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The Benchmark is a quarterly newsletter which will provide succinct discussions about important topics or developments in defense and commercial litigation. if there is a specific article or topic that piques your interest, please feel free to contact andrew McCumber, at [email protected] or any other member of the team through our website, www.mccumberdaniels.com. The Benchmark is provided to foster collaborative discussion and your feedback or suggestions for topics is welcomed.

Second Quarter, 2011

in tHis issue“learn everything you can, anytime you can, from anyone you can - there will always come a time when you will be grateful you did.” sarah Caldwell

Medical Apps: Innovation Followed by Regulation and Liability P. 2

Sorry Seems to be the Hardest Word P. 4

When is Personal Financial Discovery Appropriate? P. 6

The Appellate Brief P. 9

The National Practitioners Data Bank: Overcoming Challenges Before and After Settlement P. 10

Proposals for Settlement: A Twisted Set of Teeth P. 12

www.MCCuMBerdaniels.CoM seCond quarTer, 2011

Medical apps: innovation Followed by regulation and liability

By Mary Beth davis

With the ever-increasing popularity of iPhones, Androids, and iPads, there is an increasing myriad of applications or “apps” that you can download for them, some for free and some for a fee. Apps can allow you to watch a movie, edit a document, read a book, or learn a language, among many other things, on your smartphone or tablet. The app categories are vast, and include Entertainment, Social Networking, Productivity, Books, Travel, and Medical, to name just a few.

The countless functions that apps provide with the simple touch of a fingertip make it no surprise that many physicians have already begun to tap (literally) into this mobile technology to help provide care to their patients. A physician may tap into an app to learn how drugs interact, the latest breaking medical news, or new

acceptable safety margins.5 However, some fear that it may also lead to corrupt politics and diminish innovation. While the FDA may decide not to regulate the medical apps that function as mere reference guides, the apps that monitor patients, change medications based on test results, or are “diagnostic,” may be more akin to a medical device from the FDA’s perspective.

While the FDA is deciding how and what to regulate in the rapidly proliferating medical apps industry, there is already a risk of liability for users. How will this affect the standard of care for physicians and hospitals? Nick van Terheyden, M.D., CMIO at Nuance Communications told TechNewsWorld that the future of medical apps will go as far as to allow patients to send a picture to his or her doctor and receive a clinical opinion and guidance without having to go into the office.6 While diagnoses from office visits are based in-part on self-reporting of the patient, there is still clinical evidence from firsthand observation that cannot be substituted with an app. There is already an app, Mobile MIM, that allows doctors to view an MRI, PET scan, or CT scan

drug-warnings. Or a physician may even tap an app to monitor one of his or her patient’s vital signs and waveform data from the comfort of his or her home.

It is estimated that by 2012, 81% of physicians will have a smart phone with medical apps.1 “mHealth” refers to mobile health and many consider it a subsection of “eHealth,” or electronic health. However, many of these medical apps are not yet regulated by the FDA.2 And despite there being a push for eHealth,3 the federal government is behind in the already prevalent mHealth field. The FDA announced that it plans to offer regulatory guidelines on medical apps later this year, which is a topic that is of great debate in and of itself.4 Regulating apps may help providers get reimbursement from insurance companies and ensure that the software is designed and operates within


Mary beth Davis is an associate at McCumber daniels and practices at the firm’s Philadelphia area office. she is admitted to practice in both Pennsylvania and new Jersey. Ms. davis focuses her practice in civil

defense litigation and was selected by her peers as a “rising star” for Pennsylvania super lawyers in 2010. email Ms. davis at [email protected].

remotely. 7 While this has been called a “diagnostics app,” some say this is misleading and could lead to misdiagnoses, as it is not a primary medical tool.8 But doctors and hospitals should not be the only ones concerned about liability issues stemming from use of medical apps. Just like with a medical device, there is always a risk of a defective app. “Adverse events resulting from medical apps and other health information technology errors have already been reported to the FDA.” 9 Medical app developers, such as WebMD, have voiced potential liability concerns. 10 WebMD found the issue significant enough to report it to the SEC and to its investors.

With the increasing use of medical apps, the next question that arises is whether they will change the standard of care for medical care and treatment. It would seem that some apps would exceed and potentially raise the standard of care. Apps that monitor patients (diabetes, fetal, cardiology) would allow a quicker response time to criticalvalues or abnormalities.

Or an app that helps an orthopedic surgeon perform a knee replacement surgery with improved accuracy. These appscould improve

the quality of healthcare, decrease costs for insurers, and decrease malpractice suits. However, some diagnostic apps could conceivably lead to substandard care if a physician relies on them too much in the place of primary medical tools, firsthand observation, and discretion. At this point, before a provider places any reliance or trust in an application, even as a reference tool, he or she should research the authors, source, and developer to establish that it is credible. While medical apps are still vastly unregulated and carry inherent technological and malpractice risks, they are swiftly changing the quality of healthcare delivered -- and seemingly for the better.

