Insurance Claims And Issues

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 **Insurance Bad Faith Expert -- Author's Note:  If you have reached this blog through a list that carries advertising, your computer may or may not be put at risk either through the list or through the advertising.  I do not accept or authorize any commercial advertising of any kind on any list or post.  Placing commercial advertisements with or near any of my web log posts is prohibited.  Further, I do not recommend any products or services advertised with or near any of my posts or any list of my posts.** 

On Memorial Day, Include ...

... James Chaney, Andrew Goodman, and Michael "Mickey" Schwerner.

    They died in 1964 during the Vietnam War.  But they did not die in Vietnam.

    They did die for their country.  But they died in Mississippi.

    They are the three who were buried in a levee.  They were each tortured and then killed because they defended an ideal of their country.

    They believed strongly that every person in the United States is equal before the law.  

    They too died for their country.  I include them in my recollections and prayers each Memorial Day.

    I ask you to include them in yours.  They too died for your country.

Please Read The Disclaimer.

Congress Did Not Exempt Anyone From Women's Health Requirements.

    Catholic bishops in the United States, and their law firm Jones Day it is reported, have filed at least 12 lawsuits in different Federal District Courts to challenge a legal requirement that is not in the Affordable Care Act.  If you read their press releases, you would get the impression that they want you to think their lawsuits are all about requirements imposed by the President that they "provide birth control" to women.  See, e.g., Laurie Goodstein, "Bishops Sue Over Mandate to Provide Birth Control" p. A13, col. 1 (New York Times Nat'l ed., Tuesday, May 22, 2012), misleadingly re-titled online as "Catholics File Suits on Contraceptive Coverage".  There is no such mandate.

    And there is no exemption in the statute for "religious employers".  Instead, the Affordable Care Act applies equally to all Employers, with no exceptions in the Act.  This must be clearly understood, or nothing wonderful can come of the truth here.

    Stepping back for a moment, the Affordable Care Act or "ACA" is really made up of a series of new provisions and amendments to old laws. 

    The Affordable Care Act reorganizes, adds and amends each of the following 22 other Federal Acts and Statutes:

1. The Public Health Services Act (PHS)
2. The Health Insurance Portability and Accountability Act
3. The Social Security Act
4. The False Claims Act
5. The Internal Revenue Code of 1986
6. The Assistance Tax Act of 2008
7. The Fair Labor Standards Act of 1938
8. The Black Lung Benefits Act
9. The Employee Retirement Income Security Act of 1974 ["ERISA"]
10. The Children's Health Insurance Program Reauthorization Act of 2009
11. The Deficit Reduction Act of 2005
12. The Medicare Improvements for Patients and Providers Act of 2008
13. The Medicare Prescription Drug, Improvement, and  
    Modernization Act of 2003
14. The Medicare, Medicaid, and SCHIP Extension Act of 2007
15. The Omnibus Budget Reconciliation Act of 1993
16. The Federal Food, Drug, and Cosmetic Act
17. The Rehabilitation Act of 1973
18. The Higher Education Act of 1965
19. The Department of Health and Human Services Appropriations Act
20. The Prescription Drug Improvement and Modernization Act of 2003
21. The Indian Health Care Improvement Act, and
22. The Civil Rights of Institutionalized Persons Act.

     In order to be a "qualified health plan" under the ACA, Section 1301(b)(1)(B) [42 U.S.C. § 18021(b)(1)(B)] imposes a requirement that the plan must offer" an essential health benefits package described in the Act.

    The determination of what are "essential health benefits" is left in the Statute largely to the rule-making power of the Secretary of Health and Human Services. However, the Statute provides at least general guidance for these administrative regulations, by which means Congress intended that the administrative regulations should follow the Affordable Care Act:

SEC. 1302 [42 U.S.C. § 18022]. ESSENTIAL HEALTH BENEFITS REQUIREMENTS.

(a) ESSENTIAL HEALTH BENEFITS PACKAGE.-In this title, the term "essential health benefits package" means, with respect to any health plan, coverage that:

            (1) provides for the essential health benefits defined by the Secretary under subsection (b);

(2) limits cost-sharing for such coverage in accordance with subsection (c); and

(3) subject to subsection (e), provides either the bronze, silver, gold, or platinum level of coverage described in subsection (d).

 

    Congress imposed these requirements on ALL EMPLOYERS 'covered' by the Act.  Congress DID NOT EXEMPT ANY EMPLOYER from the requirement to provide "minimum essential benefits" in a "qualified health care plan" -- and that includes health services for women.

    However, the Secretary of Health and Human Services, a branch of the Obama Administration, DID provide an exemption -- and for "religious employers".  THAT is what this new litigation challenges.

    How Congress addressed women's health issues in the Affordable Care Act statutes, and how the Secretary of Health and Human Services and other officials of the Federal Government address both women's health issues, and the concerns of Employers which claim an exemption for their religions, are continued in future posts.

Please Read The Disclaimer.

They Should Be Ashamed.

    They should be ashamed.

    Colleges and Universities affiliated with the Vatican have coordinated their filing of multiple lawsuits against the Obama Administration to challenge a regulation which will not take effect for another year.  Their lawsuits have been filed in key cities which certainly will generate publicity.  Their challenge is to a regulation under review by the Obama Administration which -- unlike the Patient Protection and Affordable Care Act passed by the U.S. Congress -- would exempt qualifying religious bodies from complying with the requirements of the Act which apply to all Employers.  The lawsuits challenge the application to the Plaintiffs-Employers of particular requirements including offering Plans and Policies to Employees, like all other Employers, which will provide for contraceptive services.  No Employee is required to use them, but the Act requires all Employers to provide Health Coverage Plans or Health Insurance Policies which offer them.  See Aaron C. Davis & Laura Vozzella, "D.C. Archdiocese, Other Catholic Groups File Suit Against Birth Control Mandate" (Washington Post Online, May 20, 2012), re-posted by Washington Post under the byline of Michelle Boorstein.

    I will post the regulation here in a future post so that you can read it for yourself if you want to.  That will be an offer to read it; no-one will make you use it.

    In the meantime, standing appears to be a glaring problem for these Plaintiffs which challenge a regulation that on its face does not take effect for a year.  Surely the Plaintiffs and their lawyers know that.  The question is, why then would they choose to file these lawsuits now, in May of 2012, instead of say May of 2013 after the regulation they are challenging has legal effect?  Publicity from the filing now of these lawsuits may harm the President's chances of re-election.  I see no other reason for filing suit now, in the face of a known and total absence of standing to sue.

