THE VERDICT - OADCDeschutes County Legal Counsel 1300 NW Wall St., #200 Bend, OR 97701 541/330-4683 ... the scribe’s tiPs for better writiNg 27 associatioN News 26 from the P reside

TMTHE

VERDICT

Oregon Associationof Defense CounselOADC

Trial Lawyers Defending You in the Courts of Oregon

2016 • Issue 1

recreational drone use

Nanotechnology: a Primer

medical bill write-offs

mandated insurance coverage

medicare compliance

2016 OADC Practice Group Leaders

tranSportation

alan galloway, ChairDavis Wright Tremaine LLP1300 SW Fifth Ave., #2400Portland, OR 97201503/[email protected]

patrick rowe, Vice ChairSussman Shank1000 SW Broadway, #1400Portland, OR 97205503/[email protected]

chad colton, PublicationsMarkowitz Herbold PC1211 SW 5th Ave., #3000Portland, OR 97204503/[email protected]

anne talcott, Board LiaisonSchwabe Williamson1211 SW 5th Ave., #1500-2000Portland, OR 97204503/[email protected]

coVerage eMployMent

neW laWyerS product liability proFeSSional liability

katie eichner, ChairLindsay Hart LLP1300 SW 5th Ave., #3400Portland, OR 97201503/[email protected]

heather bowman, Vice ChairBodyfelt Mount319 SW Washington St., #1200Portland, OR 97204503/[email protected]

peter tuenge, PublicationsKeating Jones Hughes, PC1 SW Columbia Street, #800Portland, OR 97258503/[email protected]

grant Stockton, Board LiaisonBrisbee & Stockton LLCPO Box 567Hillsboro, OR 97123503/[email protected]

trial practice

goVernMent liabilityconStruction

katie Smith, ChairHenrie & Smith LLP15455 NW Greenbrier Pkwy, #125Beaverton, OR 97006503/[email protected]

Monica Wells, Vice ChairWestern Litigation1919 NW LovejoyPortland, OR 97209503/[email protected]

bradley krupicka, PublicationsLindsay Hart LLP1300 SW 5th Ave., #3400 Portland, OR 97201503/[email protected]

Vicki Smith, Board LiaisonBodyfelt Mount319 SW Washington St., #1200Portland, OR 97204503/[email protected]

coMMercial

kim Sewell, ChairTri Met1800 SW 1st Ave., #300Portland, OR 97201503/[email protected]

Stacy tela-kerber, Vice ChairElkins Zipse & Mitchell4380 SW Macadam Ave., #350Portland, OR 97239503/[email protected]

greg lockwood, PublicationsHitt Hiller Monfils Williams LLP411 SW 2nd Ave., #400Portland, OR 97204503/[email protected]

brian Williams, Board LiaisonHitt Hiller Monfils Williams LLP411 SW 2nd Ave., #400Portland, OR 97204503/228-8870, Ext. [email protected]

daniel thenell, ChairThenell Law Group PC12909 SW 68th Pkwy, #320Portland, OR 97223503/[email protected]

Matthew hedberg, Vice ChairBullivant Houser Bailey PC888 SW 5th Ave., #300Portland, OR 97204503/[email protected]

tessan Wess, PublicationsKilmer Voorhees & Laurick PC732 NW 19th Ave.Portland, OR 97209503/[email protected]

lloyd bernstein, Board LiaisonBullivant Houser Bailer PC888 SW Fifth Ave., #300Portland, OR 97204503/[email protected]

brenda baumgart, ChairStoel Rives LLP900 SW 5th Ave., #2600Portland, OR 97204503/[email protected]

colin geiger, Vice ChairTonkon Torp LLP888 SW 5th Ave., #1600Portland, OR 97204503/[email protected]

Samuel Smith, PublicationsDunn Carney851 SW 6th Ave., #1500Portland, OR 97204503/[email protected]

allyson krueger, Board LiaisonDunn Carney851 SW 6th Ave., #1500Portland, OR 97204503/[email protected]

Jamie Valentine, ChairKeating Jones Hughes PC1 SW Columbia, #800Portland, OR 97258503/[email protected]

Megan cook, Vice ChairBullivant Houser Bailey, PC888 SW 5th Ave., #300Portland, OR 97204503/[email protected]

brian best, PublicationsZupancic Rathbone Law Group4949 Meadows Rd., #600Lake Oswego, OR 97035503/[email protected]

george pitcher, Board LiaisonLewis Brisbois Bisgaard888 SW 5th Ave., #600Portland, OR 97204971/[email protected]

nicholas Wheeler, ChairCosgrave Vergeer Kester LLP888 SW Fifth Ave., #500Portland, OR 97204503/[email protected]

nicholas kampars, Vice ChairDavis Wright Tremaine LLP1300 SW Fifth Ave., #2400Portland, OR 97201503/[email protected]

brandon Stuber, PublicationsDavis Rothwell Earle & Xóchihua111 SW 5th Ave., #2700Portland, OR 97204503/[email protected]

elizabeth lampson, Board LiaisonDavis Rothwell Earle & Xóchihua111 SW 5th Ave., #2700Portland, OR 97204503/[email protected]

timothy heinson, ChairHeinson & DeDobbelaere LLC9200 SE Sunnybrook Blvd., #335Clackamas, OR 97015503/[email protected]

laura taylor, Vice ChairBullivant Houser Bailey PC888 SW 5th Ave., #300Portland, OR 97204503/[email protected]

patrick Wylie, PublicationsDavis Rothwell Earle & Xóchihua111 SW 5th Ave., #2700Portland, OR 97204503/[email protected]

Molly Marcum, Board LiaisonKeating Jones Hughes PC1 SW Columbia, #800Portland, OR 97258503/[email protected]

christopher bell, ChairDeschutes County Legal Counsel1300 NW Wall St., #200Bend, OR 97701541/[email protected]

david landrum, Vice ChairPortland City Attorney’s Office1221 SW 4th Ave., #430Portland, OR 97204503/[email protected]

blake Fry, PublicationsMersereau Shannon LLPOne SW Columbia St. #1600Portland, OR 97258503/[email protected]

karen Vickers, Board LiaisonMersereau Shannon LLP1 SW Columbia, #1600Portland, OR 97258503/[email protected]

OADC BOARD OF DIRECTORSOFFICERS

Michael lehnerPresidentLehner & Rodrigues PC1500 SW 1st Ave., #900Portland, OR 97201Phone: 503.226.2225Email: [email protected]

Mary-anne rayburnPresident ElectGordon & Polscer LLP9755 SW Barnes Road, Suite 650Portland, OR 97225Phone: 503.242.2923Email: [email protected]

Vicki SMithSecretary/TreasurerBodyfelt Mount319 SW Washington St., #1200Portland, OR 97204Phone: 503.243.1022Email: [email protected]

DIRECTORS

lloyd bernSteinBullivant Houser Bailey PC888 SW Fifth Ave., #300Portland, OR 97204Phone: 503.228.6351Email: [email protected]

allySon kruegerDunn Carney851 SW 6th Ave., #1500Portland, OR 97204Phone: 503.224.6440Email: [email protected]

elizabeth laMpSonDavis Rothwell Earle & Xóchihua111 SW 5th Ave., #2700Portland, OR 97204-3650Phone: 503.222.4422Email: [email protected]

Molly MarcuMKeating Jones Hughes PC1 SW Columbia, #800Portland, OR 97258Phone: 503.222.9955Email: [email protected]

george pitcherLewis Brisbois Bisgaard & Smith LLP888 SW 5th Ave., #600Portland, OR 97204Phone: 971.712.2803Email: [email protected]

grant StocktonBrisbee & Stockton LLCPO Box 567Hillsboro, OR 97123Phone: 503.648.6677Email: [email protected]

anne talcottSchwabe Williamson1211 SW 5th Ave. #1500-2000Portland, OR 97204Phone: 503.796.2991Email: [email protected]

karen VickerSMersereau Shannon LLP1 SW Columbia, #1600Portland, OR 97258Phone: 503.517.2406Email: [email protected]

brian WilliaMSHitt Hiller & Monfils Williams LLP411 SW 2nd Ave., #400Portland, OR 97204Phone: 503.228.8870 Ext. 104Email: [email protected]

ADMINISTRATIVE OFFICE

Sandra FiSher, cae147 SE 102nd

Portland, OR 97216503.253.0527 • 503.253.9172 (fax)800.461.6687 • [email protected]

The VerdictTM

A quarterly publication of OADC

F E A T U R E S

12

14

10

6

4 NaNotechNology: a Primer for Product liability lawyersNicholas E. Wheeler, Cosgrave Vergeer Kester LLP

medicare comPliaNce: settiNg the stage for success duriNg discoveryDonna L. Lee, Hart Wagner LLP

rouNd hole/square Peg – wheN iNsuraNce iNteNded to comPly with maNdated coverage does NotJames B. Rich, Harris Wyatt & Amala LLC

three traPs to avoid at trialThe Honorable Jerome LaBarre, Multnomah County Circuit Court

regulatory aNd coverage challeNges of recreatioNal droNe use: the sky’s the limitPhilip A. Rush, Navigate Law Group LLC

D E P A R T M E N T S

legislative uPdate 28the scribe’s tiPs for better writiNg 27

associatioN News 26

from the PresideNt 2

receNt case Notes 17

2

PetitioNs for review 25

▼

2 The VerdicTTM ■ 2016–issue 1

p r e s i d e n t ’ s m e s s a g e

I

b y m i c h a e l a . l e h n e r

The Art of Communication

Michael A. Lehner

n our profession, we cannot

afford a failure to communi-

cate. Communication—that

is the over-arching theme for

the OADC Annual Convention

in 2016.

The OADC has always been a service

organization. We serve our member-

ship with our Convention, Fall Seminar,

special practice group

meetings, webinars, and

social events. We also

strive to serve the larger

community by providing

Amicus support to help

guide the courts regard-

ing important questions

of law. Our Government

Affairs Committee monitors proposed

legislation and informs OADC members

of significant changes in the law.

The Annual Convention this year will

focus on communication and the various

methods and styles by which communi-

cation is accomplished—a subject with

many different aspects. Our organization

offers several useful methods of commu-

nication. One of our most popular tools

is the listserv, providing the opportunity

for members to seek advice from a vast

experience base beyond the walk down

the hall to the senior partner. The Verdict,

our highly acclaimed quarterly magazine,

provides another method of communicat-

ing new developments to our member-

ship and to judges and others who receive

complimentary copies. Our Government

Affairs Committee provides an avenue for

communication with the Legislature. And,

of course, our seminars and other educa-

tional events provide obvious benefits.

Maybe we can do more. We com-

monly become involved in issues where

we are opposed to the views and lobbying

efforts of the Oregon Trial Lawyers Asso-

ciation (OTLA). Might we serve the larger

legal community more effectively if we

open lines of communication with OTLA

leadership? Perhaps there are compro-

mise solutions to conflicts over discovery

issues, modification of mandatory arbitra-

tion, the current speedy trial initiative, or

other various procedural changes.

The above brief discussion deals only

with methods of communication. As I

write this message, the Annual Conven-

tion is still in the planning stage, but I

suspect sessions will deal with content

and clarity of communication in order to

better serve our clients. Letters, emails,

pleadings, motions, and appellate briefs

all call for different styles of communica-

tion. In some respects, the advance of

modern means of communication, such

as email, has caused a decline in the ef-

fectiveness of other forms of communi-

cation, such as the common letter. The

art of conversation may have suffered

as we have gravitated toward email and

Twitter communication. Often a simple

telephone call is more effective than a

series of emails.

