Expert Witness Blog

In Workers’ Compensation Underwriting Philosophy as Partnership, workers compensation expert witness David L. Stegall, CPCU, ARM, ARe, RPA, writes:

The problem with workers’ compensation underwriting is relatively simple: How does an underwriter find employers whose employees do not get injured very often and that return to work well and quickly. Identifying a problem is much easier than solving it. The best service a business can provide is to solve a problem. Most of the problems with workers’ compensation are management problems, i.e. how the process is managed. Businesses handle processes in different ways, some more effectively and efficiently than others. The processes used by some employer’s lead to superior results, i.e. fewer losses (frequency) and lesser losses (severity) as compared to the employers who have poorer loss histories. Process management flows from management attitudes. The way a manager faces a problem has much to do with their success in solving the problem. So, what needs to be looked for is a management attitude: one of partnership and cooperation. An underwriter needs to look for employers who understand human resource management and who care about their employees.

David Stegall is the Principal Consultant at Risk Consulting & Expert Services.

Pollution expert witnesses may provide reports concerning air pollution, air quality, contamination, and pollution regulations. In its annual World Energy Outlook report, the International Energy Agency says the world's carbon dioxide emissions rose in 2012. China had the largest emissions growth last year. The IEA is an autonomous organization which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond.

More info: http://iea.org/

Patents expert witnesses may consult on software patents, invention patents, patentability requirements, license agreements, and international patents, as well as related issues. Against the backdrop of Apple v. Samsung litigation, Chris Velazco writes for techcrunch.com How Samsung Got Big.

Before Samsung Electronics there was merely Samsung Sanghoe: a small trading company founded by Lee Byung-Chull in 1938 that dealt mostly in dried seafood, produce, and its own noodles.

Read more: http://techcrunch.com/2013/06/01/how-samsung-got-big/

Environmental expert witnesses may provide reports and expert testimony regarding EPA regulations, the National Environmental Protection Act, water pollution, the Clean Water Act, and more. Recently the EPA reached a settlement agreement with Davisco Foods International for dumping waste water containing phosphorus and ammonia pollutants over allowable limits into the Snake River. Davisco does not admit any liability in the U.S. District Court Boise, ID, case but will pay $300K in fines.

In Workers’ Compensation Underwriting Philosophy as Partnership, workers compensation expert witness David L. Stegall, CPCU, ARM, ARe, RPA, writes:

Insurance is a business based on the concept of “Utmost Good Faith” between the parties; this is the opposite of the “Caveat Emptor” (buyer beware) concept. This is particularly true of workers’ compensation where there are two beneficiaries to the agreement, the employer and the employee. Workers’ Compensation is one of the social programs that made our Free Enterprise System strong. In the 1920′s, when most states passed laws regarding workers’ compensation, it was agreed that these laws are beneficial to all parties. Employers could know the cost of labor, thereby allowing them the ability to manage their businesses and price their products with certainty and stability. Workers knew if an accident or illness did occur from their work, they would be able to receive benefits without filing suit against their employer and seeking relief in tort. This system bestows both rights and responsibilities on the parties to the agreement. It was intended to be a no-fault, non-adversarial system and to succeed it requires both parties to act with the utmost good faith.

David Stegall is the Principal Consultant at Risk Consulting & Expert Services.

In Property & Casualty Insurance Procurement & Litigation (Ten Recurring Themes Every Lawyer Should Know) insurance expert witness David L. Stegall, CPCU, ARM, ARe, RPA, of Risk Consulting & Expert Services writes on ten recurring themes that often lead to litigation. Attorneys either dealing in insurance procurement litigation issues or with clients who purchase insurance may want to consider these ten themes:

Theme 10 of 10
Business Interruption, Income, Extra Expense and other time element coverages are unique to business entities and are seldom purchased correctly. These coverages are extremely important in that they are practically the only insurance coverages that will cover the future earnings of a business. Businesses that fail to purchase the coverage seldom fully recover after a major loss occurs. However, the process of purchasing the coverage is wrought with misunderstanding due to the use of what appears to be accounting terms, but are actually insurance terms. This causes confusion on the part of both insurance professionals and accounting personnel normally asked to complete the application forms. There are very few agents, brokers, or underwriters who can accurately assist in the application process, yet the actual process of buying coverage (not necessarily the correct coverage) is easy and often handled in a very cavalier manner. Very few insurance professionals within the industry have enough experience with business interruption and time-element coverage claims to understand the claims adjusting process. This makes misunderstandings common between buyers and insurance companies, which can lead to litigation.

Lesson #10: Have your client’s accountant work directly with the underwriter on this coverage procurement, if at all possible. The accuracy of the application for this coverage is paramount. Again, ask questions, make sure you understand how the coverage will respond in a loss scenario, follow-up in writing, and document answers.

