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NOVEMBER/DECEMBER 2012 ISSUE NO.

265

Inside this issue.


Tips from the Trenches Making the Court Reporters Job Easiersee page 5 Civil Appeals in the SD Supreme Courtsee page 6 Recent U.S. Tax Court Decision Highlights Issues Regarding the Tax Treatment of Damagessee page 7 De-Felonization: An Effective Way of Reducing Our Prison Population and the Financial Burden of Over-Incarceration page 10 SDTLA Completes Membership Surveypage 15 Law School Timessee page 16 Top Ten Reasons to Go Ruralsee page 18 The Ethics of Hold Harmless and Indemnificationpage 20

December 13 Jan 8 March 8 January TBA January TBA February TBA February 8-10 March 21 April 18 May 3 June 19 June 20 July 18

SDTLA CALENDAR OF EVENTS 2012 Board Conference call, 4 pm CT 2013 SD Legislative Session SDTLA Town Hall Meeting, USD School of Law Board Conference call, 4 pm CT Board Meeting for legislative purposes Texas Young Lawyer Assn Regional Trial Competition, Sioux Falls Board Conference call, 4 pm CT Board Conference call, 4 pm CT SDTLA 50th Anniversary GALA Grand Falls Resort & Casino Board Meeting at Bar Convention, Pierre, 11 am Annual Meeting and Elections Board Conference call, 11 am CT

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PRESIDENT S MESSAGE.
BY STEVEN S. SIEGEL As I reflect on Thanksgiving and all the things we have for which to be thankful, I am reminded of two of my friends who also happen to be trial lawyers: Eric Schulte and Vince Purtell. Eric and Vince recently organized and paid for two volunteer sessions at the Banquet in Sioux Falls. Erics group prepared and served breakfast to those in need the day after Thanksgiving, and Vinces group prepared and served breakfast the Monday before Thanksgiving. Erics group served 130 people and Vinces group served 202. Those 332 people were able to eat a hot meal because of the action and generosity of two good men. Eric has established a tradition he organizes a group to serve breakfast the Friday after Thanksgiving every year. We trial lawyers are often maligned by the Chamber of Commerce, the media, and society in general. This is true even though we help our clients tremendously. People like Eric Schulte and Vince Purtell not only help their clients, but they go out of their way to help people they do not even know. They do it not because of financial gain or notoriety. They do it because they have good hearts and they feel compelled to help the less fortunate. It is people like Eric and Vince that make me proud to be a trial lawyer. While others take shots at us for being greedy and self -serving, people like Eric Schulte and Vince Purtell continue to do what they do help those in need and ask for nothing in return. Is that not what Thanksgiving is all about? Thank you for setting a wonderful example for all of us, Eric and Vince. The 88th South Dakota legislative session gets underway January 8th. Once again, our able lobbyist, Roger Tellinghuisen, will be our watchdog and advocate in the halls, committee rooms, and on the floor at the State Capitol in Pierre. Thank you in advance for all your hard work, Roger. We are so fortunate to have you advocating for us in Pierre. Rest assured, there will be bills circulating that attempt to limit or otherwise adversely affect the rights of our clients. We expect to see more attempts at tort reform this session. Please pay attention and do what you can to help Roger. I can promise you that he appreciates all the help he can get. The most important and helpful thing you can do is call and write your senator and representative(s) when a bad bill is introduced. The legislators listen more closely to their constituents than anyone else. Please be proactive and contact your legislators. Speaking of the legislature, we need more lawyers in the legislature! This session, the Senate will be completely devoid of lawyers. That is not a good thing. This organization has consistently shown that it supports lawyer -legislators that are willing to throw their hats in the ring. We also continue to support those lawyer -legislators that stand up for our clients and us in the committee rooms and on the floor. If you are thinking of running for state office, do it! Odds are, we will behind you 100 percent with our time and money. Happy Holidays to you and your families. As 2012 winds down, lets try to follow the example of Eric Schulte and Vince Purtell and reach out to those in need. After all, helping people is what we trial lawyers do.

Officers President: Steven S. Siegel President-Elect: Stephanie E. Pochop Secretary-Treasurer: G. Verne Goodsell Board of Governors John P. Blackburn, AAJ Delegate Richard D. Casey, AAJ Delegate Clint Sargent, AAJ Governor Terrence R. Quinn, AAJ Governor Renee H. Christensen Aaron D. Eiesland Alecia E. Fuller Margo Tschetter Julius Ryan Kolbeck Brad J. Lee Michael H. Paulson Timothy J. Rensch Susan M. Sabers Eric C. Schulte McLean Thompson Kerver T.J. Von Wald Past Presidents Immediate Past President Roger A. Tellinghuisen William J. Holland - Stan Siegel Joseph M. Butler - John H. Zimmer Carleton R. Hoy - Horace R. Jackson William F. Day Jr. - Vincent J. Protsch Gale E. Fisher - A. William Spiry Franklin J. Wallahan - Gerald L. Reade Rick Johnson - David V. Vrooman Terence R. Quinn - Thomas R. Pardy Charles M. Thompson - David R. Gienapp Gary E. Davis - Gregory A. Eiesland James S. Nelson - Robert J. Burns Brent A. Wilbur - Steven M. Johnson Glen H. Johnson - William J. Srstka Jr. Gary D. Jensen - John P. Blackburn Michael W. Day - Michael J. Schaffer Bruce M. Ford - Nancy J. Turbak Berry Scott Heidepriem Michael D. Stevens Robert L. Morris II - Richard D. Casey Jon Sogn Mark V. Meierhenry Brad Schreiber Jeff A. Larson Mark Connot Tina M. Hogue James Roby - Wally Eklund Michael F. Marlow - Clint Sargent Michael A. Wilson Association Office 104 W Spring Creek Dr PO Box 1154 Pierre, SD 57501-1154 605-224-9292 sdtla@mncomm.com (email) Sara HartfordExecutive Director

The Barrister is published electronically six times a year by the South Dakota Trial Lawyers Association as a service to its membership and as part of its continuing commitment to educate and promote professionalism among trial attorneys. Submissions are welcome. Interested authors should contact Sara Hartford, Executive Director at the above address. Subscriptions of $25 are included in the Associations annual membership dues. Non -members subscription rate is $50 per year. Statements and opinions in the Barrister editorials and articles are not necessarily those of SDTLA. Publication of advertising does not imply endorsement of products or services or statements made about them. Add advertising copy is subject to approval by SDTLA. Copy deadlines are February 1, April 1, June 1, August 1 October 1 and December 1. Call for advertising rates.

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Editors Notes and Comments


The holidays have arrived and I want to wish each and every one of you a safe and joyous season. Make sure to take the time from the busy month to enjoy the small things. When my grandfather, Vernon Vrooman, was teaching law school in Eugene, Oregon in 1947, he sent out a printed Christmas card that stated: When my daughter Ann was very, very small, she said this is a great day to be glad in. May Christmas Day be such a day for you. I hope you too find something to be glad about this Christmas. We have a great variety of articles this month. Retired Justice Judy Meierhenry has written a two-part article on Supreme Court appeals in South Dakota. Also, in this issue we have a great article from Sarah Larson who is a lawyer practicing law in Gettysburg, South Dakota. We asked her to share her experience of being a small town lawyer with our membership. Brad Lee has summarized the results of the SDTLA Feedback Survey. Susan Sabers submitted an article about working with court reporters which summarized a panel discussion held at a recent Court Reporters conference. It is a good read and one that I am sure all court reporters will appreciate. Finally, we have an article from John Murphy and a submission from an out of state contributor writing about ethical considerations in hold harmless cases. One idea that came up during the planning session was having a contest for law students to be published in the Barrister. We need a topic for the contest and would appreciate your suggestions. Session is around the corner and we need everyones help. Stay tuned. Marya Tellinghuisen

SDTLA is going to be 50! Mark your calendars May 3, 2013 Grand Falls Resort & Casino!!
Watch for details coming soon...

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SUSTAINING MEMBERS
Scott A. Abdallah Michael C. Abourezk Charles Abourezk Grant G. Alvine Stephanie R. Amiotte Kenneth E. Barker Steven C. Beardsley John P. Blackburn Michael D. Bornitz John William Burke Michael J. Butler Renee H. Christensen J. Michael Dady Patrick K. Duffy Aaron D. Eiesland Gregory A. Eiesland Dennis W. Finch Bruce M. Ford Elizabeth M. Frederick Jay R. Gellhaus G. Verne Goodsell Scott N. Heidepriem Scott G. Hoy John R. Hughes Gary D. Jensen Steven M. Johnson George Johnson David J. King Jeff A. Larson James D. Leach Michael F. Marlow Lee C. Kit McCahren Mark V. Meierhenry N. Dean Nasser James S. Nelson Stephanie E. Pochop Terence R. Quinn Timothy J. Rensch James C. Roby Susan M. Sabers Michael K. Sabers Clint Sargent Steven S. Siegel Michael J. Simpson Michael D. Stevens Michael W. Strain Roger A. Tellinghuisen Thomas P. Tonner Nancy J. Turbak Berry TJ Von Wald Thomas K. Wilka Michael A. Wilson

Sustaining members pay $700 in dues each year, which entitles them to attend the Associations annual fall seminar, the annual meeting and luncheon and a plaque denoting their sustaining membership status. Our gratitude goes to these members so that the association can continue to sustain funding for an on-going defense of the civil justice system!

