Bill Stone and six other lawyers represented the plaintiff against the insurer, on which they blamed injuries to a paper mill worker burned in an accident. (John Disney/Daily Report)
A trial over a paper mill worker’s horrific burns, alleged racketeering and charges of fake insurance coverage ended last week with a confidential settlement, halfway through its expected two months. But that was apparently more than enough for the defendant, the Hartford Steam Boiler Inspection and Insurance Co., whose in-house lawyer spent a night in jail after a southwest Georgia judge found him in contempt for being evasive on the witness stand.
The plaintiff was seeking $4 million in medical costs, $14 million for a life care plan and an unspecified amount for permanent disability and disfigurement of a man who was 36 at the time he was injured. If the plaintiff had won, the damages could have been tripled under the provisions of the Georgia Racketeer Influenced and Corrupt Organizations Act.
“It was resolved because it made economic sense to resolve it,” said Thomas O’Connor of Ansa Assuncao in White Plains, N.Y., who was part of a team of lawyers defending the company. “It probably should have been resolved at the courthouse steps.”
The decision to settle, announced in court on Monday morning, March 10, followed a trip by Hartford GC Nancy Onken to the Blakely courthouse the previous Friday for a settlement conference with Judge Ronnie Joe Lane of Early County Superior Court, the parties and the lawyers. (The case was filed in Early County State Court, but Lane took it over after the lone state court judge recused.)
O’Connor said Lane had requested that decision makers be present at a conference Friday to discuss the possibility of settlement.
O’Connor said the decision to settle was not related to action 10 days earlier, when Lane held the company’s litigation counsel, Darren Sinofsky, in contempt of court for failing to answer questions as directed on the witness stand.
Despite being sentenced to five days in jail, Sinofsky’s situation was resolved 24 hours later, O’Connor said. Hartford’s spokesman also noted that the contempt order was rescinded.
The suit was brought by Traci Evans, a registered nurse who lives in Tallahassee, the conservator and guardian of her brother. (Evans’ nursing skills came in handy during voir dire, when a potential juror stopped breathing, and she revived him.)
Her brother was a maintenance worker at a Georgia-Pacific Corp. paper mill in Cedar Springs when he was burned by a flash fire in a power-generating boiler on June 22, 2006. He survived burns on most of his body, spent six months in a medically induced coma, received multiple organ damage and had 80 surgeries, including skin grafts, according to plaintiff’s counsel.
Georgia-Pacific was not sued because the company paid benefits and medical expenses under the Workers’ Compensation Act, guaranteeing immunity from liability under the law, according to the lawsuit. Hartford was sued as the insurer of the boiler, on the basis that it provided a state-required safety inspection that allegedly failed to rectify the hazard that led to the injury.
The Department of Labor relies on insurance companies to conduct safety inspections because they have assumed financial risk. But the lawsuit alleged that the type of insurance issued by Hartford shared no risk of loss and was not true insurance—and that the safety inspections were fraudulent as well.
“Hartford has created a unique, shell, pseudo, sham, counterfeit, spurious and illusory insurance product which it appropriately calls an ‘enabling policy,’” the lawsuit stated. “Hartford sells ‘enabling policies’ to large commercial enterprises like Georgia-Pacific that are self-insured and neither need nor want boiler insurance, but they do need and want jurisdictional inspections so they can obtain inspection certificates authorizing them to operate their boilers and pressure vessels. Hartford cannot legally perform these jurisdictional inspections unless it has issued an insurance policy insuring the boilers inspected.”
The lawsuit stated that the “enabling policy” in question had a $100,000 limit and a $100,000 deductible, for an annual premium of $862,880. “This arrangement is not insurance under Georgia law,” the claim stated.
William Stone of Boone & Stone tried the case for the plaintiffs with Jane Swearingen Leger of Provost Umphrey in Beaumont, Texas. The plaintiff’s team included: Stone’s partner, David Boone, and Stone’s sons, Ryals Stone and James Stone, all of Boone & Stone; J. Christopher Clark of Clark & Smith in Macon; and Jarome Gautreaux of Gautreaux & Adams in Macon.
Leger first filed the lawsuit in DeKalb County, where Hartford’s registered agent is located. The suit was moved to Early County, the location of the plant, at the defendant’s request. That’s when Leger associated the Boone & Stone firm, which is based in Atlanta and has an office in Blakely.
The trial date was postponed several times at the defendant’s request. During the delay, the plaintiffs’ team added the civil racketeering part of the case, alleging that Hartford conspired with Georgia-Pacific to produce fake insurance policies in order to secure safety inspection certificates to satisfy the Georgia Boiler Safety Act, and also made false statements to the state regarding that arrangement.
Both companies denied the charges. A Hartford spokesman issued a statement that said, “Normally it is not our policy to comment on litigation, particularly with the settlement entailing a confidentiality agreement. However … the Georgia Insurance Department, which regulates the business of insurance, issued a directive in January 2014 saying that our contract with our customers is valid.”
