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Two Birmingham law firms agree to merger
Legal Business | 2008/02/24 03:08

Birmingham law firm White Arnold & Dowd PC and fellow Birmingham firm Summey & Hennecy have merged.

Partners Sidney C. Summey and Karen M. Hennecy and their staff members recently agreed to join White Arnold & Dowd PC, which brings the firm's total staff to 17.

The move strengthens the firm's growing probate and elder law practice, a news release said.

Summey has more than 30 years of experience practicing in the probate and civil courts in Alabama and will continue his primary practice of wills, trusts and estates, assistance to litigators handling lawsuits for minors and incompetents, special needs trusts and planning, guardianships and conservatorships, elder law and litigation related to probate issues.

Hennecy will concentrate her practice on elder law issues, assisting clients and their families with matters including advance directives, durable powers of attorney, wills, trusts, asset preservation and Medicaid planning and administration of the estates of decedents and protected persons.



Enzyte Maker Found Guilty of Fraud
Criminal Law | 2008/02/23 13:21
A federal court jury on Friday found the owner of a company that sells "male enhancement" tablets and other herbal supplements guilty of conspiracy to commit mail fraud, bank fraud and money laundering.

Steve Warshak, whose conviction was reported Friday by The Cincinnati Enquirer, is founder and president of Berkeley Premium Nutraceuticals, which distributes Enzyte and a number of products alleged to boost energy, manage weight, reduce memory loss and aid restful sleep.

Television ads for Enzyte feature "Smiling Bob," a goofy, grinning man whose life gets much better after he uses the product, which allegedly boosted his sexual performance.

Warshak, 40, could face more than 20 years in prison and his company could have to forfeit tens of millions of dollars.

Messages seeking comment from Warshak's Boston attorney Martin Weinberg and Assistant U.S. Attorney Anne Porter were left at their offices Friday night.

Prosecutors claimed customers were bilked out of $100 million through a series of deceptive ads, manipulated credit card transactions and the company's refusal to accept returns or cancel orders. They said unauthorized credit card charges generated thousands of complaints over unordered products.

Warshak's mother, Harriett Warshak, also was convicted of conspiracy, bank fraud and money laundering.

The government also alleged the defendants obstructed investigations by two federal agencies.

Some former employees, including relatives of Warshak, pleaded guilty to other charges and cooperated with prosecutors. They testified that the company created fictitious doctors to endorse the pills, fabricated a customer-satisfaction survey and made up numbers to back claims about Enzyte's effectiveness.

Defense lawyers characterized that testimony as tainted because it was forced by the threat of prosecution.

The defense contended in the trial that Berkeley suffered from customer service that didn't keep pace with the company's rapid growth from a one-person startup in 2001 to 1,500 employees in 2004.

Weinberg also had told jurors that Berkeley had been targeted by the government in "a relentless criminal investigation."



Health Net Inc. must pay client $9 million
Insurance | 2008/02/23 13:18
A woman who had her medical coverage canceled as she was undergoing treatment for breast cancer has been awarded more than $9 million in a case against one of California's largest health insurers.

Patsy Bates, 52, a hairdresser from Lakewood, had been left with more than $129,000 in unpaid medical bills when Health Net Inc. canceled her policy in 2004.

On Friday, arbitration judge Sam Cianchetti ordered Health Net to repay that amount while providing $8.4 million in punitive damages and $750,000 for emotional distress.

"It's hard to imagine a situation more trying than the one Bates has had to endure," Cianchetti wrote in the decision. "The rug was pulled out from underneath, and that occurred at a time when she is diagnosed with breast cancer, one of the leading causes of death for women."

Bates, a mother of two, said she screamed when she heard about the damage award.

"I am elated," she said.

Bates' attorney William Shernoff said he wanted other insurers to take notice of the award.

"We are going to put a stop to this practice," he said.

Health Net said it was implementing a freeze on policy cancelations that would last until the company sets up a third-party review panel to scrutinize cases.