    And they deny that they are instruments of the Republican Party.

    They should be ashamed of themselves.

    I know that I am.

Please Read The Disclaimer. 

Cavalcade of Risk #157: The Risk of Risk Edition.

    Welcome to the Cavalcade of Risk #157 Risk of Risk Edition.  Hank Stern of InsureBlog leads off with a post entitled, "From the P&C Files:  Marvel-ous Insurance".  InsureBlog asks whether the risks of worldwide domination outweigh the cost of superheroes destroying large swaths of Manhattan.

    Dr. Jaan Sidorov of Disease Management Care Blog posts on "Commercializing On-Site Care Management for Primary Care: The Outsourcing Option They Won't Tell You About".  This is the tale of Care Management – the use of nurses to engage health care consumers in defining the goals of their medical treatments – has been used by both managed care health insurers and medical providers as a means of increasing quality of care and reducing health care costs.  It’s no secret that most policy makers, academics and physician groups prefer that care management remain under the firm control of the patient’s physician.  The Disease Management Care Blog says fine, but there are other examples of insurer-directed care management that also work.  In this post, Dr. Sidorov discusses one example of such a program and points out that its advantage is economies of scale with little disruption of the physicians’ work flows.

     Cash Money Life Blog posts:  "What to Ask Your HR Department About Life, Health, and Disability Insurance".  Each company offers different benefits. It's always a good idea to ask some important questions to your HR department when you start your hob so you better understand your employer sponsored insurance options, costs, and portability.

     AAAMP Blog offers another fine analysis, this one posting on Margin of Safety: Core Financial Concept is Price Matters.  The life of this post is in the risk:  The margin of safety is the difference between the market price and intrinsic value of an asset. Price matters is the core concept of margin of safety.

    Finally for this installment, Colorado Health Insurance Insider Blog offers insights written nowhere else.  Here is an excerpt from "Taxes and Individual Health Insurance":   Excerpt: "People with individual health insurance usually don’t get such a benefit.  The self-employed get to deduct individual health insurance premiums on the 1040, but there are plenty of people who purchase individual health insurance and are not self-employed.  Early retirees are a good example, as are people who buy their own health insurance because their employer does not provide it."

 Please Read The Disclaimer.

 

 

 

 

Today in Tampa: Explanations Due at JPMorgan Annual Shareholders Meeting.

This is a special Tuesday post, in the nature of a memo to the Shareholders of JPMorgan Chase at their Annual Meeting today in Tampa, Florida.

"I have gotten disturbed at ... some of the Democrats' anti-business behavior, the sentiment, the attacks on work ethic and successful people.  I think it's very counter-productive."

Mr. Jamie Dimon, CEO of JPMorgan Chase, quoted by Noam N. Levey, "JP Morgan CEO Says $2 Billion Trading Loss Not 'Life-Threatening" (LA Times Online at latimes.com, posted Sunday, May 13, 2012).

    Describing a $2 Billion 1Q2012 loss with hints of more to come later, Mr. Jamie Dimon of JPMorgan said the announced loss was the result of "sloppy" and "stupid" trading, a "mistake" which involved "bad judgment," and which caused losses that are "very unfortunate" and that come at an "inopportune time," but which in any case are not "life threatening".  Noam N. Levey, "JP Morgan CEO Says $2 Billion Trading Loss Not 'Life-Threatening" (LA Times Online at latimes.com, posted Sunday, May 13, 2012).

    It was not a mistake.  It was planned, calculated, and preconceived -- except for the risk of failure.

    The office of JPMorgan involved in this failure was in charge of JPMorgan's risk management.

     As the risks increased and so did the concerns of JPMorgan's risk managers, the unit head brought in other risk managers who would okay the deals or at least not stop them.  Jessica Silver-Greenberg and Nelson D. Schwartz, "Warnings Said to Go Unheeded By Chase Bosses" p. A1, col. 6 (New York Times Nat'l ed., Tuesday, May 15, 2012).

    The losses that resulted did not come from a moment's whim.  The announced losses -- and the losses waiting to be announced -- resulted from planning begun and actions taken at least by 2007-2008.  See id.

    2007-2008?  Hmmm.  Sound familiar?  Also, 2008 was the year in which JPMorgan acquired Washington Mutual and Wamu's portfolio of subprime mortgages.

    Instead of being used for hedging risks, the JPMorgan risk management unit was used for making a profit.

    Enough evidence is already in.  Whether this scheme was "life-threatening" or not, it was not simply "stupid," "sloppy," or a "mistake".  It was planned, calculated, and preconceived -- except for the risk of failure.

    JPMorgan Shareholders meet in Tampa today.  There are more failures to come.  Maybe not right away, maybe not now, but definitely, and soon.  You have choices.  Among them, you can keep the failures in charge of your company, or you can sell your shares.

    JPMorgan Shareholders, the choices are yours.

Please Read The Disclaimer.

The JPMorgan Chase to Tampa: Fortunes Falling, Shareholders Meet Tomorrow.

    JP Morgan Chase was a net seller of $206 Billion worth of Credit Insurance, or "credit protection," in 1Q2012.  Its CEO, Mr. Jamie Dimon, has announced losses of $2 Billion so far on its "synthetic credit portfolio".  "JPMorgan doesn't seem to have been reducing credit risk last quarter.  It was taking on more.  And if credit defaults suddenly surged, it would lose a lot of money."  Jonathan Weil, "What Jamie Dimon Doesn't Know is Plain Scary" (Bloomberg.com, posted online May 11, 2012).

    JPMorgan issued more and more Credit Insurance without proper insurance reserving, without adequate financial reserves -- obviously, and without complying with rules against proprietary trading (trading with the firm's -- read, "shareholders'" -- own money), for which JPMorgan successfully lobbied for exemption from the rules that would have prevented this failure.  See Edward Wyatt, "JPMorgan Chase Fought New Rule on Risky Trading" p. A1, col. 6 (New York Times Nat'l ed., Saturday, May 12, 2012).

    Reserving requirements exist for a good reason, whether reserving is required by Insurance Companies or by Financial institutions.  The Volcker Rule and the Dodd-Frank Act exist for good reasons as well.

    We just received some more evidence of why they all exist.

Please Read The Disclaimer. 

Notice of Hurricane Wilma Losses 4 Years Later ...

... was held not "as soon as practicable" in Clena Investments, Inc. v. XL Specialty Ins. Co., 2012 WL 1004851 * (S.D. Fla. March 26, 2012), Download Clena Investments, Inc. v. XL Specialty Insurance Co. (S.D. Fla. Case No. 10.62028, Order on MSJ Filed March 26, 2012) PUBLIC ACCESS.  The insurance policy in that case required notice "as soon as practicable" of "every loss, damage or occurrence which may give rise to a claim under this Policy."  Id. at *2.