Another form of communication

seems to be suffering as a result of our

busy schedules and our ability to obtain

required CLE credits in a short hand way

through webinars and audio recordings.

By using those methods rather than at-

tending live seminars, we have lost the

ability to communicate with one another

in a casual, informal setting to share our

“war stories.” The Annual Convention of-

fers more than CLE credit and education.

It offers the opportunity to mingle with

your colleagues and develop friendships

and relationships that last far beyond

the Convention itself. Much valuable

information is exchanged—as well as

great ideas addressing problems we all

face—while socializing with your fellow

defense attorneys. Live attendance at the

Annual Convention and the Fall Seminar

provides value and benefits that cannot

be over-stated.

I urge you all to clear your calendars

to attend this great annual show from

June 16-19, 2016. It provides a great

opportunity to nurture friendships with

others who endure the same stress as

you do, and we all know that engenders

camaraderie. It can’t be beat. Some firms

will combine the Convention with their

firm retreats, a wise combination of CLE

credits and improved morale.

As a New Year’s resolution, let’s all

resolve to improve our communications

with our clients, our opponents, the

courts, and with each other.

▼

3The VerdicTTM ■ 2016–issue 1

Convention Registration:Information and registration is avail-able on the website www.oadc.com.

Lodging at Sunriver Resort: Start your planning now by booking your OADC discounted lodging through Sunriver Resort today. Call the resort directly at 800.547.3922 to make your reservations and when speaking with a reservation agent, ask for OADC’s Annual Convention room block. For more information on what Sunriver Resort has to offer, visit their website at www.sunriver-resort.com.

Why Book Your Lodging Through Sunriver Resort? By making your reservations through Sunriver Resort, OADC is able to maintain a strong partnership with the Resort and continue to hold our conventions in beautiful Sunriver, Oregon. If we do not meet our commitment on lodging reservations, that relationship and future OADC conventions are at

risk. Please support OADC and make your reservations through Sunriver Resort in 2016!

We encourage you to take advantage of the OADC group lodging rates at Sunriver Resort—their guest rooms and homes offer unparalleled service and amenities, including:

• SunriverResort’sguestrooms and suites offer the utmostincomfortandPacificNorthwest style and quality with spectacular views, cozy fireplaces,privatedecks,andWiFi access. Pet-friendly lodging is also available. Sunriveralsooffersthefinestselection of vacation rental properties in Central Oregon, including luxury homes and Caldera Springs Cabins.

• UseofSunriver’snewpool,The Cove. The Cove features a large pool area with zero

entry design, hot tub, spacious deck and lawn areas, water slide, kid’s discovery area, nature trails, improved food and beverage services, and private cabanas.

• AccesstoSageSpringsClub&Spa.

• Guaranteedadvancedteetimesat Sunriver’s golf courses.

• AccesstoCrosswatergolfcourse, golf shop, and The Grille.

• ComplimentaryResort-widetransportation service.

• 24-hourserviceandregistration.

• Thelargestselectionof premiere homes and condominiums throughout Sunriver.

OREGON ASSOCIATION OF DEFENSE COuNSEL

annual conVentionJune 16-19, 2016 | Sunriver Resort | Sunriver, Oregon

Questions? Contact OADC at [email protected] or 503.253.0527 or 800.461.6687


Mark your calendars to attend the 2016 convention in Sunriver! The convention is going to be a weekend full of exciting activities and education at Sunriver Resort! The convention will feature outstanding CLE

credit, social/networking activities and more. Mark your calendars now and plan to attend!

FEATURES


s our society becomes more technologically advanced, product manufacturers are increasingly incorporating engineered nanomaterials

(ENMs) and nanomanufacturing processes into their products. This article explores the impact of these technological develop-ments on product liability litigation, and offers several practice tips for defending claims against this emerging class of con-sumer products.

What is nanotechnology?Nanotechnology is any technology

that incorporates ENMs.1 Nanomateri-als are defined as en-gineered particles that range from 1 to 100 nanometers in size.2 A nanometer is one-bil-lionth of a meter. To give a sense of scale, a single nanometer is about the width of three atoms.3

On a more practical level, a sheet of news-paper is approximately 100,000 nanome-ters thick.4

how are enMs currently used?ENMs are commonly used in the

healthcare, coatings, and electronics indus-tries. Examples of their use in healthcare include ceramic ENMs injected in bones or incorporated into certain dental implants.5 These ceramic particles are used because their mechanical and chemical properties

can be “tuned” to attract bone cells from the surrounding tissue to make new bone.6 As another example, some pharmaceutical products have already been reformulated with ENMs to improve their absorption and make them easier to administer.7 In the near future, ENMs will be used to deliver toxic anti-cancer drugs targeted directly to tumors, minimizing collateral damage to other parts of the body.8 Other ENMs will be able to make MRI and CAT scans safer and more effective.9

ENMs are beneficial in coatings prod-ucts because they create lightweight, strong materials for a wide range of appli-cations such as boat hulls, sporting equip-ment, and automotive parts.10 Opticians, for example, apply coatings containing ENMs to eyeglasses to make them easier to keep clean and harder to scratch.11 ENMs are used on fabrics to make clothing stain-resistant and easier to clean.12 Other examples of ENMs coatings include certain sunscreens and cosmetics.13

In terms of high-performance elec-tronics, ENMs have paved the way to mak-ing faster and more advanced computer chips.14 As a recent example, scientists at IBM now believe they can create a new type of transistor (a tiny switch inside a computer chip) made with parallel carbon nanotubes.15 This new technology may be the key to once again increasing the speed of computer processors, which has stalled in the last decade.16

potential health risksENMs are not without risk. In fact, it

is precisely many of those characteristics that make nanoparticles so useful—tiny size, high ratio of surface area to volume, and reactivity—that may pose unique and unknown risks to human health.17 For example, concern exists that a particular type of ENMs (carbon nanotubes) might cause asbestos-like reactions if inhaled into the lungs.18 After reaching the lungs, these particles are then small enough to potentially enter the bloodstream, posing a threat to other vital organs, including the brain.19 Another area of concern is that certain ENMs may interfere with the signaling pathways of cells, cell division, and cardiac function.20

Currently, risk-assessment models for nanotechnology are still in their infancy.21 As a result, it is impossible to draw a line between the level of exposure that might be dangerous to humans and the level of exposure that is not.22 until we have more reliable data, “the risks from nanoparticles remain largely unknown and, in all likeli-hood, unknowable until time passes.”23

practice tip no. 1 – Stick to the basicsAlthough nanotechnology is new and

its risks are largely unknown, Oregon’s established legal framework for resolving products liability claims involving ENMs is not. The plaintiffs’ bar likes the strict liability theory because it allows a finding of liability without the need to prove negli-

Nicholas E. Wheeler

Continued on next page

Nanotechnology: A Primer for Product Liability Lawyers

nicholas e. WheelerCosgrave Vergeer Kester LLP

A

FEATURES


NaNotechNologycontinued from page 4

gence.24 On the other hand, ORS 30.900 et seq. provides a number of unique substan-tive protections to product liability defen-dants. For example, ORS 30.910 provides a favorable rebuttable presumption that a product is not unreasonably dangerous. ORS 30.915 sets out a unique alteration/modification defense for product cases. And, ORS 30.920(1) requires the jury to find a product is unreasonably dangerous to establish liability.

practice tip no. 2 – Focus on unreason-ably dangerous

Especially in design defect cases, keep in mind that the plaintiff must prove that the product was “in a defective condition unreasonably dangerous to the user or consumer or to the property of the user or consumer[.]”25 The test for “unreason-ably dangerous” is whether the product was “dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics.”26

In most design defect cases, the plain-tiff is required to produce evidence that there was an “available alternative, safer design, practicable under the circumstanc-es.”27 The evidence needed to meet that standard in any given case will vary, but as an example, the Oregon Supreme Court in an aircraft case deemed it to require evidence covering the “cost, economy of operation, maintenance requirements, [and] overall performance” of the alternate design.28 Given the enormous technologi-cal advances and potential benefits made possible through ENMs, making this risk/utility balancing a focal point of the de-fense is likely a good strategy. While the technology may not be entirely free from danger, it is not unreasonably dangerous because its potential benefits outweigh its risks.

practice tip no. 3 – keep in Mind the raw Material Supplier doctrine

In Oregon, the manufacturer of a

component part is not subject to strict liability if the component part was misap-plied by the whole-product manufacturer rather than defectively designed.29 In Hoyt v. Vitek, 134 Or App 271, 274 (1995), the court addressed the question of whether du Pont could be strictly liable for a Vitek jaw implant containing du Pont’s Teflon that was unreasonably dangerous because the Teflon fragmented and broke apart inside the human body. The court rejected that notion, reasoning that “Teflon is a multi-use raw material that is not inher-ently defective. It became unreasonably dangerous only when incorporated as a component in Vitek’s TMJ implant.”30 With the frequent use of ENMs in coating products, more cases like Hoyt are surely to arise in the future.

conclusionWhile the technological advancements

made possible by ENMs are exciting, it will be some time before we have a good un-derstanding of all of their associated risks. In the meantime, practitioners defending ENMs product cases should stick to the basics, focus on the “unreasonably danger-ous” standard, and keep in mind the raw material supplier doctrine.

The author would like to acknowledge and thank Chester D. Hill, Law Clerk, Cos-grave Vergeer Kester LLP, for his assistance with this article.

endnotes1 David Dana, When Less Liability May

Mean More Precaution: The Case of Nanotechnology, 28 uCLA J. Envtl. L. & Pol’y 153, 155 (2010).

2 Id.; Ethan V. Torrey, Sweat the Small Stuff—Nanotechnology Insurance Issues, Law360 (Aug. 25, 2010, 11:52 AM), http://www.law360.com/ar-ticles/187450/sweat-the-small-stuff-nanotech-insurance-issues.

3 Torrey, supra note 2.4 What is Nanotechnology?, NANO.gov

(last visited Mar. 1, 2016), http://www.nano.gov/nanotech-101/what/defini-tion.

5 Frequently Asked Questions, NANO.

gov (last visited Mar. 1, 2016), http://

www.nano.gov/nanotech-101/nano-

technology-facts.

6 Id.

7 Id.

8 Id.

9 Id.

10 Id.

11 Id.

12 Id.

13 Id.

14 Id.

15 John Markoff, IBM Scientists Find

New Way to Shrink Transistors, The

New York Times (Oct. 1, 2015), http://

www.nytimes.com/2015/10/02/science/

ibm-scientists-find-new-way-to-shrink-

transistors.html.

16 Id.

17 David G. Owen, Bending Nature, Bend-

ing Law, 62 Fla L Rev 569, 577 (2010).

18 Id. at 577, n 37 (noting that “[n]

anoparticles might be thin enough

to reach sensitive areas of the lungs,

long enough to bypass the lungs’ built-

in defense systems, and persistent

enough to remain without dissolving

for many years”).

19 Id. at 577–78.

20 Id. at 578.

21 Id.

22 Id.

23 Id.

24 ORS 30.920(2)(a).

25 ORS 30.920(1).

26 McCathern v. Toyota Motor Corp., 332

Or 59, 77 (2001) (quoting Restatement

(Second) of Torts § 402A, comment I

(1965)).

27 Wilson v. Piper Aircraft Corp., 282

Or 61, 67 (1978) (internal quotations

omitted).

28 Id at 70.

29 Hoyt v. Vitek, Inc., 134 Or App 271

(1995).

30 Id. at 285.

FEATURES



Medicare Compliance: Setting the Stage for Success During Discovery

donna l. leeHart Wagner LLP

Donna L. Lee

By now, attorneys who de-

fend claims involving an in-

jury for which the plaintiff

has received medical care

are aware of the manda-

tory reporting requirements in Section

111 of the Medicare, Medicaid, and

SCHIP Extension Act of 2007 (MMSEA).