"Obviously we regret the way that this has turned out, but we are intent on fixing the processes to maintain the public trust," spokesman David Olson said.

The award came a day after the Los Angeles city attorney sued Health Net, claiming it illegally canceled the coverage of about 1,600 patients. City Attorney Rocky Delgadillo also said the company illegally ran an incentive program in which it paid bonuses to an administrator for meeting targets of policy cancelations.

Health Net acknowledged that such a program existed in 2002 and 2003 but was subsequently scrapped.

"It's hard to imagine a policy more reprehensible than tying bonuses to encourage the recision of health insurance that helps keep the public well and alive," Cianchetti wrote in the Bates decision.

Bates had been insured with another company but was persuaded to switch over to a Health Net policy after an agent suggested she could save money.

She said she had undergone surgery to remove a tumor and had received her first two chemotherapy treatments when doctors stopped treating her because her bills were going unpaid.

"I was devastated. I didn't know what was going to happen," Bates said. "It's boggling that someone can do that to you."

Bates went on to complete her cancer treatment through a state-funded program.

Health Net also said it would review its practices and the way its brokers and agents are trained.



SEC settles case vs. Charlotte investment adviser
Securities | 2008/02/22 08:16

The Securities and Exchange Commission has settled its civil case against Vincent Lenarcic Jr., a Charlottean accused of investment-adviser fraud. Lenarcic has been ordered to pay $808,274 in restitution, but that payment will be deemed satisfied if Lenarcic pays restitution in a parallel criminal case. Lenarcic consented to the order without admitting or denying any of the allegations of the SEC's complaint.

The SEC contended Lenarcic committed securities and investment-adviser fraud in connection with the sale of securities held by Fundamental Growth Investors. The complaint alleged that from June 2000 to December 2003, Lenarcic misappropriated at least $807,000 by selling securities in Fundamental Growth's account and misappropriating the proceeds.



Rezko lawyer says jail 'degrading,' pleads for release
Breaking Legal News | 2008/02/22 08:01
Jailed political fundraiser Antoin "Tony" Rezko's lawyer made an emotional plea for his release from a federal lockup Wednesday, saying he is being held in "degrading" conditions where inmates must share underwear.

"It's disgusting, judge," chief defense counsel Joseph Duffy told U.S. District Judge Amy J. St. Eve.

Rezko, 52, a millionaire developer and formerly a fundraiser for both Sen. Barack Obama and Gov. Rod Blagojevich, is being held without bail awaiting the scheduled March 3 start of his political corruption trial. He is accused of joining with millionaire lawyer Stuart Levine in a scheme to use political influence to shake down companies.

Duffy told St. Eve that Rezko's living conditions at the federal Metropolitan Correctional Center are so horrible that some means must be found to get him out.

"It's a very degrading way for people to even try to serve time," Duffy said.

He said that while general population inmates have their own supplies of underwear, Rezko and others held in solitary must share.

Rezko, who was born in Syria and has extensive connections in the Mideast, had been free on $2 million bail but St. Eve revoked his bail and ordered him jailed Jan. 28 after prosecutors disclosed he had received $3.5 million from an overseas businessman without informing the court.

Duffy said that if Rezko is released, the defense will pay a security firm to put guards in Rezko's Wilmette mansion 24 hours a day to make certain he doesn't try to flee.

"They will physically deliver him to the courtroom every single day," Duffy said.

The judge said she already had asked the correctional center about Rezko's living conditions and said she was told he was not being singled out. She noted he was being held on a floor where high-profile defendants are kept while authorities assess any risk to them from being in the lockup's general population.

Levine has pleaded guilty and is expected to be the government's star witness at Rezko's trial.



Supreme Court allows prosecution of NASSCOM chief
Court Watch | 2008/02/22 06:58

The Supreme Court on Thursday allowed the prosecution of Chief of the National Association of Software and Services Companies (NASSCOM), Som Mittal, for not providing adequate security to a female employee who was raped and murdered in 2005.