Reoccurring Conclusion: Just like poor legal advice, poor understanding of insurance procurement issues can be very expensive for your client!

Design patent expert witnesses may consult on computer patents, design patents, international patents and licensing. In Apple Loses The European Design Patent Case Against Samsung, Tim Worstall writes for Forbes.com that design patents in the EU are different than in the US. "This is about the look and feel of the device, not the technical manner in which it operates. Almost, but not quite, closer to a copyright or trademark issue than what we usually think of as a patent."

Worstall is a British-born writer and blogger, who writes about many topics, but particularly about economics.

Read more: http://www.forbes.com/sites/timworstall

Medical toxicology expert witnesses may consult on adverse drug reactions, drug toxicology, overdoses, poisoning, and forensic toxicology. www.dailyrx.com reports on a study published in the journal Pediatrics this week showing that the rising use of prescription drugs by adults in the U.S. has led to more poisonings among children. Led by Dr. Lindsey C. Burghardt, Division of Emergency Medicine at Boston Children’s Hospital, the study used data from the National Poison Data System as well as National Ambulatory Medicare Care Surveys.

Sanity expert witnesses may provide testimony regarding insanity pleas, clinical competency, diminished capacity, testamentary capacity, insanity defense, and more. In the news, 18th Judicial District Judge Carlos Armando Samour Jr., Centennial, CO, accepted James Holmes' plea of not guilty by reason of insanity. Colorado law defines insanity as the inability to distinguish right from wrong caused by a diseased or defective mind. Judge Samour set a date of August 2, 2013, to complete a mental evaluation. Holmes faces more than 160 counts of murder and attempted murder after killing twelve and injuring seventy in a Denver suburb movie theater.

Read more: http://www.denverpost.com/

Accident reconstruction expert witnesses may consult regarding collision analysis, crash worthiness, traffic accident reconstruction, and injury reconstruction issues. This week Chrysler Group refused to recall 2.7 million Jeeps that federal safety officials say are dangerous. The Jeep maker disagrees with the National Highway Traffic Safety Administration's analysis that rear mounted gas tanks in 1993-2004 Jeep Grand Cherokees and the 2002-2007 Jeep Liberty models may cause a vehicle fire in a rear end collision.

DNA expert witnesses may give opinions regarding serology, DNA testing, forensic DNA, DNA fingerprinting, and related matters. This week, the US Supreme Court ruled that police may take DNA samples from people arrested in connection with serious crimes. Justice Anthony Kennedy wrote: "A suspect's criminal history is a critical part of his identity that officers should know when processing him for detention."

Slip opinion Maryland v. King: http://www.supremecourt.gov/opinions/12pdf/12-207_d18e.pdf

In Workers’ Compensation Underwriting Philosophy as Partnership, workers compensation expert witness David L. Stegall, CPCU, ARM, ARe, RPA, writes:

An underwriting philosophy is the logical analysis of the principles and processes underlying the conduct, thought and knowledge used in selecting and assuming the risk of another party.

Philosophy attempts to draw unity from diversity. It attempts to deduce conclusions (leading to unity) based on overall observations, both direct and indirect (diversity). The unity we are attempting to achieve is profitable business. The diversity is all of the risks, which we, as a company, have the capacity and authority to assume. Selection is the key. Underwriting is a process of selection.

In a voluntary and competitive market, there will always be selection in insurance. The question is whether the selection will be done by the insurance company or by the insurance buyer. The two opposite poles in this continuum are selective underwriting vs. adverse selection. It is the job of the underwriter to select rather than be selected. By analogy, an underwriter is similar to a loan officer at a lending institution. There is nothing difficult about lending money (the assets of the company). The key is to make good loans: loans that will be paid back and at an adequate rate of return. An underwriter has the power and responsibility to use the assets of the company for the benefit of the stockholders and must think much like a loan officer to create, maintain and maximize the value of the company’s assets.

David Stegall is the Principal Consultant at Risk Consulting & Expert Services.

Money laundering expert witnesses may provide reports and expert testimony on anti-racketeering law, organized crime, and embezzlement, as well as related topics. In the news, www.miamiherald,com reports that 7 people have been charged in the biggest money-laundering scheme in U.S. history. Liberty Reserve is accused of laundering $8B over the past seven years. The company's principals were arrested in Costa Rica, Spain and New York. Based in Costa Rica, Liberty Reserve was a digital currency service that allowed users to register and transfer money.