The specific provisions are set out in 42

USC § 1395y(b)(2)(B), which provides

that, if an injured party is or was en-

titled to Medicare,1

and payment is made

to resolve the case,

Responsible Report-

ing Entities (RRE)2 are

required to notify the

Centers for Medicare

and Medicaid Services

(CMS) electronically of the resolution of

the claim.3 The reporting requirement

applies regardless of whether liability

is admitted, and regardless of whether

Medicare currently has a lien interest

against any recovery. Most RREs register

with the Coordination of Benefits Secure

Website (COBSW) and use professional

vendors to upload the necessary data,

which includes the claimant’s first initial

and last name, Medicare health insur-

ance claim number or the last five digits

of the claimant’s Social Security number,

gender, and date of birth.

Medicare has both a subrogation

right and an independent right of re-

covery to recoup costs for treatment

for which a Medicare beneficiary later

receives compensation. There is a three-

year statute of limitations on Medicare

conditional payment recovery actions,

and the clock starts ticking on the date

Medicare receives notice of a settlement,

judgment, or award. The federal pen-

alty for non-compliance is up to $1,000

per day. This is in addition to double

damages plus interest, if the injured

beneficiary/plaintiff fails to reimburse

Medicare for conditional payments that

have been made.4 Critically, parties to

a lawsuit, their insurers, and their attor-

neys can all be subject to the penalty.5

The system relies on voluntary

reporting by the RRE. There is no no-

tice requirement on the part of the

government, and no parallel reporting

requirement for Medicare beneficiaries,

although a plaintiff may be “on the

hook” for failure to satisfy Medicare’s

lien and, if necessary, to address future

medical care through a Medicare set-

aside. This article describes steps that

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u Insurance Defense Attorney for Over 35 Years

u Honorary Member of OADC

u Active/Non-Practicing Member of OSB

u Over 350 Mediations/Arbitrations & Counting

u Have Car/Will Travel Anywhere In Oregon & NW

No Travel Fees or Travel-Related Expenses

William E. FlinnMediation & arbitration

747 SW Mill View Way u Bend OR 97702 u http://www.flinnmediation.com/

(541) [email protected]

medicare compliaNcecontinued from page 6


attorneys representing RREs can follow

to set the stage for compliance with

the reporting requirements during the

discovery phase of the case.

Step 1: identifying plaintiff’s Medi-

care Status

The first step in complying with MM-

SEA is to identify the plaintiff’s Medicare

status. A comprehensive background

search can often reveal the necessary in-

formation. Individuals who are 65 years

old or older are entitled to Medicare.

Additionally, all Social Security Disability

recipients can receive Medicare cover-

age two years after the first month they

are eligible for their monthly disability

benefits. Earlier coverage is available if

the individual has certain medical con-

ditions, such as end-stage renal disease

or ALS.6

Early in the case, a written discovery

request should be issued that includes

a request for documents identifying

whether a plaintiff is a Medicare or Med-

icaid beneficiary, including the plaintiff’s

full name, date of birth, Social Security

number, and Medicare health insurance

claim number, if there is one. Depend-

ing on the plaintiff’s medical condition,

a request for production of documents

related to Social Security Disability insur-

ance application and benefits might also

be necessary. Additionally, every request

for production or subpoena of medical

records should include a request for

copies of any medical bills, which can be

reviewed for Medicare payments.

When in doubt, “query access” re-

garding an individual’s entitlement to

Medicare is available through the CMS

website, by submitting the last 5 digits

of the Social Security number or Medi-

care health insurance claim number,

name, date of birth, and gender of the

individual.7 This process involves regis-

tering and opening an account to access

the CMS database, so is best handled by

the RRE or a professional vendor, rather

than the defense attorney. However, the

attorney should be prepared to provide

the necessary data, and should ensure

that the inquiry is resubmitted periodi-

cally, if there is any chance the plaintiff

will become Medicare-eligible during

the pendency of a claim. The relevant

inquiry is whether the plaintiff is or may

become a Medicare beneficiary within

30 months of case resolution, not from

the initiation of the claim or litigation.

Finally, Medicare information can

be confirmed at the plaintiff’s deposi-

tion. The collateral source rule will likely

bar admission of this information at trial.

However, there is no privilege or rule

preventing questions about Medicare at

a discovery deposition.

Step 2: identifying conditional pay-

ments

Once the Medicare status of a plain-

tiff has been confirmed, the next step

is to determine whether Medicare has

made any conditional payments and,

if so, the amounts of those payments.

Although medical bills are one source

of information, it is not possible to de-

termine the “bottom line” from medical

bills alone, because Medicare might be a

secondary source for some types of care

and a primary source for others.

To receive information regarding

conditional payments, a defendant

should ask the plaintiff to sign a Medi-

care Consent to Release this information

to the RRE (Consent to Release forms

FEATURES




are available online). A separate form

should be signed by the plaintiff’s spouse

if resolution of the case might have the

effect of releasing medical expenses for

both the patient and the spouse, as pay-

ment for loss of consortium does trigger

the reporting requirement. Interim pay-

ment statements and a final determina-

tion letter will be issued to the Medicare

beneficiary and to the RRE if there is a

properly signed Consent in place.

What to do if plaintiff does not

cooperate

There is no statute or regulation

that requires a Medicare beneficiary to

cooperate with efforts to gather the

data that an RRE is required to report

under the MMSEA. And, occasionally,

plaintiffs will take the position that they

do not need to provide Medicare pay-

ment information, especially prior to

any recovery in the case. Arguments

that may be raised include the collateral

source rule, which of course deals only

with the admissibility at trial of collateral

source information. A plaintiff might

also argue that, because he or she will

assume responsibility for reimbursing

Medicare, the defendant/RRE need not

know the specific amounts of any interim

payments.

While it is true that reporting re-

quirements only apply if a payment has

been made to resolve the case, there are

compelling reasons for a defendant/RRE

to know about the plaintiff’s Medicare

status and to have access to interim

payment statements prior to resolution

of the case. At the very least, an RRE is

entitled to know of a potential report-

ing requirement in order to comply with

federal law.

CMS published a helpful Alert on

April 6, 2010, explaining to beneficiaries

why demographic information may be

requested, and advising that it is appro-

priate to comply and provide informa-

FEATURES



thus far, oregon courts

have not been consis-

tent in ruling on mo-

tions to compel Medi-

care information. in

Multnomah county—

where, not coinciden-

tally, the majority of

medical malpractice

claims are filed—the

court has generally not

been willing to grant

a motion to compel

Medicare interim pay-

ment information, al-

though inroads have

been made.

tion “that the Secretary of the Depart-

ment of Health and Human Services

requires for purposes of coordination

of benefits.”

unfortunately, the April 6, 2010 CMS

Alert does not address an RRE’s access

to interim payment statements, so may

not be persuasive on this point. If court

intervention is necessary, arguments a

defendant might raise include:

• The information is relevant to

the defense under ORCP 36 B(1).

Whether or not admissible, interim

payment statements are relevant to

any calculation of damages, which,

of course, must be pled in this state

(ORCP 18).

• Interim payment statements may

lead to admissible information re-

garding the extent and nature of

the plaintiff’s injuries.

• Interim payment statements may

identify providers who have not

been previously disclosed, including

providers who might be involved in

future care and are thus relevant

to a potential Medicare set-aside

amount.

• An interim payment statement

could become admissible at trial,

should the plaintiff’s ability to pay

medical damages be put at issue.

• Responsible Reporting Entities are

entitled to know the extent of their

possible exposure.

• Oregon public policy favors the com-

promise and settlement of disputes.

Thus far, Oregon courts have not

been consistent in ruling on motions to

compel Medicare information. In Mult-

nomah County—where, not coinciden-

tally, the majority of medical malpractice

claims are filed—the court has generally

not been willing to grant a motion to

compel Medicare interim payment in-

formation, although inroads have been

made. As defense attorneys, we should

prepare our case from the outset to es-

tablish the facts necessary to file such a

motion. The weight of authority is on

our side, and proper discovery, coupled

with a motion to compel if necessary,

will add to the emerging trend for full

disclosure of Medicare information on

the part of plaintiffs, and full compliance

with federal reporting requirements on

the part of defendants/RREs, if payment

is made to resolve the case.

endnotes

1 Reporting requirements may also

apply if there is a likelihood that the

plaintiff will be eligible for Medicare

benefits within the next 30 months.

2 Insurers and self-insured entities,

along with workers’ compensation

insurance and employer group

health plans (the “payers” under

MMSEA), are the Responsible Re-

porting Entities (RRE) identified by

CMS.

3 ORS 416.530 contains a similar no-

tification requirement with respect

to Medicaid recipients in Oregon.

4 See Humana Medical Plan, Inc. v.

Western Heritage Insurance Com-

pany, 94 F Supp 3d (SD Fla March 16,

2015) (granting plaintiff’s motion

for summary judgment on claim for

double damages).

5 See U.S. v. Stricker, 2010 WL 6599489

(ND Ala Sept. 30, 2010) (complaint

filed by united States to recover

Medicare costs against settling

parties, their insurers, and their

attorneys); U.S. v. Harris, 2009 WL

891931 (ND W Va Mar. 26, 2009)

(summary judgment appropriate

against plaintiff’s attorney for fail-

ure to reimburse Medicare follow-

ing settlement), aff’d, 334 Fed Appx

569 (4th Cir 2009).

6 42 USC §1395(c).

7 Regarding Medicaid, defense at-

torneys can submit a letter to the

Oregon Department of Health and

Services asking if there is a lien asso-

ciated with the plaintiff’s particular

date of injury. Again, plaintiff’s

demographic information must be

provided in the letter, including the

last five digits of the Social Security

number.

FEATURES


Round Hole/Square Peg – When Insurance Intended to Comply with Mandated Coverage

Does NotJames b. richHarris Wyatt & Amala LLC


James B. Rich

Caveat Emptor (“let the buyer

beware”) evokes, for me, cli-

ché images of white-belted,

white-shoed, flamboyant

pant-wearing hawkers of

“as-is” used cars. Well, we learn some-

thing new every day. I’ve recently been

reminded that our advice to our insurance

consumer clients should include, early and

often, the ubiquitous Latin caution. Toss-

ing that caution to the wind could very

well result in such clients

paying substantial de-

fense costs and damages

out of pocket, despite

believing that they have

fulfilled their mandated

insurance obligations.

Oregon mandates

that individuals and businesses obtain

liability insurance for many endeav-

ors—for example, driving. The Financial

Responsibility Law (“FRL”) statutes pre-

scribe specific terms and coverages that

must be contained within every Oregon

auto insurance policy.1 I have frequently

encountered ORS 742.450, which states

in several subsections that every motor

vehicle liability policy issued for delivery

in this state shall state/contain/provide

certain provisions. Oregon’s uninsured/

underinsured motorist coverage statutory

scheme has, at times, been described as

containing a “model policy.”2 That is, “in-

surers are required to include in their uIM

policies “coverage that in each instance

is no less favorable in any respect to the

insured or the beneficiary than if the . . .

provisions [of ORS 742.504(1) to (12)] were

set forth in the policy.”3

So, in Oregon, our mandatory auto

liability insurance policies are required to

contain specific, minimal provisions. There

are, however, other instances in which in-

surance coverage is mandated by Oregon

law but no such specific policy provisions

are prescribed by statute or rule. As a

consequence, the insurance consumer (or,

the business owner) bears the obligation

of finding coverage that complies with the

mandate. That is where caution must be

exercised, because courts have been reluc-

tant to use mandatory insurance laws to

“find” coverage in a policy (or to reform

the terms of a policy) in areas other than

auto insurance.