    Notice of loss provided 4 years later was unacceptably late, the Court in that case held.   The Court granted the insurance company's motion for summary judgment on late notice.  Id. at *4, *6-*7.

Please Read The Disclaimer.

Wise About Little.

    Condominium Association Boards are reportedly reducing expenses by eliminating Insurance Premiums.  A major drawback to that scheme is that they also eliminate Insurance Coverage just when the Condominium Association most needs it.

    For example, when there is damage to drywall, the Association is still responsible for drywall repairs.  That responsibility is not taken away when Insurance is taken away.  See Richard White, "Community Living / Be Wary of Insurance Reduction" p. B9, col. 1 (Orlando Sentinel, "Central Florida Business" Section, Monday, May 7, 2012)(no results after diligent searches on the Orlando Sentinel website at www.orlandosentinel.com).

    Eliminating Insurance does not save money.  Eliminating Insurance makes it much more likely that your money is going to be spent. 

Please Read The Disclaimer.

 

Citizens United Rejected!

    In Citizens United Reciprocal Exchange v. New Jersey Back Institute, 2011 WL 1392602 (N.J. Super. Ct. App. Div. January 30, 2012) (New Jersey State Courts hyperlink not located for this unreported decision), Citizens United's appeal was rejected.  Citizens United appealed an umpire's award of PIP benefits after arbitration.  Its appeal was rejected in this case because it did not show the kind of "rare circumstances" which qualify in New Jersey law for appellate review of an umpire's arbitration award.  Id. at unnumbered page, final paragraph before section "III" of opinion.

    Although Citizens United lost the war, it did not lose a battle in this case.  The Law Division was upheld by the Appellate Division in a ruling denying reimbursement of attorney's fees to the Back Institute.  Id., first paragraph following section "III" heading on unnumbered page in opinion.

Please Read The Disclaimer.

Settling Out-of-Network Health Payments: It'll Make You Weep.

    In 2009, the New York Attorney General began settling claims with Health Insurance Companies in New York, that they low-balled their out-of-network payments based on habitually understated "usual and customary" rates in the locality.  See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 9:30, "'Out of network' Healthcare Calculations" (3d ed. West Publishing 2011).

    As a part of the settlements, the settling Health Insurance Companies agreed to finance a more reality-based database for out-of-network payments they would make in New York.  They did not, however, agree to use the reality-based database.  Nina Bernstein, "Insurers Alter Cost Formula; Patients Pay" p. A1, col. 1 (New York Times Nat'l ed., Tuesday, April 24, 2012).

    Instead, by 2012 the same Health Insurance Companies were basing their out-of-network payments on a model that has reduced even the meager amounts they were paying before they agreed not to follow the "usual and customary" rates or "UCR" model.  Id.

    The payment model currently favored by the Health Insurance Companies for out-of-network payments in New York is based on a percentage of rates paid by Medicare.  However, Medicare pays principally based on rates for primary medical treatment whereas patients-Policyholders seeking out-of-network health care are seeking treatment by and large from specialists.  Id.

     You have got to wonder.  Does anyone paid by the Government know how to negotiate a settlement and, if they do, do they know anything about how Health Insurance Companies charge Premiums?

The author is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Litigation Committee.

Please Read The Disclaimer.

The Uneven Hand of Attorney's Fees.

    Insurance companies often face attorney's fees claims which are submitted with breathtaking rates.  Sometimes Judges acquiesce in high attorney's hourly rates.  From the insurance companies' perspective, it sometimes seems as though they are made to pay attorney's fee rates simply because they can appropriate the money to pay.  See the previous posts in the category of "Attorney's Fees," on this very blog.

    The Republican leadership of the Florida Senate is paying a Miami lawyer $695.00 an hour.  The Florida Senate retained his legal services to represent the Florida Senate's side of the argument in a legislative redistricting-gerrymandering contest.  Mary Ellen Klas, "Florida Supreme Court Justices Raise Doubts About Arguments Against Senate's Redrawn Map" (Tampa Bay Times Online, posted Friday, April 20, 2012).

    Attorney's fee bills.  What are you gonna do?

Please Read The Disclaimer.

    

Crop Insurance and Federally Undefined "Material" Misrepresentations in the Application.

   Crop Insurance is flying under the radar of most Insurance Coverage practitioners.  It is reportedly a highly lucrative business, heavily subsidized by the Federal Government.  See Ron Nixon, "Report Says a Crop Subsidy Cap Could Save Billions" p. A15, col. 3 (New York Times Nat'l ed., Thursday, April 12, 2012).

   A mom and dad tried to set their son up with a Crop Insurance Policy, but the attempt was not successful when the Crop Policy was rescinded by a Federal Court.  Among other evidence in the record of that case, the Federal Court pointed out that apparently the son did not invest very much in the crop which he was applying to insure before he made a claim for a big loss on it.  Skymont Farms v. Federal Crop Insurance Corp., 2012 WL 1193407 *1 (E.D. Tenn. April 10, 2012), Download Skymont Farms v. Federal Crop Ins. Corp. (E.D. Tenn. Case No. 4.09cv65, Memorandum and Order of Lee, U.S.M.J.) PUBLIC ACCESS.

   However, the Federal Court faced the task of defining what a "material" misrepresentation would be in an application for Crop Insurance, because Congress had not defined the term.  Without a Federal definition, the Federal Court turned to State Insurance Law for a definition, held that the application for Crop Insurance at bar met the definition because the son just did not display an insurable interest for the Crop Insurance he was applying for, and ordered that the Crop Insurance Policy was rescinded -- without payment of the son's claim, of course.  Id. at *8 - *10.

   This decision is of interest at the present time for reasons beyond Crop Insurance and that extend to Health Insurance.  The Patient Protection and Affordable Care Act, or "ACA," one provision of which is currently under constitutional review by the U.S. Supreme Court, contains a provision governing Rescission of Health Insurance policies and plans subject to the ACA.  It does not contain any definition of what constitutes a "material" misrepresentation sufficient for Rescission of such Health Coverage.

Please Read The Disclaimer.

Florida Homeowners Insurance Premium Catastrophe: Imaginative Premium Base Spiked Premiums.

   Florida Homeowners are facing a Catastrophe without a named storm.  Premiums for Homeowners Insurance have spiked sharply, even skyrocketed, even over the Premiums that were charge for the same Homeowners Insurance last year.

