Tuesday, Aug. 2, 2022
Richard Elliot v. Abubakar Atiq Durrani; Center for Advanced Spine Technologies Inc.; and TriHealth Inc., Case No. 2021-1352
First District Court of Appeals (Hamilton County)
Ohio Power Company v. Michael Burns et al., Case No. 2021-1168
Fourth District Court of Appeals (Washington County)
EMOI Services LLC v. Owners Insurance Company, Case No. 2021-1529
Second District Court of Appeals (Montgomery County)
Does Four-Year Deadline Apply to Lawsuits Against Doctor Who Fled Country?
Richard Elliot v. Abubakar Atiq Durrani; Center for Advanced Spine Technologies Inc.; and TriHealth Inc., Case No. 2021-1352
First District Court of Appeals (Hamilton County)
ISSUE: Does the law that extends the time for filing a lawsuit against a person who is out of state or has fled the state apply to the “statute of repose” for medical claims – which bars the filing of lawsuits after four years?
BACKGROUND:
Richard Elliot suffered from lower back pain. In January 2010, he saw a television advertisement for the Center for Advanced Spine Technologies (CAST)and made an appointment with Dr. Abubakar Atiq Durrani. At Elliot’s first appointment, on Jan. 5, Durrani recommended surgery.
On March 1, Durrani performed back surgery on Elliot at Good Samaritan Hospital (TriHealth) in Cincinnati. Elliot alleges that the doctor implanted a dangerous product without consent during the surgery. Elliot also asserts that the surgery caused numerous infections, which led to emergency room trips and hospitalizations, and he lost about 80 pounds.
The doctor was indicted in July 2013 on federal charges related to his billing practices. Durrani returned later that year to his native country, Pakistan. His medical license in Ohio was revoked in March 2014.
Patient Is One of Hundreds Suing Former Doctor
Elliot filed a complaint against the former doctor, CAST, and the hospital in Hamilton County Common Pleas Court on June 12, 2014. His lawsuit is one of approximately 500 against Durrani, CAST, and hospitals where Durrani performed surgeries. Elliot’s claims against the former doctor include negligence, battery, lack of informed consent, intentional infliction of emotional distress, fraud, and spoilation of evidence .
Elliot voluntarily dismissed his lawsuit and refiled it on Aug. 19, 2015. Durrani, CAST, and the hospital asked the trial court to dismiss the case, asserting it was filed outside of a four-year time limit in state law. The trial court agreed in July 2018.
Elliot appealed to the First District Court of Appeals. The First District held the case until the Supreme Court of Ohio resolved another appeal involving Durrani. In the December 2020 Wilson v. Durrani decision, the Supreme Court reviewed the four-year time limit and ruled that two patients who had moved their cases from Butler County to Hamilton County had waited too long to refile their cases.
Following the Wilson decision, the First District requested additional briefing on one of Elliot’s arguments – how a state law about lawsuit deadlines when a person leaves or flees Ohio applied to Elliot’s time limit for filing suit. He argued the absent-defendant statute, R.C. 2305.15, extended, or tolled, his time to file his medical claim because Durrani fled the country less than four years after the surgery.
The appeals court agreed with Elliot. Durrani appealed to the Supreme Court of Ohio, which agreed to review the issue.
Laws Establish Deadlines for Medical Cases
R.C. 2305.113(A) sets a general, one-year statute of limitations for filing a civil lawsuit involving a medical claim. Statutes of limitations are plaintiff-focused, establishing a time limit for suing in a civil case, based on when the plaintiff knew or should have known about an injury.
R.C. 2305.113(C) is called a “statute of repose,” which is a different time restraint than a statute of limitations. A statute of repose is defendant -focused. It reflects a defendant’s right to be free from possible liability after a certain amount of time. This particular statute of repose requires a lawsuit to be filed within four years from the date the defendant allegedly did or didn’t do something. The law states:
“Except as to persons within the age of minority or of unsound mind as provided by section 2305.16 of the Revised Code, and except as provided in division (D) of this section, …[n]o action upon a medical, dental, optometric, or chiropractic claim shall be commenced more than four years after the occurrence of the act or omission constituting the alleged basis of the … claim.”