1 Dyer, William D. “Top Medical Mobile Apps For Doctors.” 23 Jul.2010 EzineArticles.com. 21 Apr. 2011 http://ezinearticles.com/?Top-Medical –Mobile-Apps-For-Doctors&id=4727751.

2 There are some medical apps that are approved by the FDA, i.e. Airstrip OB. See id.

3 On February 17, 2009, included in the American Recovery and Reinvestment

Act, was $19.2 Billion intended to be used to increase the use of Electronic Health Records (EHR) by physicians and hospitals, which is known as the Health Information Technology for Economic and Clinical Health Act (HITECH Act). Title XIII in Division A, pages 112 through 165 and Title IV in Division B, pages 353 through 398.

4 Merrill, Molly “Summit shows EHRs’ potential on drug regulation, marketing.” 12 Apr. 2011 http://www.healthcareitnews.com/news/summit-shows-ehrs-potential-drug-regulation-marketing.

5 Hyett, Chadd “Should the FDA regulate medical apps?” http://www.kevinmd.com/blog/2011/02/fda-regulate-medical-apps.html.

6 Baker, Pam “Mobile Health Apps, Part 2” Making Life Safer and Sweeter.” 21 Apr. 2011 http://www.technewsworld.com/story/72311.html?wlc=1303400413.

7 Wilson, Bob T. “Medical IPhone Approved by the FDA.” 04 Mar. 11 http://business.ezinemark.com/medical-iphone-approved-by-the-fda-1d9d85cc4b9.html.

8 Id.

9 Wapner, Jessica “iRegulate: Should Medical Apps Face Government Oversight?” 12 Apr. 2011 http://www.scientificamerican.com/article.cfm?id=medical-apps-regulation.

10 Misra, Satish, M.D. “WebMD, parent company of Medscape, reports concerns over liability to SEC.” 18 Mar. 2011 http://www.imedicalapps.com/2011/03/webmd-liability/.


“anything you say can and will be used against you in a court of law.” We are all familiar with this phrase as part of Miranda warnings when someone is arrested. However, this phrase likewise has had a chilling effect on preventing doctors, nurses and other health care providers from expressing regret to a patient or their family in times of need. Indeed, shrewd trial lawyers seek to introduce these statements in court to somehow show an acknowledgement of liability or wrongdoing on the part of the health care provider. When doctors and nurses should be providing comfort, they are forced to choose their words carefully when talking with families for fear their words will later being used against them in civil lawsuits.

As a result, many states are now considering laws which are commonly referred to as “apology legislation.” Essentially, this

type of legislation permits medical professionals to express empathy for, and take ownership of an unforeseen outcome without the risk of retaliatory litigation based solely on the statements made at the time of the apology.

Many states have already adopted apology legislation and in Pennsylvania, House Bill 495 is currently pending. This Bill would make any benevolent gesture or admission of fault made prior to the commencement of a medical professional liability action inadmissible as evidence of liability or as evidence of an admission against interest:

§ 6145. Benevolent gesture or admission by health care provider or assisted living residence or personal care home.

(a) Admissibility. In any liability action, any benevolent gesture or admission of fault made prior to the commencement of a

medical professional liability action by:

(1) a health care provider or an officer, employee or agent thereof to a patient or resident or the patient’s or resident’s relative or rep-resentative regarding the patient’s or resident’s dis-comfort, pain, suffering, in-jury or death, regardless of the cause, including, but not limited to, the unanticipated outcome of any treatment, consultation, care or service or omission of treatment, consultation, care or ser-vice provided by the health care provider, assisted liv-ing residence or personal care home, its employees, agents or contractors, prior to the commencement of a medical professional liabil-ity action, liability action or mediation shall be inadmis-sible as evidence of liability or as evidence of an admis-sion against interest; or

(2) an assisted living residence or personal care home or an officer, employee or agent thereof, to a patient or resident or the patient’s or resident’s relative or representative regarding the patient’s or resident’s discomfort, pain, suffering, injury or death, regardless of the cause, including, but not

sorry seems to be the Hardest wordBy Michael P. gould


limited to, the unanticipated outcome of any treatment, consultation, care or service or omission of treatment, consultation, care or service provided by the health care provider, assisted living residence or personal care home, its employees, agents or contractors, prior to the commencement of a medical professional liability action, liability action or mediation shall be inadmissible as evidence of liability or as evidence of an admission against interest.

Stuart Shapiro, President and CEO of the Pennsylvania Health Care Association (PHCA) and the Center for Assisted Living Management (CALM) supports this type of legislation as well as the need for other tort reform. On March 29, 2011, Mr. Shapiro spoke before Pennsylvania’s House Judiciary Committee urging the adoption of tort reform including apology legislation. 1 Dr. Shapiro noted that this change from the traditional “deny and defend” strategy can result in fewer claims and better customer service ratings.

