Mississippi Litigation Review & Commentary

Mississippi Litigation Review & Commentary

Comments on the Latest Developments in Mississippi Civil Litigation

For Mississippi native son and attorney Philip Thomas, blogging about law, politics and topical issues in the state extends a conversation he’s been... More

Kingfish Analyzes PERS Structural Problems

Posted in Mississippi Public Employer's Retirement System (PERS), Politics in Mississippi

Last week in this post on Jackson Jambalaya Kingfish analyzed the recent column by PERS director Pat Robertson that I discussed here.

Kingfish notes that PERS has problems despite the fact that it has been meeting its investment return assumption that I have been so critical of:

The problem PERS faces is structural in nature.  The retirees and other beneficiaries continue to grow in number but the contributions paid into the system continue to fall.  The ratio of active workers to retirees declined from  2.4 in 2006 to 1.6 in 2015.  The PERS portfolio earned a return of 18% in 2014 but the growth in retirees prevented it from enjoying the full benefits of that return.  The slightly positive rate of return in 2015 was not enough to keep the funding level from falling by half a point.  The deficit’s growth ate up nearly all of the investment income. PERS also increased the amortization period to 32 years.

Kingfish also addressed Robertson’s mortgage analogy that I criticized:

Suppose you quit your job but have $100,000 in the bank.  Your monthly house note is $1,500 per month.  You can pay that house note with your savings for years without getting a job.  However, the day will come when you will be forced to either lose the house or generate some income.  The longer you delay getting a job, the easier it is going to be to lose that house.

Blithely stating that a 60% funding level is not really anything to worry about takes the same approach.  The Executive Director does not acknowledge there is a problem because PERS can meet its obligations for the near future.  What she doesn’t mention is that if the funding level woes continue, the ratings agencies will come calling and that will be a problem.  It will also be a problem if the funding level continues to worsen. 

I wonder if Robertson and other PERS cheerleaders wait until their car is out of gas before they start looking for a gas station.

The canaries in the coal mine on PERS aren’t saying that PERS is going to blow-up tomorrow or next year. They are pointing out the structural problems and stating the obvious that the longer the State kicks the can down the road the more painful it will be to fix it.

Nursing Homes Operators Sue to Uphold Arbitration — Are They Honest in Complaint?

Posted in Tort Reform, U.S. District Courts in Mississippi

On Monday the American Health Care Association, Mississippi Health Care Association and several nursing homes sued the federal government in federal court in Oxford. The suit challenges the recent ban on pre-dispute arbitration provisions in nursing home admission agreements. I wrote about the ban in this post.

Here is the Complaint.

This is a real issue and the nursing industry deserves its day in Court. Unfortunately, the Complaint is filled with statements that will make a lot of people roll their eyes.

  • the ban on arbitration will result in the siphoning of resources toward litigation costs and away from resident care (para. 2);
  • for residents and their families, arbitration is an equally fair–yet far simpler and less costly–means of seeking redress as compared to the complicated and slow-moving court system (para. 3);
  • facilities pass on the cost savings to their residents (para. 3);
  • these benefits can be realized only when parties are free to enter into arbitration agreements before disputes arise (para. 3);
  • lawyers talk their clients out of agreeing to arbitration after a dispute arises because lawyers are more comfortable in court and convince their clients to litigate in court (para. 3);
  • arbitration takes only months to resolve (para. 69);
  • arbitration procedure is simpler and allows individuals to proceed without a lawyer (para. 70);
  • without arbitration, residents will be priced out of the judicial system (para. 70);
  • the increase in the cost of dispute resolution will cause an increase in insurance premiums (para. 71) [many institutions carry no insurance];
  • the increased cost of services will be a financial burden on the residents (para. 72); and
  • arbitration has been repeatedly shown to be fair to both sides and a preferable alternative to court proceedings (para. 75).

John Maxey locally and Mayer Brown out of D.C. represent the industry.

My Take:

One of the things people hate about the nursing home industry is the rampant dishonesty. These statements are ridiculous. It would be embarrassing for an attorney to try to defend them in court before a hot bench.

Nursing homes can’t just reduce resident care. They have to provide sufficient care to meet the residents’ needs. There are minimum staffing levels. Nursing homes that are worried about arbitration/lawsuits staff at the minimum levels. They send employees home if the resident count drops. They don’t provide more care. This is about profits–not resident care.

Arbitration is less fair, less simple and more expensive than litigation. How is it less costly for the resident when she has to pay the arbitrator? Claiming that arbitration is less expensive than litigation is the biggest lie arbitration proponents make.