The Oregon Court of Appeals’ recent

opinion in 5 Star, Inc. v. Atlantic Casualty

Ins. Co. highlights why defense attorneys

and their business clients should never as-

sume that policy coverage conforms to the

applicable statutory insurance mandate.

In 5 Star, Inc., a construction contractor

argued, in part, that its insurer had an

obligation to provide coverage that satis-

fied the contractor’s insurance mandate

in former ORS 701.105.4 The contractor

argued that if the express terms of the

policy excluded the claim at issue, the court

should engage in “statutory reformation”

to expand the insurer’s obligations.5 That

argument was rejected. The court con-

cluded that the statute “creates a legal

obligation for contractors, but it does not

specify that insurers must cover particular

losses.”6 Similarly, the court concluded

that nothing in the applicable administra-

tive rule7 put the burden on the insurer

to provide the coverage required of the

Oregon contractor.8 Therefore, under 5

Star, Inc., it is the insurance consumer—the

contractor—and not the insurer who has

the burden of ensuring that insurance cov-

erage is sufficient to satisfy the contractor’s

legal obligations.

The same situation has been held to

exist in the context of a liquor liability

policy. In Desrosiers v. Hudson Specialty

FEATURES


maNdated iNsuraNce coveragecontinued from page 10

Ins. Co., a federal diversity action constru-

ing Oregon law, the assignee of a bar’s in-

surance coverage claim argued to the trial

court that Oregon’s liquor liability laws

prohibit a liquor liability insurance policy

from containing the “assault and battery”

exclusion relied upon by the insurer.9 The

plaintiff argued that Oregon’s liquor laws

were similar to the auto FRL and required

that all liquor liability policies must con-

tain certain provisions. In adopting and

quoting the magistrate’s findings and

recommendations, the trial judge rejected

plaintiff’s FRL analogy and concluded, “the

statute imposes a burden on liquor licens-

ees, not insurance providers.”10

Thus, like construction contractors,

purveyors of alcohol who purchase an

insurance policy for the purpose of com-

plying with a mandatory insurance statute

are charged with confirming that the

policy they are purchasing, in fact, com-

plies with state insurance requirements.

The insurers, however, are not similarly

charged with selling policies that fulfill

the full extent of the State’s insurance

mandate.

I recently encountered a situation

in which a licensed purveyor of alcohol

purchased a general commercial liability

policy plus an endorsement specifically

entitled “Liquor Liability.” The insured

intended that the policy plus the en-

dorsement would satisfy the insurance

requirements of its liquor license. upon

further inspection, however, the policy and

endorsements purported to exclude any

coverage for damages arising out of any

assault or battery, whether real or alleged.

That assaults, battery, and liquor are con-

nected seems obvious. The existence of

such an exclusion in a policy intended

to provide protection for a bar seemed

unusual. Furthermore, the liquor liability

endorsement (intended to satisfy liquor

license obligations) specifically stated:

“In the event this policy is filed with any

governmental entity instead of or as a re-

placement for a statutory or other legally

required Liquor Bond, this policy will not

be construed to cover or insure any re-

quirements or obligations of such bond.”

That is, the “liquor liability” endorse-

ment seems to say that it does not satisfy

the liquor licensee’s insurance obligation.

Such provision, to me, makes my point:

the insurance policy your client purchases

may turn out to be “square” when the law

requires it to be “round.” That ill fit may

not be discovered until it’s too late and

the client is facing substantial financial

exposure. Caveat emptor.11

endnotes

1 See ORS 806.070 and ORS 742.450, et

seq.

2 Paton v. American Family Mutual Ins.

Co., 256 Or App 607, 611, n. 3, 302

P3d 1204, rev. den. 354 Or 386, 314

P3d 964 (2013).

3 Id. (quoting ORS 742.502(1).

4 269 Or App 51, 56-60, 344 P3d 467, rev.

den. 357 Or 743 (2015). ORS 701.105

has been renumbered to ORS 701.073.

5 Id. at 58.

6 Id. at 59.

7 Former OAR 812-003-0015.

8 Id. at 59-60.

9 2010 WL 1727119 (2010) (finding

insurer had no duty to defend or to

indemnify liquor licensee) reversed

on other grounds, 438 Fed Appx 629

(2011) (holding insurer had duty to

defend and indemnify based upon

allegations of complaint and not

addressing “statutory reformation”

argument raised at trial level).

10 Id. (considering impact of ORS

471.168).

11 A certain insurance company’s ad

campaign about “knowing the gaps”

comes to mind.

FEATURES


his is an article about what

works at trial. Generally the

lawyers I see defending civil

cases in my court do a very

good job. But we all make

mistakes, and in a jury trial we all know

that a multitude of things can either go

right or go wrong. To win at trial, an

attorney must clearly communicate and

persuade—developing a positive emo-

tional rapport with the

jury is a way to open up

communication so the

jury can truly connect

with the content of your

message. In addition,

from a defense perspec-

tive there are certain

pitfalls which one needs to work hard to

avoid that present the risk of a very costly

result. I am now in my seventeenth year

as a trial judge. I am always watching

for what works and what does not work

for each side. In this article I want to

share my reflections on three of the most

common traps that can diminish the ef-

fectiveness of defense counsel.

1. Falling into the “big bad corpora-

tion” trap

Humility sells. Arrogance and bul-

lying do not. One of the consistent

problems I have seen for an institutional

defendant over the years is allowing itself

to be portrayed as a bully. Jurors do not

like bullies, and when they see this type

of behavior, it tends to cause the normal

reaction of cheering for the underdog.

Of course, at trial, the judge will

instruct the jury that the case must be

decided on the evidence and on the law,

and that neither sympathy nor prejudice

against any party is to play any role in

the jury’s decision. But the jury is made

up of 12 warm-blooded human beings.

We know that emotion plays a role in all

decision-making. Therefore, if the facts

come out at trial in a way that depicts

defendant as overbearing, greedy, or

recklessly disregarding the legitimate

concerns of the plaintiff, then there may

be big trouble ahead for the defendant.

In my opinion there are appropri-

ate ways to counteract and minimize

the damage that may be caused by a

corporate defendant’s appearance of

excess size, wealth, or power. Very sim-

ply, the defendant must be humanized.

The reality is, just like the jury deciding

the case, corporations and businesses are

made up of individuals. When defense

counsel undertakes the defense of an

institutional defendant, efforts should

be made to introduce the “people side”

of the business. I have seen this done in

many different ways. It can be highly

effective in removing the negative infer-

ence that bigness is badness.

In the courts our goal is to provide a

level playing field to both sides and not

to let emotion get in the way of decid-

ing the case on its merits. Most cases

end up with the right result for the right

reason. But it is important that defense

counsel not unnecessarily let the client

get cloaked with a bad image in front

of the jury. It is hard enough to win

without having a big emotional hurdle

to overcome.

2. not admitting the obvious

Pick your battles. Only fight about

what really matters to your case. Abra-

ham Lincoln was a gifted trial lawyer for

25 years. He represented railroads and

individuals before he became one of our

greatest presidents. His former law part-

ner William Herndon described Lincoln’s

way of winning cases with words to this

effect: “He would concede, concede and

concede until he got down to the nub of

the issue he would win upon.” Lincoln

would admit his opponents’ minor points

in order to give force to his own major

points. It takes confidence to do this. But

there is power in brevity.

A good example of how this can

work well for the defense can be found in

rear-end automobile accident cases alleg-

ing soft tissue injuries. In my courtroom I

have seen many defense verdicts in such

cases even though liability was admitted.

T


Jerome LaBarre

Three Traps to Avoid at Trialthe honorable Jerome labarreMultnomah County Circuit Court

FEATURES


The defense does not seem to be disad-

vantaged when the case is submitted to

the jury to determine only the nature and

extent of the injury and what damages, if

any, should be awarded. Defense counsel

do not weaken their efforts by straying

from their central contention that the

damages sought have not been proven.

There are important lessons in these

cases, which apply to many other types of

defense cases as well. It is always hard to

wade through a multiplicity of issues to

decide what should be emphasized and

what should be downplayed or ignored.

By simplifying your case and focusing

on major points, you will improve your

advocacy.

3. disagreeing Without being dis-

agreeable

Litigation is a polite form of waging

warfare as a way of resolving disputes.

The court rules must be followed, and

also the rules of professionalism. From

what I have seen over the years, being

highly professional also helps to win at

trial. Jurors and all of the rest of us in the

courtroom operate out of both the head

and the heart. A lawyer may have a case

that is objectively strong on the facts, but

the waters can be muddied if the focus

gets shifted to bad behavior that makes

counsel look like an unpleasant person.

Trying your case in a way that is respectful

and courteous to the other side embraces

professionalism.

Based upon watching hundreds of

trials, I have come to believe that most

attorneys try hard to follow the principles

of professionalism. The Oregon State Bar

Statement of Professionalism provides in

pertinent part:

• As officers of the court, we aspire to

a professional standard of conduct

that goes beyond merely complying

with the ethical rules. Professional-

ism is the courage to care about and

act for the benefit of our clients, our

peers, our careers, and the public

good.

• I will not employ tactics that are in-

tended to delay, harass, or drain the

financial resources of any party.

• I will be courteous and respectful to

my clients, to adverse litigants and

adverse counsel, and to the court.

• I will only pursue positions and litiga-

tion that have merit.

The above aspects of professionalism

are not just important for the sake of

your obligations as a lawyer, but in my

view they raise your chances of prevail-

ing. My recommendation to attorneys

who want to improve their game is to

work on improving their professional-

ism. It is a real “win-win.” This advice

also applies to ADR. When I act as a

settlement judge I also see the merit in

this approach by counsel. There is an

old saying: “Be hard on the problem and

soft on the people.” This works won-

ders. The disputes that one handles are

battles. But disagreeing without being

disagreeable is the best way to operate

in the courtroom.

conclusion

Trying cases is an art, but it is also

a science. Things can always go wrong.

But avoiding the mistakes described

above is an easy way to bring focus to the

strengths of your case. It turns out that

the simple virtues—which we may have

learned in kindergarten—serve us not

only in life but in the courtroom as well.

Judge LaBarre is a graduate of the Univer-

sity of Oregon and Georgetown Universi-

ty Law Center and is a Multnomah County

Circuit Court Judge. Judge LaBarre can

be reached at 503-988-3348 or at jerome.

[email protected].

three traps to avoid at trialcontinued from page 12

Corrigan adrMediation | arbitration

exclusively alternative dispute resolution

Chuck Corrigan 503.241.0677 1000 SW broadway, Portland

www.corriganadr.com

FEATURES


Sales of small drones (also known as

“Unmanned Aerial Systems”) have sky-

rocketed in recent years. Long gone are

the days when drone technology was

available only to the military or to large

companies such as Boeing or Lockheed

Martin. Today, any middle-schooler can

crack open his or her piggybank, visit

a Walgreens or Radio

Shack, and for bet-

ter or worse, walk out

with a high-tech small

drone—such as the DJI

Phantom II, equipped

with high definition

cameras and capable

of over 20 minutes of flight time—for

less than $500. As the popularity and

accessibility of these drones soar, so do

the resulting mishaps, privacy concerns,

and potential insurance coverage issues.

