patients presenting similar symptoms. tal had no general policy that would re- capable of giving his consent to refuse It is important to remember that EM- quire medical screening of leg injuries care against medical advice. A failure TALA is not intended to be used as a to include such an inquiry. The court to screen and treat incompetent patients federal malpractice statute, and those considered the fact that Mr. Reynolds who attempt to leave the ED could, plaintiffs whose EMTALA claims are was admitted as an inpatient for the then, potentially give rise to a viola- based solely on allegations of pro- EMC of his lower extremity injuries as tion of EMTALA. It is all too common fessional negligence are unlikely to prima facie evidence that the screening for hospitals to encounter individuals prevail. Moreover, the inquiry is exclu- requirements were in fact satisfied. who cannot give informed consent due sively related to care in the ED; once If the goal of EMTALA is to make to incapacitating physical conditions, a patient is admitted as an inpatient, a sure that patients seeking emergency mental illness, or drug or alcohol in- hospital’s duties and obligations under medical treatment are not turned away, toxication. Nonetheless, the statute is EMTALA generally cease. what happens where it is the patient, silent on the issue of competence, and

4 Norman, Hanson & DeTroy Newsletter / Summer 2013 CMS has not provided any guidance on ruled in favor of the hospital, noting concerns about a patient’s capacity. this point. Few courts have addressed that Plaintiff was in a Catch-22. It rea- Medical personnel should have a good this issue, and the case law that does soned that if Ms. Cavender was incom- understanding in advance of what op- exist provides little insight into a hos- petent at the time she returned to the tions may be available to them when pital’s obligations under these circum- ED, then she was also incompetent at these issues arise. For example, a hos- stances. the time of her elopement. This would pital should have guidelines as to how to address concerns about a patient that A California court managed to mean that EMTALA would therefore may be a harm to himself or others avoid this prickly situation altogether not apply because she still had inpatient when a provider is unable to talk the in Cavender v. Sutter Lakeside Hosp., status. Likewise, if she was competent patient into staying, such as notifying Inc.. 2005 WL 2171714 (N.D. Cal). to discharge herself, then she was also an administrator for further guidance or This case arose from an elderly inpa- competent to refuse examination and requesting police assistance. ED staff tient’s self-discharge from a hospital treatment against medical advice in the should remain abreast of both involun- and the hospital’s unsuccessful at- ED. Either way, the hospital could not tary commitment laws and EMTALA, tempts to convince her to come back. be found liable for allowing Ms. Cav- and should be provided with the tools Shortly after Mary Lou Cavender snuck ender to leave. they need to navigate through these out of the hospital, staff discovered her So what is a hospital to do when challenging situations. Standard forms in a ditch across the street, with a fresh EMTALA requirements and a patient’s to help document events in a uniform cut to her head. Although a nurse was rights to refuse care come to a head? manner are imperative. able to coax Ms. Cavender into the ER As with everything, the best measure to treat her fresh wound, the woman a hospital can take is to ensure that it Whatever protocols a hospital puts refused further evaluation or treatment. has developed sound procedures, and into place, there are no guarantees that Over the objections of her family, that these procedures are being carried a patient will not come back later and the hospital allowed Ms. Cavender to out in a consistent and even-handed allege an EMTALA violation. A hos- leave. Plaintiff argued that the hospital manner. During medical screenings, it pital cannot prevent an individual from violated EMTALA by failing to admit will be important to conduct a mental bringing suit; it must instead protect her because she did not have the capac- orientation evaluation if there are any itself from liability by avoiding viola- ity to refuse medical care. The court tions in the first place.

RECAP OF 2013 WORKERS’ COMPENSATION LEGISLATION

are consistent with the amendments to By Kevin M. Gillis the statute enacted in 2012, particularly The first session of the 126th relating to the creation of the Appellate Maine Legislature produced a number Division of the Workers’ Compensa- of proposals in the area of workers’ tion Board in 2012. However, the bill compensation, which was not surpris- also made some substantive changes ing in the first session after the Demo- to the Act. The legislation restores the crats regained control of the legislature eligibility of chiropractors, podiatrists, after two years of being in the minor- and psychologists to serve as indepen- ity. However, very few bills in this area dent examiners under Section 312, were actually enacted. The following which had inadvertently been removed is a summary of legislation enacted as by prior legislation. Section 218 was well as legislation proposed but not en- also amended, so that the time period acted in 2013. for the obligation of employers with Kevin M. Gillis 200 or fewer employees to reinstate the This legislation, enacted as a Resolve, Enacted Legislation injured employee to available and suit- calls for the Workers’ Compensation LD 1 able work is extended from 1 year to 2 Board to study possible means of pro- years from the date of injury. This bill, which becomes effective on tecting workers who are injured while October 9, 2013, primarily amends var- LD 444-Protection for Employees working for employers which have ious provisions of the Workers’ Com- of Employers without Insurance failed to obtain workers’ compensation pensation Act so that those provisions Coverage