The so called benefits of arbitration can’t ‘only’ be realized if the agreement is made pre-admission and pre-suit. That’s just stupid. If it was so great people would agree when the dispute arose. Also, saying lawyers are more comfortable in court is disingenuous. If arbitration is so fast, cheap and simple that residents don’t need lawyers how could it be so hard on lawyers to arbitrate?

Months to resolve?  Ha ha ha ha ha! At least they have a sense of humor.

Residents don’t need lawyers in arbitration? How do they get the experts lined up? They don’t explain. A resident/ family who tried to handle their case themselves would get steamrolled.

Without arbitration residents are priced out of the judicial system? Actually, the reverse is true.

Insurance rates will rise? They don’t carry insurance.

Increase cost of services?  For what exactly?

Arbitration shown to be fair [to nursing homes] and preferable to court [for nursing homes]? Remember the National Arbitration Forum, which was the go-to arbitration service for nursing homes? You can read about it here and here. 

They could have drafted a Complaint making the same legal claims and left out the nonsense. Judges know that these assertions are not true. The industry does not have to prove these allegations to win. It just makes them look sleazy.

An intellectually honest argument would be that under the FAA, pre-dispute arbitration clauses should be legally enforceable. Too bad if you don’t like it. Nursing home operators love it and are free to jam it in their admission agreements as long as the FAA applies.

I hope that whoever represents the government uses these allegations as a basis to conduct extensive discovery on these claims. Evidence would show that the statements that are not totally untrue are really misleading.

$15,000 Verdict in Lamar County Slip and Fall Case

Posted in Verdicts in Mississippi

Last week a Lamar County jury returned a $15,000 plaintiff verdict in Johnson v. Potters Wings Realty. The case involved a slip-and-fall at the Buffalo Wild Wings in Hattiesburg. Here is the Complaint.

Sam Creasey and Greg Bosseler with Morgan & Morgan in Jackson represented the Plaintiff. Jason Strong with Daniel Coker in Jackson represented the Defendant.

My Take:

This is the biggest action in a Hattiesburg bar since the big UFC fight at Logan’s Roadhouse.


5th Circuit Affirms $6.5 Million Judgment in Breach of Fiduciary Duty Case

Posted in 5th Circuit Court of Appeals, U.S. District Courts in Mississippi

Jimmy Gates with the Clarion Ledger reported a few weeks ago on the 5th Circuit Court of Appeals affirming a 2014 bench trial verdict of $6.49 million by U.S. District Judge Daniel Jordan. The case was tried for three weeks in 2014 and involved ERISA breach of fiduciary duty claims.

Here is the 5th Circuit’s May 3, 2016 decision. Here is a Holland & Knight news alert discussing the decision.

I wrote about the trial and decision here and here. The second post covers the trial court’s awarding the plaintiffs $2.7 million in attorneys’ fees on top of the original judgment.

PERS Director Now Says 60% Funding is Good

Posted in Mississippi Public Employer's Retirement System (PERS)

Last week PERS executive director Pat Robertson published an article in the state press responding to criticism of Mississippi’s public employees retirement system. Think Kevin Bacon at the end of Animal House.

From the article:

Our funded status means we have approximately 60 percent of the funds needed to pay not only all current benefits, but all projected and future benefits.

Having an unfunded liability is analogous to having a mortgage and making mortgage payments faithfully every month while 60 percent of all the funds needed to pay the entire mortgage is in savings.

Paying off the mortgage might be a desired or even preferred course of action, but having the mortgage is not a crisis…

That’s a ridiculous and misleading analogy. People pay their mortgage with income from their jobs–not savings accounts.

It’s more like someone who has a mortgage and they can only pay 60% of the monthly payment from their current income. They may be able to raid savings to cover the difference for a while, but sooner or later there is going to be hell to pay. Hoping for lighting to strike is not a good strategy.

This also appears to be a pivot for Ms. Robertson. In a 2010 video posted on the the Jackson Jambalaya blog, Robertson said that 80% is considered the benchmark for a well-funded plan.

Keep in mind that in 2011 a commission appointed by Governor Barbour recommended changes to PERS that the State has ignored. Here is the Commission’s report posted on Ya’ll Politics.

I don’t get Robertson’s strategy of defending PERS funding levels. Who said it was her fault? She should be banging the drum for the State to fix it–not pretending like it’s not a problem.

