Wednesday, December 2, 2015

A History of Workers’ Compensation: Part II | Callagy Law

The 1900’s.

The purpose of this post is to help assist healthcare providers and owners with questions they have concerning their business or relevant knowledge in the field. The Callagy Law team is knowledgeable in many law practice areas and will frequently post topics ranging from Medical Revenue Recovery, PIP, Workers Compensation, and Commercial Insurance. We hope to have this blog shed a light on many common questions.

Although Workers’ Compensation reform took root in Europe during the late 19^th century, it would take several decades later before the United States adopted the concept. During the 1900s, a group of authors known as the “muckrackers” focused their writing on the experiences of the common man, government and business corruption, and social change. One of these muckrackers, Upton Sinclair, wrote The Jungle. The novel detailed the deplorable working conditions of a slaughterhouse in Chicago. Although the intention of the book was to call attention to the need to improve working conditions, its immediate effect on the public led to the passage of the Food and Drug Act of 1906.

Nevertheless, public support for workers’ compensation reform continued to increase during the 1900s. Several states made attempts to pass comprehensive workers’ compensation acts. In 1908, President Taft put into law the United States’ first workers’ compensation system for workers involved in interstate commerce. The decentralization of labor law in the United States created a barrier to nationwide reform. Manufacturers argued that although they were ready for change, state by state regulation would create unfair competitive advantages. In 1910, a conference was held in Chicago to address this issue. Representatives from all industrial states gathered to create a uniform set of compensation laws. The first of these laws was passed in Wisconsin in 1911 and expanded to most other states shortly after.

In its inception, workers’ compensation received criticism from medical professionals as an attempt to control fees. However, this opinion changed when Social Security Disability Insurance was created during the 1930s. The program generated a greater demand for medical services and proved to be profitable for the medical profession.

The workers’ compensation system in the United States follows the Prussian model of the late 19^th century. It is a no fault system that provides security for employees and shields employers from tort liability. An injured worker may sue third parties responsible for their injuries, but recovery from these suits must compensate the workers’ compensation carrier. Workers’ compensation plans are either funded by the employer through an insurance carrier or self-insurance account. Although the Workers’ Compensation system has remained largely unchanged through the decades, in 1990, the American with Disability Act (ADA) required employers to provide “reasonable accommodation” for disabled workers.

The Team at Callagy Law hopes the information in this article was helpful in either your personal or professional life. The legal world pertains to all walks of life and more specifically, various types of healthcare providers. Callagy Law, is a multidisciplinary law firm, headquartered in Paramus, NJ owned and operated by Sean Callagy. We are committed to providing legal representation and advice to our clients at additional law offices located across the United States. Please note that the information posted here should not be used as a legal argument of defense. If you find yourself needing legal advice pertaining to your unique situation, you can contact us at here. Feel free to search us on Facebook, Twitter or LinkedIn! Additionally you can subscribe to our daily videos on YouTube.

Click Here to Read Part I.

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Tuesday, October 27, 2015

The Litigation Funding Business: A Closer Look

The litigation funding business consists of hundreds of companies throughout the country which purchase portions of the anticipated recoveries of plaintiffs in pending lawsuits. In return for these cash advances, the funding company receives a contingent interest in the potential post-judgment proceeds of the plaintiff’s case. The nonrecourse nature of these transactions distinguish litigation funding from traditional loans, which require absolute repayment— i.e., in litigation funding, if the plaintiff fails to recover, the funding company receives nothing in return for its cash advance. It is only in scenarios where a plaintiff recovers on his or her claim, that litigation funding companies receive any return on its investment.

In Opinion 691 of “Referral of Personal Injury Client to Third-Party Factor Which Will Purchase an Interest in the Case,” Referral of Personal Injury Client to Third-Party Factor Which Will Purchase an Interest in the Case, 2001 WL 169754, the Supreme Court’s Advisory Committee on Professional Ethics (the “Committee”), explains the fundamental purpose of the litigation funding business and how it operates. The Committee explains that the purchase of a portion of a “potential personal injury settlement or judgment” involves a great degree of risk being assumed by the possibility that a plaintiff’s claim could fail completely, or yield insufficient awards unable to cover the original investment. Id. at p. 2. Further, litigation funding companies often represent the only option available to plaintiffs, to address their immediate personal financial needs, and relieve the pressure “to accept a settlement offer not in the client’s best interests simply in order to survive financially.” Id. at p. 3. The Committee concludes that, “… a lawyer may ethically refer a client to a factor concerning a possible advance against an anticipated personal injury judgment or settlement, provided that the standards and limitations [as to independence of the lawyer’s judgment, etc., were] followed. Id. at p. 6.

Opinion 691 also acknowledges that litigation funding companies have been visible and accepted in the legal setting for years. By providing such funds, litigation funding and the pre-settlement finance industry as a whole, helps to level the playing field in many cases where cash-strapped plaintiffs would otherwise be forced to accept inadequate and unfair settlement offers made by large companies that have the resources to out-litigate and ultimately out-last individual victims of their insured’s’ tortious conduct. On a final note, while some may be skeptics of the litigation funding business, pre-settlement finance companies take great risks in these business ventures and are often a plaintiffs only opportunity to maintain personal financial viability while his or her case works itself through the legal system to a fair and just resolution.

The team at Callagy Law hopes the information in this article was helpful in either your personal or professional life. Businesses and people are multi-dimensional and at times may need a guiding light. The legal world pertains to all walks of life and businesses, therefore, we aim to provide information which will help you navigate through your life. Callagy Law, is a multidisciplinary law firm, headquartered in Paramus, NJ owned and operated by Sean Callagy. We are committed to providing legal representation and advice to our clients at our law offices located in New York, New Jersey and Arizona. Please note that the information posted here should not be used as a legal argument of defense. If you find yourself needing legal advice pertaining to your unique situation, you can contact us at by writing us here. Feel free to connect with us on Facebook, Twitter or LinkedIn! Additionally Callagy Law has had some great reviews and is working hard to be a leader in multiple fields of the legal profession.

Related Blog: NY Litigation Funder Awarded $33.5M In Kickback Suit

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