Norman, Hanson & DeTroy Newsletter / Summer 2013 5 coverage. The Board will be studying average wholesale price plus a factor. the Governor, and the veto was sus- this issue in 2013, and reporting back As amended and enacted, the legisla- tained by the Legislature. to the legislature in 2014. The Board tion simply provides that employees LD 235-Injuries to On-Call will be considering the possibility of a have the right to select the provider, Firefighters and Emergency Medical fund of some type to pay these claims but does not propose a specific fee Personnel and possible mechanisms to administer schedule. This legislation does not alter As originally proposed, this bill would the claims. present law, because under the statute have provided that injuries to volunteer currently, employees are not required LD 696 and 761-Agricultural firefighters or volunteer emergency to obtain prescription medication from Exemption medical personnel are considered com- the provider to which they are directed These bills revised the exemption for pensable as long as they occur after the by the employer, but often do so, and small agricultural businesses from ap- call for the emergency is received, re- presumably will continue to do so. It plication of the Workers’ Compensa- gardless of the nature or cause of the should be noted that, after the enact- tion Act, by including horse farms in injury. As amended, the bill provided a ment of this legislation, employers will the definition of agriculture, and by presumption that such injuries are com- retain the right to challenge the reason- updating the size of the agricultural pensable, and expanded the application ableness of the costs of medication pre- concern, with respect to the maximum to include professional firefighters and scribed to injured employees. number of employees, for eligibility for professional emergency medical per- the agricultural exemption. Legislation Proposed but not Enacted sonnel. Because of the potential cost LD 949-Offset For Retirement LD 443-Partial Incapacity increases to municipalities resulting Benefits This bill would have significantly from the legislation, a mandate was at- tached to the bill, which meant that a The bill amends Section 221 of the amended Section 213 of the Act, which two-thirds majority in each chamber Workers’ Compensation Act to clarify applies to partial incapacity benefits, was necessary for enactment. Neither that the offset for private retirement and would have to a great extent re- chamber passed the bill with the neces- benefits received is based upon the versed changes to Section 213 enacted sary two-thirds majority, so that enact- proportionate contribution made to the in 2012. Originally drafted as a concept ment failed. retirement plan by the employer at the bill, without specific provisions, the bill time of injury relative to all contribu- was eventually amended to include two LD 1149-Corrections Workers tions made on behalf of the employee key provisions. First, under the bill, for This bill would have created a pre- to the same plan. The legislation be- injuries beginning January 1, 2013, the sumption that hypertension or cardio- comes effective October 9, 2013. Under 520 week durational limit on partial vascular disease of corrections workers current law, if retirement benefits are incapacity benefits would not apply is compensable. The bill was rejected being received from a retirement fund if the employee after 520 weeks was by the Labor, Commerce, Research and into which more than one of the injured working and earning 70% or less of the Economic Development (“LCRED”) employee’s employers has contributed, original average weekly wage, regard- Committee. less of permanent impairment resulting arguably the entire retirement benefit LD 1201-Remedy for Abusive Work from the injury. Under current law, for would be subject to offset. Under this Environment legislation, in this situation, the offset these injuries, partial incapacity ben- As originally drafted, this bill pro- would be limited to the percentage of efits would terminate after 520 weeks, vided a right of action for employees the retirement benefit reflected by the unless the employee is working and against employers based upon an “abu- proportionate contribution to the plan earning 65% or less than the average sive work environment.” This right of made on behalf of the employee by the weekly wage, and unless the permanent action would have been available even employer at the time of injury relative impairment from the injury exceeds if the employee had developed a mental to all contributions on behalf of the em- 18%. Second, the bill proposed an un- injury as a result of mental stress from ployee. This legislation will not have precedented standard for entitlement this environment, compensable under widespread application. to 100% partial incapacity benefits for unemployed workers, proposing a pre- the Workers’ Compensation Act. As LD 1376-Prescription Drugs sumed entitlement to 100% benefits if amended, the bill called for the Work- As originally proposed, this legislation the employee conducts a work search ers’ Compensation Board to study the would amend Section 206 of the Work- sufficient for unemployment benefit issue of possible remedies for an abu- ers’ Compensation Act to provide that purposes. Industry analysis concluded sive work environment, and report back employees have the right to select the that this bill, if enacted, would have to the Legislature. The bill was passed provider of prescription medication, significantly increased system costs. by both chambers of the Legislature, and then proposed a fee schedule for but was vetoed by the Governor, and LD 443 was passed by both chambers prescription medication based upon the veto was sustained. of the Legislature, but was vetoed by

6 Norman, Hanson & DeTroy Newsletter / Summer 2013 Designation of Retirement Account Beneficiaries: An Integral Part of An Estate Plan