In Real Estate Management, property management expert witness Ms. Ann E. Reisch, CCIM, CPM, RPA, writes:

Real estate management, also known as property management, is the specialized field within the real estate industry that supervises the operations of a property in accordance with the owner's objectives. A real estate manager is responsible for the physical and financial operations of a property or group of properties. Managing a property is the same as running a business and expertise is required in the areas of finance, accounting, economics, marketing, customer relations, personnel, risk management, law and organizational operations. Successfully managing properties encompasses all of these areas as well as other specialized and technical areas of expertise.

Regardless of whether a building is designed to live, work or shop in, the fundamental principles of real estate management remain the same. Investment properties have tenants to interact with on a regular basis, maintenance requirements to continuously manage, and financial operations to meticulously oversee. Whether the property is an apartment community, an office building, a retail shopping center, an industrial warehouse, a parking garage or any other type of property, proficient management is required for success.

In Property & Casualty Insurance Procurement & Litigation (Ten Recurring Themes Every Lawyer Should Know) insurance expert witness David L. Stegall, CPCU, ARM, ARe, RPA, of Risk Consulting & Expert Services writes on ten recurring themes that often lead to litigation. Attorneys either dealing in insurance procurement litigation issues or with clients who purchase insurance may want to consider these ten themes:

Theme 9 of 10
Coinsurance is one of the most common insurance purchase misunderstandings. The coinsurance clause/penalty is a stated understanding and agreement within most property policies that requires the property owner to purchase insurance for a certain percentage of the full value of the property. The trade-off is, if the property is insured to the required value, the insurance company will use the lowest possible rates for calculating premiums. However, if the property is not insured to the required amount, then partial claims (versus total losses) will be paid in a ratio of the amount insured divided by the amount that should have been insured multiplied by the partial loss. The Co-Insurance Penalty formula is: the amount insured, divided by the amount required to be insured, multiplied by the partial loss amount, equals the claim payment amount.

Example: Property is purchased for $120,000 (includes the land, which is not insured). The building on the property is 25 years old and has a replacement cost value of $100,000. There is a mortgage on the property for $50,000, and the mortgage company requires fire insurance coverage of at least that same amount. The owner buys a fire insurance policy with a limit of $50,000 and the policy has an 80% coinsurance clause. During the policy period, a fire occurs causing $20,000 in fire damage. How much will the insurance company pay? Answer: $12,500 (not $20,000.) Why? Amount insured ($50,000) divided by the minimum amount for which it should have been insured for ($80,000, which is 80% of $100,000) multiplied by the amount of the partial fire loss ($20,000) equals $12,500. This is a relatively easy calculation but a concept that is almost never understood by a claimant at the time of a loss.

Lesson #9: Do not allow your client (the insurance buyer) to confuse the price paid or the market value of property owned with the amount of insurance that should be purchased. If your client is not sure of the replacement cost or actual cash value on the property, have the insurance company determine it. Again, there are ways to circumvent this problem. Your client may negotiate “Stated Amount Valuation” on the property coverages and have the “coinsurance clause” eliminated by endorsement.

Reoccurring Conclusion: Just like poor legal advice, poor understanding of insurance procurement issues can be very expensive for your client!

In Radiology Over The Past 40 Years, radiology expert witness Jordan Haber M.D. F.A.C.R., writes:

Radiology in the 1960s was considered an ancillary specialty divorced and segregated from the mainstream of practice. Internists and surgeons very frequently would have little but polite regard to the input of the radiologist. As a consequence, the Radiologist was positioned all too frequently in the basements of hospitals. Relegated to locations far from where the clinical practice hotspots are, their physical location in the hospital reflected the disinterest that the clinicians had in radiographic input. Also, stereotypically, the personality profile of the radiologist also frequently reflected his relatively passive role in clinical care. While the general surgeon often had a bravado characteristic of an outgoing engaging clinician, the Radiologist would be construed as a relatively withdrawn doctor either incapable of or not interested in interpersonal contact. He would be thought of as sitting in a dark room filled with view boxes and x-rays, avoiding the light of day and of active clinical direct practice. Both Radiologists and Psychiatrists were very peripheral from clinical care in the late 1960′s.

Now, 40 years have passed. Currently, Radiology is one of the most sought-after subspecialties in medicine. Residency positions in Radiology are only offered to medical students in the top 25% of their class. Just a few years ago, such positions were primarily and solely offered to those medical students accepted in the National Honor Society (AOA). The Radiologist, who was portrayed historically as a relatively withdrawing participant in healthcare, frequently now sits on executive boards of hospitals and rises to president of the medical staff. His leadership role in many hospitals, both academic and community, reflects the new realization that Radiology is no longer ancillary but integral in the algorithm of outpatient care. No longer is the Radiology suite in the basement. It is now located adjacent and sometimes within the emergency room, reflecting its vital importance in diagnostics and treatment development. It is now understood that Radiology’s input is critical to virtually all of the medical subspecialties.

