Cogito, Ergo Sum
Mar 31, 2021


French philosopher René Descartes believed that a state is “better governed which has few laws, and those laws strictly observed.” We trade the Cartesian model for the Socratic Method to observe a few state laws making headlines this week.


Illinois Governor J.B. Pritzker (D-IL) vetoed HB 3360.  The measure would have allowed plaintiffs in all personal injury and wrongful death cases to collect 9% interest, accrued from the date of loss, on jury awards and verdicts.  In his veto message, Governor Pritzker said the bill was too burdensome for hospitals and medical professionals, potentially driving up health care costs and deterring physicians from practicing in Illinois.  The proposed 9% interest rate was higher than surrounding state rates like Michigan and Wisconsin, where pre-judgement interest rates are tied to the federal prime rate. On the same day as the veto, a subsequent pre-judgment interest bill passed both houses of the Illinois General Assembly.  The new measure seeks to impose a 6% percent prejudgment interest rate.  Lawmakers appear to be following the Governor’s urging to negotiate a compromise that includes stronger protections for health care providers, but still encouraging the faster resolution of cases.



The United States Supreme Court unanimously ruled that a defendant motor company could be sued for allegedly defective vehicles involved in accidents in Montana or its home state of Michigan. The defendant argued that it could be sued only in states where the vehicles were actually designed, manufactured, or sold. Justice Elena Kagan, writing for the Court, said the defendant is incorporated in Delaware and headquartered in Michigan, "but its business is everywhere." The decision creates a new standard for the second prong of the personal jurisdiction test that requires a defendant’s in-state activities to merely “relate to” the plaintiff’s claims. And, in at least some instances, this new “relate to” standard does not require a causal connection.



Staying in Big Sky Country, the Montana Supreme Court held that the Federal Employers’ Liability Act (FELA) does not preempt a bad-faith tort claim.  Enacted in 1908, FELA affords railroad workers a means to obtain compensation for on-the-job injuries.  Under Montana law, railroad employees can file a separate cause of action for bad-faith in the improper handling or settlement of FELA claims.  Railroad advocacy groups argued in Amici briefs that Congress intended to preempt the entire field of railroad injury claims, thus barring under the Constitution’s Supremacy Clause the state-law claims routinely recognized by Montana courts.



Also this week, U.S. Supreme Court justices ruled 5-3 that police officers and law enforcement agencies can be sued for using excessive force, even when they fail to stop someone from fleeing. The case involved an alleged assailant who drove away from a parking lot when police approached to question her. Officers fired multiple shots, hitting her twice in the back. She sued, claiming they used excessive force, making the shooting unconstitutional under the Fourth Amendment's protection against unreasonable seizures.  Writing for the majority, Chief Justice John Roberts ruled that the use of force intended to restrain amounts to a seizure, even if the person escapes.



Finally this week, the New York City Council passed a series of ordinances related to the New York Police Department, including ending qualified immunity for officers. The package of legislation included five bills and three resolutions that provide additional oversight and require more transparency from the department, including a Civilian Complaint Review Board (CCRB) and the elimination of qualified immunity. According to Council Speaker Corey Johnson, New York City is the first in the nation to end qualified immunity.  We’ll continue to track these and other matters on the docket.




New York State lawmakers reached a deal to legalize recreational marijuana.  Lawmakers are finalizing "The Cannabis Law," which would create a new Office of Cannabis Management (OCM) controlled by a Cannabis Control Board.  The measure passed the Senate Finance Committee yesterday.  Legislative leaders seek to swiftly pass the legislation.  The proposal would eventually allow New Yorkers over the age of 21 to grow their own plants in their homes and the state would impose a 13% tax on to retail sales for state and local tax revenue.  The deal follows marijuana legalization in neighboring New Jersey earlier this year.



In a related story, bi-partisan lawmakers in the U.S. Senate introduced the Clarifying Law Around Insurance of Marijuana (CLAIM) Act, which would protect insurers that transact with cannabis-related businesses.   Under the CLAIM Act, no federal agency may prohibit, penalize, or otherwise discourage a company in the business of insurance from transacting with cannabis-related legitimate businesses. The bill’s sponsors assert that the CLAIM Act would ensure that businesses operating under state laws that have legalized recreational or medical marijuana have access to insurance products such as workers’ compensation, property & casualty lines, and title insurance.


Making Our Way Around the Country


The National Safety Council reported this week that the average verdict size for lawsuits above $1 million involving a truck crash has increased nearly 1,000% from 2010 to 2018, rising from $2.3 million to $22.3 million.  We continue to monitor related legislation moving through the Texas State legislature, where the number of commercial auto liability claims over $500,000 in value grew by 60 percent in Texas from 2015 to 2019.  Yet in other major case news, a recent analysis of medical malpractice award data shows that Texas is the state with the lowest medical malpractice award payout amount per capita.  The study looked at medical malpractice payouts as one of 19 metrics to determine the best and worst states to practice medicine in 2021. The five states with the highest medical malpractice award payout amounts per capita were: Massachusetts, New York, Pennsylvania, South Dakota, and Alaska. 



In the United Kingdom, Financial Conduct Authority (FCA) published an updated list of business interruption insurance policies capable of responding to the COVID-19 pandemic. The list follows a recent U.K. Supreme Court judgment finding in favor of coverage.  The policies listed cover over 200,000 policyholders across Great Britain and beyond.



The Suez Canal Authority reported that crews finally dislodged a vessel that became stuck in the shipping channel for almost a week.  Data from Lloyd’s of London showed the stranded ship was holding up an estimated $9.6 billion in trade along the waterway each day, or $400 million and 3.3 million tons of cargo an hour.  Pundits expect insurance claims related to the shipping delays could range in the hundreds of millions of dollars.



Back to our main story this week, on this day in 1596, René Descartes was born in the Touraine region of France. Descartes reminds us to “divide each difficulty into as many parts as is feasible and necessary to resolve it.” We’ll be back to you next week breaking down the news and information affecting the risk and insurance industry.  In the meantime, stay well, stay safe, and stay connected.


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