By Kathryn M. Longley-Leahy

While millions of Americans take beneficiary designation is pro-actively advantage of tax-deferred savings each changed by the account owner follow- year by setting aside a portion of their ing the divorce. Failing to review the earned income into various forms of status of beneficiary designations can retirement accounts in anticipation of not only result in unintended conse- being able to save sufficient funds for quences upon the death of a retirement retirement, it is important for each re- account owner, but more importantly, tirement account owner to be aware of such neglect can totally derail a care- how those growing retirement account fully crafted estate plan. values will be distributed should the Since much of a client’s wealth is account owner die leaving a retirement often invested in retirement plans, fail- Kathryn M. Longley-Leahy account balance. ure to coordinate the flow of probate A fundamental component in the and non-probate assets as part of the this article is intended to highlight the preparation or review of a client’s es- estate plan can completely derail a cli- importance of reviewing and under- tate plan is the coordination of the cli- ent’s estate planning objectives. The standing of the provisions set forth in a ent’s probate assets (i.e. those assets object of this article is to create aware- retirement plan contract, knowing what owned individually by the client that ness of the importance of beneficiary distribution options are made available will be distributed to named beneficia- designations in particular, as well as in the retirement plan, and carefully in- ries in accordance with the terms of the highlighting the importance of a peri- corporating the distribution of the re- client’s Last Will and Testament) with odic review with professional advisors tirement plan account with the overall those non-probate assets (i.e. jointly- of the overall estate plan to confirm that estate plan to minimize estate tax con- owned assets, assets with a transfer on all assets flow in the intended direction sequences, maximize the income tax death (TOD) designation) and, most upon the client’s death regardless of deferral and, most importantly, achieve particularly, those assets on which the any key changes in circumstances that coordination with the overall estate client has made a specific, contractual may have occurred since the initial des- plan to meet estate planning objectives. beneficiary designation identifying an ignation was made. While a detailed review of the individual, trust or charity as the “des- While life insurance and retirement many different retirement accounts, ignated beneficiary” to whom some or accounts are the two primary non-pro- including but not limited to, defined all of the retirement accounts will be bate assets that often account for the benefit plans, 401(k) plan, Individual distributed upon the death of the retire- vast majority of a client’s net worth, the Retirement Accounts (IRAs), Roth ment account owner. retirement account is unique in that its IRAs, profit sharing plans, etc., and Of the non-probate assets, it is those origin is based on Congressional enact- the tax rules and regulations govern- carrying a beneficiary designation that ment of tax code provisions permitting ing each plan is beyond the scope of clients frequently overlook or forget to the deferral of income tax on certain this article, there are several common review following life changing events amounts of earned income in order to planning issues applicable to all retire- such as death or divorce of a spouse, encourage savings for retirement. As a ment accounts. First, every retirement birth or death of a current or potential result, the designation of a beneficiary account owner needs to know and retirement account beneficiary, a new to receive the retirement account upon understand the terms and conditions job, etc. While certain statutory pro- the death of the account owner can re- included in their particular retirement tections may void reference to an ex- sult in both income and estate tax con- plan. While the tax laws set forth rules spouse in a Last Will and Testament, sequences. Because of the potential for governing the amount, timing and tax in most states, designating a spouse as both estate tax consequences for the consequences of retirement account a retirement account or life insurance deceased account owner and income distributions to the account owner dur- beneficiary remains valid notwithstand- tax consequences for the estate and the ing retirement and when distributed ing a subsequent divorce unless the named retirement account beneficiary, to a ‘designated’ or ‘non-designated’

1 Generally speaking, a “designated beneficiary “ is either an individual or a qualifying trust that is entitled to take retirement account distributions over the individual or trust beneficiary’s lifetime, while a beneficiary that does not qualify as a ‘designated beneficiary’ must take the distributions within a five-year period.

Norman, Hanson & DeTroy Newsletter / Summer 2013 7 beneficiary1 following the death of the of the surviving spouse, a “roll-over” of from the trust would be subject to account owner, not all plans offer every the first deceased spouse’s retirement income taxation at the higher income distribution option statutorily available. account into the surviving spouse’s tax rates imposed on trust income. Retirement account owners should also retirement account could cause unwanted Another intended result could look closely at the distribution options state or federal estate tax exposure upon occur when a retirement account owner offered by the retirement plan. Once the death of the surviving spouse. This names a surviving spouse who has not aware of the options, each account is an especially significant issue when yet attained the age of age 59 ½ as his owner should confirm that a primary the value of the spouses’ combined or her designated beneficiary as doing and secondary beneficiary is designated retirement account value represents a so could create a planning challenge for on each retirement account, review how high percentage of the couple’s overall the surviving spouse. While a surviving well your primary and secondary ben- net worth, and the combined value of spouse can choose to between leaving eficiary designations are incorporated the couple’s assets exceeds the thresh- the inherited benefits in the deceased into the overall estate plan, understand old above which an estate tax will be spouse’s plan (where s/he may be forced the flow of assets underlying the estate imposed. to take minimum requirement distribu- plan, and make a point of reviewing the To minimize potential estate tax tions as the beneficiary) or “rollover” designations on a regular basis. exposure upon the death of the surviv- the retirement account into his or her While assisting a client in an es- ing spouse, and in lieu of naming the own retirement account, if the surviv- tate’s administration, is not unusual to surviving spouse as the outright ben- ing spouse is under the age of 59 ½, the find that the now deceased retirement eficiary of the retirement account, the rollover option may restrict withdraws account owner failed to designate a owner of a large retirement account from her own plan (which would then beneficiary on one or more retirement might consider designating a trust for include the deceased spouse’s retire- accounts. It may be that a new retire- the lifetime benefit of the surviving ment account) until attaining age 59 ½ ment account was opened, and that the spouse as the designated beneficiary of unless the survivor incurs a 10% early owner never “got around” to making the retirement account. While naming a withdrawal penalty that would not the beneficiary designations, or more trust as the designated beneficiary may apply if the surviving spouse elected likely, never revised the beneficiary provide estate tax planning benefits, a to take beneficiary distributions from designation once a retirement account host of other problems can arise when a the deceased spouse’s retirement was opened. When there is no desig- trust is named as beneficiary of a retire- account directly. On the other hand, nated beneficiary named, the terms of ment plan, including the limited flex- if the surviving spouse dies while the the particular retirement plan control. ibility afforded by current IRS rulings benefits are still in the deceased spouse’s Some plans may include a “default” in identifying the “measuring life” used retirement account, the distribution op- beneficiary, which could be the spouse, for calculating the required minimum tions after the surviving spouse’s death children or even the Estate, with each distributions payable to the surviving are typically less favorable than the possibility having significantly differ- spouse. options would have been had the ent distribution rules and income tax For example, leaving retirement surviving spouse rolled the benefits consequences. If the decedent’s estate benefits to a trust that qualifies as an into his or her own retirement account. is the retirement plan’s ‘default’ ben- estate tax-free transfer between two Unintended results can also occur eficiary, all retirement account distribu- spouses (i.e. a QTIP trust) does not where a retirement account owner tions are typically required to be made have any income tax benefits as it often names the surviving spouse as the to the estate within a five-year period, results in a forced distribution of the primary beneficiary with the couples’ thereby losing the income tax deferral benefits sooner than would be the case minor children named as the secondary advantages available to a properly des- if the surviving spouse, individually, beneficiaries of both the Will and the ignated beneficiary. were named as the beneficiary. Simi- retirement accounts, or simply names There are significant income tax larly, naming the credit shelter trust as the children as the primary beneficiary advantages in naming a surviving the beneficiary of a retirement account of life insurance and/or retirement ac- spouse as the primary beneficiary of a unnecessarily creates a situation where counts. While the typical retirement retirement plan as current tax laws per- the credit shelter trust is receiving, and account owner does want his or her mit the surviving spouse to “rollover” distributing some or all of the income children to benefit from his or her a deceased spouse’s retirement account to or for the benefit of the surviving retirement account proceeds, especially into his or her own, thereby further de- spouse thereby reducing the value of if there is no surviving spouse, in all ferring the income tax on retirement the credit shelter trust while potentially likelihood, the client may not have account distributions over a longer pe- increasing the estate tax exposure of intended that young children, or their riod of time; however, while helpful to the surviving spouse. Further, any un- legal guardian, or worse, an ex-spouse, defer the income tax over the lifetime distributed retirement account income be given an option to withdraw, in a