In subsequent discussions, I will review from my perspective concerning how Radiology has become such a critical component to ongoing patient care.

Environmental toxicology expert witnesses may opine regarding toxic chemicals exposure, PCBs, forensic toxicology, and related matters. In the news, an Italian study found a link between certain chemicals and Parkinson's disease. health.usnews.com reports their findings: “Prolonged exposure to pesticides, bug and weed killers, and solvents appears to raise the risk for developing Parkinson's disease, a new study says.” Researchers reviewed more than 100 earlier studies regarding exposure and the risk of Parkinson’s.

In STANDARD OF CARE: What Standard, Who Cares?, oncology expert witness Dr. Ronald Citron writes:

A hundred years ago, one man could master the cumulative medical knowledge of all humanity. Today, one man could spend a lifetime reading the new findings published in a single year. We doctors learn it ‘all’ in medical school. But, of course, that is not enough. We must keep up with the continuing flow of new data. How do practicing physicians manage the torrential onslaught of new information inherent in the modern age? How do they find and learn the information? How do they integrate new findings into their daily activity? How often does this happen? What mechanisms for learning are there?

Medicine mandates education for doctors be they Chaired Professors at a University or generalists. It is the responsibility of every physician to log a required number of hours of education per year.

These Continuing Medical Education (CME) requirements supposedly define medical practice in the digital age. We mandate post-graduate education. There are over 750 CME sites on the Web. CME can be any approved meeting, symposium, tumor board, educational cruise or vacation, medical staff lectures and iCME: from the Internet. However, the subject of the lecture may be only relevant to a small percentage of the assembled doctors - yet they all qualify for CME.

The majority of physicians derive their CME credits from the Friday noon staff meeting and lecture at the hospital.

Medical Specialties, such as Medical Oncology, have their own meetings, journals and network. Oncologists also have Clinical Practice Guidelines with detailed schemes for treatment of just about every cancer at every stage.

Railroad expert witnesses may give opinions regarding railroad accident reconstruction, railroad accident investigation, train wrecks, and railroad safety. In the news, a Union Pacific train struck a Burlington Northern Train about 120 miles south of St. Louis on Saturday causing a highway overpass to collapse. The locomotive and a dozen cars derailed which injured seven people. A post-crash fire was reported.

More info: http://www.ntsb.gov/investigations/2013/scott_city_mo/scott_city_mo.html.

In Property & Casualty Insurance Procurement & Litigation (Ten Recurring Themes Every Lawyer Should Know) insurance expert witness David L. Stegall, CPCU, ARM, ARe, RPA, of Risk Consulting & Expert Services writes on ten recurring themes that often lead to litigation. Attorneys either dealing in insurance procurement litigation issues or with clients who purchase insurance may want to consider these ten themes:

Theme 8 of 10
Property values matter and vary based on the purpose of the valuation. Although this issue seems easy, there is more contention at the time of a property claim on this issue than practically any other issue. The problem is usually the misunderstanding on the part of property insurance buyers as to the relationship between “Market Values,” which is usually how much they paid for the property, versus an insurance contract’s definition of property value. In a property insurance policy, usually there are two ways and sometimes three ways of purchasing the correct value. The first is “Replacement Cost,” which is the cost of repairing or replacing the property with like or similar materials or paying cash for up to the replacement cost designated on the policy. The second is “Actual Cash Value” meaning replacement cost minus depreciation and the third is “Stated Amount Value” meaning an agreement is made up-front with the insurance buyer and the insurance company as to how much the property is worth and the valuation basis at the time of a claim.

Confusion often arises for two reasons: First, over the difference between the Replacement Cost Value (what it would cost to repair or replace with like materials) or Actual Cash Value (replacement cost minus depreciation) of a structure and its market price. Market price has nothing to do with the insurable value and is based on a completely separate set of criteria. Primarily, it is based on location and real estate market forces; secondly, the amount borrowed from a lender to purchase the structure and the lenders’ contractual requirements for purchasing coverage to protect their interest.

It is also important to note the operative words: their interest and what the policy says. “Their” interest and the owner’s interest are often confused and the property owner sometimes gets the impression that the amount of insurance they should buy on a purchased building is whatever the lender requires of them. This is incorrect. It is a difficult lesson to learn after a claim occurs and there is a misunderstanding how the claims adjuster will value the property.

Lesson #8: Have your client (the insurance buyer) request a “Stated Amount” Endorsement to the policy, which is an agreement between the insurance buyer and the insurance company as to what the value is and how it will be adjusted, overriding any policy provisions to the contrary in the actual policy.

Reoccurring Conclusion: Just like poor legal advice, poor understanding of insurance procurement issues can be very expensive for your client!