O’Connor, Hartford’s outside counsel, sent a link to the website of Insurance Commissioner Ralph Hudgens, where he wrote that it’s his opinion that “fronting policies, enabling policies, or matching deductible policies” are valid because the insurance companies “retain some risk of loss.”
Whether Hartford had any risk of loss in the case of the boiler in question in the lawsuit was a major point of contention in the litigation.
Hartford said in its pre-trial summary of the case that it had no duty to inspect the malfunctioning dampers that allowed flames to escape from the boiler, because they were not part of the definition of a boiler under Georgia law. (The lawsuit takes the opposite position on the definition of a boiler and the duty to inspect its parts.)
Hartford stated that plaintiffs had “no evidence” for allegations of “a vast conspiracy” between the two companies in violation of the racketeering act. Hartford blamed the injuries entirely on acts and omissions of Georgia-Pacific, which was not a party.
Hartford sought to have Georgia-Pacific included on the verdict form so the jury could have apportioned some of the blame to it, but Lane ruled against that effort, saying G-P couldn’t be found liable for damages due to its Workers’ Compensation immunity. But the judge did allow Hartford to present evidence to place the blame for the accident on Georgia-Pacific.
Sinofsky’s contempt citation came after hours of cross-examination about the nature of Hartford’s insurance arrangements with Georgia-Pacific. Stone said Sinofsky was speaking at length but not answering his questions. Several times, Stone said he asked the court to direct the witness to answer the question. The judge directed Sinofsky to first answer the question yes or no, and then proceed to give explanations if desired.
The tension boiled over when Sinofsky refused the court’s direction and then offered his own opinion about what the jury needed to know, said Stone. That’s when Lane sent the jury out and dressed down Sinofsky.
Stone said that before Hartford’s GC came to town, she insisted that the plaintiff’s counsel promise not to put her under subpoena and not to move for her to be held in contempt.
Sinofsky hired a local lawyer, Gilbert Murrah of nearby Bainbridge, to defend him. Murrah asked for a hearing during a break from the trial the next morning and persuaded the judge to rescind the contempt order and release Sinofsky after one night in jail and an apology to the court, said Stone.
Other than the jail incident, O’Connor said, the judge was “cordial” to the team of lawyers visiting from New York and Connecticut in the Georgia city of 5,000. Blakely is “quite picturesque,” O’Connor said, and the city’s Chamber of Commerce even rented the defense team work space in its newly refurbished quarters across the street from what he called the “quintessential” red-brick courthouse, built in 1905. O’Connor’s team spent nights 30 miles away in to Dothan, Ala.
O’Connor tried the case with partner and lead counsel Stephen McLaughlin of Ansa Assuncao, along with R. Dennis Withers of Robins, Kaplan, Miller & Ciresi in Atlanta and Robert McLendon of Blakely.
While O’Connor said he disagreed with some of the court’s rulings, one came down in favor of the defense just after the trial started Jan. 27. In the middle of voir dire, with the entire jury pool of 42 crowded into the courtroom, one—an elderly man with a heart valve condition—stopped breathing and lost consciousness, according to Stone.
Evans, the plaintiff, who is a registered nurse, sprang up from the plaintiffs’ table, rushed through the rail opening to the unconscious man and directed the other jurors to lay him out on the floor, where she resuscitated him. He was carried away in an ambulance to a hospital and later recovered. The defense moved for a mistrial on the grounds that the jury pool was tainted by potential high regard for the plaintiff’s actions. The judge granted the mistrial and scheduled a new date for as soon as another jury pool could be assembled. They started again Feb. 7.
When the trial came to a halt after four weeks, the lawyers had not even discussed damages. They had just finished presenting evidence on the question of liability and were on the verge of closing arguments in the first phase. If the jury had reached a verdict for the plaintiff on liability, a second phase would have covered compensatory damages, according to the joint portion of the consolidated pre-trial order. A third phase would have covered punitive damages and legal fees.
After the three phases, the court was set to hear arguments from Georgia-Pacific on its intervening claim to recover benefits and medical expenses paid under the Georgia Workers’ Compensation Act. The tab at the time Georgia-Pacific filed its outline for the pre-trial order was near $3 million and rising for medical expenses and roughly $200,000 in benefits.
Georgia-Pacific was represented by Douglas Scribner and Tejas Patel of Alston & Bird and Robert Welch of Drew, Eckl & Farnham. In response to inquiries, a spokesman emailed a statement that said the company “has always been concerned” about the injured man’s welfare and recovery “following this tragic accident.” The statement noted the company has paid support and medical expenses and was not sued. “We dispute the claims made against us during trial, but we were not permitted to participate in the trial and introduce any evidence on our own behalf. We were not part of the settlement.”
Georgia-Pacific’s claim for the return of its workers’ compensation payments out of any recovery by the plaintiff, called a subrogation lien, is still pending before the court.
The case is Evans v. Hartford, No. 2008-062.
This story has been changed to reflect the following correction.
The March 21 story, “Insurer settles after its lawyer is jailed,” misstated the age of the man whose injuries were at the heart of the case. He was 36 when the accident occurred in 2006, not 34.