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Life Insurance Policies with Vanishing Premiums – and Vanishing Policies

Many life insurance companies have sold life insurance policies with the enticing premise that the premiums paid in the early years of the policy will accrue interest that will pay for the premiums owed in the later years.  These policies were marketed with illustrations showing the interest being used to pay the premiums, referring to them as “vanishing premiums.”  The theory behind policies with this structure is that the premiums are relatively high when the policy is first issued, while the policy-holder is in his or her earning prime.  The premiums paid then accumulate cash value, which generates interest that is used to pay the premiums in later years, when the policy-holder is earning less or retired.  Thus, the premiums are supposed to vanish, which is an appealing prospect for someone purchasing a whole life or universal life policy they plan to maintain until their death.  (These policies differ from a term life policy, which lasts for a fixed number of years, for which the premiums are generally much lower than whole or universal life policies offering the same level of insurance coverage.)

There is nothing inherently wrong with a vanishing premium policy; however, since interest rates are much lower in recent years than was the case when the policies were issued, the result is that the accumulated interest ends up being insufficient to pay the premiums in the long term.  So, for example, the policy-holder pays high premiums for years 1 through 15; the cash value of the accumulated interest covers the premiums for years 16-20; and then suddenly, in year 21, the insured is again asked to make a premium payment.  Having grown accustomed to not paying the premiums, the policy-holder often does not understand the change in circumstances, is confused by the notice demanding payment, or does not have the money to pay.  The unfortunate outcome in these situations is that the policy-holder does not make the required premium payment.  When this occurs, the policy is cancelled, despite the fact that thousands of dollars in premiums (or hundreds of thousands of dollars) have been paid over the course of many years and despite the fact that the illustration used in marketing the policy turns out to be incorrect. The likelihood of this occurring is particularly high when the policy-holder is elderly and may not fully comprehend complex financial documents or is in a lower earnings bracket.

If you or a family member has a life insurance policy with this type of premium structure, it is important to monitor any notices you receive from the insurance company. Be on the look-out for any notice indicating that a payment must be made by a specific date in order to avoid cancellation of the policy.  If it is not clear whether a payment is owed or whether the accrued interest is sufficient to cover the premium, contact the insurance company to make sure you understand the situation.

If you recently lost a loved one who had life insurance for which payment was denied, you may have a claim.  The life insurance attorneys at Trief & Olk are available to answer your questions and represent you if life insurance has been denied.  Feel free to consult our website for examples of the many successes we have had when life insurance companies denied payment or call us directly to discuss how we may help you.

Trief & Olk Wins Summary Judgment in Complex Construction Accident Case

Trief & Olk recently won an appeal of an order which granted the plaintiff summary judgment of a complex Labor Law 241(6) claim. The case involved a plaintiff who suffered an electric shock as a result of dangerous conditions at a construction site. The order, which is a ruling by the Court, finds that the building owner defendant is legally responsible for the plaintiff’s injuries, and, equally as important, the plaintiff is not at all at fault. The case will proceed to trial where a jury will determine whether a second defendant, an electrical contractor, is also partially responsible, and the value of the plaintiff’s injuries.

Trief & Olk’s success is particularly notable because summary judgment for plaintiffs with Labor Law 241(6) claims is fairly uncommon. Under Labor Law 241(6), a building owner or general contractor can be held liable for injuries at a construction site if there was a violation of New York’s Industrial Code and the violation caused the plaintiff’s injuries. Summary judgment is relatively rare, because, not only must the plaintiff demonstrate that Labor Law 241(6) was violated, but he must also demonstrate that he did not partially cause the injuries through his own negligence, known as comparative negligence. If there are any facts from which a jury may find that the plaintiff negligently caused or contributed to the incident, summary judgment will be denied so that a jury can determine the extent to which the plaintiff and the defendant(s) were at fault.

Trief & Olk was able to demonstrate to the Court that summary judgment was appropriate by use of all the tools available to the firm. Specifically, Trief & Olk was able to show through deposition testimony, accident reports, and an affidavit from the plaintiffs’ electrical engineering expert that the condition of the electrical wiring at the job site violated the Industrial Code because it was energized, not grounded, and not otherwise guarded. The defendant attempted to avoid liability by denying that the plaintiff suffered an electric shock, but Trief & Olk used objective signs of injury from the accident reports, the defendant’s own expert reports, a videotaped deposition from the plaintiff’s treating physician, and hospital records to show that, despite the defendant’s protestations, all of the evidence confirmed the electrical shock occurred.