8 Norman, Hanson & DeTroy Newsletter / Summer 2013 lump sum, all of the retirement funds account beneficiary designations is no life events, such as the birth and insurance proceeds at one time, nor simple matter and involves the bal- or death of a family members, is the client likely to have considered ancing of multiple tax and non-tax divorce, separation, marriage or re- the enormous income tax consequence considerations, and the unintended con- marriage, etc., consider the impact if the children elected to take the re- sequences of making a beneficiary des- of current beneficiary designations, tirement distributions in such manner. ignation without fully understanding and make the necessary changes. More typically, a parent of young chil- how the distribution options can best be • Confirm how existing beneficiary dren would prefer to direct a child’s incorporated into an overall estate plan designations impact income and beneficial interest in his or her estate can lead to a largely ineffective estate estate tax exposure by reviewing or retirement accounts to a trustee of plan. To avoid falling into the plan- the pros and cons of beneficiary a trust who would manage and distrib- ning trap for the unwary, consider the designations from an income and ute the funds to or for the benefit of the following planning recommendations: estate tax planning perspective; child or children in a tax efficient man- • Periodically review the language and ner while making account funds avail- in your retirement account with • Confirm that all existing primary able for the child’s care and support specific attention toward the retire- and secondary beneficiary designa- over a longer period of time. ment account distribution options tions are consistent with the overall In summary, naming and moni- provided in a particular plan; estate plan designed to meet overall toring the existence of retirement • Upon the occurrence of significant estate planning objectives.

Feeling Your Pain: Law Court holds that emotional distress is not a covered “bodily injury” in personal liability insurance policy.

By Lance E. Walker

In Langevin v. Allstate Insur- misrepresentation, negligent in- ance Co., 2013 ME 55, the Law fliction of emotional distress and Court held that personal liability intentional infliction of emotional policies defining “bodily injury” as distress based on the following al- “physical or bodily harm, sickness legations. or disease or death that results,” do During the pendency of the sale not cover emotional distress dam- of the property, Johnson allegedly ages. This leaves a substantial and misrepresented the condition of the common category of tort damages property and failed to disclose its potentially uncovered, which in- prior use as a junkyard. As a result Lance E. Walker eluctably will lead to legislative, of Johnson’s misrepresentations, the regulatory and market responses. Langevins purchased the property injury: “physical harm to the body, Background for $315,000 and suffered damages, including sickness or disease, and resulting death.” In August 2010, the Lan- including loss of the investment gevins filed a complaint against value of the property, undisclosed Johnson tendered the underly- Charles Johnson (“underlying com- physical problems with the prop- ing complaint to Allstate. Allstate plaint”) arising out of their purchase erty, and emotional distress. refused to defend or indemnify from Johnson of property located While he owned the property in Johnson. The Langevins and John- in Hollis, Maine. The underlying Hollis, Johnson maintained a home- son eventually reached an agree- complaint included ten counts, al- owners insurance policy with All- ment resolving the underlying though the Langevins pursued only state. The Allstate policy provided complaint and the court entered a the counts of negligence, negligent the following definition of bodily judgment against Johnson in the amount of $330,000. The judg-