The following article discusses the gov-

ernment’s response to the sudden and

dramatic increase in drone sales and

incidents, as well as potential coverage

issues for claims involving small drones

under homeowners’ insurance policies.

drone incidents are on the rise

As mentioned above, recreational

drone sales are taking off in huge

numbers. In December 2015, the Fed-

eral Aviation Administration (“FAA”)

estimated that 2015 drone sales would

reach 1.6 million.1 With such a dramatic

increase in drone sales and use, it is no

wonder we are seeing more reported

incidents in the news. Some recent

examples include:

• August 26, 2013 – A drone being

used to record spectators at the

Virginia Motorsports Park for the

Great Bull Run crashed into the

stands injuring several people.

• September 17, 2013 – A drone

crashed in front of German Chan-

cellor Angela Merkel. No one was

harmed, but the situation raised

concerns.

• July 22, 2014 – A drone narrowly

missed colliding with an Airbus

A320 as it was landing at London’s

Heathrow airport. The plane was at

about 700 feet altitude when the

incident occurred. British authori-

ties rated the incident as a “serious

risk of collision.”

• August 2, 2014 – A Dutch tour-

ist crashed a small camera drone

into Yellowstone’s Grand Prismatic

Spring. The operator was fined, and

the incident prompted the National

Park Service to issue a nationwide

ban on drone use inside national

parks.

• August 17, 2014 – Fans and players

were surprised when a drone flew

over a Carolina Panthers football

game. The drone caused no harm

or damage in its operation, but its

operator was detained and ques-

tioned by the authorities.

• January 26, 2015 – A drone crash-

landed on the White House lawn.

The operator was attempting to

Regulatory and Coverage Challenges of Recreational Drone Use: The Sky’s the Limit

philip a. rushNavigate Law Group LLC

Philip A. Rush

according to the Faa,

the number of re-

ported “potentially

unsafe drone oper-

ations” more than

doubled from 2014 to

2015. the increased

incidents help illus-

trate the potential for

personal injury and

property damage ex-

posure as the number

of drones continue

to increase in our na-

tional airspace.


FEATURES


make a political statement but was

not charged with any crimes.

• May 15, 2015 – A Seattle news

helicopter covering a fire reported

a near miss with a drone. The

FAA said it received 25 reports a

month of drones flying too close to

manned aircraft.

These highly publicized incidents

represent only a small sampling of drone

incidents that have accompanied the

recent boom in sales and use. Accord-

ing to the FAA, the number of reported

“potentially unsafe drone operations”

more than doubled from 2014 to 2015.2

The increased incidents help illustrate

the potential for personal injury and

property damage exposure as the num-

ber of drones continue to increase in our

national airspace.

Status of Faa regulations over rec-

reational drone use

In 2012, the FAA Modernization and

Reform Act (the Act)3 was enacted which

included sections directing the FAA to

promulgate new rules governing the

emerging field of unmanned Aerial Sys-

tems, more commonly known as drones.

The Act distinguished FAA regulation of

commercial drones from smaller (under

55 pounds) “model aircraft” flown for

recreational purposes which would

not be regulated.4 Although the Act

mandated the FAA to promulgate final

rules for commercial drones by certain

dates, those dates came and went fol-

lowing protracted notice and comment

periods, with no final action. In the

meantime, the sales and use of unregu-

lated recreational drones continued to

skyrocket. The FAA’s delay in developing

a comprehensive set of rules, coupled

with the Act’s exception for regulation

of recreational drones, eventually over-

took the FAA’s ability to safely manage

the national airspace.

In an effort to gain control over

recreational drone use, the FAA recently

issued a new rule requiring registration

of all recreational drones weighing be-

tween 0.5 and 55 pounds with the FAA

before conducting flight operations.5

The new rule, which took effect Decem-

ber 21, 2015, resulted in the registration

of over 300,000 recreational drones

within 30 days of the rule’s implementa-

tion.6 The new rule also brought legal

challenges, not the least of which is

the Act’s apparent expressed intent for

the FAA not to regulate recreational

drones.7 These challenges will need

time to work through the legal system.

For now, the FAA’s position is that all

recreational drones must be registered

before flight and that failure to do so

could result in fines up to $250,000 and/

or three years in prison.

homeowners’ insurance policy cov-

erage for recreational drones

The emergence of small drones is

not only prompting significant action by

the FAA, but it may soon impact the lan-

guage and terms of our homeowners’

insurance policies because drones pose

a number of potential coverage issues.

As a starting point, the standard

homeowners’ policy provides cover-

age for damages the insured becomes

legally obligated to pay because of

bodily injury or property damage arising

from an occurrence to which the policy

applies.8 Many such policies exclude

liability for injuries or damages arising

out of the ownership, maintenance,

operation, use, loading, or unloading of

‘’aircraft,” but then make an exception

for ‘’model or hobby aircraft not used

or designed to carry people or cargo.”9

Thus, to the extent the standard home-

owners’ policy includes this definition,

or some similar variation, harm caused

by an insured’s drone will probably be

covered as it is deemed “a model or

hobby aircraft not used or designed to

carry people or cargo.”

However, the standard homeown-

ers’ policy also includes an exclusion for

harm caused by commercial or business

recreatioNal droNe usecontinued from page 14


FEATURES


activities, which could be implicated in

many drone-related insurance cover-

age claims. Although the distinction

between recreational (hobby) and com-

mercial drone use can be murky at times,

receiving compensation could preclude

coverage under most homeowners’

policies. In addition, most standard

homeowners’ policies also exclude cov-

erage for harm that is either expected or

intended. This exclusion is particularly

important in the drone-coverage setting

because many potential claims involve

alleged privacy invasion. In Oregon, the

common-law torts of trespass and intru-

sion upon seclusion10 and the statutory

tort of invasion of personal privacy11 all

require a showing of intentional con-

duct. As a result, an insurer might argue

that a drone-related trespass or inva-

sion of privacy claim is excluded from

coverage under the “intentional acts”

exclusion. Whether such a coverage

position is successful will likely depend

on the specific policy language at issue.12

conclusion

Given the exponential increase in

recreational drone sales and use, we

can expect an increase in claims against

drone operators for mishaps causing

personal injury and property damage,

as well as a resulting increase in the

number of claims under existing home-

owners’ insurance policies. Attorneys

and insurers need to read and under-

stand the specific policy coverages and

exclusions, paying particular attention

to whether ‘’aircraft’’ are excluded from

policy coverage and whether ‘’model or

hobby aircraft’’ are excluded from the

general definition of ‘’aircraft.” They

should also evaluate exclusions for

commercial operations and intentional

torts to see if they apply, as well as any

other internal ambiguity that might

exist. In sum, drones are here to stay

as they become cheaper, smaller, and

more capable. So, check your policies

and start your engines.

endnotes

1 Ralph Morris and George Thurston,

Registration and Marking Require-

ments for Small Unmanned Aircraft,

FAA.gov (Dec. 2015), http://www.

faa.gov/news/updates/media/2015-

12-13_2120-ak82_ria.pdf.

2 Unmanned Aircraft Systems (UAS)

Registration, FAA.gov (last visited

Mar. 1, 2016), http://www.faa.gov/

uas/registration/.

3 Pub L 112-95.

4 The Act defines ‘’model aircraft’’ as

an ‘’unmanned aircraft that is: 1)

capable of sustained flight in the

atmosphere; (2) flown within visual

line of sight of the person operat-

ing the aircraft; and (3) flown for

hobby or recreational purposes.”

Section 336, Pub L 112-9S. The FAA’s

proposed rules further require that

model aircraft weigh less than 55

pounds, that the aircraft not in-

terfere with manned aircraft, and

that operators must notify air traffic

control if the aircraft is operated

within five miles of an airport. FR

Vol 80, No 35, page 9555.

5 FAA Docket No 2015-7396.

6 Unmanned Aircraft Systems (UAS)

Registration, FAA.gov (last visited

Mar. 1, 2016), http://www.faa.gov/

uas/registration/.

7 Taylor v. FAA Administration, No

15-1495 (DC Cir December 24, 2015).

8 See ISO Homeowners 3 - Special

Form HO 00 03 05 11, see also, Led-

ford v. Gutoski, 319 Or 397, 877 P2d

80 (1994).

9 See ISO HO 00 03 OS 11, para.

r.C.4.(d).

10 Mauri v. Smith, 324 Or 476,482-483,

929 P2d 307 (1996).

11 ORS 30.865 (1)(a).

12 See Western Protectors Ins. Co.

v. Shaffer, 624 F Supp 2d 1292,

1301(WD Wa 2009) (court finds duty

to defend where ambiguity existed

in homeowner’s policy providing

coverage for ‘’invasion of privacy’’

but then later excluded intentional

acts where underlying state law

claim for invasion of privacy claim

required showing of intentional

conduct).

recreatioNal droNe usecontinued from page 15

RECENT CASE NOTES


Recent Case NotesJonathan henderson, davis rothwell earle & Xóchihua

Case Notes Editor


Settlement And Release

Court holds that an agree-ment to enter into a mutual release is sufficient to release claims for legal malpractice, even where release has not yet been drafted

In Wieck v. Hosetter, 274 Or App 457

(2015), the Court of Appeals affirmed the

trial court’s grant of summary judgment

for defendant, holding that the parties

entered into a binding and enforceable

settlement agreement that barred plain-

tiffs’ claims.

Plaintiffs, a married couple, became

friends with defendant, an attorney in

Wallowa County, Oregon. Defendant

advised plaintiffs as their lawyer. Defen-

dant also entered into an agreement with

plaintiffs to buy a parcel of land on a 12-

year installment contract. Approximately

five years into the contract, defendant

instructed plaintiffs to sign certain docu-

ments, but did not explain the content

of the documents or give plaintiffs time

to review them. After plaintiffs signed

the documents, defendant informed

plaintiffs that he was on the verge of

bankruptcy and would not be able to

make any further payments. Plaintiffs

sought the advice of another attorney

who advised that the documents they

signed had subordinated their property

interests—both for the land purchased by

defendant and for a separate parcel of

land that plaintiffs retained—to the lien

defendant owed to the bank.

The parties reached an agreement

that allowed defendant to sell the prop-

erty and pay off plaintiffs. The settle-

ment agreement included a provision

that the parties would sign a mutual

general release, although the terms of

the release were not negotiated. After

the settlement agreement was finalized,

defendant sent a draft mutual general

release to plaintiffs. Plaintiffs requested

revisions to the release as a condition of

signing. Defendant did not respond, and

plaintiffs refused to sign the release.

Plaintiffs filed a professional neg-

ligence claim, alleging that defendant

breached his duty of care, which ulti-

mately forced plaintiffs to sell their rock

quarry, resulting in $2 million in damages.

Defendant moved for summary judg-

ment, arguing that plaintiffs had released

any and all claims arising from the install-

ment contract. In response, plaintiffs

argued that they had never fully accepted

the mutual release agreement. The trial

court granted summary judgment for

defendant, finding that the settlement

agreement regarding the mutual general

release barred plaintiffs’ claims.

On appeal, plaintiffs did not dispute

the existence of a settlement agreement,

but argued that the mutual general re-

lease was not valid and enforceable until

the parties agreed on the exact terms and

the form of the release agreement. The

court reasoned that even when parties

contemplate that additional documents

will be finalized in the future, the ques-

tion of whether an agreement is binding

turns on mutual assent. Here, the court

found that the parties intended to enter

into a binding mutual general release,

and that plaintiffs’ subjective belief

that there were material terms that still

needed to be negotiated did not make

the agreement unenforceable.J

— Submitted by Lindsay H. Duncan,

Hart Wagner LLP

Evidence-Peer Review Privilege

Court holds that party invok-ing the peer review privilege in ORS 41.675 must meet his burden of establishing that the evidence sought to be ex-cluded was a report prepared for a peer review body

In Rowen v. Gonenne, MD, 274 Or

App 803 (November 12, 2015), the Court

of Appeals affirmed the trial court’s rul-

ing denying plaintiffs’ motion to exclude

under ORS 41.675 evidence of a “bench-

marking study” about post-polypectomy

bleeding because plaintiffs failed to pres-

ent evidence in support of their claim of

privilege necessary to meet the require-

ments of OEC 104(1).