Moreove r, according to Dr. Shapiro, although the proposed apology legislation has yet to be passed in Pennsylvania, the legislation has already had a ripple effect in that Central Pennsylvania Physicians Risk Retention Group, representing 1,200 health care professionals has seen premium drops to 35% below market rates due to the adoption of this type of policy. Dr. Shapiro also highlighted for the Committee that thirty-five (35) states have already passed apology legislation enabling a disclosure program as a viable option for doctors, hospitals and nursing homes to reduce liability claims.

Studies conducted by the University of Michigan 2 have shown that when health care providers are allowed to apologize and have full disclosure of an incident, there is an increase in patient satisfaction while also reducing the number of medical malpractice claims which, in turn, assists in containing health care costs. The rationale behind this approach is fairly simple. When health care providers are allowed to say “I’m sorry,” without fear that those words will be used against them to assert they were negligent, the providers are able to potentially calm the anger which is often the motivating factor for litigation

where patients may view the health care provider as not caring and unremorseful.

While it may seem absurd to enact litigation to allow a doctor or health care professional to utter three simple words, “I am sorry,” the net effect can prove positive in improving overall patient satisfaction while reducing litigation and attempting to contain already skyrocketing health care costs. With apology legislation, doctors no longer have to exercise their right to remain silent.

1 dr. shapiro’s full testimony can be found at www.phca.org.

2 http://www.med.umich.edu/news/newsroom/mm.htm

“ESSENTIALLy, THIS TyPE OF LEGISLATION PERMITS MEDICAL PROFESSIONALS TO EXPRESS EMPATHy FOR, AND TAkE OWNERSHIP OF

AN UNFORESEEN OUTCOME WITHOUT THE RISk OF

RETALIATORy LITIGATION BASED SOLELy ON THE

STATEMENTS MADE AT THE TIME OF THE APOLOGy.”

Michael gould is an associate at McCumber daniels, and based out of the Firm’s Pennsylvania office. Mr. gould focuses his practice on insurance defense representing clients in both commercial and

personal lines. He has handled cases in the areas of automobile and premises liability, products liability, medical malpractice and insurance coverage. email Mr. gould at [email protected]


Discovery requests for a party’s personal financial information are frequently the source of aggravation for clients and often generate costly and voluminous motion practice by their attorneys. While such requests are justifiable in some cases at certain junctures, practitioners are painfully aware that the practice of seeking such confidential financial information is often generated to harass and frustrate the opposing party. This article provides a general overview of some of the contexts in commercial litigation where personal financial discovery is appropriate and offers suggestions on arguments that should be made to protect your client where the requests constitute untenable violations of your client’s privacy.

An individual’s f inancial i n fo rma t ion is p ro t ec t ed from disclosure by Florida’s constitutional right of privacy, pursuant to Art. I, § 23, Fla.

The discovery rules permit broad discovery in furtherance of the state’s interest in the “fair and efficient resolution of disputes” while also providing protections to individuals “to minimize the impact of the discovery on competing privacy interests.” 8

Under the compelling interest standard, only where the discovery of the confidential financial information is required to move the case forward will the interference with individual’s right to privacy be justified. Thus, the general rule in Florida is that personal financial information is discoverable only in aid of execution after a judgment has been entered. 9 The disclosure of personal financial information may cause irreparable harm to the disclosing party; therefore, the financial records of a party are not discoverable unless the information sought is relevant to contested issues. 10

Relevancy is usually tied to the allegations in the complaint or counterclaim or the defending party’s defenses. For example, where a defendant’s profits are relevant to the damages sought in a complaint alleging a profit-sharing participation agreement, financial records establishing the defendant’s profits are relevant.11

Const.,1 unless there is a relevant or compelling reason to compel disclosure.2 The Florida Supreme Court has held that this provision in the Florida Constitution “recognizes an individual’s legitimate expectation of privacy in financial institution records.” 3 The Florida Constitution’s safeguarding of an individuals’ private financial information extends to all state action, which includes court orders compelling discovery.” 4

The Florida Supreme Court held that the right of privacy demands the “compelling state interest standard.” 5 This means that the “party seeking discovery of confidential information must make a showing of necessity which outweighs the countervailing interest in maintaining the confidentiality of such information.” 6 Florida’s discovery rules are designed to provide counsel with a framework within which to challenge discovery where the requested discovery will

result in an unjustified invasion of privacy and to provide judges with a structure of judicial analysis to review those challenges.7

when is Personal Financial discovery appropriate?By robert w. Pyles


Where possible, courts will utilize means that are less intrusive than the release of confidential information in furtherance of the discovery process. 12 For example, in some cases, where an individual’s identifying information can be redacted from responses to discovery requests, the individual’s privacy rights can be protected without sacrificing the ability to discover legitimate information. 13 The trial court may also conduct an in camera inspection of the requested discovery to ensure that the individual’s privacy rights are protected. 14 This avenue may be utilized where a non-party’s tax returns are requested to ensure that the information remaining after redaction is relevant to the dispute between the parties. 15

Under certain circumstances in the commercial litigation context, propounding discovery targeted to elicit personal financial information is well warranted, recognized, and necessary. The practitioner may find themselves entwined with a matter that involves personal financial malfeasance or fraud. Personal financial discovery may be the only way to prove that a party concealed information from another, perpetrated a financial fraud, or otherwise aggrieved another financially. Under Florida law, discovery of personal financial information should be well received and allowed when faced with such allegations.