 One reason for higher Homeowners Premiums is the higher cost of Reinsurance for Homeowners Insurers.  See Scott Maxwell, "Taking Names / Why Homeowner Insurance Rates Are Skyrocketing" p. B1, col. 1 (Orlando Sentinel, Sunday April 15, 2012).  But they are not just passing along costs as the market would ordinarily dictate.

 Instead they are pushing a false model, some say, which is based not on evidence but on opinions about how major storms -- if they strike Florida -- might sometimes result in Property Damage claims.  See "Current Computer Models Predict Premium Increases, Not Hurricanes," posted here on December 7, 2011 with links to prior posts.

 Computer models matter.  That is why many Homeowner's Insurance Companies are putting money in the bank, and why many Homeowners are not.

 Please Read The Disclaimer.

Government's Role in Health Insurance: Two Questions Answer Legitimate Concerns.

"You can get health insurance."  Associate Justice Samuel Alito, during the recently held oral arguments at the Supreme Court in the Patients Protection and Affordable Care Act ("ACA") Case.

    Maybe you can get health insurance.  Others cannot get health insurance.  Not because they do not want it.  But because they cannot get it even though they need it.

   There is a big difference.

   A Constitution-size, Insurance Coverage-size difference.

          During the course of the recent oral arguments at the Supreme Court over the constitutionality of the so-called Health-Insurance-purchasing-mandate of the ACA, a recurring interrogatory was if the Federal Government can require people to purchase Health Insurance or be penalized with a monetary penalty if they do not, what else can the Federal Government require people to do if it can require that?  And like unto it:  What then are the boundaries of this power, what are the limits if any on it?

        A business owner named Donna Dubinsky gave a complete answer to these questions with a compelling two-part test:

   The government muffed its response.  To me, the answer is obvious.  There are two simple limiting conditions, both of which must be present:  (1) it must be a service or product that everybody must have at some point in their lives and (2) the market for that service or product does not function, meaning that sellers turn away buyers.  In other words, you need something, but you may not be able to buy it.

Donna Dubinsky, "What Makes Health Care Different" (Washington Post Online, published Friday, April 6, 2012).

         Phrasing the required answers to the two parts of this test in slightly different words, (1) people need it and (2) regardless of how much if anything they are willing to pay for it, someone else, not them, controls whether they get it or not.

        Clearly the control of someone else is a power which ought to be exercised only in Good Faith, dealing fairly with the people who need "it," whatever "it" is, including Health Insurance.  The reluctance of many if any Courts to impose an actionable duty of Good Faith and Fair Dealing on the Insurance application process reflects the difficulty in relying on common law or even equitable solutions as alternatives to the problem.

 A related post on this subject was published on Insurance Claims Bad Faith Law Blog on Tuesday, April 10, 2012.

Please Read The Disclaimer.

 

Coverage of Health Care in U.S. Supreme Court? Why Not?

    Coverage allowed by the U.S. Supreme Court of its oral arguments recently came into focus for me, and probably for you.

    Specifically, the recent three years (or so it seemed to some) of oral arguments on  the status of the Patients Protection and Affordable Care Act, or "Health Care," was covered by:

• Transcripts authorized by the Court.
• Print media permitted by the Court.
• Sketch artists listed by the Court.
• Audio broadcast live from the Court.

    So why not video broadcasting live images of the Justices and the lawyers, in real time, doing what they really do, acting how they really act?  Brian Lamb, a founder and the long-time CEO of C-Span, recently made exactly this compelling argument -- on video -- which is accessible here.

    Coverage.  It's an issue pending in the Supreme Court. 

Please Read The Disclaimer.

 

Loan Servicer Invokes Union Clause to Receive Fire Loss Payment.

    Rescission of an Insurance Policy should leave no policy in its wake at all, is the usual understanding of Rescission.  A Federal Court in Indiana recently held that this is not the case where an innocent mortgagee had a right to be paid for a loss covered under the rescinded policy.

    In Ocwen Loan Servicing, LLC v. Nationwide Mutual Fire Insurance Co.,  2012 WL 1067854 (S.D. Ind. March 29, 2012), Download Ocwen Loan Servicing,LLC v. Nationwide Mut. Fire Ins. Co. (S.D. Ind. Case No. 1.07cv01449, Order on Pending Motions Filed March 29, 2012) PUBLIC ACCESS, Mr. and Mrs. Allen applied for two Homeowner's Policies with overlapping policy periods.  The relevant Homeowner's Policy was issued by American Family.  It contained a "standard" or "union mortgage clause" which provided for payment to the mortgagee regardless of the conduct of the insured(s).

    The Allens claimed a fire loss.  American investigated and determined that the Allens' application did not accurately reveal their prior fire loss history.  American unilaterally rescinded its policy on the ground that there was a material misrepresentation in the application.  American refused to pay either the Allens or Ocwen, a Mortgage Servicer representing the mortgagee at the time of the fire loss.

    The Federal Court agreed with American that it had properly and unilaterally rescinded all of its Coverage as to Mr. and Mrs. Allen.  However, the Court also held that, under Indiana law, an innocent mortgagee was entitled to recover under American's policy terms even if the insurance contract was rescinded as to the named Policyholders.  Id. at *7.

    "Asymmetry of information" is a phrase in vogue.  It is often used to describe the information about claims that is ordinarily vastly more accessible to an Insurance Company, than to a Policyholder.  In this case, however, it was the applicants for American's Homeowner's Insurance Policy who were addressed with this phrase, not the Insurance Company.  In this case, the Court upheld American's unilateral rescission on the ground of material misrepresentation by describing the "asymmetry of information" available to the applicants and not available to American.

Please Read The Disclaimer.

ATTORNEY AND PARALEGAL RATES IN FLORIDA.

   In  Rynd v. Nationwide Mutual Fire Insurance Co., 2012 WL 939247 (M.D. Fla. March 20, 2012), Download Rynd v. Nationwide Mut. Fire Ins. Co. (M.D. Fla. Case No. 8.09cv1556, Order Filed March 20, 2012) PUBLIC ACCESS, a Federal District Court considered a 57-page Report and Recommendation of a United States Magistrate Judge.  The District Judge affirmed the Magistrate Judge's reduced hourly rates for Attorneys and Paralegals retained by the Plaintiff-Policyholder.