SDTLPAC is the political action committee of the SD Trial Lawyers Association. Organized in 1987, SDTLPAC contributes to any candidate for a state office who will support fair and equitable legislation to protect the rights of South Dakotans through the preservation of our justice system. WE THANK THESE CONTRIBUTORS FOR THEIR SUPPORT!
$1,800 ANNUAL Michael F. Marlow Stephanie E. Pochop $1,200 ANNUAL Kenneth E. Barker John P. Blackburn Aaron D. Eiesland Gregory A. Eiesland Scott N. Heidepriem Clint Sargent Michael D. Stevens Roger A. Tellinghuisen $1000 ANNUAL Scott Hoy $900 ANNUAL Gary D. Jensen Nancy Turbak Berry $720 ANNUAL Michael A. Wilson $600 ANNUAL Terry L. Hofer Margo T. Julius Mark V. Meierhenry James C. Roby Michael J. Schaffer Whiting Hagg & Hagg $500 ANNUAL John W. Burke Courtney R. Clayborne Terry Pechota $480 ANNUAL Jon C. Sogn $300 ANNUAL Charles Abourezk Steven C. Beardsley Day Morris G. Verne Goodsell Wm. Jason Groves Thomas Johnson Paul H. Linde Terry Quinn Thomas Tobin $240 ANNUAL Richard D. Casey $200 ANNUAL Stephanie R. Amiotte Susan M. Sabers $180 ANNUAL Brad J. Lee $120 ANNUAL Kenneth D. Bertsch Richard A. Engels Dennis W. Finch Robert B. Frieberg Alecia E. Fuller George E. Grassby Ryan Kolbeck Michael Paulson Catherine V. Piersol Haven L. Stuck T. J. Von Wald

Fred J. Nichol Award for Outstanding Jurist


Hon. Ernest W. Hertz 2000 Hon. Andrew W. Bogue - 2001 Hon. John B. Jones 2002 Hon. George W. Wuest - 2003 Hon. Marshall P. Young 2004 Hon. Robert A. Amundson 2005 Hon. Lawrence L. Piersol 2006 Hon. Richard W. Sabers 2007 Hon. Judith K. Meierhenry - 2008 Hon. Tim D. Tucker 2009 Hon. David R. Gienapp - 2010 Hon. Jack Von Wald 2011 Hon. John Bastain - 2012 TRIAL LAWYER OF THE YEAR AWARDS
87-88 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 Terry Quinn Greg Eiesland Steve Johnson Glen Johnson Bob Burns Gary Jensen Joe Butler Mark Meierhenry Jeff Larson Nancy Turbak David Gienapp Rick Johnson Jim McMahon Mike Schaffer John Blackburn William F. Day, Jr. Michael Abourezk Michael W. Strain Patrick Duffy Thomas G. Fritz Michael J. Butler Wally Eklund James D. Leach N. Dean Nasser, Jr. Stanley Whiting

LIFETIME ACHIEVEMENT AWARD Carleton Tex Hoy John F. Hagemann Robert C. Ulrich

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TOAST OF TRIAL LAWYERS June 2006 Nancy Turbak T.F. Martin Travis Jones Michael Stevens June 2007 Roger Tellinghuisen Mike Butler Eric Schulte June 2008 Sid Strange Jerry Reade Jim Leach June 2009 Mike Abourezk Alecia Garcia Scott Heidepriem Shiloh MacNally Doug Cummings June 2010 Michael DeMersseman Hon. John Schlimgen Joni Cutler Margo Julius Scott Abdallah June 2011 Susan Sabers TJ Von Wald John Murphy Steve Siegel June 2012 John Blackburn Linda Lea Viken Hon. Mark Smith Ronald Parsons

Tips from the Trenches Making the Court Reporters Job Easier 1
By Susan M. Sabers Fuller & Sabers, Sioux Falls and SDTLA Board of Governor member Slow down. This is a perennial concern in the world of court reporting. Most of us talk too fast, and in doing so, risk an incomplete or inaccurate record. Although we might think of our speedy delivery as a burden for the reporters, they nearly unanimously voiced concern for the accuracy of our written record instead. If youre going too fast for the reporter, youre going too fast for the jury. If there isnt a jury present, then youre developing a bad habit that will strike when you are in front of a jury. Acronyms are a nightmare. We might say ICWA, because its a lot easier than saying the Indian Child Welfare Act. But we need to keep in mind that our reporters group letters together as they take down our words. To record ICWA, each of those specific letters must be recorded, individually, to reference the correct act. The reporter is forced away from their normal mode of letter grouping and has to think in letter specific terms. Every time we use an acronym to speed up (see paragraph 1), it slows the reporter down. Numbers arent much better. We might say three eighty, and know exactly what we mean. But without the appropriate labels, those words could mean different thingsthree hundred and eighty dollars, three dollars and eighty centsyou get the point. We need to label our numbers with substantive tags like hundred or dollars. Numbers alone rarely get the job done. (Does two hundred and fifty gallon barrels mean two 150-gallon barrels, or 250 gallon barrels? Chances are your audience doesnt know either.) And just as in the case of acronyms, each number requires an individual keystroke for accurate recording. Captions are always helpful. (Extra credit will be given for lists of attorneys with corresponding firms in the multi-party litigation setting!) Many of us have our staff, as a matter of routine, send a caption to the court reporter in advance of a deposition. Are we extending that same courtesy to the official court reporters? Many of us have been working under the mistaken assumption that the UJS reporters have access to the court file and already have all of the necessary information. As it turns out, that is rarely true. It would be incredibly helpful if we arrived for court hearings with captions in hand. If you plan to quote a statute, case, or expert report, take an extra copy of the quoted language along to share with the court reporter as well. And, when you e-mail your brief to the judge, copy in the official court reporter so they can get the caption and other terminology you will be using in argument. Speak up. During arguments and examinations, we sometimes use fluctuations in our volume to add emphasis. Sometimes, however, we do that by speaking more quietly for effect. If thats the case, move closer to the court reporter. Whether its projectors, computers, or just the general background courtroom noises, there are many reasons reporters struggle to hear us as we drop our voices. We lose more points than we gain if the reporter has to interrupt us and ask for the missing language to be repeated. Remember the face, but not the name? Finally, we all know the sinking feeling you get when you show up and cant remember the reporters name. You know the person, likely know the names of their spouse and/or children, but a first name eludes you for whatever reason. Guess what? They sometimes forget our names too. Try to make it a habit to re-introduce yourself when greeting the reporter.
1

NOTE to YOUR ACCOUNTANT NON DEDUCTIBLE DUES YEAR Ending 6/30/12 33.94%

These comments and others were shared during the recent Court Reporters Conference, held on October 4th and 5th at the Minnehaha County Courthouse. The panel discussion involved several local lawyers along with Cory Bouma, the Video Network Specialist for the UJS. Special thanks to Mary Anne Meyer, President of the Court Reporters Association.

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Civil Appeals in the South Dakota Supreme Court Part One


by Judith Meierhenry Last year, the South Dakota Supreme Court recorded the lowest number of appeals in recent history. You may have noticed that the annual number of appeals and written opinions has been steadily declining. Filings dropped from a high of 508 in FY2000 to a low of 324 in FY 2012. The decline could be due to various reasons. It might be the downturn in the economy, the increased cost of trials and appeals or the increased use of alternative dispute resolutions. Could it also be we are less litigious or more satisfied with trial court outcomes? Is there more settled law? Or is this just wishful thinking on my part. At least, one advantage of fewer appeals is that lawyers have fewer cases to read to stay current. Of course, the Court only writes opinions in about a third of the appeals. Some appeals merely receive a summary disposition in the form of an order of affirmance or a rare order of reversal. The number of written opinions has generally tracked the annual decline in filings. In FY2000, the Court wrote 167 opinions. That number rose to 184 in FY 2004 and then dropped to a low of 85 in FY 2011. But it bumped up again in FY2012 to 123. The number of summary dispositions during that same period peaked at 136 in FY2002 and dipped to 75 in FY2008 and FY2010. The Court prefers oral argument when the case is complex or when an issue is one of first impression or deserving of reconsideration or clarification. The Court only grants oral argument in 25 -30% of the cases; the rest are considered on the briefs. The Court issues written opinions on almost all orally argued cases and on a significant number of cases considered on the briefs. Since retirement, I have been studying the civil opinions for a training presentation that I give annually to the trial court judges. In the process, I realized that 70%-75% of the written opinions were civil cases. The other 25% to 30% were criminal, habeas and abuse and neglect cases. Summary dispositions reflected a slightly lower ratio of 60-65% civil. These ratios have been fairly consistent over the last decade. Of the written civil case opinions in the last two years, the Court affirmed 63% and reversed 37%. When summary dispositions were added, the affirmance of civil cases increased to around 75%. One could conclude that, in civil appeals, the Court is more likely to issue a written opinion and more likely to affirm. Most of the opinions (civil and criminal) issued in the calendar year 2012 up to time of this writing were unanimous. Dissents or special writings were only filed in nine of the last 77 opinions. The types of civil cases appealed vary from year to year. Two years ago, the Court saw several appeals that presented constitutional issues and condemnation and zoning issues. This year the Court addressed more cases relating to domestic relations, child support and child custody issues. More often cases are appealed from summary judgment proceedings rather than from a trial. Appeals from administrative proceedings, such as workers compensation, consistently make up part of the mix of appeals. Several cases dealing with the statute of limitation in child sexual abuse have also come up for review in the last couple of years. The Court also regularly hears questions on insurance coverage, contracts, negligence claims, and evidentiary issues. Statistics and types of cases aside; clearly formulated issues supported by comprehensible briefs will always get the Courts attention. Add a persuasive rationale, a few legal authorities and an interesting oral argument, and you may just have a winner.