September Miss. Jury Verdict Reporter Preview

Posted in Verdicts in Mississippi

Here is a preview of the September 2016 issue of the Miss. Jury Verdict Reporter:

  • $1,380,180 verdict- Hinds County medical malpractice trial (8/16/16);
  • $87,266 bench verdict- Jackson County tort claims act medical malpractice trial (7/13/16);
  • $13,000 verdict- Harrison county car wreck trial (8/30/16);
  • defense verdict- Gulfport federal court civil rights case involving prison inmate caught in cross-fire during riot (8/30/16);
  • directed verdict- Forrest County slander trial (7/22/16);
  • defense verdict- Hattiesburg federal court insurance coverage dispute (8/25/16); and
  • defense verdict- Bolivar County nursing home negligence trial (6/22/16).

My Take:

This month’s big winners are Walter Johnson and Susan Steffey at Watkins & Eager, whose client walked in the Hinds County medical malpractice case where two other defendants were found liable.

Nursing Home Arbitration Banned: What’s the Impact for Mississippi Litigation?

Posted in General, Tort Reform

The New York Times announced last night that the federal government is banning arbitration clauses in nursing homes that receive Medicare and Medicaid funding, which is pretty much all of them.

It’s nice to see that the nursing home industry isn’t happy, since they are lying about arbitration:

The nursing home industry has said that arbitration offers a less costly alternative to court. Allowing more lawsuits, the industry has said, could drive up costs and force some homes to close.

It’s a lie. Arbitration isn’t less costly than court. It’s more costly. The parties don’t pay the judge in court. In arbitration they do. Otherwise, the costs are the same. How are the parties saving money forking over $15,000 or $20,000 to the arbitrator?

Why can’t they just tell the truth? “We like arbitration because it scares off some lawyers and arbitrators aren’t going to light us up like a jury might. Some arbitrators might even shade it in our favor to try to get some repeat business.”  That would be a crappy thing to say, but people hate getting lied to more.

This is a great first step to the eventual ban of pre-dispute arbitration clauses in all consumer contracts. When it will be really good is when banks, car dealerships, credit card companies and the like can’t escape accountability with arbitration clauses buried in terms of service or contracts that no one reads and has no choice but to sign even if they do. That day is coming.

As for nursing home litigation in Mississippi, I don’t see it changing much in the current environment. Nursing home cases don’t work well for plaintiffs in Mississippi because of:

  1. the $500,000 non-economic damages cap;
  2. nursing home cases are expensive and labor intensive–much more so than a med-mal case;
  3. most nursing homes carry little or no insurance as a defense strategy; and
  4. medicare and medicaid liens eat up a lot of any recovery.

Add all that together and you can’t get much of a recovery for a client. The biggest problem for plaintiffs in nursing home cases in Mississippi is the math. Plaintiff lawyers look at it and think:

  • if we win or settle I will get a nice fee, but after the fee, expenses and liens, the client will get little money–a fraction of the recovery. Is the client going to be happy? Probably not. I think I’ll pass.

Plaintiff lawyers have to worry about unhappy clients in a different way than defense lawyers. Unhappy defense clients switch lawyers on the next case. Unhappy plaintiff clients file bar complaints and fish around for a lawyer to file a legal malpractice case.

The Mississippi Supreme Court already wasn’t a fan of arbitration clauses in nursing home contracts anyway. Half the time they weren’t enforceable because the nursing home would size the family up and get someone to sign who they could sue to collect the bill after the patient died instead of the actual patient (who was sick but not incompetent).

For things to get really better we’d need to see the caps thrown out or raised to at least $1 million and a law passed requiring nursing homes to carry a decent sized amount of insurance. It would also help if Medicare and Medicaid would reduce their liens more.

At one time nursing home cases were my biggest practice area. At the moment the only case I have is one where I am local counsel for an out of state firm. While I am happy to see this change in the law, it’s not enough to make me start marketing for nursing home cases again.

Hopefully, I’m wrong. But another lawyer who I worked with a lot on nursing home cases forwarded me news of the law’s passage in an email that said: “Too late but good.”  So I don’t think my reaction is off base.

Your Boss Probably Isn’t This Bad

Posted in General

Don’t know how I missed this guy, but the NY Times announced today that Mike Davis, the world’s grumpiest boss has died.

How grumpy you ask? Consider some of these gems contained in memos in the pre-email days:

There will be no more birthday celebrations, birthday cakes, levity or celebrations of any kind within the office,” … “This is a business office. If you have to celebrate, do it after office hours on your own time.”