    The Plaintiff apparently prevailed on an unspecified claim of Insurance Coverage in this case.  He was (or more accurately, perhaps, his attorneys and paralegals were) awarded the following rates by the Federal Court in Tampa:

$275.00 per hour for the named principal in a Tampa law firm, which was one of the two law firms he retained, and whose time and/or rate was reduced from a claim of $425.00/hour;

$200.00 per hour for a second attorney, from a law firm in Miami which was the other law firm retained by the Plaintiff, and apparently with the next level in experience, for whom the Plaintiff requested $275.00/hour; and

$95.00/hour for a Paralegal rate, reduced from a request for $180/hour.

 Rynd v. Nationwide Mutual Fire Insurance Co., 2012 WL 939247 at *3.

 

Please Read The Disclaimer.

Hollywood Change of Insurance Pace: "Soon a Major Motion Picture" ...

... 'Cause We've Got Insurance!

           Insuring a cross-eyed silent film comedian against the risk of his eyes becoming uncrossed.

          Insuring Betty Grable's legs for $1 Million.

          And insuring Jimmy Durante's nose for $50,000.00.

          These are a few of Hollywood's favorite things.  Others include John Candy's life (he died while making a movie); Patrick Swayze's two broken legs (he fell off a horse while making a movie), and Angelina Jolie's real-life role as a one-woman stunt performer while making a movie (nothing like an insurable loss happened, apparently).

          These and other interesting insurable interests -- including the lack of available coverage for mere failure to make a profit, as distinct from paying claims for broken legs and for sudden death of a film star during filming -- are explored by Janet Morrissey in "Insuring Hollywood Against Falls (But Not Flops)" p. 1, col. 1 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, March 25, 2012).

 Please Read The Disclaimer.

Affordable Care Act: Some Provisions Take Effect; Some, Oral Arguments.

    Monday, March 26, 2012 is the first of three consecutive days of oral arguments scheduled by the United States Supreme Court on the Affordable Care Act.

    Many webinars and online-access webcasts have appeared on the subjects to be addressed by the Supreme Court.  Which provisions of the ACA may reasonably be expected to remain, and how they would function independently of the key provision in controversy -- the individual purchasing mandate -- has received a lot of attention from lawyers in particular.  Here, for example, is the American Bar Association's web seminar on demand, and here is the portal to the forthcoming web seminar on demand provided by West Legal Ed Center.  In the spirit of full disclosure:  The author accepted the ABA's invitation, and West Legal Ed Center's invitation, to speak on their respective panel CLE presentations.

    The key provision in controversy is of course the individual purchasing mandate.  Compelling arguments have been made on the issue of severability of other ACA provisons from the individual mandate, should that mandate be held unconstitutional.  See Abbe R. Gluck and Michael J. Graetz, "The Severability Doctrine" p. A25, col. 2 (New York Times Nat'l ed., Friday, March 23, 2012).

    The most concise summary I have read of the likely outcomes, and the sum of the legal precedents that compel those outcomes on the law, is by Lincoln Caplan and Philip M. Boffey, "Sunday Observer / A Moment of Truth for Health Care Reform" p. 12, col. 3 (New York Times Nat'l ed., "SundayReview" Section, Sunday, March 25, 2012).

    Another presentation of the legal issues is this one by Noam N. Levey, "In Healthcare Case, Supreme Court Weighs Entwined Provisions" (Los Angeles Times Online, Saturday, March 24, 2012).

    An examination of the political, even practical, as distinguished from the legal issues, is offered by Michael Hiltzik in "The Truth About Healthcare Reform" (Los Angeles Times Online, Saturday, March 24, 2012).

    In the end, the state of health care in the United States will be very different, whatever the outcome of the case now pending in the Supreme Court.  Perhaps other things will be different too. 

    Time will tell.

The author is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Litigation Committee.

Please Read The Disclaimer.

Municipal Bond Insurer MBIA Back In The Headlines.

    After being out of the newspaper headlines for a couple of years, Municipal Bond Insurance Company MBIA is back.  Take a look at this report by Peter Lattman, "Insurer is Said to Forgo Bonuses Under Pressure" p. B5, col. 1 (New York Times Nat'l ed., "Business Day" Section, Tuesday, March 20, 2012).  This print report was slightly rewritten and posted online in "Dealbook" Blog on the New York Times website.

    Since dropping out of the headlines temporarily, MBIA has been a Plaintiff and a Defendant as a result of straying into fields full of Mortgage-Backed Securities.  It has been sued by investment Banks alleging Fraud, and it has sued Bank of America and Countrywide Financial alleging Fraud.  Id.

    More important, MBIA was allowed by the then-Department of Insurance of the State of New York to split into two MBIA's if you will:  a comparatively healthy MBIA, which contained its still profitable, and traditional, "municipal bond insurance business" and a very sick MBIA, with "crippling exposure to toxic mortgage-backed securities."  Id.

  Reportedly, the New York Department of Insurance (whose functions are performed in 2012 by the New York State Department of Financial Services) has done MBIA a more recent good turn.  The Department successfully convinced the persons who operate MBIA not to give themselves "bonuses" under the circumstances.

    Some people can learn to carry a tune, even if at first they seem to be tone deaf.

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Opposing Counsel Was Fire Loss Lawyer Too: Work Product.

    In Memory Bowl v. North Pointe Insurance Co., 2012 WL 845928 (D.N.J. March 13, 2012)(USMJ), Download Memory Bowl v. North Pointe Ins. Co. (D.N.J. USMJ Memo and Order Filed March 13, 2012) PUBLIC ACCESS, an Insurance Company retained an attorney in its investigation of a fire loss claim.  The Policyholder, dissatisfied with the handling of its claim, sued its Insurance Company for allegedly wrongfully denying part or all of the Coverage in Bad Faith.  The Policyholder sought to take the Deposition of Opposing Counsel, which is the individual who was the Insurance Company's fire loss lawyer too.

    The Insurance Company showed that it hired the lawyer as a lawyer, during its investigation of the fire loss.  It convinced the U.S. Magistrate Judge in this case that "most, if not all," of the documents and things about which the lawyer would testify in this case were protected by the Work Product qualified immunity and that the Plaintiff-Policyholder could obtain the substantial equivalent by other means.  Id. at *4.

    This decision sits squarely in the line of cases deciding Work Product and Attorney-Client Privilege issues in similar cases:  When a lawyer is acting like a claim adjuster in the investigation of an Insurance claim, then the Courts ordinarily hold that any and all facts learned and observed by the lawyer are a part of the Insurance Company's ordinary business; the Work Product qualified immunity simply does not apply that far in the ordinary Insurance claim.  When, on the other hand, the attorney is acting as an attorney even though she or he has been retained to provide legal advice and impressions during the course of an Insurance claim investigation, the immunity like the Privilege will be applied in the ordinary case.   See Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 12:8, "Insurance Counsel's Files" [Discovery in First-Party Cases] (Third Edition West 2011).