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Recent U.S. Tax Court Decision Highlights Issues Regarding the Tax Treatment of Damages for Stress-Induced Physical Ailments
By JEREMY BABENER and NEIL KIMMELFIELD
Previously published as Tax Treatment of Damages for Stress-Induced Physical Ailments, Practical Tax Strategies (Vol. 89, No. 3). Copyright 2012 Lane Powell PC.

In two cases decided in 2010, the U.S. Tax Court indicated that damages compensating for stress -induced physical ailments may be tax-free where (1) the taxpayer can demonstrate that the damages were actually received on account of those ailments and (2) the physical nature of the ailments was verified by a physician, preferably based on objective medical evidence rather than the taxpayers subjective report of symptoms. In the Tax Courts July 11, 2012, decision in Blackwood v. Commissioner, T.C. Memo 2012-190, the taxpayer did not satisfy this standard, highlighting the difficulty of establishing that damages compensating for stress -induced physical ailments are excludable from income. Section 104(a)(2) of the Internal Revenue Code provides that damages received on account of personal physical injuries or physical sickness are generally excluded from income. However, section 104(a) expressly states that emotional distress is not a physical injury or physical sickness. Thus, damages compensating for emotional distress are generally taxable. What about damages received on account of physical ailments induced by stress? The legislative history of 1996 amendments to section 104(a)(2) states that emotional distress includes physical symptoms (e.g., insomnia, headaches, stomach disorders) which may result from such emotional distress. Courts have suggested, in non-binding dicta, that other stress-induced physical ailments, including periodic impotency, fatigue, urinary incontinence, and elevated blood sugar levels, also may be considered symptoms of emotional distress. See Lindsey, Jr. v. Commissioner, 422 F.3d 684 (8th Cir. 2005); Moulton v. Commissioner, T.C. Memo 2009-38. This limited guidance does not establish a clear dividing line between such symptoms and actual physical injuries or sickness, and leaves open the possibility that damages attributable to other stress -induced physical ailments may be excluded from income under section 104(a)(2). In 2010, the Tax Court twice held that section 104(a)(2) applied to damages received on account of severe stressinduced physical ailments. In Domeny v. Commissioner, T.C. Memo 2010-9, the Tax Court found that (1) the taxpayer, who had multiple sclerosis, show[ed] that her work environment exacerbated her physical illness and (2) the damages she received were intended to compensate her for her acute physical illness caused by her hostile and stressful work environment. Based on those findings, the court held that section 104(a)(2) applied, and that the damages she received on account of her physical ailments were tax-free. The fact that the exacerbation of the taxpayers physical ailments was due to stress, rather than an obviously physical cause, did not lead the Tax Court to view the resulting damages as received on account of emotional distress. Notably, in the underlying dispute, the taxpayers physical ailment was medically verified by her doctor, who determined that she was too ill to work. The doctors diagnosis apparently was based on the taxpayers report of [v]ertigo, shooting pain in both legs, difficulty walking due to numbness in both feet, a burning sensation behind her eyes, and extreme fatigue. Your Pacific Northwest Law Firm In Parkinson v. Commissioner, T.C. Memo 2010-142, the Tax Court held that section 104(a)(2) applied to damages that the taxpayer received on account of heart attacks and cardiovascular damage that he suffered due to intentional infliction of emotional distress in his workplace. Interestingly, in concluding that the taxpayers physical ailments were not symptoms of emotional distress, the Tax Court emphasized that, in medical parlance, a symptom is subjective evidence of disease or of a patients condition, i.e., such evidence as perceived by the patient. The court viewed the taxpayers ailments, by contrast, as actual physical injury or sickness rather than mere subjective sensations or symptoms of emotional distress. The Tax Courts narrow reading of the term symptom in Parkinson could have far-reaching implications. Based on that reading, it is possible that section 104(a)(2) generally applies to damages for physical ailments caused by emotional distress as long as (1) the ailments are objectively verified by a physician based on signs of illness other than the taxpayers subjective report of symptoms, and (2) the taxpayer can demonstrate that the damages were paid on account of those physical ailments. Domeny further suggests that section 104(a)(2) may apply to damages paid on account of a diagnosed physical illness, even if the diagnosis is based entirely on symptoms reported by the taxpayer, if the illness is acute.
Continued on page 26

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NEW LAWYER REFERRAL LIST


The South Dakota Trial Lawyers Association has compiled a list of aspiring young trial lawyers who are interested in accepting civil case referrals. The list is not for pro bono referrals, but rather cases that another attorney is not interested in handling due to his or her caseload, area of interest, or the clients ability to pay. The purpose of creating this list is to allow young lawyers to gain experience handling civil cases on their own, while at the same time matching a worthy client with a willing lawyer. The goal is to give the lawyer the opportunity to independently plan case strategy, pursue a discovery plan and try a jury trial. By agreeing to be on the list, the attorneys have not automatically agreed to accept a case. They have the independence to accept or decline any case referred to them. Any lawyer in practice less than five years interested in accepting referrals is encouraged to contact the SDTLA office to join this list. First Circuit Kerri Cook Huber Blackburn & Stevens PO Box 753, Yankton, SD 57078 General Civil Litigation, Some Criminal Defense Katie Johnson PO Box 136 Beresford, SD 57704-0136 763-8013 Family Law, Criminal Defense, Bankruptcy Second Circuit Meghann Joyce Boyce Greenfield etal PO Box 5015 Sioux Falls, SD 57117 336-2424 Family law, Civil Litigation and Insurance Litigation James Nasser Nasser Law Office 204 S Main Sioux Falls, SD 57104-6310 335-0001 General civil litigation Laura Brahms Kading Kunstle & Goodhope 7400 S Bitterroot Pl #100 Sioux Falls, SD 57108 Family Law, Criminal Defense, Workers Comp, General Civil Litigation Katie Johnson PO Box 136 Beresford, SD 57704-0136 763-8013 Family Law, Criminal Defense, Bankruptcy Bill Blewett Meierhenry Sargent 315 S Phillips Ave Sioux Falls, SD 57104 336-3075 Appellate Law and General Civil litigation Updated 9/11/12

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SOUTH DAKOTA TRIAL LAWYERS ASSOCIATION Board of Governors Meeting Minutes September 27, 2012 Deadwood Mountain Grand, Deadwood, SD In attendance: Steve Siegel, Stephanie Pochop, Verne Goodsell, Clint Sargent, Terry Quinn, John Blackburn, Dick Casey, Aaron Eiesland, TJ Von Wald, Margo Julius, Alecia Fuller, Ryan Kolbeck, Brad Lee, Tim Rensch, McLean Thompson Kerver and Sara Hartford. President Siegel called the meeting to order with the first item of business being the approval of the August 16, 2012 meeting minutes. Quinn made a motion to approve as presented, Rensch seconded. Motion unanimously carried. Verne Goodsell gave the Treasurers report: $45,253 in operations, $45,212 in savings, $25,083 in the reserve fund and $8,173 in the PAC fund. Under old business, Hartford asked for discussion on the proposal to add a judicial membership category and to amend the bylaws. There was discussion but no consensus regarding the category. Pochop, Goodsell & Rensch were asked to draft bylaw language to include the judiciary and present to the board for further discussion. Siegel and Sargent will inquire with the Defense Lawyers Assn. as to whether they had a similar membership category. Sargent made a motion to defer until the next meeting, Fuller seconded. Motion unanimously carried. Siegel asked the board for items to discuss with the Chief Justice on November 16 in Pierre. There was discussion and a list was made as follows: His opinion on creating a judicial category in SDTLA; Report on Criminal justice initiative; Report on the rural practice initiative; Courtroom resources for UJS staff and attorneys; Future for additional judges; How can we improve our organization? The Board would like to know if he has any questions of SDTLA prior to the November 16 meeting. Under new business, Blackburn asked the board for feedback on surveying the membership prior to the planning meeting scheduled for November 16. There was discussion and Blackburn, Casey & Lee were directed to create a very short survey to send out to the membership via Survey Monkey to find out what SDTLA members think of their benefits and desired association amenities. Kolbeck reported the Criminal Defense Association is considering re -enacting the Gideon 50th anniversary trials in March at the Law School. There was discussion and consensus to move forward with the support and planning of such an event. Next Board meeting Thursday, October 18, 11:00 a.m. CENTRAL/10 a.m. Mountain Time by conference call. Dialing instructions will be sent with the agenda.