Plaintiffs alleged negligence against

defendant, Dr. Gonenne, due to post-

polypectomy bleeding from a polypec-

tomy performed in 2009 by Dr. Gonenne,

which left the decedent paralyzed from

the waist down. Plaintiffs moved in

limine to exclude “any evidence” of the

2008 benchmarking study that detailed

incidents of post-polypectomy bleeding

RECENT CASE NOTES


Recent Case Notes


on the grounds that the study lacked sci-

entific validity, risked confusing the jury,

and was prejudicial. In support of their

motion, plaintiffs attached a copy of the

study. In opposition, defendant argued

that the study influenced his decision on

whether to move forward with the proce-

dure at issue. The court denied plaintiffs’

motion.

During trial, plaintiffs again moved

to preclude the admission of the bench-

marking study, arguing the study was

inadmissible under Oregon’s peer review

privilege, ORS 41.675. Plaintiffs did not

produce any additional evidence, but

relied instead on the evidence previously

submitted. Defendant opposed the mo-

tion, and the court again denied plaintiffs’

motion. The jury returned a verdict for

defendant. Plaintiffs appealed, assigning

error to the court’s denial of the mid-trial

motion to exclude the study under ORS

41.675. Defendant argued on appeal

that plaintiff failed to develop sufficient

foundational evidence under OEC 104

to show that the study was, as a factual

matter, the type of document covered by

the statutory privilege. The Court of Ap-

peals agreed with defendant. The court

reasoned that plaintiff bore the burden,

as the proponent of the application of

the privilege, of proving that the study

was the type of document covered by the

privilege. The court further reasoned that

OEC 104(1) required plaintiffs to produce

evidence in support of their motion that

persuaded the trial court that the study

“more likely than not” was a written

report to the Center’s Quality Manage-

ment Committee, which plaintiffs failed

to do. Therefore, the trial court’s ruling

was proper.J

— Submitted by Brandon M. Kammer,

Hart Wagner LLP

Environmental

District Court rejects chal-lenge to Oregon Clean Fuels program

In Am. Fuel & Petrochemical Mfrs. v.

O’Keeffe, No. 3:15-CV-00467-AA, 2015

U.S. Dist. LEXIS 128277, (D Or Sept. 23,

2015), the district court rejected a chal-

lenge to the State of Oregon Clean Fuels

program.

In 2007, the Oregon legislature

found that climate change seriously

threatened Oregon’s economy, environ-

ment, and public health. The legislature

identified a need to assess and monitor

the current levels of greenhouse gas emis-

sions in Oregon. In 2009, the legislature

instructed the Oregon Environmental

Quality Commission to adopt rules to

decrease emissions from transportation

fuels that are produced or imported to

Oregon by 10 percent over a 10-year pe-

riod. Pursuant to this directive, the Envi-

ronmental Quality Commission adopted a

set of rules requiring regulated parties to

meet annual “clean fuel” standards. The

rules require, among other items, that

regulated parties replace existing fuels

with fuels that have lower calculated car-

bon intensities or purchase credits from

other parties to meet annual average

carbon intensity requirements.

The American Fuel and Petrochemi-

cal Manufacturers, American Trucking

Associations, Inc., and Consumer Energy

Alliance filed suit in district court, arguing

the Clean Fuels program: (1) discriminates

against out-of-state commerce in viola-

tion of the Commerce Clause; (2) regu-

lates extraterritorial activity in violation

of the Commerce Clause and principles

of interstate federalism; (3) is expressly

preempted by the Clean Air Act and the

Environmental Protection Agency’s Refor-

mulated Gasoline Rule; and (4) is conflict

preempted by section 211(o) of the Clean

Air Act, which contains a Renewable

Fuel Standard. The State of Oregon and

intervenors (the States of California and

Washington) and a coalition of environ-

mental organizations moved to dismiss

and for a judgment on the pleadings.

The district court rejected plaintiffs’

challenge. First, the court held that Or-

egon’s Clean Fuels program is not facially

discriminatory because it does not base

its treatment on a fuel’s origin but on its

carbon intensity. The court explained

that the program does not grant pref-

erential treatment to in-state biofuels

over out-of-state petroleum and Midwest

ethanol, and that there are no plausible

allegations demonstrating that out-of-

state fuel producers will be commercially

disadvantaged or considerably burdened.

Second, the court found the program did

not regulate activity wholly outside the

state. Third, the court rejected the argu-

ment that the program was expressly

preempted by federal law or preempted

because it conflicted with federal law. Ac-

cordingly, the court granted the motions

and dismissed the plaintiffs’ claims.J

— Submitted by Patrick Rowe,

Sussman Shank LLP

RECENT CASE NOTES



Recent Case NotesEmployment

Cab drivers are not inde-pendent contractors and the drivers’ employer is thus li-able for unemployment in-surance taxes on the drivers’ wages

In Broadway Cab LLC v. Emp’t Dep’t,

358 Or 431 (2015), the Oregon Supreme

Court affirmed an administrative law

judge’s finding that a cab company’s

drivers performed services for remu-

neration and were not independent

contractors, and, as a consequence,

that the cab company was liable for

unemployment insurance taxes on the

drivers’ wages.

The court first rejected the cab

company’s argument that the drivers

provided services only to the passengers

and not to the cab company, because

the relevant statutes do not require

that services provided by an employee

be provided for the exclusive benefit of

the employer. The court also rejected

the cab company’s argument that its

arrangement with its drivers was not

an employer/employee relationship,

but rather a provider/purchaser rela-

tionship whereby the drivers purchased

administrative services from the cab

company for a fee. The court found

it problematic that the fees that were

charged to the drivers had no relation-

ship to the value of the administrative

services being provided to or used by

the drivers. Finally, the court said that

it was irrelevant that the passengers,

rather than the cab company, paid the

drivers for their services. Remuneration

for services need not come directly from

the employer. The court concluded that

the cab company employed the drivers.

The court also rejected the cab

company’s argument that the drivers

were independent contractors such

that the cab company did not owe

unemployment insurance taxes on the

drivers’ wages. Under ORS 670.600(2),

an independent contractor is a person

who provides services for remunera-

tion and who, in the provision of the

services, satisfies a four-element test,

one of which is that the person “is cus-

tomarily engaged in an independently

established business.” A person is cus-

tomarily engaged in an independently

established business if three criteria of

a five-criteria test are satisfied. The

court stated that the cab company

failed to establish the requisite three

criteria, in part because (a) the drivers

did not maintain a business location

separate from the cab company; and

(b) the drivers lacked the authority to

hire other persons to provide, or assist

in providing, the services that the drivers

performed for the cab company.

Because the drivers provided servic-

es to the cab company for remuneration

and because the drivers were not inde-

pendent contractors, the cab company

was obligated to pay unemployment

insurance taxes on the wages earned

by those drivers.J

— Submitted by Matt Mertens,

Sussman Shank LLP

Civil Procedure —Confidential

Mediation Communications

Oregon Supreme Court holds that communications between a party in mediation and that party’s lawyer taking place outside a mediation session are not “mediation communications” subject to privilege

In Alfieri v. Solomon, 358 Or 383

(2015), the Oregon Supreme Court clari-

fied what are privileged and inadmissible

“mediation communications” under

ORS 36.220 and ORS 36.222. Defendant

represented plaintiff in an employment

claim. Defendant suggested that the

case go to mediation. No resolution was

reached at the mediation conference,

but the next day the mediator sug-

gested a settlement package. ultimately,

the parties in the employment lawsuit

agreed to and signed a confidential

settlement agreement in the amount the

mediator had proposed.

Plaintiff then sued defendant for

malpractice, arguing that if defendant

had properly and completely pleaded

plaintiff’s claims and reasonably pre-

pared for trial, plaintiff would have

received a favorable jury verdict for a

higher amount than he received via me-

diation. Plaintiff’s complaint included al-

legations of the terms of the confidential

settlement agreement and communica-

RECENT CASE NOTES


Talk with Plaintiff’s attorney.

If that doesn’t work, call me.

Jeff Merrick MerrickMediation.com

503-665-4234

Recent Case Notes


tions by various parties to the mediation.

The trial court struck as confidential

and inadmissible under ORS 36.222(1)

the portions of plaintiff’s complaint

relating to the mediation and settle-

ment agreement. The trial court then

dismissed plaintiff’s complaint, agreeing

with defendant that plaintiff could not

prove his claim without the inadmissible,

confidential mediation communications.

After the Oregon Court of Appeals af-

firmed in part and reversed in part, the

Oregon Supreme Court granted review.

The Supreme Court held: (1) interac-

tions between parties to mediation and

their lawyers outside of the mediator’s

presence and without the mediator’s

direct involvement are not part of the

mediation, even if they are related to it;

(2) a “communication is ‘in the course

of or in connection with’ a mediation

only if it is made during and at a media-

tion proceeding or occurs outside of a

proceeding but relates to the substance

of the dispute being mediated and is

made before a resolution is reached or

the process is otherwise terminated; and

(3) “to be a confidential mediation com-

munication, a communication must be

both made to one of the persons listed

in ORS 36.110(7)(a) and made by one of

those same persons”; and that “[p]rivate

communications between a mediating

party and his or her attorney outside of

mediation proceedings, however, are not

‘mediation communications’ as defined

in the statute, even if integrally related

to a mediation.”

The court also held that ORCP 23

A does not allow a party to amend as a

matter of right after a motion to dismiss

is granted, even if no responsive plead-

ing has been filed. Rather, ORCP 25 A

requires a party to seek leave of court

to amend after a motion to dismiss is

granted.J

— Submitted by Harry Auerbach,

Portland City Attorney’s Office

RECENT CASE NOTES


Recent Case Notes


Negligence - Foreseeability

Supreme Court holds that overservice of alcohol, by itself, does not make subsequent violent conduct by the drinker reasonably foreseeable

In Chapman v. Mayfield, 358 Or

196 (2015), the Oregon Supreme Court

affirmed the Court of Appeals, and the

trial court’s dismissal of plaintiffs’ neg-

ligence claims on summary judgment.

Plaintiffs were shot and seriously injured

by Mayfield, who had been drinking at

defendant’s establishment earlier in the

night. Plaintiffs alleged that defendant

had overserved Mayfield alcohol, and

that this alleged overservice made it

reasonably foreseeable that he would

injure plaintiffs.

Mayfield had accompanied a friend

to the Eagles Lodge in Gresham, Oregon.

There, he had a couple of drinks, after

which he walked to another bar and then

to the card parlor, where he stood at the

entrance, drew his concealed weapon,

and began firing indiscriminately into

the group of people inside, striking

plaintiffs.

Plaintiffs sued defendant, alleging

defendant had overserved Mayfield, and

that the over-service made it reasonably

foreseeable that Mayfield would attack

plaintiffs. Defendant moved for summary

judgment, arguing that plaintiffs were

not in the class of persons at risk from

defendant’s alleged negligence, and the

harm plaintiffs suffered was not within

the class of harm at risk by defendant’s

alleged negligence. The trial court

granted summary judgment. The Court

of Appeals affirmed in a 2 to 1 decision.

The Supreme Court affirmed the Court

of Appeals 7 to 1.

The Court held that the summary

judgment record did not support a find-

ing that plaintiffs were within the class

of persons put at risk by defendant’s

negligence, and the harm they suffered

was not within the harm at risk by de-

fendant’s conduct. The Court first held

that overservice of alcohol, by itself, does

not make the subsequent inadvertent

violent attack reasonably foreseeable.