Extension of Protection to Corporations

Although a company’s bank statements and bank records, balance sheets, general ledger accounts, inventory reports and other financial records, as well as corporate minutes, are not necessarily confidential, 16 the personal right of privacy may also be used to protect a corporate entity from disclosing certain financial information.

In Berkeley, the plaintiff investors sued the investment house for allegedly placing their funds in unsuitable high-risk investments. Plaintiffs sought to obtain the addresses and telephone numbers of 75 non-party investors in furtherance of their efforts to depose the other investors to determine if Berkeley had similarly invested those investors’ accounts. 17 The Fourth District found that while Berkeley had disclosed the names of the 75 non-party investors in discovery, the non-party investors had not waived their privacy rights and those rights were the non-party investors to waive – not Berkeley’s. 18 The court’s inquiry became whether the plaintiffs had established a countervailing need for the non-parties’ private information that justified overriding the non-parties’ privacy rights. 19 Noting that the plaintiffs could obtain the same information using search services and private investigators, the court held that “cost alone is insufficient to demonstrate that the [plaintiffs’]

need for the addresses overrides the non-party clients’ privacy rights.” 20 While acknowledging that “Berkeley may be using its clients’ shield of privacy for its own protection,” the court held that “this possibility is not reason enough to cause a judicial invasion into the individual non-party’s constitutional right of privacy in this case.” 21

Similarly, the Third District found that a trial court departed from the essential requirements of the law where it ordered a bank to give the party defendants the right to “delve into bank records that involve the financial transactions of parties not even remotely (or peripherally) related to the defendants’ business in order to substantiate their contention that, somewhere in the bank’s minutes or files, they would find traces of the missing documents.” 22 The privacy rights of individuals who were not aware of the invasion, nor connected to the litigation in any manner, were clearly implicated by production


of the requested discovery. 23 The Third District noted that the requested discovery was no less invasive due to the trial court’s order that confidentiality be maintained and defendants’ assurances that nonparty names would be redacted. 24 The court of appeal overturned the order, holding that not only did the defendants make no showing of relevancy, but defendants admitted that they wished to “go through all of Bayshore Bank’s minutes, letter of credit files, and release files for the time period in question, in hopes of finding some reference to the allegedly missing documents, or actually finding a misplaced document.” 25 The overturned order granted permission to conduct exactly the type of fishing expedition in confidential waters that Art. I, § 23 of the Florida Constitution sought to avoid.

In conclusion, the first question a practitioner faced with a discovery request for otherwise confidential financial information should ask is whether or not there is a cognizable, well pled claim that contains allegations which make the requested discovery relevant to the underlying

10 See Mogul v. Mogul, 730 So.2d 1287, 1290 (Fla. 5th DCA 1999); Woodward v. Berkery, 714 So.2d 1027 (Fla. 4th DCA), rev. denied, 717 So.2d 528 (Fla.1998); Graphic Assocs., Inc. v. Riviana Rest. Corp., 461 So.2d 1011 (Fla. 4th DCA 1984).11 Aspex Eyewear, Inc. v. Ross, 778 So.2d 481, 482 (Fla. 4th DCA 2001).12 Berkeley, 699 So.2d at 792.

13 Id. 14 See Friedman, 863 So.2d at 194.

15 Voytish v. Ozycz, 695 So.2d 1301, 1302 (Fla. 4th DCA 1997).

16 Caribbean Security Systems, Inc. v. Security Control Systems, Inc., 486 So.2d 654, 656 (Fla. 3d DCA 1986).

17 Berkeley, 699 So.2d at 790.

18 Id. at 791.

19 Id.

20 Id. at 792.

21 Berkeley, 699 So.2d at 793.

22 Federal Deposit Ins. Corp. v. Balkany, 564 So.2d 580, 581 (Fla. 3d DCA 1990). 23 Id.

24 Balkany, 564 So.2d at 581, n. 2.

25 Balkany, 564 So.2d at 581.

26 See Exit 242 Tourist Information v. Florida’s Room Service, Inc., 792 So.2d 1283, 1285 (Fla. 5th DCA 2001).

action. If not, then “discovery of … extensive and intrusive financial records is improper.” 26 If the requested discovery is relevant to a contested issue in the litigation, the second question is whether the production of documents should be redacted or otherwise limited to protect the individual’s right to privacy. Where either question is answered in the negative, the attorney should file a motion for protective order to ensure there is no unjustifiable invasion of the client’s – or non-party’s – right to privacy.

1 Art. I, § 23, Fla. Const., provides that “Every natural person has the right to be let alone and free from governmental intrusion into the person’s private life except as otherwise provided herein. This section shall not be construed to limit the public’s right of access to public records and meetings as provided by law.”2 Allstate Insurance Co. v. Langston, 655 So.2d 91, 95, n. 2 (Fla.1995); Mogul v. Mogul, 730 So.2d 1287, 1290 (Fla. 5th DCA 1999).