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ALLOCATING COVERAGE WHEN DAMAGES PAYABLE BY INSURED ARE NOT ALLOCABLE.

... Is "Time on the Risk" a Defensible Way to Allocate Insurance Coverage?

 

"The principle underlying our decision is a straightforward one:  an insurance company cannot be held liable for periods of risk it never contracted to cover."

 

        In Pennsylvania National Mutual Casualty Insurance Co. v. Roberts, 668 F.3d 106 (4th Cir. 2012), Download Pennsylvania Natl Mut. Cas. Ins. Co. v. Roberts (4th Cir., Opinion Filed Feb. 3, 2012) PUBLIC ACCESS, the Court readily applied Maryland law to allocate Insurance Coverage.  Under Maryland law, "in lead paint or 'continuous trigger' cases such as this, Maryland courts determine an insurer's liability through a 'pro-rata allocation by "time on the risk."'"  Id. at 111.

        The Roberts case involved an infant who ingested lead and was poisoned by it.  She was born on January 17, 1991.  Twenty (20) months later, she was diagnosed with lead poisoning.  Id. at 109.  Using a cutoff of "August 1995" when the child apparently stopped "exhibit[ing] elevated blood levels," id., the District Court concluded that the period during which damages occurred was "55 full months," id. at 111, a finding accepted by the Federal Appellate Court in this case.

        The underlying liability case went to a jury verdict in Maryland State Court, which reduced the verdict amount to a Judgment of $850,000.00 "following an application of Maryland's noneconomic damages cap."  Id. at 110.

        "It is undisputed that [the Policyholder and another Tortfeasor Defendant] are jointly and severally liable for this amount."  Id.  [Emphasis added.]  The fact that the Damages award could not be allocated -- which is evident because there could not be joint and several liability, if the damages could be allocated -- seemed to be inconsequential to the Insurance Coverage allocation made by the Federal Appellate Court in this case.

        The Fourth Circuit panel's opinion, written by Judge J. Harvie Wilkinson, III, first applied Maryland law, which was directly on point of course, and held that "time on the risk" allocation of indemnity required allocation of Penn National's policy limits pro rated by time on the risk, of course.  Penn National's time on the risk was only 22 months, in an apparent finding of fact by the Appellate panel, and so Penn National was held liable by the Appellate Court to pay only 22/55 months' worth of the $850,000.00 Judgment here.  See id. at 113.

        But the opinion contained more words than that, in this case.

        The panel also ruled that even if Maryland law did not require this result, then the Federal panel's interpretation of contract law would also require this result.  Like most Policies in its class, the Penn National Bodily Injury/Property Policy -- which was never described as such, but looks from the opinion an awful lot like standard CGL or Commercial General Liability Policy or Landlord's Liability Policy language -- provided Coverage for Bodily Injury or Property Damage which "'occurs during the policy period.'"  Id. at 110, 112.

        The panel's opinion never once addressed the language of the insurance contract itself, namely that it provided  Coverage for damages occurring during the policy period and not simply Coverage for some abstract period of time unconnected with the determination of the Policyholder's liability to pay Damages.

        As a third reason for its decision, the Federal Appellate panel also wrote that a result other than 'pro rata allocation by time on the risk'  would be "disruptive for insurance markets as well."  Id. at 114.  There is so much that could be said in direct contradiction of this dictum.  That is enough to say about it here.

        The concluding observations of the panel in the Roberts case are quickly summarized:  Stuff happens.  See id. at 115 ("It is a dispiriting but inescapable fact that sometimes really bad things happen ....).  

        That concluded the panel's handling of the Roberts direct appeal.  Penn National Mutual Casualty Insurance Company cross-appealed, as well.  Penn National complained on appeal that although the District Judge was correct in applying Maryland's law of allocating Penn National's liability to pay the underlying Damages Judgment by pro rating Penn National's 'time on the risk,' still the District Court erred in the eyes of Penn National by allocating to it two (2) months too many on the risk.

        The Federal Appellate panel in this case agreed with Penn National on this point also.  Penn National's time on the risk was reduced by two (2) months on appeal.  Id. at 118-19.  As the opinion put it:  "Roberts' misfortune cannot be laid at Penn National's feet ....  To place the entire judgment on the insurer would be chaotic ...."  Id.

        If the little girl's lawyers argued that her life after lead poisoning was "chaotic," or if the Policyholder's lawyers argued that joint and several liability for the entire Damages was "chaotic," none of the Courts involved including this Federal Appellate panel appeared to be moved.

        Insurance Coverage under an Insurance Contract should never be determined by the extent of the damages which the claimant alleges in its claim against a Policyholder.  That is or should be true in all United States jurisdictions.  However, that is not nearly the same thing as deciding that a contract which provides Insurance Coverage for Damages, is somehow the same as a contract which provides Insurance Coverage based not on the Damages which occurred during the policy period, but based instead on the Insurance Company's 'time on the risk' regardless of what is written in the contract.

         

 

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HURRICANE DAMAGE IN FLORIDA, INSURANCE CONTRACT IN NEW JERSEY: DISMISSED.

   Property Damage was claimed as a result of damages inflicted by Hurricane Wilma in Florida.  However, the insurance contract under which the Property Damage claim was made, was itself made in New Jersey.  The claimant is a Condominium Association in Florida who filed suit against its Insurance Company for alleged breach of contract, Declaratory Judgment, and "to compel an appraisal on damages".  Club Caribe Condominium Ass'n v. Travelers Excess & Surplus Lines Co., 2012 WL 529972 *1 (S.D. Fla. February 17, 2012), Download Club Caribe Condo. Assn v. Travelers Excess and Surplus Lines Co. (S.D. Fla. Case No. 11.62673.CV, Order Filed Feb. 17, 2012) PUBLIC ACCESS.

   New Jersey provides for a two-year Statute of Limitation for alleged breach of contract; Florida provides a four-year Statute and applies the law of the place where the contract was made to determine which State's law to apply.  Here, the Court ruled that the State where the insurance contract was made, is New Jersey.  Accordingly, the Court granted the Motion to Dismiss based on the applicable -- New Jersey -- Statute of Limitation.  Id. at *4 - *5.

   However, in this case, the Court did more than that.

   The Court granted leave to file a Second Amended Complaint and after it is filed, also granted leave to the parties to "conduct limited discovery up until April 17, 2012 on the issues related to lex loci contractus and equitable estoppel related to the statute of limitations."  Id. at *5.