It also concluded that the evidence that

plaintiffs had submitted in response to

the motion for summary judgment was

insufficient to create a question of fact

regarding whether the harm plaintiffs

suffered was the type of harm put at risk

by defendant’s conduct.

Crucial to the Court’s holding was

its analysis regarding how to character-

ize the harm put at risk by defendant’s

conduct. It held that plaintiffs charac-

terized the harm at risk too generally.

Once the characterization of the harm

at risk was properly narrowed, plaintiffs’

evidence regarding foreseeability fell

short of creating a material question of

fact for trial.J

— Submitted by David Landrum,

Sr. Deputy City Attorney,


Oregon Tort Claims Act –

Notice Of Claim

Court of Appeals holds that notice of a property damage claim is sufficient to consti-tute notice for a personal injury claim as well

In Heng-Nguyen v. Tigard-Tualatin

Sch. Dist. 23J, 275 Or App 724 (2015), the

Oregon Court of Appeals held that no-

tice of a property damage claim satisfies

the notice provision of the Oregon Tort

Claim Act for a personal injury claim.

Shortly after the accident, plaintiff

negotiated a settlement with defendant

public-body’s liability insurance trust.

Plaintiff and the trust agreed that de-

fendant’s liability insurance trust would

pay plaintiff slightly more than the car’s

value, and, in exchange, plaintiff would

release defendant public-body from all

claims except for a potential personal

injury claim. Plaintiff received a check

from defendant. The front of the check

RECENT CASE NOTES


Recent Case Notesstated, “full and final resolution of

property damage only.”

Over a year after the accident,

plaintiff notified the public body’s li-

ability insurance trust that she had suf-

fered physical injuries in the accident

and brought a personal-injury action

against defendant under the Oregon

Tort Claims Act (ORS 30.260 et seq.). De-

fendant contended it had not received

notice of plaintiff’s claim within 180 days

after the accident, as required by ORS

30.275(2). The trial court concluded that

defendant had not received timely no-

tice of plaintiff’s claim, pursuant to ORS

30.275, and granted summary judgment

for defendant. Plaintiff appealed. The

Court of Appeals agreed with plaintiff

and reversed.

The court held that defendant had

actual notice of the claim because it had

paid part of the claim already. The court

relied on Flug v. University of Oregon,

335 Or 540 (2003) to reject defendant’s

argument that because plaintiff asked

only to be reimbursed for the property

damage to her car, defendant was not

on notice of plaintiff’s personal injury

claim. Plaintiff’s conversation with de-

fendant was not required to lead defen-

dant to conclude that plaintiff intended

to assert a personal injury claim against

defendant in order to constitute actual

notice under ORS 30.275(6); instead, ORS

30.275(6) requires only that the com-

munication lead a reasonable person

to believe that the plaintiff intends to

assert some type of claim against the de-

fendant, not a particular type. The Court

of Appeals reversed and remanded.J

— Submitted by David Landrum,

Sr. Deputy City Attorney,


Premises Liability

Court of Appeals holds that question of whether defen-dant consented to plaintiff ’s presence on defendant’s prop-erty through inaction was a question for the jury

In John R. Currier v. Washman, LLC,

et al., 276 Or App 93 (2016), the Court of Appeals affirmed the trial court’s denial of the defendant’s motion for directed verdict. In this personal injury case, plain-tiff brought a claim to recover damages from injuries he suffered on defendant’s premises after plaintiff swerved to miss a car while riding his bicycle.

Defendant owned a car wash located at a busy intersection in Portland. There were no fences, barriers, or markings indicating where defendant’s property began, and there weren’t any “no tres-passing” signs or other access control signs on the property. A car that was leaving the car wash property was wait-ing at the curb cut to merge into traffic. The car was blocking plaintiff’s travel in the bike lane, so plaintiff attempted to swerve behind the car. Plaintiff traveled over a damp surface that he thought was “ordinary damp pavement,” but that was actually covered in a mixture of water, soap and other substances that drip off the cars. Plaintiff’s bicycle tires slid out from under him, and he fractured his left hip.

Defendant admitted to knowing that the area at issue was the most slip-pery portion of the car wash and that pedestrians and bicyclists often traveled over the car wash property in order to avoid cars blocking the bicycle lane after

leaving the car wash. After concluding

its case, defendant moved for a directed

verdict arguing that no reasonable juror

could find that defendant consented to

plaintiff’s entry and therefore plaintiff

was not a licensee. The trial court denied

the motion, stating that although mere

failure to object to trespassing is not con-

sent, a reasonable jury could find implied

consent considering the surrounding cir-

cumstances. A jury returned a verdict in

favor of plaintiff. Defendant appealed,

arguing the trial court erred in denying

its motion for directed verdict. The court

relied on the fact that plaintiff presented

evidence that defendant did not inform

bicyclists that they were unwelcome on

the property and that it was community

custom for bicyclists to traverse parking

lots and driveways of businesses, so the

court found that a jury could infer that

defendant’s failure to object to past and

future entries on the property implied

permission to enter. J

— Submitted by Roland Lau,

Davis Rothwell Earle & Xóchihua

Employment

Court holds that dying is not “quitting” for purposes of statute prohibiting late pay-ment of wages to employee who quits without notice

In Loucks v. Beaver Valley Back Yard

Garden Products, 274 Or App 732 (2015),

the Court of Appeals held that if an

employee dies during the course of em-

ployment, an employer is not liable for

penalties under ORS 652.140(2), which

requires an employer to pay unpaid

wages to an employee within a speci-


RECENT CASE NOTES


Recent Case Notesfied time if the employee quits without

notice.

Plaintiff’s decedent worked for de-

fendant, and died in an auto accident

while working on the job. Defendant

did not pay plaintiff or plaintiff’s dece-

dent wages owed to the decedent with-

in the time specified in ORS 652.140(1),

so plaintiff brought suit alleging entitle-

ment to penalties under ORS 652.150(1).

Defendant moved to dismiss the com-

plaint under ORCP 21 A(8). The trial

court granted the motion, and plaintiff

appealed.

On appeal, plaintiff repeated her

argument that “quitting” includes dy-

ing on the job. The Court of Appeals

rejected this argument, concluding that

“quitting” means voluntarily leaving a

job. It ruled that the trial court did not

err in dismissing the complaint.

Plaintiff also argued that ORS

652.140(2) and 652.150(1) regulate the

timing of payments under ORS 652.190,

regarding payment of wages to a sur-

viving spouse. The court rejected this

argument as well, ruling that payments

under ORS 652.190 are regulated by ORS

652.120(1). It affirmed the trial court’s

dismissal. J

— Submitted by Matthew Wiese,

Davis Rothwell Earle & Xóchihua

Arbitration

Court of Appeals rules that trial court erred in denying motion to compel arbitration of claims by class of students alleging fraud against trade school

In Gozzi v. Western Culinary Insti-

tute, LTD, et al., 276 Or App 1 (2016),

the Oregon Court of Appeals reversed a

trial court’s denial of a motion to compel

arbitration.Continued on next page

RECENT CASE NOTES


Plaintiffs were a group of students who attended Le Cordon Bleu, a culinary trade school operated by defendants. Plaintiffs asserted claims for fraud and unfair trade practices, alleging that defen-dants failed to inform prospective students that their programs do not provide any material benefit because they prepare stu-dents for only low-paying entry-level jobs that were obtainable without a culinary degree. The defendants filed a motion to compel arbitration of the claims made by a specific sub-class of plaintiffs. The arbitra-tion provision contained in the enrollment contracts included a delegation provision mandating that an arbitrator must decide issues of enforceability.

The trial court denied the defendants’

motion to compel arbitration without written explanation. Defendants filed an interlocutory appeal, arguing that plaintiffs’ objections to the motion to compel arbitration must be resolved in arbitration, so the trial court erred when it decided those issues. Plaintiffs argued that the denial of the motion to compel was unreviewable because defendants failed to appeal a prior denial of a motion to compel arbitration against a different sub-class of plaintiffs. Further, plaintiffs argued that the delegation provision in the arbitration agreements was ambigu-ous and, therefore, unenforceable.

The Court of Appeals first rejected plaintiffs’ contention that the defendants were precluded from challenging the trial

court’s denial of the second motion to compel by failing to appeal the first mo-tion because it noted that the trial court had not explained either of its rulings, and the second motion to compel was in a different context and based on different contractual language than the first.

The Court of Appeals next addressed the issue of the ambiguity of the del-egation provision. It concluded that the severability provision did not render the delegation provision ambiguous. Accord-ingly, the Court of Appeals concluded that the trial court erred when it denied the defendants’ motion to compel arbitration as to the second sub-class’s claims. J

— Submitted by Matthew Wiese, Davis Rothwell Earle & Xóchihua

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Recent Case Notes


PETITIONS FOR REVIEW

Petitions For ReviewJonathan henderson, davis rothwell earle & Xóchihua

Case Notes Editor

The following is a brief summary of cases for which petitions for review have been granted by the Oregon Supreme Court. These cases have been selected for their possible significance to OADC members; however, this summary is not intended to be an exhaustive listing of the matters that are currently pending before the court. For a complete itemization of the petitions and other cases, the reader is directed to the court’s Advance Sheet publication.

Public Records Disclosure

n American Civil Liberties Union of Or-

egon, Inc. v. City of Eugene, Oregon,

271 or app 276, 350 p3d 507 (2015)

(a150403) (s063430) (on review from

the lane county circuit court). argu-

ments scheduled for march 10, 2016.

The trial court denied plaintiff’s re-

quest for public records from defendant

relating to the Civilian Review Board’s

review of an internal investigation of

police misconduct. The Court of Appeals

affirmed the trial court. The Supreme

Court accepted review. The issues are:

• When does ORS 181.854(4)(a) require

disclosure of records that are other-

wise exempt from disclosure under

ORS 181.854(3)?

• Does the public body have the bur-

den of proof to sustain nondisclosure

of records under ORS 192.502(9)(a)

based on ORS 181.854(3) and (4)(a)?

• Does the disclosure of records to a

citizen review board that are other-

wise exempt from disclosure under

ORS 181.854(3) eliminate the exemp-

tion from disclosure pursuant to ORS

181.854(4)(c)?

Declaratory Judgments

n MT & M Gaming, Inc. v. City of

Portland, 274 or app 100, 360 p3d

611 (2015) (a154206) (s063648) (on

review from the multnomah county

circuit court). arguments scheduled

for may 10, 2016.

Plaintiff brought an action seeking

declaratory relief. The trial court dis-

missed the claim on summary judgment,

holding plaintiff lacked standing. The

Court of Appeals affirmed. The Supreme

Court accepted review. The issues on

review are:

(1) Whether a person or entity has

standing to bring a declaratory judgment

action pursuant to ORS 28.020 under cir-

cumstances where an economic market

arguably extends across state boundaries

to include Oregon, and the person or en-

tity is alleged to be harmed economically

by an interpretation of Oregon law but

does not engage in Oregon in the activity

that the law regulates.

(2) Whether poker rooms that

impose cover charges on players who

participate in their poker games violate

ORS 167.127, which describes the crime

of unlawful gambling in the first degree.

Insurance – UIM

n Roman Kiryuta v. Country Preferred

Insurance Company, 273 or app

469, 359 p3d 480 (2015) (a156351)

(s063707) (on review from the

multnomah county circuit court).

arguments scheduled for may 10,

2016.