Do not speak to me when you see me,” the man had ordered in a memo the month before. “If I want to speak to you, I will do so. I want to save my throat. I don’t want to ruin it by saying hello to all of you.”

“On days you have to work, and you think you should be off, you wear slouchy dress attire,” he complained), idle conversation (“Do your jobs and keep your mouth shut!” he once wrote, in all capital letters) and office furniture (“I am paying you to work — not slouch in your chair with your feet up on a desk or table”).

The memos were originally published in a book: Letters of Note, by Shaun Usher.

I’ve had some interesting bosses over the years. My first boss was the foreman of the underground crew at Coast Electric and relished being able to haze the general manager’s son.

The overall boss at the lodge I worked at outside Glacier was such a piece of work that when told that he had once been mauled by a grizzly, I responded “too bad he didn’t eat him.”

And of course I worked at a couple of big firms, where everyone’s idiosyncrasies are on full display.

Does PERS Have 2 Sets of Books?

Posted in Mississippi Public Employer's Retirement System (PERS)

Last week the New York Times published this Mary Williams Walsh article regarding public pensions having two sets of books. Why the difference? The dreaded investment return projections that I have discussed in many prior posts on this topic.

According to the article, public pensions only disclose the financials with the optimistic projections even though they carry a second set of books based on reality. From the article:

It turns out that Calpers, which managed the little pension plan, keeps two sets of books: the officially stated numbers, and another set that reflects the “market value” of the pensions that people have earned. The second number is not publicly disclosed. And it typically paints a much more troubling picture, according to people who follow the money….

But more important, it raises serious concerns that governments nationwide do not know the true condition of the pension funds they are responsible for. That exposes millions of people, including retired public workers, local taxpayers and municipal bond buyers — who are often retirees themselves — to risks they have no way of knowing about…

The two competing ways of valuing a pension fund are often called the actuarial approach (which is geared toward helping employers plan stable annual budgets, as opposed to measuring assets and liabilities), and the market approach, which reflects more hard-nosed math.

The market value of a pension reflects the full cost today of providing a steady, guaranteed income for life — and it’s large. Alarmingly large, in fact. This is one reason most states and cities don’t let the market numbers see the light of day….

Today in California, both the market values and the actuarial pension values for many places are available on a website run by the Stanford Institute for Economic Policy Research. But for the 49 other states, the market numbers remain unknown.

The market-based numbers are “close to the truth of the liability,” Professor Sharpe said. But most elected officials want the smaller numbers, and actuaries provide what their clients want. “Somebody just should have stopped this whole charade,” he said…

Arguably, the flawed standards worsened the problem with each passing year: Actuarial values determine the annual contributions that states and local governments make to their pension plans, so if the target numbers are too low, the contributions will always be too small. Shortfalls will be compounding, invisibly…

The problem is, which rate should be used? An economist would say the right rate for Calpers is the one for a risk-free bond, like a Treasury bond, because public pensions in California are guaranteed by the state and therefore risk-free. And that’s what Calpers does when it calculates market values. It used 2.56 percent when it calculated the bill for the pest control district, producing a $447,000 shortfall.

But the rest of the time, Calpers and virtually all other public pension funds use their assumed annual rate of return on assets, now generally around 7.5 percent. Presto: This makes a pension appear to have a much smaller liability — or even a surplus….

“Every economist who has looked at this has said, ‘It’s crazy to use what you expect to earn on assets to discount a guaranteed promise you have made. That’s nuts!’” Professor Sharpe said.

But what he calls crazy is enshrined in the actuarial standards. And since adhering to the standards makes public pensions look affordable, there is a powerful incentive to preserve those standards.

“Actuaries shamelessly, although often in good faith, understate pension obligations by as much as 50 percent,” said Jeremy Gold, an actuary and economist, in a speech last year at the M.I.T. Center for Finance and Policy. “Their clients want them to.”

My question is how many people in Mississippi’s government are even aware of these issues?

$122,242 Jury Verdict in Madison County Misrepresentation Trial

Posted in Verdicts in Mississippi

Last week a Madison County jury returned a total verdict of $122,242 in Bowles v. Gussio.The verdict included $50,000 in punitive damages.

The case involved misrepresentation and breach of home warranty claims involving defendants’ failure to disclose prior flooding of a home. Here is the Complaint.

Here is the Jury Verdict on liability and actual damages.

Here is the jury verdict on punitive damages.

Plaintiffs’ counsel were Craig Panter of Madison, Elizabeth Crowell of Jackson and Ronald Stutzman of Flowood. Defendants’ counsel was Thomas Waller of Jackson.