Norman, Hanson & DeTroy Newsletter / Summer 2013 9 ment did not specify the basis for The court, in addressing the from their failure to pay a contractor liability or damages. damages for negligent misrepre- for home renovations. Allstate had Armed with the judgment, sentation, reaffirmed the central issued two policies to the couple, the Lagevins initiated a reach and principle that loss of investment ex- a homeowners policy and an um- apply action against Allstate. On pectation in a misrepresentation of brella policy. Based on the possibil- cross motions for summary judg- the sale of property does not con- ity, observed in Maine Bonding & ment, the court concluded, in rele- stitute “property damage” as that Casualty Co. v. Douglas Dynam- vant part, that the damages for injury term commonly is defined in liabil- ics, Inc., 594 A.2d 1079, 1081 (Me. to the property did not result from an ity policies. See Vigna v. Allstate 1991), that “bodily injury, sickness “occurrence” and did not constitute Insurance Co., 686 A.2d 598, 600 or disease” could result from emo- “property damage.” Accordingly, (Me. 1996)(“Economic injury does tional distress, the Court concluded the court granted Allstate’s motion not constitute ‘property damage’ for that “unless excluded, a claim for for summary judgment, denied the purposes of insurance coverage.”) emotional distress triggers an in- Langevins’ motion for summary The Lagevins argued that be- surer’s duty to defend under bodily judgment and entered judgment for cause they also sought to recover injury coverage if the emotional Allstate. The court’s order enter- for physical problems with the distress is caused by “an accident ing judgment did not discuss the property, their damages for negli- or occurrence” within the mean- Langevins’ claim that the policy gent misrepresentation fall within ing of the policy.” Vigna, 686 A.2d covers any damages resulting from the definition of “property damage.” at 600. The Court held that Vigna their emotional distress. The Lan- The Law Court rejected that argu- did not establish that emotional gevins appealed the decision of the ment because the physical problems distress always constitutes “bodily Superior Court. with the property did not result from injury” when determining whether an insurer has a duty to indemnify. As The Langevins argued that the an “occurrence” as defined by the the Law Court explained, the Vigna judgment awarded damages for policy. The only factual allega- case determined that given the alle- loss of investment and physical tion in the complaint that arguably gations made in that complaint and problems with the property on their constituted an “occurrence” was the language of the applicable pol- negligent misrepresentation claim Johnson’s act of misrepresenting icy, emotional distress could consti- as well as damages for emotional the condition of the property. The tute “bodily injury” and, therefore, distress on their claims for inflic- fortuity that the misrepresentation the insurer was obligated to defend tion of emotional distress and negli- pertained to the physical condition the claim. Presumably what the gent infliction of emotional distress. of the property, necessarily resulted court intended to say is that physical The Langevins argued that 1) the from his misrepresentation but did manifestations, if any, of emotional damages for loss of investment and not constitute “property damage”. distress would constitute “bodily physical problems with the prop- The most significant portion of injury.” erty constitute covered “property the court’s holding was addressed damage” and 2) the emotional dis- in the section dealing with the The court then revisited its tress damages constituted a covered Langevins’ alleged damages for decision in Ryder v. USAA General “bodily injury.” emotional distress. Indemnity Co., a discussion of which was included in a previous edition As part of the court’s analysis, Emotional Distress Does Not of the Norman, Hanson & DeTroy it provided affirmations of a couple Constitute Bodily Injury Newsletter. In that case, a couple of important principles to insurers. The Langevins argued that sought a declaratory judgment to First, the court reiterated its hold- the Law Court’s decision in Vigna determine whether their bystander ing in Jacobi v. MMG Insurance conclusively established that emo- claims for negligent infliction of Co., 2011 ME 56, ¶ 14, 17 A.3d tional distress constitutes indemni- emotional distress constituted 1229, that “the party seeking to fiable “bodily injury” regardless of claims for bodily injury pursuant to recover pursuant to the reach and how that term is defined in an in- a policy defining “bodily injury” as apply statute. . . has the burden to surance policy. In Vigna, the Court “bodily harm, sickness, disease or demonstrate that [his] awarded held that Allstate had a duty to death.” 2007 ME 146, ¶ 1, ¶ 6, 938 damages fall within the scope of the defend a couple against a complaint A.2d 4. In that case, Justice Hjelm, insurance contract.” alleging emotional distress resulting sitting as the trial court judge,

10 Norman, Hanson & DeTroy Newsletter / Summer 2013 concluded that the definition of By contrast, the Allstate pol- grammatical structure that led the “bodily injury” only covers claims icy at issue in Langevin defined court to deem it ambiguous in Ryder for physical harm to the body and not “bodily injury” as “physical harm v. USAA. emotional distress. The Law Court, to the body, including sickness or Perhaps the most striking aspect rather than holding that emotional disease, and resulting death.” of the Langevin case was that the distress always constitutes “bodily Unlike the definition of “bodily in- Law Court, in applying a mechani- injury” regardless of the policy jury” at issue in Ryder, this definition cally appropriate interpretation of a definition, evaluated USAA’s defi- was held to be unambiguous. The simple insurance provision, leaves nition of that term and concluded Law Court held that the definition a substantial gap between bodily that the term was ambiguous as a in the Allstate policy quite clearly injuries which are indemnifiable result of its grammatical structure. restricted “bodily injury” to physi- under common homeowners and The Court came to this conclusion, cal ailments and/or resulting death auto policies, and commonly sought relying on the standard grammatical such that an ordinary person would tort damages, such as emotional rule that when an adjective modi- understand that it does not encom- distress, which now are the burden fies the first of a series of nouns, a pass emotional pain and suffering. of the insured alone. One potential reader will expect the adjective to The Impact of Langevin response may be market-based. modify the rest of the series as well. Although the Law Court has That is, personal lines underwriters When applied to USAA’s definition visited this issue twice in the last may identify a business opportunity of “bodily injury,” this grammatical six years, this most recent procla- to provide enhanced coverage for rule led to the term “bodily death.” mation provides much greater clar- emotional distress damages, which Although relevant in the spiritual ity as to whether emotional distress as a practical matter under Maine realm, such a definition carries lit- constitutes “bodily injury” as that law constitute a minimal economic tle meaning in the secular world of term is commonly defined in ISO- driver to most tort cases. insurance contracts. Given the member policies. For example, in For the time being, however, the grammatical structure employed in the standard homeowners policy Law Court has, with unusual clarity, the USAA definition, it was unclear form HO 00 03 10, “bodily injury” unburdened Maine insurers from to the Law Court whether “bodily” is defined as “bodily harm, sickness the prospect of emotional distress was intended to modify all of the or disease, including required care, damages being covered under nouns that followed it. Therefore loss of services and death that re- personal liability policies. the entire definition was held to be sults.” This definition presumably ambiguous, resulting in a finding of does not suffer from the same faulty coverage.