“If you are the head of a company, you are responsible for the safety of your employees,” the apex court said.

Pratibha Srikant Murthy, an employee of Hewlett-Packard (HP) GlobalSoft's BPO (Business Process Outsourcing) unit was raped and murdered in Bangalore by a cab driver who was dropping her home after work.

Mittal was the Managing Director of Hewlett-Packard GlobalSoft Pvt Ltd at that time.

However, Hewlett-Packard said in a statement: “In the matter concerning the order passed by the Hon'ble Supreme Court in response to a petition filed by Som Mittal, HP India would like to clarify that the Hon'ble Court has not pronounced either Mittal or HP guilty on any count. It has only directed Mittal to urge all the contentions as available under law, including maintainability of the complaint, before the trial court. However, since the matter is sub-judice, HP would not like to comment on any specifics related to the case at this point,” it added.

NASSCOM, which is a body representing Indian IT companies and BPO firms, refused to comment.



Medical Device Ruling Redraws Lines on Lawsuits
Breaking Legal News | 2008/02/22 04:56

The Supreme Court’s decision Wednesday protecting many types of medical device makers from personal injury lawsuits began rippling through the courts and law offices almost immediately.

Hours after the decision in the case, Riegel v. Medtronic, was announced, lawyers involved in a group of Florida state court cases related to Johnson & Johnson’s drug-coated Cypher heart stent received an e-mail message from Judge Mary Barzee Flores asking for briefs on whether the lawsuits should be allowed to continue.

And lawyers for patients with injuries they attribute to other devices like heart valves, artificial hips and defibrillators said they were girding for a flood of court filings from device makers like Medtronic asking judges to dismiss such lawsuits.

“Medtronic probably already has summary judgment motions ready to go, and I expect to see them filed in the next few days,” said Hunter J. Shkolnik, a New York lawyer.

“The next six months will be consumed fighting about such motions,” Mr. Shkolnik predicted.

He represents more than 600 plaintiffs with lawsuits in state court in Minneapolis stemming from potentially faulty electrical leads Medtronic made for heart defibrillators.

Lasr fall, Medtronic recalled the product, known as the Sprint Fidelis, after reports that the leads — wires that connected the device to the heart — were more prone to developing potentially deadly fractures than an older lead called the Quattro.

In addition to the Sprint Fidelis and the heart stent cases — some in Massachusetts have named Boston Scientific rather than Johnson & Johnson as the defendant — lawyers said Wednesday’s Supreme Court ruling could also affect the course of personal injury lawsuits filed against St. Jude Medical over a silver-coated heart valve recalled in 2000.

There were 19 state and federal cases pending involving the St. Jude valve as of last October, according to filings with the Securities and Exchange Commission by the company, which is based in St. Paul.

Other lawsuits that could be affected are ones against Johnson & Johnson and Synthes over spinal disks, and Stryker over artificial hip components. Soundtec, an Oklahoma City-based producer of an implantable hearing aid, had been told just two weeks ago by the Arkansas State Supreme Court that the federal approval of its device did not protect it from a claim in state court that its design was defective. Lawyers say the Arkansas decision is now likely to be reversed.

Recent settlements of large groups of lawsuits on terms relatively favorable to device makers are a sign that lawyers had been anticipating the Supreme Court outcome, according to Mark Herrmann, a Chicago lawyer who defends drug and device companies.

In December, for example, Medtronic announced an agreement to pay $114.1 million to settle 2,682 injury lawsuits related to its 2005 recall of defibrillators with a defective battery. In November, Boston Scientific agreed to pay up to $240 million to settle 8,550 claims stemming from recalls of defibrillators made by a subsidiary, Guidant.

Plaintiffs in those cases are free to stay out of the settlements and try to continue suing the companies. But the odds against their success are much steeper now, according to both plaintiffs and defense lawyers.



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