3 Winfield v. Division of Pari-Mutuel Wagering, Dept. of Business Regulation, 477 So.2d 544, 548 (Fla. 1985).

4 Berkeley v. Eisen, 699 So.2d 789, 790 (Fla. 4th DCA 1997).

5 Winfield, 477 So.2d at 547.

6 Higgs v. kampgrounds of America, 526 So.2d 980, 981 (Fla. 3d DCA 1988).

7 See Rasmussen v. South Florida Blood Services, Inc., 500 So.2d 533, 535 (Fla. 1987).

8 Id. (citations omitted).

9 See Friedman v. Heart Institute of Port St. Lucie, Inc., 863 So.2d 189, 194 (Fla. 2003).

robert w. Pyles is a Partner at McCumber daniels and concentrates his practice on complex commercial litigation, corporate law, business law, real estate litigation, real estate transactions,

representation of real property developers and eminent domain takings. email Mr. Pyles at [email protected].

ALTHOUGH A COMPANy’S BANk STATEMENTS AND BANk RECORDS,

BALANCE SHEETS, GENERAL LEDGER ACCOUNTS, INVENTORy REPORTS AND OTHER FINANCIAL

RECORDS, AS WELL AS CORPORATE MINUTES, ARE NOT NECESSARILy CONFIDENTIAL, 16 THE PERSONAL RIGHT OF PRIVACy MAy ALSO BE USED TO PROTECT A CORPORATE

ENTITy FROM DISCLOSING CERTAIN FINANCIAL INFORMATION.


McCumber Daniels’ appel la te department is here not only to handle appeals when they ar ise , but a lso to ass is t our c l ients and t r ia l counsel as they progress through the l i t igat ion process . One issue that appel la te pract i t ioners commonly analyze is whether a t r ia l court’s order can be appealed. Often, i f an appeal can be taken from an order entered before the end of a t r ia l , i ssues of law can be set t led that wil l s ignif icant ly impact the remaining issues in the case and even lead to an ear ly set t lement . I t may be obvious that one can always take an appeal of a f inal order. What is not so obvious is whether an order actual ly is f inal . For instance, in Flor ida, orders that only grant motions to dismiss are not f inal orders . The court must a lso include language that actual ly dismisses the case, the par ty, or the cause of act ion before the order is considered f inal .

Issues surrounding orders on motions for summary judgment can also be confusing. General ly, a denial of a motion for summary judgment is not considered a f inal , appealable order. An order grant ing a motion for summary judgment can, however, be a f inal order i f i t ent i re ly disposes of the case as to a par t icular par ty or a specif ic cause of act ion. Like orders to dismiss , an order grant ing a motion for summary judgment wil l not be considered a f inal order unless i t a lso contains language that actual ly enters judgment for or against the par ty or on the cause of act ion. These detai ls are important to know because i f an appeal must be taken from the order, there is a l imited window of t ime, of ten thir ty days, in which to ini t ia te the appeals process before any r ight to appeal the order wil l be lost .

In most jur isdict ions, there is a lso a r ight to appeal cer ta in non-f inal orders . Both the Flor ida and Pennsylvania Rules of Appel la te Procedure permit immediate appeals f rom cer ta in orders concerning venue, injunct ions, personal jur isdict ion and other issues . In Flor ida, there is no r ight to appeal other non-f inal orders that are not authorized by the Rules of Civi l Procedure. A Flor ida par ty, however, may pet i t ion the court for review by cer t iorar i—or by other extraordinary wri t proceeding—of an unappealable , non-f inal order i f i t can show that , for example, the order departs f rom the essent ia l requirements of law resul t ing in a manifest injust ice that cannot be remedied by an appeal .

Other jur isdict ions also have means of obtaining appel la te review of unappealable non-f inal orders . For instance, in Pennsylvania , par t ies may seek permission from the t r ia l court to appeal a non-f inal order that determines a control l ing issue of law for which there is substant ia l ground for a difference of opinion, the resolut ion of which wil l mater ia l ly advance the terminat ion of the matter. An order denying permission to appeal can be reviewed by the appel la te courts .

Navigat ing the waters of how and when to respond to t r ia l court orders can be daunt ing at t imes. However, McCumber Daniels’ appel la te special is ts answer these very quest ions on a dai ly basis . Let us help s teer you to the most eff ic ient and cost-effect ive resolut ion of your cases .

Contr ibutor, Amy L. Miles , Esq.