Former Doctor Contends Absent-Defendant Law Doesn’t Extend Deadline
Durrani argues the four-year time limit can be extended only for the reasons explicitly stated in the law – if the plaintiff is a minor, is of unsound mind, discovers an injury in the last year of the four-year timeframe, or has a claim involving a foreign object left in the body. None of these apply in Elliot’s case, Durrani states. Wilson concluded that a lawsuit is prohibited more than four years after the act or omission occurred, unless one of the stated exceptions applies, the former doctor contends.
Durrani maintains that the absent-defendant law, R.C. 2305.15, isn’t specifically mentioned in R.C. 2305.113(C), so the four-year time limit for Elliot to file his lawsuit can’t be extended.
He also points to the word “accrues” in the absent-defendant law. The word refers to the date the plaintiff discovers, or should discover, an injury – a date that is relevant to a statute of limitations, not a statute of repose. The absent-defendant law can only apply to statutes of limitations in R.C. 2305.04 to 2305.14, not to statutes of repose in those sections, Durrani argues.
Patient Argues Deadline Is Extended Because Doctor Left State
Elliot counters that the absent-defendant law extends all deadlines for filing lawsuits in the listed Revised Code sections, regardless of whether the time restraints are statutes of limitations or statutes of repose. That is why the General Assembly used the more general phrase “period of limitation” in the absent-defendant statute, he argues. He notes that the Supreme Court stated in Wilson that “period of limitation” means both statutes of limitations and statutes of repose.
Elliot notes that the exceptions to the four-year time limit in R.C. 2305.113(C) address actions a plaintiff, such as a patient, must take. The absent-defendant statute, however, is about the defendant’s conduct – being out of state, absconding, or concealing oneself, Elliot adds. He argues it provides consequences for a defendant’s actions. And, he maintains, the absent-defendant law explicitly applies to extend each time limit in R.C. 2305.113 because the language refers to the range of laws from R.C. 2305.04 to 2305.14.
The Court in Wilson didn’t consider the absent-defendant law, Elliot notes, but instead reviewed how a different statute affected the four-year time limit for filing a medical claim. The statute in Wilson involved extending a lawsuit deadline to ensure that a case is resolved on the merits. Wilson doesn’t apply to this case, because it wasn’t about the absent-defendant statute, Elliot argues. He contends that the four-year time limit for filing lawsuits against Durrani hasn’t expired because the doctor fled to Pakistan – suspending the deadline. Durrani’s time out of the country determines how long the deadline is extended, Elliot concludes.
Medical Groups, Lawyers Association Submit Briefs
The Ohio Hospital Association, Ohio State Medical Association, and Ohio Osteopathic Association filed an amicus curiae brief supporting Durrani’s arguments. They maintain that the reasoning in Wilson applies to this case as well – none of the exceptions listed in the statute of repose applies to Elliot, so filing his lawsuit after the four-year time limit was prohibited. Without a deadline, doctors and nurses could be subject to lawsuits indefinitely, they argue.
An amicus brief supporting Elliot’s position was submitted by the Ohio Association for Justice, which argues that, when looking at the set of statutes together, the absent-defendant law extended the deadline for Elliot to sue.
– Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Abubakar Atiq Durrani: Aaron Herzig, 513.357.8768
Representing Richard Elliot: Robert Winter Jr., 859.250.3337
Were Easements Across Properties Necessary for Electric Line Upgrade?
Ohio Power Company v. Michael Burns et al., Case No. 2021-1168
Fourth District Court of Appeals (Washington County)
ISSUES:
- To prove that property doesn’t need to be taken for public use, must the landowner show bad faith, abuse of discretion, or improper purpose by the government or authorized agency?