The defendant also attempted to avoid liability by arguing that the plaintiff, a construction supervisor, was to blame for the electrical conditions at the job site. Trief & Olk defeated this argument by showing that the plaintiff argued with his boss about the electrical work, insisted that licensed contractors do the work to ensure its safety, but was overruled.

Trief & Olk also defeated the electrical contractor’s attempts to win summary judgment against the plaintiff by alerting the Court that the electrical contractor filed its motion after the deadline. While Trief & Olk had the utmost confidence that it would have defeated the electrical contractor’s motion on its merits, the Court did not even get that far, agreeing with Trief & Olk that the motion should be summarily denied as late.

Trief & Olk represents injured individuals in a variety of personal injury actions, including construction accidents. If you have been injured in a construction accident or any other cause, contact Trief & Olk by telephone or via our website’s submission form to find out more about how Trief & Olk can help you.

Who Wins in a World Without Forced Arbitration?

“Trief & Olk featured in NLJ”: In the highly charged debate over arbitration, businesses and consumer groups have tussled over the question of who stands to gain from the Consumer Financial Protection Bureau’s proposed ban on contract clauses that prevent class actions.

To view original article, click here.

Update: CFPB Considers Ban on Arbitration Clauses

As anticipated, consumers are set to regain the power to sue banks under a proposal unveiled by the Consumer Financial Protection Bureau (“CFPB”). The proposed rule would restrict the use of arbitration clauses in consumer financial contracts that had barred consumers from pursuing class actions in court, instead requiring them to attempt individual actions in arbitration.

Studies have shown that without the class action mechanism, few banking customers ever make it to arbitration as claims are typically minor—ranging from suspicious $5 late fees to $35 overdraft charges. As Ted Trief recently explained to the National Law Journal, “For small disputes it’s fairly clear [that] without a class action remedy they will not be addressed.”

The new rule is expected to take effect next year after a 90-day public comment period and drafting of the final rule. The rule is not retroactive; therefore it will only apply to new agreements rather than existing ones. Customers wishing to take advantage of the change can close their accounts and re-open new ones after the rule has been implemented.

Trief & Olk has extensive experience in class action litigation involving financial issues, having served on the plaintiffs’ executive committee in nationwide lawsuits against the country’s largest banks centered on deceptive overdraft practices.


Hip Replacement Litigation Expected to Proliferate

When a patient undergoes joint replacement surgery, the expectation is that the joint replacement will last as many as twenty years before it needs to be replaced. Unfortunately, some joint replacements are defectively designed or manufactured, leading to corrosion of the implant within the body, build-up of metal debris in the patient’s soft tissues (a condition called metallosis), and damage to the tissue surrounding the implant. In those cases, patients often have to remove the defective medical device after only a few years in order to prevent further damage to their bodies. When such an event occurs, it is important that the injured patient know his or her rights, including whether the patient can recover the costs of any out-of-pocket expenses they incurred, and be compensated for the damage they sustained from the party responsible: the manufacturer and designer of the joint replacement.

In recent years, multiple medical device manufacturers have agreed to pay large settlements to customers who had defective hip replacements implanted in their bodies. In November 2014, Stryker Orthopaedics agreed to pay injured claimants a total of more than $1.4 billion to compensate them for injuries incurred due to Stryker Orthopaedics’ Rejuvenate and ABG II modular-neck hip stems, based on claims that the metal-on-metal ball and socket design led to corrosion of the implant and the emission of metal particles within the body. In September 2013, DePuy Orthopaedics, a subsidiary of Johnson & Johnson, agreed to settle thousands of similar claims from patients who had received the ASR hip replacement system in an amount totaling more than $4 billion. As joint replacement technology continues to proliferate, litigation in the field may become more and more likely.

One area that may receive particular attention in the near future is taper neck junction corrosion claims. In taper neck junction claims, plaintiffs allege that the metal-on-metal design at the junction of a hip replacement’s neck and ball components may result in corrosion, metallosis, and damage to the surrounding tissue. Unlike the ball-and-socket cases described above, the taper junction neck cases involve components that are relatively static, which would ordinarily suggest that corrosion from friction would be minimal. As a result, the scientific theory for why taper neck junction corrosion occurs is more complex and may involve as many as three simultaneous causes: (1) fretting or grinding between the neck and the ball which weakens the integrity of the metal; (2) crevice corrosion caused by liquids trapped in the space between the neck and head; and (3) galvanic corrosion caused by using different metals for the neck and head. Since the theory is complicated, an expert is needed to both analyze the product and explain why it is defective to the jury. This, in turn, requires an attorney who is both experienced in complex litigation and has sufficient resources to handle such a complex claim.