Norman, Hanson & DeTroy Sponsors 75th Anniversary of Maine Credit Union League Norman, Hanson & DeTroy was Lance Walker and Diane LaCourse. union representatives and guests a proud Diamond Sponsor of the The 75th Annual Meeting events attended this year’s two-day event. Maine Credit Union League’s 75th commenced on Friday, June 14th in The firm was represented dur- Annual Meeting and Convention, earnest! The convention venue was ing the course of the 75th An- which began on Thursday, June the Holiday Inn by the Bay in Port- nual Meeting by Rod Rovzar, 13 at Belgrade Lakes Golf Club in land, ironically, just a few blocks Dan Cummings, Adrian Kendall, Belgrade. The convention tourna- away from the League’s first annual Jim Poliquin, Bob Bower, Lance ment raised over $47,000 for the meeting at the old Columbia Hotel Walker, Diane LaCourse, Darya Maine Credit Union’s Campaign near Longfellow Square. While 75 Haag, and Kelly Hoffman. for Ending Hunger. Firm members individuals attended that first meet- Rod Rovzar introduced the participating in the fun at Belgrade ing of the state’s new trade associa- Keynote Speaker for the open- included Jim Poliquin, Dan Cum- tion organized to form and support ing session, Lee Wetherington, mings, Rod Rovzar, Bob Bower, credit unions, nearly 800 credit

Norman, Hanson & DeTroy Newsletter / Summer 2013 11 Director for Strategic Insight for Washington. The Saturday closing Credit Union League, its subsid- ProfitStars, who provided a statis- session was highlighted by a special iary Synergent, as well as each of tical overview of the future in the address by Jim Morris, the real-life the firm’s many Maine credit union financial services industry. The del- inspiration for The Rookie, a movie clients. The firm has been working egates meeting featured a keynote sensation. The Friday night banquet with the League and Maine credit address by Bill Cheney, President/ included entertainment by comedian unions for over 33 years, with as CEO of the Credit Union National Bob Marley and Let’s Hang On, a many as ten attorneys working on Association, who delivered an ad- popular Frankie Valli tribute show. League and credit union projects at dress on national credit union af- Norman, Hanson & DeTroy val- one time or another! fairs and key legislative events in ues its partnership with the Maine

WORKERS’ COMPENSATION – LAW COURT DECISION

By Stephen W. Moriarty

Offset for specific loss injury. ultimately the finger was surgically Specific loss benefits are pay- amputated in April 2004. He lost able pursuant to §212(3) for inju- one week from work as a result and ries which result in amputation of then returned without any ongoing designated portions of the body. wage loss. A specific number of weeks is as- The employee filed a petition signed by statute to each portion of seeking specific loss benefits for the the body, and actual amputation, as loss of the index finger, for which opposed to loss of use, is required 38 weeks of compensation may be before such benefits are payable. awarded under the Act. The em- Stephen W. Moriarty Gibbs v. Fraser Paper, Ltd., 1997 ployer argued that it was entitled ME 225 703 A.2d 1256. In addi- to offset incapacity benefits paid the claim for specific loss benefits tion, it has been recognized that prior to the amputation against the came into existence. Therefore, be- specific loss benefit entitlement may specific loss entitlement, and the cause the employee was not legally be offset against weekly incapacity presiding hearing officer agreed. entitled to receive specific loss ben- benefits for the same injury. Boehm Following denial of a Motion for efits until after the amputation had v. American Falcon Corp., 1999 Findings of Fact, the Court agreed taken place, the Court ruled that ME 16, 726 A.2d 692. A recent to hear the employee’s appeal. the employer was not entitled to re- duce the specific loss payment by decision of the Law Court clarified In its opinion a unanimous Court the amount of voluntary incapacity the circumstances under which the recited the legislative history un- benefits paid prior to the surgery. offset may be claimed. derlying §212(3) and reiterated that The Court found that the Board when an injury and an amputation In Scott v. Fraser Papers, Inc., had erroneously allowed an offset occur simultaneously an employer is 2013 ME 32 (March 21, 2013), the for pre-amputation benefits, and the entitled to offset incapacity benefits employee sustained a crush injury to decision of the presiding hearing against the specific loss entitlement. his left hand in May 2003 and was officer was vacated. voluntarily paid benefits for total However, as noted in this case, the incapacity until early December of amputation occurred eleven months that same year, when he returned after the injury itself. The Court to work. However, the condition observed that the voluntary inca- of his index finger deteriorated and pacity benefits had been paid before