- Does a certificate from the Ohio Power Siting Board that a utility project will “serve the public interest, convenience, and necessity” prove under eminent domain law that a public utility’s appropriation of the property is necessary?
- When an easement for using property is modified, must the modification harm the landowner and fundamentally change how the property is to be used before other provisions in state law are triggered?
BACKGROUND:
The Ohio Power Company (AEP) wants to upgrade the electric grid in Washington County by replacing an old electric line that runs between two electricity facilities. AEP explains that the existing line is 50 years old and deteriorating. Between 2015 and 2017, customers in the county experienced 33 outages. The company also notes that aging structures, such as deteriorating wood poles, along the electric line create public safety issues. AEP states that the update to the aging electric grid will improve safety and reliability.
In 2017, AEP’s board of directors reviewed the plan, called the Devola-Bell Ridge Project, and found there was a “public necessity” that would require easements to go across and use the land of property owners along the electric line’s route.
The Ohio Power Siting Board, the state agency that reviews and approves the construction of electric lines greater than a certain voltage, assessed AEP’s proposed project and held public hearings. The board determined that the project was needed because of reliability issues associated with the aging electric transmission system and because it would offer safe, reliable electric service. The board concluded that the project would “serve the public interest, convenience, and necessity.”
Group of Landowners Decline to Allow Access to Property
Following the board’s approval, AEP negotiated with landowners along the route to obtain the permanent easements needed to replace the existing line. AEP states that it acquired easements from 92% of landowners along the project route. But they were unable to obtain easements from Michael and Misty Burns, Ronald and Barbara Bohlen, Jeffrey and Holly Dexter, and Ryan and Denay May.
In January 2020, AEP filed a lawsuit against these landowners, seeking to use eminent domain to obtain easements from them to complete the project. The Washington County Common Pleas Court held a hearing on the necessity of AEP’s “appropriation,” which usually refers to taking or using property.
The landowners alleged that the property rights AEP seeks were overly broad and went beyond what was necessary for the project’s construction and operation. They contested various requirements in the easements, such as the company’s right to gain access to the easement area in undefined ways in an emergency; to construct, alter, inspect, repair, and relocate structures and equipment in the defined area of the easement; and to clear dead, dying, or diseased trees that threaten the power line.
The trial court ruled in September 2020 that the AEP board of directors determined a need for the easements and an AEP expert testified to the need. Those circumstances shifted the burden of proof to the landowners to prove the easements weren’t necessary, which they failed to do, the court found. It concluded that the appropriations sought by AEP are necessary and for a public use.
The landowners appealed to the Fourth District Court of Appeals, which overturned the trial court. The Fourth District found the landowners didn’t have to prove the need for the easements because AEP and the siting board didn’t review the terms of the easements on the individual properties. The appeals court ordered that the case be returned to the trial court for review of the necessity of the easement terms and stated the landowners are entitled to attorney fees and costs after being forced to defend themselves in court.
AEP appealed to the Supreme Court of Ohio, which agreed to hear the case. Nine groups have submitted amicus curiae briefs on the issues.
Company Asserts Review of Each Property’s Easement Not Required
AEP argues that determining the “necessity of the appropriation,” as stated in the eminent domain laws, refers to the necessity of the overall project or the taking of property. The word “appropriation” is synonymous with “taking” or “project,” in the company’s view. It contends that the term doesn’t require the electric company, the siting board, or the trial court to consider the necessity of the terms of each easement to be acquired. The company maintains that public agencies and utilities have broad discretion in determining the necessity of a project because that discretion is critical for the safe and efficient operation of public services, including utilities.
The company states that the Fourth District took sentences out of context in referencing the Supreme Court of Ohio’s ruling in the eminent domain case Norwood v. Horney (2006). The Fourth District pointed to statements in Norwood that a court’s “deferential review is not satisfied by superficial scrutiny” of a case and that a reviewing court’s responsibility to ensure the important restraint on eminent domain powers requires “vigilance,” AEP’s brief notes. It counters that the trial court’s three-hour hearing and “well-reasoned” decision weren’t superficial and also reflected the court’s vigilance.