NOTE TO YOUR ACCOUNTANT NONDEDUCTIBLE DUES Year Ending 6/30/12

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De-Felonization: An Effective Way of Reducing Our Prison Population and the Financial Burden of Over-Incarceration1
by John R. Murphy, J.D., with Research Conducted by Bradley Richardson (U.S.D. School of Law) Several months ago I was able to attend one of the Governors Criminal Justice Stakeholder Meetings. These meetings have occurred throughout the state. The purpose of the meetings was to seek solutions to the pending financial problems the State of South Dakota is facing based on the cost of incarcerating criminal defendants. The Governors initiative should be applauded. At the meeting I attended, it appeared that his staff was committed to addressing the problem in a meaningful way. His staff made it clear that all suggestions would be considered. In that spirit, Ive spent several months thinking about the issue. Below is a description of the problem and my proposal for a solution to part of the problem. It is not meant as a panacea for the entire problem, nor is it meant to suggest that other proposals like drug courts and expansion of the 24/7 program are improper or unnecessary. Rather, I believe that a multi -faceted approach that begins by limiting the number of people labeled as felons is the best way of reducing the costs of incarcerating individuals. The reason the Governor and others are putting so much time and thought into this issue is because the situation is dire. If we continue to lock people up at the rates we have done so in the past 20 years, we will need to invest hundreds of millions of dollars building new prisons within the next decade. The statistics are shocking. Our incarceration rate (indexed to population) has increased by 495% since 1980.2 It doubled between 1980 and 1990, and then almost doubled again between 1990 and 2000. South Dakota incarcerates at a higher rate than any other state in the Midwest, 3 and higher than any of our neighboring states. We incarcerate men at roughly twice the rate of North Dakota, Minnesota and Nebraska. We incarcerate women at over four times the rate of Minnesota, and over twice the rate of North Dakota, Iowa, Nebraska, the Midwest average, and the national average.4 The economic costs of this trend are substantial. Our womens prison, which was built just a few years ago, will be out of capacity by 2014. Our mens prisons will be out of medium security beds by 2020 and out of capacity system wide by 2026. The cost to the state of incarcerating individuals has quadrupled since 1980. If we continue locking people up at the rates we have in the past several years, we will need to begin building new prisons and/or substantially expanding the ones we already have.5 The rise in our inmate population is not due to an increase in violent crimes, sex crimes or property crimes. Incarceration rates have fallen in those categories over the last two decades. 6 Our prison population has increased because we are locking up more people for drug and alcohol related crimes. Incarceration rates for drug offenses have increased by almost 300% in the last 20 years, and incarceration rates for DUI offenses have gone up by 50%. 7 For years, policy makers have focused on over -incarceration as the issue. Essentially, their solution has been to stop locking people up as a way to reduce prison populations. It sounds obvious and has an immediate appeal. However, it hasnt been very successful except in states where the legislature has mandated the use of diversionary programs instead of incarceration. If you have a system based on the premise that drug users are felons and subject to penitentiary sentences, drug users are going to end up in the penitentiary. That is the system South Dakota presently has. I am urging the Governor, his staff, and the legislature, to consider a different approach to the problem. Instead of focusing on over-incarceration, I suggest we look at it as an issue of over-criminalization and, more specifically, over -felonization. Over-felonization, as I am using the word, means making too many crimes felonies, and, thus, subjecting too many criminals to penitentiary sentences. My emphasis on over-felonization stems from the efficient ways it addresses the issue. People can only be sent to prison if they are convicted of a felony. Thus, if fewer people are convicted of felonies, fewer people can go to prison. One way of limiting the number of people convicted of felonies is to make fewer crimes felonies. This will limit the number of crimes for which a judge may impose a penitentiary sentence. This approach is radically different that the approaches most often mentioned when the issue of over -incarceration is discussed. Many good people with great intentions have focused a tremendous amount of time and thought to create alternatives to incarceration for felony offenders. Programs like the 24/7 program, community corrections facilities, halfway houses, and increased funding for treatment programs, are all attempts at preventing recidivism and lowering the cost of managing felons. And, they are all good ideas. But, they strike me as expensive and inefficient ways of addressing the problem from the back end, rather than preventing the problem from occurring in the first place.

Continued on page 21

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SOUTH DAKOTA TRIAL LAWYERS ASSOCIATION Board of Governors Conference Call Minutes October 18, 2012
On the call: Steve Siegel, Stephanie Pochop, Clint Sargent, John Blackburn, Aaron Eiesland, TJ Von Wald, Margo Julius, Eric Schulte, Alecia Fuller, Brad Lee, Tim Rensch, Susan Sabers, Renee Christensen, Michael Paulson and Sara Hartford. President Siegel called the meeting to order with the first item of business being the approval of the September 27, 2012 meeting minutes. Eiesland made a motion to approve as presented, Pochop seconded. Motion unanimously carried. Hartford gave the Treasurers report: $41,052 in operations, $45,216 in savings, $25,085 in the reserve fund and $9,411 in the PAC fund. She presented the 1st Quarter budget report. Under old business, Pochop reported she had checked with Minnesota and North Dakota Trial Lawyer Associations to see if they offer any kind of judicial category. Minnesota does have an Alliance membership category that would include judges if they so desired to belong. Lee reported the membership survey had gone out and 61 responses were received. There was discussion regarding the results. He was asked to highlight items for discussion for the November meeting from the survey. Lee reported there are 26 members with unpaid dues. The list was discussed. Hartford will send to the board for personal follow up phone calls. Siegel reported he is sending a letter to the Chief Justice with the Boards discussion items for the November 16 meeting. Next Board meeting is Friday November 16, 10:00 a.m. CENTRAL at the AmericInn in Ft. Pierre. Meeting adjourned.

NOTE LISTSERV ADDRESS CHANGE. Do you have a general question? Use SDTLAs listserv to ask questions and search for information from other members! Send your inquiries to listserv@ls.sdtla.com (new address above)

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South Dakota Trial Lawyers Association


Notice of 20122013 MEMBERSHIP DUES CATEGORIES
Check one:

_______ Legal Support Staff . $50.00/ year ________ Law Student...$10.00/ year ________ 0-2 years in Practice$70.00/year ________ 3-5 years in Practice....$100.00/year _____ Public atty employed over 2 years*$100.00/year ______ Over 5 years in Practice $350.00/year ______ Sustaining membership ** $700.00/year ______ Subscribing membership *** ..$125.00/year Please print or type Name _________________________________________________ Email Address_______________________ Mailing address______________________________________________________________________________ CITY _____________________________________ State__________________________ ZIP _______________ Telephone _________________________________ Cell number ____________________________________ County _____________________________________ Date Admitted to Bar __________________________ Return to with appropriate dues: SDTLA PO Box 1154 Pierre, SD 57501-1154
* All public attorney members must be employed on a full-time basis by the Federal, State, county or municipal government or legal aid association. ** Any sustaining member must be engaged in the practice of law for more than five years and be a member in good standing of the Association for five years. Attendance at the Associations annual fall seminar is free for sustaining members. *** Anyone may apply for a subscribing membership in the Association, i.e. associations, institutions of higher learning, research companies, etc. Subscribing members shall receive all Association membership benefits, but are not entitled to vote.

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SOUTH DAKOTA TRIAL LAWYERS ASSOCIATION Board of Governors Planning Retreat Minutes November 16, 2012 Ft. Pierre AmericInn In attendance: Steve Siegel, Stephanie Pochop, Clint Sargent, Roger Tellinghuisen, John Blackburn, Aaron Eiesland, Margo Julius, Alecia Fuller, Ryan Kolbeck, Brad Lee, Tim Rensch, McLean Thompson Kerver, Susan Sabers and Sara Hartford. Barrister Editor Marya Tellinghuisen was also in attendance. The Board met with Chief Justice Gilbertson for their annual visit about mutual issues of interest between the bench and bar. After lunch was served Chief Justice Gilbertson excused himself. President Siegel called the business meeting to order with the first item of business being the approval of the October 18, 2012 meeting minutes. Julius made a motion to approve as presented, Kolbeck seconded. Motion unanimously carried. Hartford led a discussion to review the September 2011 planning notes. Lee reviewed the survey results with the board. Results indicate that members want, in this order, SDTLA to: Make CLEs top priority Publish the Barrister with useful and timely articles on different practice areas Offer opportunities for camaraderie with fellow lawyers Have an effective voice in Pierre during the legislative session Host the members-only listserv Promote public understanding of the law And to host CLEs on the following topics in this order of importance: Trial practice Personal injury law Technology and the law ADR & Settlement techniques Criminal law Family law And SDTLA should focus on: Being a skills organization 64.5% Criminal Defense and Civil Plaintiff Litigation Organization 35.5% With those results in mind, all were in concurrence to continue the Fall seminar in Deadwood with the new format of afternoon seminar on Thursday with evening banquet and morning seminar session on Friday. The dates for the 2013 Fall seminar are September 19-20, 2013 at the Lodge at Deadwood. All were in concurrence to plan a 50th Anniversary Gala in April or May 2013. A committee was appointed to help Hartford plan the event which will include a four hour seminar on Friday afternoon and an evening banquet and dance. The committee is Sargent, Pochop, Rensch, Kolbeck and Kerver. Dates and location to be announced ASAP. All were in concurrence that a spring seminar should be planned for 2014 in Sioux Falls with the new CLE format of two half days with an evening event in between. It was suggested to bring back our format of the two -hour limited enrollment seminars or workshops regionally on specialized topics. Kolbeck reported he is working on scheduling an event on the Gideon Trial Reenactment. Fuller, Kolbeck & Kerver will report back on this activity planned for the Law School. Hartford made a motion to hire Marya Tellinghuisen as the Barrister Editor for the nominal fee established in the 2012 13 budget, Sargent seconded. Motion unanimously carried. Lobbyist Tellinghuisen led a discussion on legislation for the upcoming session. Next Board meeting is by conference call Thursday December 13, 2012 at 4 pm Central/3 pm Mountain. Dialing instructions will follow with the agenda. Meeting adjourned.

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SDTLA Completes Membership Survey


Fellow SDTLA Members: Thank you for responding to our recent SDTLA Feedback Survey. Your participation in the survey was excellent and is a testament to how involved our membership is in improving the SDTLA. A few of the more significant responses are summarized below: The benefit that members enjoy most as members of SDTLA is Continuing Legal Education on key topics and civil and criminal trial practice. The majority of you indicated that you wanted the SDTLA to continue to cater to all practice areas as opposed to concentrating just on criminal defense and civil plaintiff litigation. The SDTLA will continue to provide these benefits and strive for new and improved methods of educating our members. The survey also asked how the SDTLA can improve as an organization. There were many valuable suggestions that the SDTLA Board of Governors recently discussed at its Strategic Planning Session on November 16, 2012. Based on these suggestions the Board has decided to adopt the most recent CLE format with presentations and workshops on Thursday afternoon and Friday morning with a group social and dinner Thursday evening. Again, thank you for responding to the survey. Your input and participation is vital to the continued growth and success of this organization. As always, if you have any questions or suggestions, please feel free to contact Executive Director Sara Hartford or any of the Board of Governors. Respectfully submitted, Brad J. Lee, SDTLA Membership Chair Steven S. Siegel, SDTLA President

WELCOME NEW SDTLA MEMBERS!