The Appellate BriefRules of Finality: Now that I have this Order, can I appeal it?


the National Practitioners Data Bank (“NPDB”) is a federally mandated resource intended to assist State licensing boards, hospitals, and other health care entities in the investigation of the qualifications of health care practitioners they are considering licensing, hiring or granting membership or clinical privileges.1 Physicians, dentists and “other health care practitioners” 2 are required to report certain adverse information, including whenever a medical malpractice payment is made on their behalf, to the NPDB. For example, dieticians, social workers, nurses, and pharmacists are all required to report adverse events to the NPDB.3

The reporting component related to liability payments for medical malpractice claims has the potential to negatively impact parties’ ability to reach settlement and to cause substantial difficulties for reporting practitioners following settlement. The manner in which a settlement of a medical malpractice claim is reported can generate professional difficulties for a practitioner with respect to the practitioner’s licensure or ability to obtain new employment. Accordingly, the reporting requirement may cause settlement to be postponed when a practitioner considers the potential difficulties the report to the NPDB may present.

State licensing boards may query the data bank at any time; 4 some states query upon the issuance of a license or renewal, other states, such as Florida, do not query the data bank at all. See Table 1 for a sample list of State licensing boards that query the NPDB upon licensure or renewal.

worth noting that physicians with a consent policy would favor a settlement over a judgment to avoid the implications of the Three Strikes Law unless the physician has a strong belief in his or her ability to be exonerated at trial. However, where a practitioner does not have a consent policy, the practitioner may not have any input into the decision of whether to enter into settlement or seek a trial on the merits of the malpractice claim.

It is significant that the insurer, not the practitioner, actually performs the reporting to the NPDB. Thus, practitioners who are not involved in the reporting process may be dissatisfied with – or negatively impacted by – the form and content of the report. For instance, in the case of a settlement, the data in the report may indicate that the allegations in the complaint are true, even though there is no acknowledgement of liability in a settlement. Or, the report may inaccurately describe the practitioner’s duties and responsibilities and thereby overstate the practitioner’s actual role in the health care at issue. In such cases, any future queries to the NPDB may give the querying entity the impression that the practitioner’s culpability was worse than it actually was.

Hospitals are required to query the data bank every time a practitioner applies for privileges or medical staff membership and every two years on practitioners serving on the medical staff or holding privileges.5 Other entities, such as private employers, professional societies and boards of medical and dental examiners, also have the option to query the NPDB, which can create several practical concerns for practitioners. See Table 2 for a list of the various entities with relationships with the data bank in regards to querying and reporting.

Where the practitioner’s insurance policy is a consent policy under which the practitioner has the right to approve or disapprove a settlement or litigation decision, the practitioner may elect to forego settlement and have the merits of the claim adjudicated at trial to seek exoneration and avoid the potential pitfalls associated with a report to the NPDB. Where the settling defendant is a physician, consideration of Florida’s Three Strikes Law, which revokes the state license of a physician who incurs three medical malpractice judgments (not settlements), will also play a role in the litigation strategy. Although consideration of this additional factor is beyond the scope of this article, it is

The national Practitioners data Bank: overcoming Challenges Before and after settlement

By e. Patrick Buntz and starlett M. Miller

Table 1: Sample of State Licensing Boards that Review NPDB QueriesAlaska North CarolinaColorado OregonConnecticut PennsylvaniaDelaware Rhode IslandGeorgia Tennesseekentucky TexasMassachusetts WisconsinMissouri North CarolinaNevada Oregon


If the practitioner undertakes to modify the language provided by his or her insurer and modify the NPDB report, the practitioner will face a lengthy dispute process replete with significant red tape. The practitioner may also incur additional, and sometimes substantial, legal fees. The process is often extended by the practicalities of the federal requirement that the insurer must sign off on any modifications to the original report. The data bank will often seek additional documentation, such as the complaint and settlement agreement, from the insurer, not the practitioner or his or her attorney. Given that this may not occur until years after the settlement, the insurer may experience difficulty providing the requested documents if the file was not retained. It is no surprise that the duration and complications associated with the dispute process are often the source of significant mental strain and frustration for the practitioner.

Accordingly, it is of great importance for attorneys and defendant practitioners to recognize the significance of the data reported to the NPDB from the outset of the reporting process. The existence of a report and the content of that report may make a difference in whether or not a practitioner is licensed, hired, or granted privileges. As attorneys guide their clients through the litigation process, they should ensure that all clients who are considered practitioners for purposes of reporting to the NPDB receive education on the

reporting requirements and potential ramifications.

The best practice is for the insurance adjuster, as the preparer of the adverse report to the NPDB, to draft the report and provide that draft to both the attorney and practitioner prior to filing with the data bank. The attorney should review the report and ensure that the language is carefully crafted so that it accurately reflects the facts, the allegations in the complaint or demand letter, and the terms of the settlement agreement with a focus on minimizing the practitioner’s culpability.

1 See 45 C.F.R. Part 60.

2 “Other health care practitioners” are defined as “individuals other than physicians or dentists who are licensed or otherwise authorized (certified or registered) by a State to provide health care services; or individuals who, without authority, hold themselves out to be so licensed or authorized.” See NPDB Guidebook, “Defining Health Care Practitioners,” C-1.