12 Norman, Hanson & DeTroy Newsletter / Summer 2013 Recent Decisions From The Law Court

By Matthew T. Mehalic

Actions for professional negli- health care services. The Superior gence Court agreed with Spurwink and In D.S. v. Spurwink Services, granted summary judgment in favor Inc., 2013 ME 31 (March 21, 2013) of Spurwink. The matter was ap- an incapacitated woman who at- pealed to the Law Court, which re- tended Spurwink Services, Inc.’s versed the Superior Court finding education facility alleged that Spur- that the claims against Spurwink wink breached its duty of care to were not an action for professional her. The alleged breach arose when negligence as defined by the MHSA, and therefore, the claims were not the woman, then sixteen years old, Matthew T. Mehalic arrived at the facility in the morning subject to the mandatory prelitiga- and declared that she was not going tion procedural requirements, or to goals and objectives, procedures to school, and subsequently left the the MHSA statute of limitations. relating to care and safety, and be- property on foot. School person- At all relevant times Spurwink havior plans. nel pursued the woman along with held a mental health license from In finding that the claims assistance from the police, but she the Maine Department of Health against Spurwink were not an ac- was not located. The woman ap- and Human Services (DHHS). The tion for professional negligence proached a vehicle and spoke to a education facility the woman at- subject to the MHSA, the Law man, who invited her into the vehi- tended focuses on providing neces- Court focused on the requirement cle. Ultimately she had nonconsen- sary emotional, psychological and that in order to be a “health care sual sexual intercourse and sexual other therapeutic services and edu- provider” the entity must be one contact with him and another man. cation in a therapeutic environment in which skilled nursing care or The claims against Spurwink for children and adolescents with medical services are prescribed by alleged negligence, negligent inflic- behavioral and developmental chal- or performed under the general di- tion of emotional distress, breach of lenges. All individuals attending rection of persons licensed to prac- fiduciary duty, and punitive dam- the facility have a primary diagno- tice medicine, dentistry, podiatry ages. Spurwink moved for sum- sis of mental illness, developmental or surgery in the State. Despite mary judgment while the matter disability, major personality disor- the psychiatrist’s evaluation of the was pending in the Superior Court der, or a combination of disorders. woman and participation in a plan- on the grounds that the Superior Upon admission, the woman re- ning meeting, he did not generally Court lacked jurisdiction pursuant ceived an individualized treatment direct the performance of the edu- to the Maine Health Security Act, plan (ISP) based on her individual cational facility’s medical services (MHSA), which requires that claims physical, psychological, education, on a day-to-day level, he was not an for professional negligence are sub- and social needs. The ISP was in employee of Spurwink, and he had ject to a prelitigation screening part formulated through consulta- no supervisory authority over those panel. Claims for professional neg- tion with a psychiatrist. However, who may have performed any med- ligence under the MHSA include (1) the psychiatrist’s evaluation did not ical services. In addition, he never any action for damages for injury or tell Spurwink staff what to do, but prescribed any particular medical death, (2) against any health care made only some recommendations services. The Court also declined provider, its agents or employees, for approaches to her treatment. to extend health care practitioner or health care practitioner, his or her The ISP also included input from status to licensed clinical social agents or employees, (3) whether individuals employed by Spurwink, workers. Accordingly, the Court based upon tort or breach of con- including licensed clinical social determined that Spurwink’s educa- tract or otherwise, (4) arising out of workers, therapists, educators, and tional facility at issue did not pro- the provision or failure to provide case managers. The ISP set the vide medical services prescribed

Norman, Hanson & DeTroy Newsletter / Summer 2013 13 by or performed under the general The day after the employee weight of the evidence to dictate the direction of a physician necessary signed her deposition she was ter- result on the hospital’s motion for to subject the claims to the require- minated on the ground that the summary judgment. The Law Court ments of the MHSA. medical record entry the employee emphasized that although a pretext Retaliation for discharge fol- made constituted a falsification of case may be weak, it is not the same lowing employee participation in a patient medical record – a termi- as no case. The Court’s holding deposition nable offense under the Hospital’s once again reaffirmed the benefit Conduct and Discipline policy. ascribed to the non-moving party in In Trott v. H.D. Goodall Hospi- summary judgment practice. tal, 2013 ME 33 (March 21, 2013), The hospital successfully the Law Court addressed on ap- moved for summary judgment in Disagreement is not bad faith peal whether summary judgment in the Superior Court. The Law Court in context of claims against con- favor of an employer, H.D. Goodall reversed the Superior Court finding dominium association Hospital, should be affirmed in a that a genuine issue of material fact In America v. Sunspray Condo. matter that alleged violation of the existed as to whether there was a Assoc., 2013 ME 19 (Feb. 12, 2013), Maine Whistleblowers’ Protection causal link between the employee’s a condominium owner’s claims Act (WPA). The specific allega- participation in the deposition and against the condominium associa- tion was that the employee was dis- her discharge. Despite reversing tion and its board of directors aris- charged following her participation the grant of summary judgment to ing from alleged failure to enforce in a deposition in a wrongful death the hospital, the Law Court held that a smoking ban were dismissed for action against the hospital. although the WPA protects the em- failure to state a claim upon which ployee from discrimination based The employee spoke with the relief could be granted. The Law on the employee’s requested partic- deceased patient’s daughter and Court affirmed the dismissal. ipation in a deposition, it does not speculated as to possible causes The owner alleged that the as- prevent an employer from taking an of death, including a morphine sociation and board engaged in bad adverse employment action against overdose, after the patient’s death. faith in failing to enforce the smok- an employee based on the content Subsequently, the patient’s estate ing ban. The allegations included of the employee’s deposition testi- commenced a wrongful death law- that the board failed to investigate mony. suit. or otherwise take effective action The Court utilized a three-step During the employee’s deposi- upon receipt of reported violations. burden-shifting analysis to exam- tion preparation, the hospital’s at- The Court held that an absolute re- ine the question of causation. The torney told her that she was to blame fusal to enforce a condominium rule Court found a genuine issue of for the lawsuit because she had in- might be actionable as a decision material fact existed on the causa- dicated to the patient’s daughter that made in bad faith unprotected by tion element due to three different the hospital might be liable due to a the business judgment rule. How- potential interpretations of the evi- morphine overdose. At the deposi- ever, an inadequate or insufficient dence, all of which could have led a tion, the employee was questioned response did not equate to bad faith. reasonable juror to conclude that the about the condition she observed The Court stated, “Disagreement Hospital discharged the employee the patient in during the employee’s is not bad faith,” the reason being unlawfully. Key to the Court’s rounds in the hours leading up to the that there is no dishonest purpose, holding was its commentary upon patient’s death. The employee tes- wrongdoing, or motive of self inter- credibility determinations in the tified that the employee was sound est. employment discrimination con- asleep and that she entered that in- Also included in the Court’s af- text. Specifically, the Court stated formation in the patient’s medical firmation of the owner’s complaint’s that due to the unique nature of em- records. Thereafter, the employee dismissal was rejection of asserting ployment discrimination matters, was presented with the patient’s a derivative action on behalf of a circumstantial evidence is usually medical record, which included her nonprofit corporation or condomin- the only type of evidence available entry on the date at issue and read ium association and rejection of the to an employee to prove her case. that the patient was “alert, oriented idea that exposure to second hand The Court implied that the Supe- times three” and had an “unsteady smoke without more is a cognizable rior Court allowed credibility and gait.” injury.