Nathan Oviatt
is a 2011 graduate of the University of South Dakota, School of Law. He specializes in personal injury and business litigation with Goodsell Quinn Law Firm in Rapid City. In 2011 -12 he clerked for the Seventh Judicial Circuit of South Dakota. As a practitioner, his first published opinion, Cheyenne River Sioux Tribe v. Davis, 2012 S.D. 69, __ N.W.2d __, was issued in October of 2012.

Raleigh Hansman Coli Jo Spencer

joined the Meierhenry Sargent firm in August 2012. She is a May 2012 graduate of the University of South Dakota School of Law where she was a published author and Lead Articles Editor of the South Dakota Law Review and a Trial Team Member. Her practice includes civil litigation, criminal defense, and appellate work. moved to South Dakota in 2009 from Northern Idaho, where she worked as a Client Advocate and Case Manager for the Department of Health and Welfare in the Adult Mental Health program. She returned to college, attending National American University in Rapid City and completed a B.S. in Paralegal Studies in November 2012. She is a paralegal with Johnson Eiesland law offices in Rapid City, and assists the firm in advocating for people who have suffered Nursing Home Abuse and Neglect, Catastrophic Personal Injury, and injury due to unsafe products. Coli is a member of the AAFPEs National Honor Society for Paralegal/Legal Assistant Studies, the American Association for Justice, the National Association of Legal Secretaries, and NALA, the National Association of Legal Assistants and Paralegals.

Lisa Prostrollo graduated from the University of South Dakota.

After receiving her MBA and JD, Lisa clerked for the judges of the Second Judicial Circuit of South Dakota for one year before clerking for the Honorable Glen A. Severson of the South Dakota Supreme Court for an additional year. After her clerkships, she joined Murphy, Goldammer & Prendergast as an associate with a practice area devoted primarily to civil litigation, including insurance defense, contract litigation, and employment law.

Thomas Cota

graduated from USD Law in 2011 and did a one-year clerkship for the First Judicial Circuit in Mitchell. He is now with Schaffer Law Office, in Sioux Falls practicing in the area of civil litigation.

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LAW SCHOOL TIMES


by Melinda J. Folkens, 3L SDTLA/USD Law Student Liaison
Greetings! I hope everyone had a great Thanksgiving and was able to spend time with those for whom you are the most thankful. Here is what has been going on at the law school over the last couple months: ADR Board: The 1L Intra-School Negotiation Competition was held on Saturday, October 27, 2012. We had around twenty teams compete, which was a great turnout. First place went Ashlee Wendt and Melissa Knight; second place went to Tony Teesdale and James Shanor; third place went to Matt Laidlaw and Matt Templar; and fourth place went to Tracye Sherrill and Andres Fick. Congratulations to all competitors! You did a great job. Thank you to all of the judges who took time out of their weekend to judge this competition. Members of the ADR Board have been busy competing this fall as well. Three teams went to St. Thomas in Minneapolis, Minnesota, to compete in the ABA Regional Negotiation Competition on November 10-11, 2012. Though no teams advanced, the teams competed well and received excellent feedback from the judges. One team went to John Marshall in Chicago, Illinois, on the same weekend to compete in the ABA Regional Arbitration Competition. They competed well and were a great representation for USD. Law Review: (No report). Moot Court: In October, the team of Kara Frankman and Christopher Dabney won the 31st Annual International Moot Court Competition in Information Technology & Privacy Law at The John Marshall School of Law in Chicago. In addition to being crowned as overall champions, Frankman and Dabney received the award for best respondents brief. In November, the Moot Court Board hosted the regional qualifier for the New York Bar National Moot Court Tournament. Both USD teams did quite well and advanced in the tournament. The team of Kristi Jones, Anthony Lamb, and Kelsey Parker advanced into the quarter finals. The team of PJ Painter, Morgan Peck, and Adam Shiffermiller advanced to the semifinals. The Moot Court Board would like to express its most sincere appreciation to Minnehaha County Courthouse Administration for its accommodations, Woods, Fuller, Shultz & Smith for its sponsorship, and to all who gave their time to judge. Trial Team: A USD School of law trial team of Melinda Folkens, Kristi Jones, Tony Lamb, and PJ Painter competed in the exclusive Puerto Rico National Mock Trial Competition from October 18-20 against 12 top trial teams selected from different regions of the U.S. It was the first time that USD was invited to compete in this highly selective tournament. Although our team did not reach the final four, they competed with great determination and professionalism. Professor Horton noted that USDs students were consistently recognized by the judges for their ethics, skill, and professionalism. Once again, our students showed that they can more than hold their own against teams from the very best trial advocacy programs in the United States. A USD School of Law trial team of Alyssa Herbold, Eric Erickson, Ben Tronnes, and Patrick Weber competed in the prestigious Buffalo-Niagara National Mock Trial Competition from Nov. 9-12 against 32 teams from 16 states. Again, it was the first time that USD received an invitation to this elite tournament. Following qualifying round victories over teams from the University of Pittsburgh (Pitt), St. Marys (Tx.) and University of Houston, USD was named an octofinalist. In the elimination rounds, USDs successful run ended against finalist St. Johns (NY). USD Professor and Coach Tom Horton praised the students for their outstanding efforts and achievement. Our students competed with great skill and professionalism. We are very proud of them. Finals for law students begin on Monday, December 3, 2012, and end on Friday, December 14, 2012. Please keep the 1Ls in your thoughts as they undertake their first, and most stressful, round of finals! We will return to school from Winter Break on Wednesday, January 2, 2013. I wish you all a very safe holiday season, a Merry Christmas, and all the best in 2013!

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Top Ten Reasons for Going Rural


By Sarah L. Larson I did not grow up in rural South Dakota. I always worked and spent most of my time in Rapid City, and had plans to move to a bigger city as soon as I graduated. After marrying a wonderful small -town, east-river man, I found myself contemplating the move to a town with the approximate population of the high school I graduated from. After now living and practicing here for 3 years, I have learned that there is not as much to be scared of as one might think. So, here are the Top Ten Reasons to consider small-town practice. 1. Diversity When a rural citizen needs a lawyer, they go see their local lawyer. There arent 20 pages worth of names and ads in the yellow pages for them to sift through and look for an attorney specializing in a certain area. They have you. This is one of the best and most challenging parts of being a rural lawyer. Literally any type of case can walk through your door, and it will. If you are comfortable taking on the challenge of something new, its all yours. If you are more comfortable referring it to someone else, you build camaraderie from other attorneys, and respect from them and the potential client. A diverse practice means diverse experience and a diversely intellectual mind. 2. Respect Whether you like it or not, people are generally aware that becoming an attorney was not easy, and you are probably fairly smart. Doctors and lawyers are often categorized as a couple of the most esteemed professions. When you practice in a small town, a lawyer gains a certain amount of respect before he or she even tries a case. This is not something to abuse. In my experience, it makes you want to exceed expectations, become active in the community, assist as many of your neighbors as possible, and make them proud. 3. Flexibility It is no secret that being your own boss is one of the most attractive qualities of hanging up your own shingle. That certainly rings true in small town practice. Even if you work for another attorney, you may find yourself able to dictate your own manner of scheduling and the types of cases you take on. If you practice solo, this can be challenging for those without a knack for business management. Thankfully, law schools are offering more and more courses like USD Laws Business Planning and South Dakota Drafting & Legal Practice. Even without this background, help is always available through the State Bar and the many wonderful mentors that fill our state. 4. Shorter Ladder In small town practice, you can rise as high and get there as quickly as you would like. Positions of city and states attorney are sometimes available and uncontested, leaving one the opportunity to expand their resume accordingly. If sticking to private practice is more attractive, it is surprising how many potentially big cases walk through a small offices doorway. Millions of dollars flow through the hands of your small-town farmers and business people each year. Someone in rural South Dakota is just as likely to experience a life -altering injury as someone in Sioux Falls. If you thirst for newsworthy cases and Supreme Court appearances, you will have as much of an opportunity to get them here as anywhere. 5. Extracurriculars You will be asked to volunteer. Your new community will want you to serve as a coach, a science fair judge, a board member, and an organizational officer. Ive judged History Days, Snow Queens, and science projects. Ive served on multiple boards and become a cantor at church. These are all good things. Being more active in the community means meeting more people and building more relationships. The benefits this has on your business are obvious; it also tends to make you happier and feel much more at home, even if it was not your home before you started practicing there. 6. One Big Happy Family I can guarantee one thing about rural South Dakota: nowhere else will you find more community support. Your neighbors become your family. They are welcoming, caring, and encouraging. They want to see you succeed. Your childrens teachers want to see them succeed. I recently attended a benefit for a local woman who was diagnosed with cancer and needed a little money to help pay for her trips to Houston for treatment. Over a thousand people attended and raised over $70,000.00 solely from auctioning donations. It was incredible. You can find no comparison elsewhere. 7. Creativity If you have a knack for technology or marketing, owning your own small town practice can be an incredibly exciting opportunity to use those talents to the fullest. Build and manage your website to your hearts content. Design and print your own letterhead and envelopes. Design, print, and send holiday and thank you cards to your most valued clients.
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(Hint: Buy a hard-bound version of the Rules of Professional Conduct, keep it within hands reach of your office chair, and continuously refer to it when it comes to advertising and all topics, for that matter). If these traits couldnt be more opposite of your strengths, have no fear. I live in a town of only 1,000 people and we have a printing/advertising shop that rivals some of the best Ive seen in the state. One of these is never too far away if you need someone else to handle your printing and marketing needs. 8. Old Fashioned Family Time Many of us were raised during a time when playtime was spent outside (regardless of whether it was sunny, raining, or six feet of snow blocked the front doorway) rather than in front of a computer or video game console. Our neighborhood peers were not just classmates but weekend playmates that we rode bike with and built forts with. Ive found that living in a small town brings us back to our roots a little. Your neighbors are known and trusted, and a yell out the window brings the kids home for dinner much better than needing to call their cell phone. You dont live on a busy 5 -lane metro thoroughfare making you ultra nervous about their safety. In many parts of South Dakota, you are surrounded by beautiful natural attractions that teach your children (and you) the ever -so-important value of being outdoors and treasuring Gods creation. I take great comfort in knowing my children will be raised respecting the land, like I was, with limited trips to the arcade for entertainment. 9. More Than Just Needs I was admittedly hesitant to give a small town a chance when it comes to the 3 Big Rs: recreation, refreshment, and retail. I was sure there would never be anything to do, nowhere to eat, and I would have to make 6 -hour trips to Minneapolis to gratify my shopping habit. As it turns out, recreation has become one of my most favorite parts of living in a small town. With the gorgeous Missouri River close by, any free time is an opportunity to get out and enjoy fishing, boating, kayaking, hunting, walking/running, photography, or water sports. Many small towns have gorgeous golf courses, and if horseback riding is your thing, Im fairly certain you can find a piece of available pasture. Ive also found that small-town restaurants know their home-cookin. You cannot get a better steak anywhere than you can at Bobs Steakhouse near Gettysburg. Ruths Chris doesnt hold a candle. And, admittedly, if you are seriously lusting over the spring line of Diane Von Furstenberg handbags, you may need to travel elsewhere or do some online shopping. But you never know what kind of hidden gems are tucked away at a small town boutique. I once bought a brand new Michael Kors top in downtown Gettysburg. I have witnesses. 10. Vacation, Sweet Vacation You may think there cannot be a single benefit to being an hour away from the closest Walmart. I initially found the concept horrifying. What if I need a stick of butter at 10 p.m. the night before Thanksgiving? What if I come down with a headache on a Sunday and I have no Tylenol in the house?? As it turns out, your small town is probably able to accommodate you. There are very, very few things I need to travel out of town to get. And as a bonus, it makes trips out of town that much more exciting. You learn to make shopping lists and buy in bulk. And gloriously, less continuous access to money pits like Walmart mean more time and more money to spend on a couple flights to a white sandy beach in the Caribbean which is where you would much rather spend your free time anyway. As with all things, you get as much out of rural practice as you put into it. It will take some time to adjust, to become financially stable, and to feel at home. Keep working hard. Support is there. The benefits of realizing and appreciating small town South Dakota practice are innumerable.