3 See NPDB Guidebook, “Examples of Other Health Care Providers,” C-3.

4 See NPDB Guidebook, “Overview,” D-1.

5 See NPDB Guidebook, “Overview,” D-1.

starlett M. Miller is an associate at McCumber daniels focusing her practice on professional liability defense, nursing home litigation, medical malpractice defense and complex commercial litigation. in addition,

Ms. Miller develops presentations for the firm’s clients and their industries regarding developments in the law and strategies for minimizing liability. email Ms. Miller at [email protected]

e. Patrick buntz is a founding shareholder at McCumber daniels and practices from the firm’s Florida office. His areas of practice include general insurance defense,

nursing home, hospital and medical malpractice litigation in state and federal courts. email Mr. Buntz at [email protected]

Table 2: Organization Query ReportBoards of medical and dental examiners Optional RequiredState licensing boards for other practitioners Optional RequiredHospitals Required* RequiredHealth care entities (also referred to as health care organizations) that provide health care services and follow a formal peer review process for the purpose of furthering quality health care

Optional Required

Professional societies that follow a formal peer review process for the purpose of furthering quality health care Optional Required

Medical malpractice payers Prohibited RequiredPeer Review Organizations Prohibited RequiredQuality Improvement Organizations Optional** No RequirementPrivate Accreditation Organizations Prohibited RequiredState Medicaid Fraud Control Units and Law Enforcement Agencies Optional** No Requirement

Agencies administering Federal Health Care Programs and their contractors Optional** No Requirement

State Agencies administering State health care programs Optional** No RequirementState Agencies that license health care entities Optional** RequiredU.S. Comptroller General Optional** No RequirementThis information is provided on http://www.npdb-hipdb.hrsa.gov/hcorg/howToGetStarted.jsp#table1

* Hospitals must query when physicians, dentists, and other health care practitioners apply for medical staff appointment (courtesy or otherwise) or for clinical privileges, and every two years on physicians, dentists, and other health care practitioners who are part of the medical staff or who hold privileges.** This organization may only receive information reported to the NPDB under Section 1921 of theSocial Security Act.


addresses settlement offers made to a party which is alleged to be vicariously liable for the acts of another. The new amendment states:

(4) … when a party is alleged to be solely vicariously, constructively, derivatively, or technically liable, whether by operation of law or by contract, a joint proposal made by or served on such a party need not state the apportionment or contribution as to that party. Acceptance by any party shall be without prejudice to rights of contribution or indemnity.

While this amendment appears fairly straight forward, it is actually a complete reversal of recent court decisions. The amendment became necessary because Subsection (c)(3) requires a “joint offer” PFS to specifically state the settlement amount attributable to each party. In a scenario involving vicariously liable parties, confusion arises because the parties are technically distinct but, practically speaking, one in the same. Liability for a vicarious party flows solely from the acts or liability of the actively negligent party or tortfeasor. As a result, there is no practical distinction

Florida’s Proposal For Settlement (“PFS”) Statute has clearly failed to accomplish its intended purpose. Florida Statute §768.79 was initially enacted to discourage litigation by forcing parties to evaluate good faith settlement offers early in the process. To accomplish this intended goal, Florida’s legislature provided the PFS statute with a considerable set of teeth. Under the statute, a substantive right to collect attorney’s fees and costs is created when a party fails to accept a reasonable settlement offer. The Florida Supreme Court further honed these proverbial teeth through the Florida Rules of Civil Procedure which provide the operative mechanism for the statute.

Under Rule 1.442, a party may obtain attorney’s fees if that party’s proposal is rejected and

www.MCCuMBerdaniels.CoM FirsT quarTer, 2011

Proposals for settlement:a Twisted set of Teeth

By Kevin B. elmore


Kevin b. elmore is an associate in McCumber daniels’ Tampa, Florida office. Mr. elmore’s practice focuses on insurance and professional liability defense including medical and dental

malpractice, first and third party insurance, long term health care and workers compensation defense. email Mr. elmore at [email protected]

between the two for purposes of apportionment.

This amendment was necessary, in part, because the apportionment rule was not enforced consistently among the district courts. Eventually, the Florida Supreme Court weighed in on the issue. In Lamb v. Matatzschk, (Fla. 2005), the Court strictly enforced the requirements within Rule 1.442 by requiring apportionment between vicariously liable parties. The court reasoned that the plain language of the rule stated a joint offer must distinguish the amount attributable to each “party.” This decision attempted to clarify the rule’s application in the various districts but the effect of the holding may have actually discouraged settlements. As noted in the dissent by Justice Lewis, there is no practical basis for requiring apportionment among vicariously liable defendants. In fact, Florida’s indemnification law makes it difficult, if not impossible, to

do so because a vicariously liable party is entitled to complete recovery from an active tortfeasor. Theconcurring o p i n i o n

acknowledged that while the rule’s plain language was clear, the application of that plain language ran afoul of legislative intent.

In January of this year, Florida Rule of Civil Procedure 1.442(c)(4) became effective. This newly amended rule attempts to align the plain language of the rule with the legislative goal of the PFS Statute.