AEP notes that Norwood involved a private developer attempting to use the city government’s eminent domain power to take property for a commercial development. The legal issue in that case was whether the project was for public use, not the project’s necessity, AEP maintains. This case, the company argues, is about acquiring easements across property to safely and reliably supply electricity to the public, not about razing homes or acquiring property.
Property Owners Maintain That Details Determine Necessity
Norwood statesthat a court must “ensure that the state takes no more than that necessary to promote the public use.” The landowners assert this directive means that determining the need for the “appropriation” must include reviewing the terms of the individual proposed easements. A necessity review focuses on the scope of what is being taken from private landowners, they argue. The terms of the easements establish what the state is taking, so a court must review the easements, they contend. Their brief maintains that AEP, however, wants “appropriation” defined in a way that would prevent courts from ever reviewing whether the provisions in the company’s easements actually are necessary.
They also argue that AEP wants the Court to defer to private, for-profit utilities on what qualifies as “necessary.” Their brief contends this view “flies in the face of Norwood.” Quoting that opinion, they maintain that when the government gives eminent domain powers to “another,” like a public utility, “courts must ensure that the grant of authority is construed strictly and that any doubt over the propriety of the taking is resolved in favor of the property owner.”
They add that the Norwood decision has been applied to a variety of issues, including cases about flooding and interest on unclaimed funds. The legal analysis in Norwood isn’t limited to its specific facts, they maintain.
The landowners stress that they didn’t dispute the siting board’s approval of the project or the project route. As landowners, though, they could challenge, and the courts must review, the need for the easements, which AEP would be required to prove, the owners argue. But those easements weren’t seen or reviewed by AEP or the siting board, they contend.
Landowners Disagree With Company About Who Pays Attorney Fees
Ohio law awards attorney fees and costs in eminent domain cases only when the agency unnecessarily or without authority forces the landowner to litigate, or when the landowner is harmed by the agency’s actions, AEP states.
The easements in this case refer to three types of wires, including distribution wires, which carry lower-voltage electricity for homes. Before the trial court’s hearing, AEP removed references to installing distribution wires from the terms of the easements. The Fourth District found that this step triggered consideration of granting attorney fees and costs to the landowners. It determined that AEP removed the language because distribution wires weren’t needed for the project, concluding that the modification requires AEP to pay attorney fees and costs.
The company disagrees, contending that the removal benefitted the landowners and didn’t affect the proceeding in any other way.
The landowners respond that AEP’s inclusion of an unnecessary element in the easements shows how large utilities abuse the eminent domain process and are “playing games” that harm landowners. They maintain that AEP changed its mind and removed the language only because they challenged the company in court.
Power Companies and Others Back AEP’s Positions
The following groups filed an amicus briefs supporting AEP:
- Affiliated Construction Trades Ohio.
- Columbia Gas of Ohio, East Ohio Gas Company (doing business as Dominion Energy Ohio), and Ohio Gas Association.
- Dayton Power and Light Company (doing business as AES Ohio), Buckeye Power, Vectren Energy Delivery of Ohio (doing business as Centerpoint Energy Ohio), and Duke Energy Ohio.
- FirstEnergy Service Company.
- JobsOhio and its regional economic development partners: Ohio Southeast, One Columbus, Dayton Development Coalition, REDI Cincinnati, Regional Growth Partnership, and Team NEO.
Groups and Other Property Owners Support Washington County Landowners
Amicus briefs supporting the Washington County landowners’ positions were submitted by:
- Buckeye Institute.
- Institute for Justice.
- Ohio Farm Bureau Federation.
- Glenn C. Weaver and 14 other Clermont County landowners defending eminent domain lawsuits brought by Duke Energy, and 5 Crawford County landowners contesting claims from AEP.
– Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Ohio Power Company (AEP): Ryan Sherman, 614.227.2184
Representing Michael Burns et al.: Joseph Miller, 614.464.6400
Does Business Property Insurance Policy Cover Ransomware Attacks?
EMOI Services LLC v. Owners Insurance Company, Case No. 2021-1529
Second District Court of Appeals (Montgomery County)
ISSUES:
- Does a businessowner’s property insurance policy that covers “direct physical loss or damage to property” include losses from a ransomware attack?
- To avoid a claim of acting in bad faith, must an insurer secure an expert opinion before making a coverage decision?
BACKGROUND:
The parties in this case note that while many courts across the nation have heard disputes regarding business insurance coverage for ransomware attack claims, this is the first time the Supreme Court of Ohio will address the issue. Ransomware is malicious software that gains remote access to a computer device or network and encrypts the computer system or files preventing access. A ransom payment demand is made to regain access.
EMOI Services provides medical billing services and support to medical providers. EMOI developed its own software and obtained software from other industry providers to serve their clients. In September 2019, EMOI experienced a ransomware attack. Its employees couldn’t access any of the software to provide services. IT Manager Dan Glaser-Gabrick soon learned a hacker was demanding three bitcoin — at the time worth about $35,000 — to provide a “decryption key” that would allow the company to restore its operations. EMOI agreed to pay the ransom, and within a day, the company was able to partially restore its system to point that it could serve its clients.
Gabrick filed a claim with Owners Insurance Company. EMOI’s business owner’s insurance policy included three additional “endorsements,” providing coverage for electronic equipment and computers. The claim was assigned to adjuster Bradley Weaner, who testified that during his five years as an adjuster he had handled claims dealing with cyberattacks, but hadn’t received a claim for a ransomware loss.
Gabrick told Weaner that the data was not “physically damaged,” but was inaccessible because the hacker encrypted it. Weaner denied EMOI’s claim. He noted the “electronic equipment” endorsement included a provision addressing the “direct physical loss or damage to ‘media,’” and only paid for software repair if the tangible media, such as disk, film, or magnetic tape, was physically damaged.
EMOI filed a breach-of-contract lawsuit in Montgomery County Common Pleas Court in December 2019. EMOI argued that Weaner didn’t understand that the software was damaged by the attack. EMOI had to make repairs to the programs it had purchased and rewrite the coding for its own software, the company claimed.
In 2021, Owners Insurance requested summary judgment from the trial court. The court granted the request, stating the situation was a “data compromise” situation rather than physical damage to electronic equipment. EMOI’s insurance policy had coverage from a “data compromise,” but that endorsement specifically excluded coverage for extortion, blackmail, or ransom payments, the court concluded.
EMOI appealed to the Second District Court of Appeals. The Second District reversed the trial court’s decision. It also questioned whether Owners Insurance acted in bad faith because Weaner never consulted with any experts on software damage before denying the claim.
Owners Insurance appealed to the Supreme Court, which agreed to hear the case.
Coverage Provided for Physical Loss of Property, Insurer Maintains
The business owner’s property policy covers the “direct physical loss of or damage to covered property,” Owners Insurance notes, and that has been established by court precedent to mean structural damage to tangible property. EMOI reported no damage to its tangible property, only the loss of access to its computer programs, the insurer asserts. The “electronic equipment” endorsement did extend coverage to EMOI’s software and data “contained on covered media,” the insurer notes. However, the software coverage is an extension of the coverage for tangible equipment loss, Owners Insurance explains. If EMOI demonstrated it suffered damage to its equipment, the insurer would also pay to restore the software on the damaged equipment, Owners Insurance maintains.
Owners Insurance asserts EMOI losses were similar to a person forgetting a password to a bank account or a key to a bank lockbox. The money in those accounts isn’t damaged, but is inaccessible to the account owner. Once EMOI received the key from the hacker, it was able to restore access to its software and data, and was able to serve its clients, the insurer notes. The lack of access, without damage, is beyond the scope of a traditional business coverage policy, Owners Insurance asserts.