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THE ETHICS OF HOLD HARMLESS AND INDEMNIFICATION: WHAT, ME WORRY?


By Aaron P. Frederickson, Attorney at Law, MSCC Direct 651-485-7036 aaron@mspComplianceSolutions.com 2012 MSP Compliance Solutions, LLC/All Rights Reserved In 1952, Americans were introduced to the fictional character Alfred E. Neuman in Mad magazine. Since that time, the carefree, and often reckless attitude of Mr. Neuman is characterized by the phrase, What, Me Worry? To some extent, this slaphappy attitude persists in our legal landscape today as attorneys attempt to deal with the scandalon1 known as the Medicare Secondary Payer Act. In order to avoid these issues, it has become common practice to place hold harmless/indemnification clauses in settlement agreements in an attempt to expedite the settlement process. As a result, state and local bar associations have taken note along with lawyer professional responsibility boards. This article serves as an overview of recent ethics decisions regarding these matters and highlights efforts in West Virginia to limit the use of such agreements. Can I Hold You Harmless? In 2005, the Indiana State Legal Ethics Committee issued what is considered the first real attempt to address hold harmless/indemnification agreements by attorneys under the auspices of the Medicare Secondary Payer Act. 2 In examining this issue, the Committee found that such agreements could be unethical for several reasons. This included concerns over an attorneys own financial exposure into the settlement negotiations, whether an attorney would be providing financial assistance to a client that exceeds advancements of costs and expenses, whether such agreements materially limit the attorneys interests and the inherent conflict between the attorney and the client. Following the issuance of this decision, several years elapsed before another state specifically examined hold harmless/ indemnification in settlements involving Medicare beneficiaries. In 2010, the Tennessee Board of Professional Conduct determined that such agreements are unethical in certain circumstances. 3 They also went on to note that nothing in this opinion is intended to relieve any individual or any entity, including plaintiffs counsel, of any obligations, including reporting and/or payment obligations, and posed by the MSP Act, 42 U.S.C. 1395y et seq. Counsel (defense or plaintiff) may be subject to a direct action suit by the Center for Medicare and Medicaid Services (CMS) recovering attorneys fees collected through a settlement or release that has not been properly reported and negotiated consistent with the obligations of this statute. Following the Tennessee opinion, a similar decision was issued in the state of Ohio. 4 In this instance, the Supreme Court of Ohio, Board of Commissioners on Grievances and Discipline relied on advisory opinions from Arizona, Illinois, Kansas, Missouri, North Carolina, South Carolina, Tennessee and Wisconsin. Based on its findings, the Ohio Board determined that personal indemnification by a lawyer is essentially an agreement by the lawyer to provide financial assistance to the client.5 The Florida State Bar also considered this issue in 2011. In rendering their decision, the Florida Bar opined that a defendant lawyer should not request that a plaintiff lawyer enter into such an indemnification agreement as it would violate its rules, nor should they knowingly assist or induce others to do so. 6 Aftershocks of United States v. Harris? In September 2012, the West Virginia Lawyer Disciplinary Board sought comment on the question as to whether it is a violation of the Rules of Professional Conduct for an attorney to personally agree, as a condition of settlement, to indemnify and hold harmless the opposing party from any and all claims to the settlement funds by third persons. 7 Based upon a reading of the proposed Legal Ethics Opinion (L.E.O.), the Board seemed to be concerned about the events surrounding United States v. Paul J. Harris8, where Harris, a plaintiff attorney, was found responsible to fully reimburse Medicare for $11,367.78, plus interest in conditional payments. This was based on the decision of Harris not to avail himself or his client to the administrative appeals process for conditional payment reimbursement. Accordingly, the Lawyers Board noted, the purpose of this L.E.O. is not to address the legal requirements of the MSPA (Medicare Secondary Payer Act), it is generally acknowledged that there are notification of settlement requirements under the MSPA and that a plaintiffs counsel must determine if a client is a Medicare beneficiary and, if so, whether there are past or future medical Medicare expenses associated with the claim which is being settled. 9 In conclusion, the
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Every day in South Dakotas courts a common scenario occurs. A defendant appears in felony court for possession of a controlled substance. That substance could be something as dangerous as methamphetamine, as innocuous as hashish, or as common as prescription pain pills. There are hundreds of drugs for which the penalty in South Dakota is a 5 or 10 year felony. And, under South Dakota law, the defendants possession does not mean that he is an actual possession of any useable amount of the drug. If there are metabolites of a controlled substance in the defendants blood or urine, or if there are trace amounts of the drug found in a baggy, snort tube, or other item within the defendants control, possession has occurred. In South Dakota, it is a class 4 felony, punishable by up to 10 years in prison, to have any amount of most controlled substances in your urine, or any testable amount, however small, in your possession. Forensic scientists are able to test microscopic amounts of a substance. Further, possession of a single pill that is listed as a controlled substance is a felony if you do not have a prescription for it. Thus, the spouse who gives her husband one of her leftover pain pills to ease an aching back is committing a felony (distribution of a controlled substance), as is her husband who takes the pill (possession of a controlled substance). Every day defendants face a felony record and years in prison for having miniscule amounts of a controlled substance in their possession or in their urine. The vast majority of defendants enter a guilty plea to the charge as these cases are typically tough to beat absent proof that the search or seizure of the defendant was unconstitutional. First time felony offenders for offenses such as those described above rarely go to prison absent aggravating circumstances. Most of these individuals are sent to jail for a relatively short period of time, and are placed on probation for a few years. Thus, it may seem like the felonization of the defendant does not impact our incarceration rate. This process, however, starts an almost inevitable chain of events that leads to the increase in our prison population and our present problem with over-incarceration. To understand this, we must acknowledge some obvious factors within the criminal justice system. First, we are often dealing with addicts. The defendant who had methamphetamine in his urine or a trace amount of cocaine in a snort tube probably wasnt caught the first time he used. He used before and it is likely hell use again. These are highly addictive substances. Addicts use. Recovering addicts relapse. Complete recovery is possible, but it is the exception and not the rule. Thus, many felons that got probation and a local jail sentence for their first offense are going to be back before the court system on a probation violation. Most drug defendants who get probation are required to do regular or random urine analysis tests. Ask any judge what the most common reason for probation violations are and you are likely to hear, Hot UA. This brings us to the second factor. Probation violators and repeat offenders are more likely to get sent to prison than first time offenders. Discuss this matter with any prosecutor or judge. The odds of a defendant being sent to prison go up exponentially if they are a repeat offender. And, probation violators in South Dakota often face a double whammy. Because South Dakota makes it a crime to have any amount of a controlled substance in your urine, the guy who tests positive for a controlled substance while on probation may be hauled back before the court for violating his probation (and face a penitentiary sentence for that act) and be charged with a whole new crime of possession of a controlled substance. There is no double jeopardy protection for being prosecuted for the probation violation and the new crime for the same act. To make matters worse, because the defendant is now before the court on a new felony, he is subject to the habitual offender laws, which increase his penitentiary exposure. Thus, a guy can get a 10 year suspended sentence for possessing a tiny amount of methamphetamine. But, when he tests positive for methamphetamine while on probation, he can face imposition of that 10 year sentence for violating probation, and he can be charged with another count of possession, which now carries a maximum penalty of 15 years under the habitual offender law. Not only is the defendant facing huge consequences, but the court system is bearing the costs of handling multiple felony prosecutions for garden variety addict behavior. This is how the initial felonization of a defendant for personal use of controlled substances and hashish lead to a situation where that defendant is likely to be sent to prison. By making the person a felon in the first place, we have made it more likely that the person will end up incarcerated. A common response to this scenario is to say that the defendant got what he deserved. If a guy doesnt turn his life around after being given a break, he deserves a consequence. That response, regardless of its appeal to base morality, does little to address the problem. How much do we want to pay to teach someone a lesson? Can addicts be penalized into sobriety? Do we spend millions of dollars of tax payers money to make ourselves feel better when an addict doesnt follow the rules?
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Incarcerating addicts (and alcoholics) because they are non -compliant only makes sense if you believe that prison is going to make them sober. Ive yet to hear anyone in the criminal justice system assert that prison makes people sober. Day after day in our court system, folks who have 5, 10 or 15 year prison sentences hanging over their heads choose to use, notwithstanding the consequence they face. It may make us mad, but that is what addicts do. As Mike Huckabee once said, Weve got to quit locking up all the people that were mad at and lock up the people that were really afraid of.8 In other words, dont lock up addicts, lock up rapists. How does de-felonization address this issue? It takes away the possibility of prison for non -compliance. Imagine you are a judge. Youve sentenced a drug user to a suspended imposition of sentence and probation. He violates by continuing to use. You resentence him to probation, but take away his suspended imposition. You threaten him that if he is back before the court, he will go to prison. He violates again. He is also charged with new felonies. For each of his acts, the legislature has authorized a punishment of up to 10 or 15 years in the penitentiary. How many times can you, as the judge, lecture the defendant before the failure to send him to the penitentiary becomes a mockery of your prior orders? At what point does your failure to send the guy to the penitentiary make a mockery of the legislatures decision to authorize long prison sentences for the crime? Arent judges expected, at some point, to honor the legislatures determination that this is an offense worthy of the penitentiary? If the crimes are not felonies in the first place, then this whole dynamic goes away. For these reasons, I suggest that the focus shouldnt exclusively be on giving judges more options (the over incarceration approach). Drug courts, 24/7 and diversionary programs are great. But, to foist upon the judiciary the responsibility of creating solutions to problems like chronic addiction seems less than fair. This is especially true when the programs dont work for particular defendants. If a defendant repeatedly violates 24/7, and the legislature has authorized a lengthy penitentiary sentence for the offense, arent judges duty bound to make use of the more significant sanction? Thus, my suggestion is that we seriously consider whether many of the offenses that are presently classified as felonies need to be. I am not alone in believing that the de -felonization of conduct is a reasonable response to the over -incarceration issue. William Shepherd, Chairperson of the American Bar Associations Criminal Justice Section, wrote an excellent editorial on the matter in the Fall 2012 issue of Criminal Justice. Shepherd has identified over -criminalization as one of the Sections top three priorities for 2013.9 He is working in conjunction with prosecutors and defense attorneys to explore the area. Shepherd frames the issue as such: This is not simply a discussion of over -incarceration, but instead an equally important question of what conduct do we actually want to criminalize. I fully expect that legislators may be reluctant to reduce certain crimes from felonies to misdemeanors, or to limit prosecutions for certain offenses. Few folks get elected if they are considered soft on crime. However, legislators working in conjunction with the Governor, prosecutors, the private and public bar, and the judiciary, can address the matter without appearing to have turned South Dakota into the republics of Boulder or Berkeley. It is sound fiscal policy, not liberal social policy. Cautious politicians and policy makers may be guided by how other states have addressed the issue of drug usage and possession of small amounts of controlled substances and hashish. Most states do not make possession of a drug within the body (possession by ingestion) a felony. Many states make actual possession of small amounts of controlled substances a misdemeanor. Numerous states make possession of select drugs, such as hashish, non -narcotic schedule I and II drugs, and possession of all schedule III, IV and V drugs, misdemeanors. Below is a summary of many states laws.10 In Alaska, the use (ingestion) or possession of small amounts of various controlled substances is considered misdemeanor misconduct.11 Possession of three grams or less of hashish or hash oil is a misdemeanor. 12 Synthetic marijuana13 and ketamine hydrochloride possession can also be charged as a misdemeanor. 14 Arizona makes it a misdemeanor to use or administer prescription drugs without a prescription, and allows prosecutors to charge the use or possession of controlled substances (except methamphetamine and LSD) as misdemeanors. 15 Arkansas classifies possession of numerous personal use amounts of various controlled substances, including hashish, as misdemeanors. 16 California considers possession of personal use amounts of many controlled substances, marijuana and hashish, as a misdemeanor.17 Colorado has decriminalized possession of personal use amounts of marijuana, and it makes the use or ingestion of controlled substances a misdemeanor.18 To help pay for the costs associated with illegal drug use, the Colorado legislature has added Drug Offender Surcharges to most drug offenses (from $200.00 to $4,500.00). 19