The new “plain language” of the rule clearly reverses Lamb v. Matatzschk but raises new concerns. Under Subsection (c)(4), a Plaintiff is not required to apportion settlement demands between parties which are merely vicariously liable. Therefore, a single offer may be presented to both parties. However, it is unclear if a party must apportion amounts when a defendant is both vicariously and directly liable to a plaintiff. There is no doubt that lawyers

will seek to litigate this issue, creating yet another period of uncertainty.

The new rule will likely catch a few attorneys by surprise and it is imperative that defendants evaluate each Proposal For Settlement carefully. The new bright line rule will help in regard to pure vicarious claims. However, the amended rule is unlikely to accomplish the PFS Statute’s ultimate goal of discouraging litigation. In the end, the remaining ambiguities leave the PFS statute with a few loose teeth.

seCond quarTer, 2011www.MCCuMBerdaniels.CoM

ANNOUNCEMENTS

Page 10

sPeaKing evenTs

reCenT arTiCles

Mark Hartig is scheduled to present on June 2, 2011 at the Florida liability Claims Conference (FlCC) in orlando, Florida. Mr. Hartig’s presentation is titled, “defending against Motions to add Punitive damages.” For more information on this conference, please visit the event page on the Florida defense lawyers association (Fdla) at http://www.fdla.org.

Judd goodall is scheduled to speak on behalf of the Council on litigation Management (ClM) on May 12, 2011 in Jacksonville, Florida on the topic of “negotiation strategies for Claim Professionals.”Mr. goodall is also scheduled to present on June 3, 2011 at the Florida liability Claims Conference (FlCC) in orlando, Florida. Mr. goodall’s presentation is titled, “survey of 2011 legislative reforms.”

cathleen Kelly rebar and starlett Miller coauthored an article titled, “Pennsylvania and Florida Premises liability Cases: defenses To Be remembered” published in the January/February 2011 edition of The litigation Counsel of america’s, 4 Litigation Commentary & Rev. 2. This article addresses some basic, yet worthwhile defenses that should never be overlooked in regards to Premises liability Cases.

amy Miles published an article titled, “long Term Care Facilities’ and employees’ responsibilities under the elder Justice act” in the american Health lawyers association, February 2011 LTC-SIR Advisor. This article summarizes the elder Justice act (eJa) provisions that have the greatest immediate impact on long term care facilities, including the new reporting requirements, and suggests actions facilities should take to ensure compliance.

stuart o’neal and Kara White presented on May 4, 2011 to long Term Care providers and directors in state College, Pa. The presentation is titled, “The extension of Corporate negligence to long-Term Care.” stuart and Kara will also discuss the implications of the Scampone decision which has attempted to extend corporate liability to nursing homes For more information on this topic, please contact stuart o’neal at [email protected].

sPeaKing evenTsMichael gould is scheduled to speak on behalf of the Council on litigation Management (ClM) on June 9, 2011 in newtown, Pennsylvania on the topic of “negotiation strategies 2.0”

McCumber daniels is a full service, Martindale-Hubbell av-rated civil litigation firm with offices in Florida and Pennsylvania. McCumber daniels offers a wide variety of litigation services for insurers, health care facilities, businesses and licensed professionals. with years of legal, corporate, medical, administrative and legislative experience, we are able to provide full-service representation for all of our clients in all types of disputes or litigation.

McCumber daniels attorneys are well versed in applicable law, procedure, courtroom tactics, legal and evidentiary rules, as well as the analysis and application of medical or financial information. our attorneys provide thorough investigation, negotiation, trial, and appellate services our clients expect and deserve.

McCumber daniels employs full time nurses as part of its permanent staff to support our medical and personal injury defense practice. The nurses quickly provide organization of medical documents and a preliminary analysis of the medical issues involved in each case. Their contributions are a value added asset to the attorney assessing and defending the case.

Mccumber Daniels’ team

Please visit our website to find out the latest legal news, seminars, speaking opportunities and firm news.

For more information on anything that you have read today, please contact Andrew McCumber at [email protected]

shareholdersandrew r. McCumber

derek M. danielse. Patrick BuntzMark B. Hartig

Kenneth a. Puigstuart T. o’neal

Cathleen Kelly rebar

PartnersJudd w. goodall

Fred J. Hughesrobert w. Pyles

associatesMary Beth davisPatrick T. duffy

Kevin B. elmoreMichael P. gouldPatrick J. Healey

Kyleen a. HudsonJohn F. Mcgreevey

amy l. Miles, esq., Editorstarlett M. Miller

Marc l. PenchanskyKimberly a. Potter

albert M. rodriguezdrew M. rothman

Karen l. TucciKara C. white

Marketing Departmentstephanie Hedrick

www.MCCuMBerdaniels.CoM

Florida oFFiCe:4830 wesT Kennedy BoulevardsuiTe 300TaMPa, Florida 33609813-287-2822

Pennsylvania oFFiCe:1400 souTH TrooPer roadsuiTe 102eagleville, Pennsylvania 19403610-650-0871

seCond quarTer, 2011

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