Owners Insurance explains that for several years, the insurance industry has cautioned businesses about cyberattacks and developed specialty policies that businesses could purchase to cover the risk. EMOI chose not to buy a cyberattack policy, Owners notes.
The trial court ruled the financial loss EMOI experienced was from having its data compromised. The Owners Insurance policy endorsement sold to EMOI for compromised data explicitly excludes coverage for a ransom payment, and the claim was properly denied, the insurer concludes.
Insurer Argues It Didn’t Act in Bad Faith
Owners Insurance cautions, the Second District’s opinion that the denial of the claim creates a question of bad faith could set a harmful precedent for Ohio insurers. The insurer notes the appeals court questioned why the adjuster didn’t consult with any experts on software damage or ransomware attacks before issuing his denial. Owners Insurance argues Ohio law doesn’t require an adjuster to obtain an expert opinion on a matter before making a claims decision, and requiring such consultation creates an unwieldly and costly process to avoid a charge of acting in bad faith.
Owners Insurance asserts the requirement to consult with an expert also changes the burden of proof in an insurance breach-of-contract case. When a policyholder files a lawsuit for breach, the burden is on the policyholder to prove a loss and that the loss is covered by the policy. Forcing an insurance company to support its decision through an expert opinion switches the burden to the insurer to prove there is no coverage, Owners Insurance argues, and that would be an unprecedented change in Ohio law.
Damage to Media Covered, Policyholder Asserts
EMOI argues that Owners Insurance is making broad arguments about standard business insurance policies without focusing on the specific policy it sold to the EMOI. While several prior court cases have dealt with coverage to tangible property, no case Owners Insurance cited in its brief dealt with claims for damage to software, EMOI asserts.
EMOI argues that it paid an extra $161.91 in premiums for the electronic equipment endorsement, which included a specific provision to cover “media.” The policy states that “media” includes “computer software and reproduction of data” contained on covered property. EMOI’s software was located on servers. The company notes the appeals court, citing other court cases, determined the servers were covered media under the policy, and the software on the media is covered by the policy. EMOI contends the adjuster didn’t know how software could be damaged and didn’t investigate the matter before denying coverage.
EMOI argues the loss was not similar to a misplaced password. Once it recovered access, it could provide services to clients, but the hacker damaged the software. Significant changes to its processes and software were required to fix problems not resolved even after EMOI regained access to its system the company asserts.
The company maintains the appeals court applied Ohio’s traditional rules of insurance policy interpretation. If policy language can be interpreted in more than one way, the policy favors the policyholder, EMOI explains. Because it can be argued that the software was damaged, the trial court is required to hear EMOI’s arguments regarding the damage, and summary judgment in favor of Owners Insurance was unjustified, the company argues.
Bad Faith Claim Not Alarming, Company Maintains
EMOI claims that Owners Insurance is overstating the impact of the Second District’s directive that the trial court consider if the insurer acted in bad faith. Bad faith arises from a failure to investigate a claim fully and fairly, EMOI explains. It is reasonable to argue that the adjuster didn’t fairly investigate a claim for a ransomware attack because he had no experience with such a claim, the company concludes.
The appeals court isn’t requiring insurers support all their claim denials with expert opinions, but stated insurers do have an obligation to consult with experts in complicated fields where a claims adjuster would likely not have the expertise to make a coverage decision, EMOI asserts. Those cases most likely would be rare, the company concluded.
Friend-of-the-Court Briefs Submitted
An amicus curiae brief supporting Owners Insurance was jointly submitted by the Ohio Insurance Institute and the American Property Casualty Insurance Association. The Rutter & Russin law firm, which represents policyholders in insurance disputes, filed an amicus brief supporting EMOI. United Policyholders also submitted an amicus brief supporting EMOI.
– Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Owners Insurance Company: Erin Moore, 937.224.3333
Representing EMOI Services LLC: John Smalley, 937.223.8888