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In Delaware, the unlawful use of prescription drugs is a misdemeanor, as is the use or consumption of illegal controlled substances, unless statutorily defined aggravating factors exist. 20 Florida considers possession of small amounts of synthetic marijuana a misdemeanor.21 In Georgia possession of one ounce or less of hashish is a misdemeanor.22 Idaho makes it a misdemeanor to possess non -narcotic schedule I drugs and all schedule III, IV or V controlled substances, and it makes it a misdemeanor to be under the influence of these substances. 23 In Indiana, possession of two grams or less of hashish is a misdemeanor.24 Iowa classifies hash and hash oil as marijuana, and possession thereof is punishable as a misdemeanor.25 Kansas makes possession of most controlled substances a misdemeanor, as is the ingestion of these substances.26 In Kentucky, possession of hashish, non-narcotic schedule I and II drugs, and all schedule III, IV and V drugs, are misdemeanors. 27 Both Maine and Massachusetts cap the punishment for the possession of many controlled substances at one year, making the offenses effectively misdemeanors.28 Michigan lists the possession of a wide range of controlled substances and hashish as misdemeanors, and makes it a misdemeanor to use (ingest) cocaine and methamphetamine. 29 Mississippi makes the possession of less than one dose (.1 gm) of all controlled substances an offense that may be charged as a misdemeanor, as well as possession of less than 50 grams or 100 doses of schedule III, IV and V drugs. 30 This presumably also covers use and ingestion, as the amount of drugs existing within a persons urine or blood would be less than a dose. In Montana less than a gram of hashish is a misdemeanor.31 Five grams or less of hashish is a misdemeanor in New Hampshire.32 In New Jersey, ingesting, using or being under the influence of a controlled substance, and possession of less than five grams of hashish, constitutes the misdemeanor crime of being a disorderly person. This offense carries a huge fine but little chance of incarceration.33 New Mexico makes possession of a variety of controlled substances a misdemeanor.34 In New York, possession of small amounts of controlled substances is a misdemeanor. For instance, possession of up to one half gram of cocaine is a misdemeanor. 35 In North Carolina, possession of many schedule II, III, IV and V substances, and possession of some synthetic marijuana products, are punishable as misdemeanors. 36 In North Dakota, ingestion of a controlled substance is a misdemeanor. 37 Ohio makes it a misdemeanor to possess some schedule I and II drugs, up to 10 grams of hashish, or to possess any schedule III, IV and V substances. 38 Oklahoma treats hash like marijuana and allows for misdemeanor possession of it as well as schedule III, IV and V substances.39 Pennsylvania makes possession of controlled substances and less than eight grams of hashish a misdemeanor.40 South Carolina makes first offense possession of all controlled substances (including cocaine, heroin, LSD, and methamphetamine) a misdemeanor, possession of hashish a misdemeanor, and possession of many controlled substances (whether or not a first offense) a misdemeanor. 41 In Tennessee, possession or the casual exchange of all controlled substances is a misdemeanor, and hashish is treated the same as marijuana. 42 Our state could save substantial money by making a few changes to our present drug laws. We could make possession of any controlled substances within ones body a misdemeanor. No longer would a person face 10 years in prison for simply being a user of controlled substances. We could make possession of personal use amounts (e.g. one gram or less) of other controlled substances a misdemeanor. No longer would a person caught with a baggy with some residue be labeled a felon or face 10 years in prison. And, we could treat small amounts of hashish like we treat personal use amounts of marijuana: as misdemeanors. The cost savings to our system could be enormous. Both the judicial system and prison systems could save money. The felony court system is remarkably complex and cumbersome. Defendants are typically initially charged in magistrate court. After a couple of court hearings, an indictment or information is returned, and the case is transferred to felony court. Once in felony court, even if the defendant has no defense, several court hearings occur. If the defendant pleads guilty, a pre-sentence report is commissioned. This requires that a probation officer spends substantial time interviewing the defendant, reviewing court records and gathering data. The defendant is then sentenced, and possibly put in prison. In comparison, the magistrate court system (where misdemeanors are handled) is relatively simple. No transfer from one court to the other occurs. Pre -sentence reports and interviews are not required. And, no prison term can be imposed. That is not to suggest magistrate courts could not adequately handle the cases. Magistrate judges can mandate completion of drug or alcohol treatment as a condition of the sentence just as felony court judges can. The money saved within the court system and by reducing prison numbers could be diverted to funding the drug treatment programs that addicts need. After all, there is almost universal agreement that access to treatment, not access to prison, is what is going to solve the issue of chronic addiction. _______________________________
1 This article was written by John R. Murphy. However, substantially all of the research for the article was conducted by Bradley Richardson, a third year law student at the University of South Dakota. Mr. Richardsons research was invaluable to the project. Notwithstanding the demands of school and his summer internship, Mr. Richardson prepared a summary of the drug laws of every state in the nation. These codes are often complex and rules related to drugs are often scattered throughout many titles and chapters, yet he persisted in finding and summarizing the rules for every jurisdiction. His thoroughness, promptness and efficiency were greatly appreciated by the author. And, when compensation was offered for his work, Mr. Richardson insisted that instead of compensating him, a donation to the Native American Law Students Association would be more appropriate. 2 In 1980 we incarcerated 84.54 persons per 100,000. In 2010 we incarcerated 416.92 people per 100,000. 3 Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. Continued on page 24