Trief & Olk represents injured individuals in a variety of product liability actions, including medical devices and consumer products. If you have been injured because of a medical device implanted in your body or any other product, medical or otherwise, contact Trief & Olk by telephone or via our website’s submission form to find out more about how Trief & Olk can help you.

NLRB Challenges Class Action Waivers In Employment Agreements

Over the past decade, large corporations have found a mechanism for avoiding class action litigation: their contracts or employment agreements include provisions that require any disputes be brought through private arbitration, rather than in a court, and that any such arbitration be handled on an individual basis. The United States Supreme Court has repeatedly upheld such provisions, referred to as class action waivers. Recently, however, employees have successfully challenged these contractual bans on class actions in actions brought before the National Labor Relations Board (known as the NLRB).

The NLRB’s mandate is to safeguard employees’ rights and to determine whether they can be represented by a union; the rights it enforces are guaranteed under the National Labor Relations Act (NLRA). The NLRA protects employees’ ability to engage in “concerted activity,” which is when two or more employees take action for their mutual aid or protection regarding terms and conditions of employment.  As the NLRB’s website explains: “A single employee may also engage in protected concerted activity if he or she is acting on the authority of other employees, bringing group complaints to the employer’s attention, trying to induce group action, or seeking to prepare for group action.” In the view of the NLRB, this right to engage in “concerted activity” includes the right to bring an action in court on behalf of a group of employees. In other words, the NLRB views the ability to bring a class action against an employer as a tool to protect employee rights.

In 2012, the NLRB held in D.R. Horton, Inc., that an employer violates Section 8(a)(1) of the NLRA when it requires employees, as a condition of their employment, to sign an agreement that precludes them filing joint, collective, or class actions addressing wages, hours, or other working conditions. When the employer challenged that ruling in federal court, the Fifth Circuit Court of Appeals, in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013) disagreed with the NLRB panel, finding that the class action is a procedural mechanism, and not a substantive right guaranteed by the NLRA.  Since that opinion, the Fifth Circuit reaffirmed its understanding of the NLRA in Murphy Oil USA, Inc., 808 F.3d 1013 (5th Cir. 2015) and the Second Circuit Court of Appeals came to a similar conclusion in Sutherland v. Ernst & Young, 726 F.3ed 290 (2d Cir. 2013)).

Despite the outcomes in these court cases, the NLRB has continued to hear challenges to class action waivers included in mandatory arbitration clauses in employment contracts and has continued to strike down these provisions. In the last several months alone, the NLRB has rejected class action waivers in employment agreements for employees in various industries, including employees of Samsung Electronics America Inc.; Citigroup Inc. and its Citicorp Banking Corp. subsidiary; several restaurants (including Jack in the Box Inc. and Great Lakes Restaurant Management, LLC, a Wendy’s franchise based in Buffalo, NY); and a Honda dealership.

Ultimately, the United States Supreme Court will likely be called upon to decide whether the NLRB’s interpretation of the NLRA is correct. In the meantime, however, the NLRB is continuing its fight against mandatory arbitration provisions that incorporate class action waivers.

Trief & Olk represents employees in actions challenging unlawful wage and hour practices, both in collective or class actions brought in court and in individual arbitration proceedings brought when employers require such alternate dispute procedures as a condition of employment.

Montanile and ERISA liens

In many personal injury lawsuits, the plaintiff’s medical care is paid by his or her private health insurance. In most states, the health insurance company (the insurer) can assert a lien on plaintiff’s recovery, i.e., any verdicts or settlements, to reimburse the insurer for the health benefits it paid out. New York is one of the few states that passed legislation preventing this type of lien, with one exception: self-funded ERISA liens (explained below) may still assert a lien on the recovery.  However, a recent decision by the United States Supreme Court in Montanile v. Board of Trustees of National Elevator Industry Health Benefit Plan, 136 S. Ct. 651, may have major implications for self-funded ERISA plans asserting liens on personal injury actions.

Self-funded ERISA plans are health benefit plans under which covered employees’ health care expenses are paid directly by their employer. Unlike traditional insurance plans, an insurance company does not guarantee payment of medical bills in exchange for premiums, although an insurance company or other company may be hired to manage the ERISA plan’s funds. When an ERISA plan participant is injured and brings litigation to recover for his or her injuries, the injured participant may be required to pay back the related health care expenses paid by the ERISA fund. Unfortunately, that money comes directly from the person who needs it most: the injured plaintiff.