 

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FINAL FOUR-TEEN FOR THE EXPERTS: EXPERTS IN INSURANCE CASES ....

... THE LAST OF THE BUNCH.  FOURTEENTH AND FINAL CASE.

(FOR NOW.)

   On the Defendant Insurance Company's Motion for Partial Summary Judgment in a Hurricane Wilma Property Damage case, a United States Magistrate Judge in South Florida now allowed an Expert Report where there is evidence of Hurricane Wilma Damage.  The Defendant's motion was denied on this ground, i.e., on the ground that there was insufficient evidence in the record that Hurricane Wilma caused the Damages which it was claimed to cause under the Property Policy at bar because the Plaintiff's Expert's Report was not stricken although it could have been stricken and it, the Plaintiff's Expert's Report, provided "evidence of its [Kendall Lakes'] damages and summary judgment cannot be granted on this ground."  Kendall Lakes Towers Condominium Association v. Pacific Insurance Co., 2012 WL 266438 *1 (S.D. Fla. January 30, 2012; Goodman, USMJ), Download Kendall Lakes Towers Condominium Assn v. Pacific Ins. Co. (S.D. Fla. Case No. 10.24310, Order of USMJ Filed Jan. 30, 2012) PUBLIC ACCESS.

   The Court's previous and unique ruling refusing to entirely exclude the Testimony of the Plaintiff's Expert in question, and allowing the Plaintiff to make certain payments if it elected to use the Testimony of that Expert, was previously posted here, on February 22, 2012 .  PACER, the online docket of the Federal Courts, reveals that the parties filed a joint stipulation for dismissal on March 6, 2012.  The next day, the Court entered an Order granting the stipulation for dismissal. 

   The Defendant's Motion for Partial Summary Judgment on the different ground of Late Notice was also denied.  Whether there is prejudice from Late Notice in this case is a question of fact, the Court ruled.  Id. at *5 - *7.  However, the Court in this case first ruled that the Notice given to the Insurance Company was in fact late.  Id. at *2 - *5.

   The thing that saved the Plaintiff from suffering the entry of Summary Judgment on Late Notice was the Court's ruling that Kendall Lakes, the Plaintiff, could rely on Pacific's "own expert reports" to rebut the rebuttable presumption of Late Notice under Florida law here:  "But Kendall Lakes may nevertheless rely on evidence produced by Pacific, including its own expert reports, to sustain its burden of rebutting the presumption of prejudice, as it has attempted to do here."  Id. at *5.

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FOURTEEN FOR THE EXPERTS: NEW INSURANCE CASES THAT MAKE EXPERT WITNESS LAW ....

.... The Twelfth Case.

    In a change-of-pace, Insurance Claims and Bad Faith Law Blog and Insurance Claims and Issues Weblog have been trading consecutive posts addressing a single common theme:  Court rulings on Expert Witness Testimony and Reports in recent Insurance Cases.  For the previously developed rules of law and judicial decisions on these issues, see generally as to Liability Insurance Cases, volume 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 8:17 (West Publishing 3d ed. 2011; 2012 Supplement in process), and see generally as to all types of First-Party Insurance Cases, volume 2 id. § 12:18.

 

Hurricane Wilma Professional Engineer Expert Disallowed.

        In the case of Banta Properties, Inc. v. Arch Specialty Insurance Co.,  2011 WL 7118542 (S.D. Fla. December 23, 2011), Download Banta Props, Inc. v. Arch Specialty Ins. Co. (S.D. Fla. Case No. 10.61485, Order Granting Daubert Motion for Exclusion, Filed Dec. 23, 2011) PUBLIC ACCESS, the District Court disallowed a Plaintiff Property Management Company's proffered Expert.  The Expert in question is a Professional Engineer.  She was proffered to testify to her Opinions "that Hurricane Wilma damaged windows and doors at Plaintiff's properties and as a result needed replacement."  Id. at *1.  The Defendant Insurance Company requested the Court to exclude her Expert Testimony on a number of different grounds.

        In pertinent part, the Professional Engineer Expert could not satisfactorily attribute the Plaintiffs' claimed Damages to their claimed cause, Hurricane Wilma.  The Court "agrees that Mellinger was unable to attribute damage to Hurricane Wilma with any degree of certainty and that she used an unreliable methodology.  Therefore, the Court shall exclude her expert opinions."  Id. at *2.

        If an Expert is proffered on Damages, she should also offer acceptable Opinion Testimony as to what caused those Damages, or suffer the risk of not testifying at all, as in this case.

      Parenthetically, the exclusion of this Expert's Testimony does not appear to have harmed the Plaintiff''s case very much.  PACER, the online docket of the Federal Courts, reflects that the Jury returned a Verdict for the Plaintiff on January 30, 2012.  The Verdict includes the Jury's finding that $4,000,000.00 or $4 Million is the amount of the Plaintiff's covered Damages resulting from Hurricane Wilma.  On February 27, 2012, the Plaintiff filed a motion for entry of final judgment.

Part of a Series.  To be continued ....

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FOURTEEN FOR THE EXPERTS: NEW INSURANCE CASES THAT MAKE EXPERT WITNESS LAW ....

.... TWO MORE.

    In a change-of-pace, Insurance Claims and Bad Faith Law Blog and Insurance Claims and Issues Weblog will carry consecutive posts addressing a single common theme:  Court rulings on Expert Witness Testimony and Reports in recent Insurance Cases.  For the previously developed rules of law and judicial decisions on these issues, see generally as to Liability Insurance Cases, volume 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 8:17 (West Publishing 3d ed. 2011; 2012 Supplement in process), and see generally as to all types of First-Party Insurance Cases, volume 2 id. § 12:18.

What Will be Done With Late-Filed Expert Witness Affidavits and Reports?

           In the case of House of Clean, Inc. v. St. Paul Fire & Marine Insurance Co., 2011 WL 2118633 (D. Mass. May 27, 2011), Download House of Clean, Inc. v. St. Paul Fire & Marine Insurance Co. (D. Mass. Case No. 07.10839, Memorandum and Order Filed May 27, 2011) PUBLIC ACCESS, a Federal District Judge's solution was not to consider Plaintiff's late-filed Expert's Affidavit on Defendant's Motion for Summary Judgment.  The Affidavit (or the Expert's Testimony live) would be considered at Trial in this Declaratory Judgment Action involving issues of Insurance Coverage for Pollution, and the Sudden and Accidental Exception, the District Judge in that case ruled.   Id. at *12.