Defendant insurer sent plaintiff

a safe harbor letter pursuant to ORS

742.061(3). The trial court ruled that

the letter met the requirements of the

statute and denied plaintiff’s request

for attorney fees. The Court of Appeals

reversed and remanded. The Supreme

Court accepted review. On review, the

issues are:

(1) If an uninsured/underinsured

(UM/UIM) claimant rejects an insurer’s

“safe harbor” offer of binding arbitra-

tion and files suit in court, may the

insurer be subject to attorney fees if

the insurer raises affirmative defenses

in its answer?

(2) If a UM/UIM claimant rejects an

insurer’s “safe harbor” offer of binding

arbitration and files suit in court, may

the insurer be exposed to attorney fees

under ORS 742.061 if it challenges li-

ability or damages?

(3) Does a UM/UIM insurer’s failure

to concede that a claimant is entitled to

some damages affect the “safe harbor”

offer of binding arbitration?

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tania mannersLaw Offices of Kathryn Reynolds Mortonhaley percellOregon School Boards AssociationBeth plassMersereau Shannon LLPlauren russellDunn Carney Allen Higgins & TongueJohn stellwagenOregon School Boards Associationalan stewartHurley Re PC

New membersoadc welcomes the following new and returning members to the association:

did you knoW. . . that your membership in OADC provides you with a free member-ship in the Defense Research Institute (DRI) for one year if you have not previously been a member of DRI? As with OADC, the Defense Research Institute serves the needs of attorneys like you, but on a national level, opening up resources, contacts and referral sources from like-minded attor-neys and industry professionals through-out the united States. The DRI website

(www.dri.org) and online communities, which are devoted to specific substan-tive legal areas in which you practice, are valuable resources available only to DRI members. You should take advantage of this opportunity now while it is available to you at no charge. To do so, or to re-join if you were previously a member of DRI, sim-ply send an email to M. “Sam” Sandmire, DRI’s Oregon State Representative, at [email protected] and he will get you set up.

FREE DRI Membership Offer!

Gordon Welborn .........................2015Dan Schanz ..................................2014Michael (Sam) Sandmire .............2013Greg Lusby ...................................2012Jeanne Loftis ................................2011Drake Hood .................................2010Julie Elkins ...................................2009Bill Sime .......................................2008Chris Kitchel .................................2007Robert Barton ..............................2006Hon. Mark Clarke ........................2005Martha Hodgkinson ....................2004James Edmonds ...........................2003Stephen Rickles ............................2002Steven Blackhurst ........................2001Jonathan Hoffman ......................2000Chrys Martin ................................1999

Thomas H. Tongue ......................1998Paul Fortino .................................1997Larry A. Brisbee ...........................1996Frank E. Lagesen ..........................1995Robert E. Maloney, Jr. .................1994Keith J. Bauer ..............................1993Michael C. McClinton ..................1992Ronald E. Bailey ...........................1991John H. Holmes ............................1990John Hart .....................................1989Carl Burnham, Jr. .........................1988James H. Gidley ..........................1987Ralph C. Spooner .........................1986G. Marts Acker .............................1985James L. Knoll ..............................1984Walter H. Sweek ..........................1983James F. Spiekerman ...................1982

Hon. Malcolm F. Marsh ...............1981Austin W. Crowe, Jr. ....................1980Richard E. Bodyfelt ......................1979Robert T. Mautz ...........................1978Douglas G. Houser .......................1977Hon. Rodney W. Miller ................1976David C. Landis ............................1975William V. Deatherage ................1974Frederic D. Canning .....................1973Wayne Hilliard .............................1972Roland (Jerry) F. Banks ................1971Jarvis B. Black ...............................1970Thomas E. Cooney .......................1969James B. O’Hanlon ......................1968Hon. Robert Paul Jones ...............1967

oadc past presidents

27The VerdicTTM n 2016–issue 1

They Have Selected the Word of the Year

The American Dialect Society’s

word of the year is “they” as a singular

pronoun.

This has been coming for a while.

Standard grammar demands that “they”

must be used with plural antecedents,

such as this example:

“Music lovers were

saddened when they

learned of David Bow-

ie’s death.” But when

it comes to singular

pronouns, there are

only two choices: he

or she. English lacks a gender neutral

singular pronoun.

For reasons I don’t know, but can

probably guess, the default rule has been

that where a sentence calls for singular

pronoun describing a generic, unknown

antecedent, the male pronoun is used:

“Every voter must do what he can to be-

come informed about the issues.” That

rule has been under attack for at least

20 years, leading to a variety of clunky

alternatives, such as “he/she,” “he or

she,” or “(s)he.”

In response to these unsatisfactory

alternatives, writers have begun using

“they” as a singular pronoun despite the

fact such usage violates standard usage.

But as often happens with English, what

began as a nonconventional usage has

started gaining broad acceptance. The

American Dialect Society’s award rec-

ognizes the emergence of “they” as an

acceptable singular pronoun. Similarly, in

2015 The Washington Post style manual

changed its guidelines to allow use of

“they” as a singular pronoun. Most

official style manuals still reject “they,”

but there’s a pretty clear trend toward

acceptance.

And if you’re interested, other final-

ists for word of the year included “am-

mosexual,” “ghost” (as a verb, meaning

to abruptly end communication), and

“on fleek” (a term I admit to having

never heard). You can read about all

of the awards at http://www.american-

dialect.org/2015-word-of-the-year-is-

singular-they

Add Bookmarks to Make Your Digital Document Easier to Understand

Make your digital briefs easier to

read by adding bookmarks.

Researchers have found that one

reason digital documents are difficult to

comprehend is that readers struggle to

achieve “structural comprehension” of

digital documents; without such struc-

tural comprehension, readers find it hard

to grasp the document’s overall organiza-

tion. Bookmarks (which can appear in a

pane to the left of the text) provide an

overview of the document’s organization,

allowing the reader to easily see where

the reader is within document.

Bookmarks also provide an efficient

way to move around within a document.

Judges rarely read a brief from start to

finish. Instead, they move around in the

brief, including often reading both the

opening and answering briefs in a side-

by-side manner, matching up the com-

peting arguments. But moving around

inside an electronic document can be dif-

ficult. Adding bookmarks makes it easy.

Bookmarks can be overdone, how-

ever. If every heading in a lengthy docu-

ment is bookmarked, the bookmarks can

become so voluminous that they are

unhelpful. Therefore, judges recommend

using some judgment about what to

bookmark and refraining from marking

every heading in a lengthy document.

The Scribe’s Tips for Better Writingby dan lindahl

Bullivant Houser Bailey PC

Dan Lindahl

legislative update


Legislative Updateby rocky dallum, tonkon torp llp

OADC Lobbyist

The 2016 Legislative Session closed

in early March, providing plenty of dra-

ma during the 32-day session. The big-

gest issue was a newly enacted increase

to Oregon’s minimum wage, while other

politically divisive issues ranging from

renewable energy to gun purchases

took turns in the spotlight. The session

featured procedural battles as well, with

Republicans leveraging assembly rules to

try and slow the Democratic agenda up

until the final days. Civil legal practice

was not immune to the wrangling, as

insurance regulation and tort liability

both garnered significant attention this

session.

Oregon’s minimum wage reigned

as the biggest topic of the session. Fac-

ing potential voter initiatives raising

Oregon’s minimum wage as high as

$15 per hour, the Legislature opted to

send its own proposal to the Governor

in the hopes of avoiding a ballot fight.

Senate Bill 1532 passed on largely par-

tisan lines, creating a three-tiered ap-

proach to minimum wage throughout

Oregon. The three tiers raise Oregon’s

minimum wage to $14.75 within the

Portland metro-area and $13.50 outside

the metro area, except for Oregon’s 14

smallest counties where it tops out at

$12.50, all phased in by 2022. Several

days prior to the Governor signing SB

1532, proponents of the various initia-

tives withdrew their efforts to place

proposals on the ballot.

The Legislature’s other controver-

sial sweeping policy change this session

directs utilities to eliminate coal-fired

power in Oregon by 2030. Environmen-

tal groups and the states’ two major

private utilities crafted Senate Bill 1547,

the “Renewable Portfolio Standard” as

a compromise to avoid a looming ballot

initiative. This bill also passed on near-

party-line votes.

The 2016 session generated several

issues of concern for civil practitioners.

OADC took a lead role educating leg-

islators on the dangers of overhauling

Oregon’s insurance defense regime,

particularly in a short session. Senate

Bill 1590 would have imposed a duty to

defend carriers and required insurers

to provide independent counsel for any

claims defended under a reservation

of rights or if the insured’s potential

liability exceeds policy limits. The

practical effect of this proposal would

have drastically impacted the tripartite

relationship between carriers, insured,

and counsel. It would have poten-

tially also put defense counsel front and

center in the “failure to defend” bad-

faith lawsuits. Further, SB 1590 could

have jeopardized preservation of the

attorney-client privilege in such cases.

Several OADC members met with key

committee members as well as testifying

in opposition and it was evident that the

impact on the practice of law had not

been vetted prior to the introduction of

this proposed legislation.

OADC’s Government Affairs Com-

mittee also closely watched the debate

over increasing the cap on non-econom-

ic damages. HB 4136 would have tripled

the maximum available non-economic

damages in tort cases to $1.5 million.

The bill also contained a provision that

could apply the proposed new cap to

pending cases. After narrowly passing

the House of Representatives, the bill

died in the Senate without a hearing.

Not all of OADC’s work in the Or-

egon State Capitol was contentious.

OADC joined Chief Justice Thomas

Balmer and several legislators in success-

fully procuring a modest salary increase

for Oregon’s judges. Originally, HB 4145

called for Oregon judges to earn at least

the median salary of similarly situated

judges in comparable states. While that

effort died, the Ways & Means Commit-

tee ultimately used a separate budget

bill (SB 1597) to provide a $5,000 salary

increase for all Oregon judges.

The 2016 Legislative Session result-

ed in several major changes in Oregon

public policy, but none that would have

significantly impacted OADC members’

practices. In addition, OADC’s contin-

ued work on judicial compensation is

helping to ensure a qualified bench in

Oregon.

The VerdictTM

editors

editor in chieFJeanne loftis Bullivant Houser Bailey PC888 SW 5th Ave., #300 Portland, OR 97204 503/499-4601 [email protected]

Feature articleS editorStephen yoshidaMB Law Group LLP117 SW Taylor St, #200Portland OR 97204503/[email protected]

caSe noteS editorJonathan hendersonDavis Rothwell Earle & Xóchihua111 SW 5th Ave., #2700Portland, OR 97204503/[email protected]

THE ScRiBE’S TipS editor dan lindahlBullivant Houser Bailey PC 888 SW 5th Ave., #300 Portland, OR 97204503/499-4431 [email protected]

editorial aSSiStant Stephanie WilkenBullivant Houser Bailey PC 888 SW 5th Ave., #300 Portland, OR 97204503/499-4490 [email protected]

The Oregon Association of Defense Counsel State Political Action Committee (PAC)The Voice of the Civil Defense LawyerThe Oregon Association of Defense Counsel works to protect the interests of its members before the Oregon legislature, with a focus on:

•Changesincivilpractice and the court system

•Thejudiciaryandtrial court funding

•Tortreform

•Accesstojustice

The Oregon Association of Defense Counsel has a compre hensive government affairs pro gram, which includes providing effective legislative advocacy in Salem.

We need your help and support to continue this important work. All donations to the OADC State PAC go to directly support our efforts to protect the inter ests of the Civil Defense Lawyer.

Your contribution to the Oregon Association of Defense Counsel State PAC will support OADC’s efforts in legislative activities and government affairs.

To make a contribution please contact the OADC office to receive a donation form at 503.253.0527 or

800.461.6687 or [email protected]


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