14 Norman, Hanson & DeTroy Newsletter / Summer 2013 New Associate: Sadie Jones We are pleased to announce Sadie graduated from the Uni- that Sadie Jones joined the firm in versity of Maine School of Law March, 2013, as an associate attor- cum laude in 2011. While in law ney. Sadie was born in New Orleans school, she served as Case Note and and raised in Washington D.C., al- Comment Editor of the Maine Law though spent her summers in Maine Review and generally focused her on Damariscotta Lake. She at- studies on tax and business related tended Georgetown Day School and matters. Sadie also spent a summer was a twelve-season varsity athlete clerking for the Honorable Jon D. who was voted captain of the soc- Levy of the Maine Supreme Judicial cer, basketball, and lacrosse teams. Court and later worked in the Office Sadie graduated from Middlebury of the Attorney General. Following College in 2005 with a B.A. in Eng- graduation from law school, Sadie sadie jones lish and a minor in Political Science. pursued her tax-related interests at Prior to law school, Sadie worked one of Maine’s largest accounting Maine home for the past five years. for former Senator John Kerry and firms. She and her husband recently moved from Portland’s East End to his presidential campaign, and later Sadie married a lifelong Mainer Freeport with their dog, Fischer. In moved to Vail, Colorado to pursue and has been proud to officially call another passion—skiing. her free time, Sadie enjoys skiing, biking, cooking, and attempting (pathetically) to golf.

KUDOS The July 2013 edition of “Maine” Casco Bay Hockey Association, and ing Institute on the subject of “The magazine included PETER De- was recently elected to a third term Heart and Soul of Lawyering.” TROY in a feature article titled “50 as president. Casco Bay is Maine’s KEVIN GILLIS spoke at the People Who Have Made a Differ- largest youth hockey association SEAK National Workers’ Compen- ence in Maine”. Noting his exten- with nearly 900 skaters and 150 sation Seminar in Hyannis, Massa- sive statewide trial experience, the coaches. In June John attended the chusetts, on July 15, 2013. article also featured Peter’s leading USAHockey Annual Congress in In May LANCE WALKER role in the tobacco settlement of the Colorado Springs at the invitation spoke as a faculty lecturer at the late 1990’s together with his service of the Maine Amateur Hockey As- Litigation Institute, a two-day con- to the bar on the Task Force on Gen- sociation. USAHockey is the gov- ference sponsored by the Maine der Bias in the Courts and the Maine erning body for all amateur hockey State Bar Association in Augusta. State Bar Association silent partners nationally, including the U.S. Olym- Over three separate sessions, Lance programs. pic team. lectured to a diverse group of attor- MARK DUNLAP has been At the annual summer meeting neys from all over the state about elected to the American Board of of the Maine State Bar Association, strategic considerations at the inter- Trial Advocates, a nation-wide or- PETER DeTROY participated in a section of litigation and insurance ganization of experienced civil trial panel summarizing the Maine Bar coverage issues. attorneys devoted to the integrity Disciplinary Enforcement Rules,

and preservation of our civil justice which will be considered for adop- system. tion shortly by the Maine Supreme JOHN VEILLEUX has served Judicial Court. In May Peter also for eight years on the Board of the spoke at the Osher Lifelong Learn-

Norman, Hanson & DeTroy Newsletter / Summer 2013 15 NHD attorneys honored by Benchmark Litigation. Benchmark Litigation has listed NHD as one of five “highly recommended” firms within the State of Maine, and has honored Jonathan Brogan, Peter DeTroy and Mark Lavoie as “local litigation stars”. Lance Walker is recognized as an “emerging insurance talent”, Jim Poliquin as a “leading insurance attorney” and both Dave Herzer and Tom Marjerison have been recognized as “future stars”.

Norman, Hanson & DeTroy, LLC 415 Congress Street P.O. Box 4600 Portland, Maine 04112

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