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Continued from page 23 4 South Dakota incarcerates 100 women per 100,000. The U.S. average is 59 per 100,000, and the Midwest average is 53 per 100,000. 5 And, this doesnt account for all the indeterminate costs of a large population of incarcerated individuals: children and spouses put on welfare when a wage earner is incarcerated; increased involvement by social services agencies; lost revenue when people are incarcerated rather than working and living in our communities; etc. 6 Between 1991 and 2011, the percentage of people locked up for violent, sex or property crimes dropped by 14%. 7 n 1991, 6% of inmates were incarcerated for drug cases, but by 2011 drug crimes accounted for 17% of the inmate population. In 1991 DUI cases accounted for 8% of the prison population, but that had rises to 12% by 2011. 8 GOP Presidential Forum, Morgan State University, September 27, 2007 9 Over-criminalization is broader than over-felonization. Over-criminalization considers whether certain acts should be considered criminal at all. I havent gone that far in this article, as I dont see de-criminalization of drugs a solution to the issue. 10 I havent summarized every states drug laws. There were several state statutory schemes that were extremely complicated to summaries (e.g. Texas), and others whose laws were similar to our own (e.g. Louisiana). However, several generalizations can be made. Almost no states specifically criminalize possession of a drug within ones body. Most states make it a misdemeanor to possess small amounts of all or most controlled substances. Many states treat possession of small amounts of hashish as a misdemeanor. 11 A.S. 11.71.050/060/100 12 A.S. 11.71.050/160 13 An irony of existing South Dakota law is that possession of less than two ounces of marijuana is a misdemeanor, whereas the possession of any quantity of synthetic marijuana is a felony. 14 A.S. 11.71.050/060/160/170 15 Ariz. Rev. Stat. Ann. 13-3406/3407 16 Ark. Code Ann. 5-64-215/419/436/438/439 17 Cal. Health & Safety Code 11357/11383/11006.5/11356 18 Col. Rev. Stat. 18-19-406; 18-18-403/404/412/418 19 Col. Rev. Stat. 18-19-101 20 Del. Code Ann. 16 4751/4761/4763 21 Fla. Stat. 893.12 22 Ga. Code Ann. 16-13-2/21 23 Idaho Code Ann. 37-2705/2732 24 Ind. Code 35-48-1-19; 35-48-4-11 25 Iowa Code 124.101/401/410 26 Kan. Stat. Ann. 21-5760/5712 27 Ken. Rev. Stat. Ann. 218A.050/1416/1417 28 Me. Rev. Stat. Ann. 17 1102/1107; Mass. Gen. Laws. Ann. 94C 1/31/32 29 Mich. Comp. Laws Ann. 333.7106/7403/7404 30 Miss. Code Ann. 41-29-139 31 Mont. Code Ann 45-9-102 32 N.H. Rev. Stat. 318-B:26 33 N.J. Stat. Ann. 2C:35-10; 2C:43-3 34 N.M. Stat. 30-31-23 35 N.Y. Penal Law 220.03/06 36 N.C. Gen. Stat. 90-95 37 N.D. Cent. Code 19-03.1-22.3 38 Ohio Rev. Code Ann. 2925.11 39 Okla. Stat. 63 2-101/402 40 35 Pa. Cons. Stat. Ann. 780-113 41 S.C. Code Ann. 44-53-370 42 Tenn. Code Ann. 39-17-415/418/420

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Board recommended, settlement agreements that require an attorney to make a personal agreement to indemnify and hold harmless the opposing party from subrogation liens and/or third party claims violate the Rules of Professional Conduct.10 Practice Pointers for Attorneys At this time, there are a number of ethical issues involving indemnification and/or hold harmless agreements. While ethical standards in one state are not controlling in other jurisdictions, they certainly do have persuasive value. This is demonstrated by the consistent line of opinions that have been issued to -date. Notwithstanding this fact, attorneys falling outside the purview of a controlling ethical advisory opinion should take heed to the following tips: Investigate all Medicare Secondary Payer issues early in the process when handling a personal injury or workers compensation claim involving Medicare beneficiaries, or someone who will become eligible for Medicare benefits in the foreseeable future. All attorneys (plaintiff and defense) should note that they are under an affirmative obligation to investigate matters concerning Medicare Secondary Payer compliance and place Medicare on notice through the Coordination of Benefits Contractor (COBC). Openly communicate with opposing counsel on all non-privileged matters and correspondence received from CMS and their contractors regarding Medicare compliance. Address all issues concerning Medicare Secondary Payer compliance in your settlement agreements. While CMS does not have a formal review process for Medicare Set -Aside agreements in non-workers cases, it is still imperative this occurs. It is also implied in the above ethics opinions that efforts to avoid Medicare Secondary Payer compliance in personal injury and workers compensation cases via Medicare Savings 11 clauses are not enforceable and likely unethical. If you have questions regarding ethics and professional responsibility, take advantage of prospective ethical advisory opinion services from your local or state bar associations. Additional information regarding the topic of ethics and Medicare Secondary Payer compliance can be found at The Medicare Secondary Payer Act: Ethical Consid-

erations in Settling Cases.http://mnbenchbar.com/2012/06/secondary-payer-act/


1 The word scandalon comes from the Greek word, proskomma, which means a stumbling block an obstacle in the way which if one strikes his foot against he stumbles or falls that over which a soul stumbles, i.e. by which is caused to sin. 2 Indiana Opinion No. 1 (2005). 3 Tennessee Formal Op. 2010-F-154 (2010). 4 Ohio Board of Commissioners on Grievances and Discipline, Opinion 2011-2 (2011). 5 Id. 6 Florida Ethics Op. 30310 (2011). 7 W. Va. Ethics L.E.O. 2012-02 (Proposed). 8 2009 WL 891931 (N.D.W. Va. 2009). 9 W. Vir. Ethics L.E.O. 2012-02. 10 Id. 11 Medicare Savings clauses tend to note the affirmative obligations Medicare beneficiaries and their legal counsel have under the Medicare Secondary Payer Act, but do not specifically address how Medicares interests were considered in the settlement. This classic form of burden shifting is discussed in detail and cautioned against in 42 C.F.R. 411.46. It is also noted that if there is even an attempt to maximize the value of a settlement, the entire settlement is void and all parties (and their attorneys) are subject to the enforcement provisions contained in 42 C.F.R. 411.24.

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In the recent Blackwood decision, the Tax Court held that a settlement payment received by the taxpayer as a result of her wrongful termination was taxable even though the termination allegedly exacerbated the taxpayers depression, causing her to suffer insomnia, migraines, nausea, and pain in her back, shoulder, and neck. In reaching its decision, the court emphasized that neither the taxpayers letter to her employer threatening suit, nor the subsequent settlement agreement, identified any of the taxpayers physical ailments, except by referencing her depressive symptoms. The court also emphasized that the taxpayer did not show the level of physical injury or physical sickness in Domeny or that the taxpayers physical symptoms of depression were severe enough to rise to the level of a physical injury or physical sickness. The Blackwood decision is a reminder that, when a taxpayer seeking damages for stress -induced ailments does not (1) obtain a medical diagnosis during the underlying dispute and (2) emphasize diagnosed physical ailments in communications with the defendant, the taxpayer will have difficulty establishing that any resulting damages were received on account of physical injuries or physical sickness. It remains to be seen whether taxpayers who do obtain, and use, medical diagnoses in their pursuit of damages will receive tax-free treatment when their stress-induced physical ailments are less acute than multiple sclerosis or heart disease.

Jeremy Babener concentrates his practice in the area of taxation. Prior to joining Lane Powell, he worked as a Tax Policy Fellow in the U.S. Treasury Departments Office of Tax Policy, focusing on partnership tax issues including noncompensatory partnership options and debt -equity exchanges. He has written and spoken on the taxation of personal injury damages, structured settlements and qualified settlement funds. He can be reached at 503.778.2140, or at babenerj@lanepowell.com.

Neil Kimmelfield is chair of Lane Powells Taxation practice Group. He can be reached at 503.778.2196, or at kimmelfieldn@lanepowell.com.

This is intended to be a source of general information, not an opinion or legal advice on any specific situation, and does not create an attorney-client relationship with our readers. If you would like more information regarding whether we may assist you in any particular matter, please contact one of our lawyers, using care not to provide us any confidential information until we have notified you in writing that there are no conflicts of interest and that we have agreed to represent you on the specific matter that is the subject of your inquiry. Copyright 2012 Lane Powell PC

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