The United States Supreme Court’s decision in Montanile could severely hamper an ERISA plan’s ability to recover from injured plaintiffs. The Court held that when a plaintiff has obtained the proceeds of litigation and has spent it on nontraceable assets or otherwise made those specific funds indiscernible from the plaintiff’s general assets, the ERISA plan cannot seek recovery of the funds from plaintiff’s general assets. Its right to recover is directly and solely affixed to the proceeds of litigation and once those funds have been dissipated, no recovery can be had.

Of note, the Montanile decision will have no effect on other types of liens, including liens asserted by Workers’ Compensation, Medicare and Medicaid.

The full effects of this relatively recent decision have yet to be felt. However, one can presume that ERISA plans that sit on their rights to recover and then assert them after recovery and dissipation may be out of luck, to the benefit of the injured party.

Trief & Olk has extensive experience dealing with and negotiating a variety of liens in order to benefit our personal injury clients. It is our goal to obtain the most amount of recovery possible for our clients, and fighting liens is part of that process. If you have questions about your potential personal injury claim and its related liens, contact Trief & Olk by telephone or via our website’s submission form.

Construction Accidents and Labor Law 241(6)

For anyone working at construction sites, it’s imperative to know the law. Construction sites are, by their very nature, dangerous. Workers are constantly exposed to dangerous working conditions, including defective power tools, fall hazards, insufficient safety devices, falling objects, and electrical hazards. When a worker gets so injured and cannot work, Workers’ Compensation may not be enough. Fortunately, New York’s Labor Law 241(6) provides a means of recovery for individuals injured at construction sites beyond the relatively small compensation available through Workers’ Compensation Law.

Labor Law 241(6) provides that when a construction worker is injured due to a violation of New York’s Industrial Code, the building owner and general contractor can be responsible for the injury. The law developed as a way for the State to protect construction workers from dangerous working conditions. Usually, construction workers are at the mercy of their employer, the general contractor or the building owner. If a worker is provided with inadequate equipment or exposed to a dangerous workplace, the worker generally does not have the authority or financial security to insist on safer working conditions. Before the Labor Law, when those workers were so injured that they could not work, they usually ended up on public assistance. The Labor Law was designed to shift the cost away from the State and to the parties most able to control working conditions and pay for workers’ injuries, i.e., the building owner and general contractor.

Trief & Olk handles a wide variety of construction accident cases, from defective power saws, to nail gun accidents, to falls from ladders and scaffolds. One unique case involved a construction executive who suffered an electric shock at a construction site because of a dangerously-installed wire. The defendant went so far as to deny that plaintiff suffered an electric shock, but plaintiff demonstrated the existence of the shock through an emailed accident report, medical records that included a diagnosis of electrocution, testimony from plaintiff’s treating physician in Canada (who Trief & Olk deposed on video in anticipation of the very defense used by defendant), and defendant’s own medical experts, five of whom wrote in their reports that the plaintiff suffered an electric shock or had objective symptoms consistent with electric shock.

If you are a construction worker or a person who was injured at a construction site, Trief & Olk is available to answer your questions. Feel free to leave us a submission via our website or call us directly to discuss how we may help you.

Class Actions – “Organic” Food Claims

An assortment of class action lawsuits have targeted food producers that mislabeled their products “organic” when in fact they failed to meet the stringent standards set forth by the USDA. To qualify as organic, a product must be certified in accordance with the National Organic Program (NOP), which requires that “organic” products contain at least 95% organic material, and “made with organic ingredients” contain at least 70% organic ingredients. If a manufacturer is applying this label to products that do not meet the NOP’s criteria, they are deceptively advertising their product and receiving a premium from consumers who pay extra to receive organic products.

Trief & Olk is currently investigating claims that food manufacturers and producers are improperly applying the label to their products.

Class Actions – “Natural” and GMOs

With consumers growing increasingly health conscious, many major food manufacturers are attempting to brand their products as healthy and “natural.” At the same time, the overwhelming majority of staple crops such as corn and soy planted in the United States are genetically engineered (GE). This has inevitably led to a host of issues for consumers and manufacturers trying to navigate the “natural” terrain.

Numerous class action lawsuits have arisen stemming from processed food manufacturers advertising their products as “natural” despite being laden with genetically modified organisms (GMO). The lawsuits typically allege violations of state statutes on false advertising, unfair trade practices, breach of warranty, and fraud.

The attorneys at Trief & Olk are currently investigating claims that certain products are being illegally marketed as “natural.”