     Parenthetically, the Online Docket of this Federal Case on PACER reflects that the parties settled the case, and the Court granted the parties' joint motion to dismiss because of the settlement, on August 16, 2011.

What Will be Done With Very Long Expert Witness Affidavits and Reports?

            In some Insurance Cases, as in Curatolo v. Allstate Insurance Co., 2011 WL 2116459 (N.D. Ohio 2011), Download Curatolo v. Allstate Insurance Co. (N.D. Ohio Case No. 5.10CV607, Memorandum of Opinion and Order Filed May 27, 2011) PUBLIC ACCESS, the Court may not read Expert Witness Affidavits that are just too long and are not even referenced in pertinent part in the Motions and Memorandums which they are filed to support.  In Curatolo, the Expert's Affidavit in question was 63 pages long.  The Affidavit was offered in the context of a theft claim followed by a vehicle claim and then by a sewer backup claim, denial of all Coverage for all claims on various grounds, and a Complaint in Federal Court for alleged Breach of Contract, Declaratory Judgment, alleged Bad Faith, and alleged Intentional Infliction of Emotional Distress.  Id. at *1.

          The Federal Judge in that case ordered the Defendant as the proffering party to brief the issue(s) for which the Expert's Affidavit was proffered, if they want the Court to consider the Expert's Affidavit which they filed in support of their Motion for Summary Judgment on various grounds.  See id. at *4 - *10.

     Parenthetically, PACER relects that this case was dismissed with prejudice based on the parties' settlement agreement, on June 10, 2011.

To be continued ....

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FOURTEEN FOR THE EXPERTS: NEW INSURANCE CASES THAT MAKE EXPERT WITNESS LAW ....

 

.... TWO MORE.

    In a change-of-pace, Insurance Claims and Bad Faith Law Blog and Insurance Claims and Issues Weblog will carry consecutive posts addressing a single common theme:  Court rulings on Expert Witness Testimony and Reports in recent Insurance Cases.  For the previously developed rules of law and judicial decisions on these issues, see generally as to Liability Insurance Cases, volume 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 8:17 (West Publishing 3d ed. 2011; 2012 Supplement in process), and see generally as to all types of First-Party Insurance Cases, volume 2 id. § 12:18.

 

 Expert Witness Testimony:  Reliability is Required.

    Many criteria are generally accepted as measurements of the reliability of scientific testimony.  Even when the criteria are different from Court to Court, including between Federal Courts and State Courts, there are generally accepted measurements of the reliability of scientific testimony when it is offered at Trial.

   In "the area of non-scientific, experience-based testimony, while these same criteria may be used to evaluate its reliability, sometimes other factors may prove more useful."  Clena Investments, Inc. v. XL Specialty Insurance Co., 2012 WL 266422 *8 (S.D. Fla. January 30, 2012)(Rosenbaum, USMJ), Download Clena Investments, Inc. v. XL Specialty Insurance Co. (S.D. Fla. Case No. 10.62028, Order of USMJ Filed Jan. 30, 2012) PUBLIC ACCESS.  What those factors may be in a given case, will vary from case to case in which "non-scientific, experience-based testimony" is offered from  Expert Witnesses.

   For example, in the Clena case itself, one Calitu testified that his analysis of Hurricane Wilma Damage sustained by Plaintiff Clena Investments, Inc. depended in part on a "six-factor chart".  The Court held that the chart was unreliable evidence and struck Mr. Calitu's Opinion in his Report to the extent that he relied on that chart in reaching his Opinion.  Id. at *10.

   However, Mr. Calitu also based his Opinion on "his training, experience, and inspection of the Property to opine that it is more likely that Hurricane Wilma imposed the Property damage than that any prior hurricane did."  To that extent, based on his own "training, experience, and inspection of the Property," Mr. Calitu's Opinion that the Plaintiff sustained damage from Hurricane Wilma was held admissible in that case.  Id. at *10.

 

When Reliability is Not Enough:  Disclosure Deadlines Must Be Met or There May Not Be Any Expert Testimony.

   In another case another United States Magistrate Judge in the Southern District of Florida faced a request to allow an Expert to testify even though the Expert was not timely disclosed, his Report was untimely provided, and he could not in any stretch of the Court's imagination be deemed a "rebuttal" Expert in this case.  Kendall Lakes Towers Condominium Ass'n v. Pacific Insurance Co., 2011 WL 63272198 * 1 (S.D. Fla. December 20, 2011)(Goodman, USMJ:  "This is an insurance coverage dispute concerning the issue of whether there is coverage for property damage allegedly arising from Hurricane Wilma on or about October 24, 2005."), Download Kendall Lakes Towers Condominium Assn v. Pacific Ins. Co. (S.D. Fla. Case No. 10.24310, Order of USMJ Filed Dec. 20, 2011) PUBLIC ACCESS.  The Defendant understandably was not amused and requested that the Expert be precluded from testifying.

  The Court set the scene by laying down the law:

Evaluating a preclusion request involves an analysis of several factors, including the history of the litigation, the proponent's need for the challenged evidence, the justification (if any) for the late disclosure and the opponent's ability to overcome its adverse effects (i.e., the degree of prejudice and whether it can be cured or ameliorated.

Id. at *3.

   These things factor into a standard of discretion, said the Magistrate Judge.  The Expert was allowed, with restrictions.  These are the restrictions, reasonably tied, it certainly appears, to being allowed to present the Expert's Opinion Testimony in this case under these circumstances:

1. If Plaintiff intends to use the Expert in question at Trial, then within 7 days of the Court's Order the Plaintiff was required to submit to the Defendant Insurance Company "an amended or supplemental expert report, in compliance with all the disclosure requirements."
2. The Defendant could take the Expert's Deposition within 1 month after this decision.
3. If the Defendant took this Expert's Deposition, the Plaintiff would pay the Expert's fee for this Deposition, and the Court Reporter fees, and the attorney's fees and costs incurred by the Defendant "in preparing and taking" this Deposition.
4. If the Defendant chose to obtain a Rebuttal Expert in response to this particular Plaintiff's Expert, it was allowed 1 month and 10 days, or a total of 41 days, after this decision to do so.
5. Finally, in part here pertinent, if the Plaintiff wished to depose the Defendant's Rebuttal Expert in question, then the Plaintiff could do so within 1 month and 20 days, or a total of 52 days, after this decision provided that  the Plaintiff would bear "the typical costs" and pay the Defendant's Rebuttal Expert's fee both for Deposition time and for time spent in preparing for this Deposition.

Id. at *5.

   Clearly, Expert Witness Testimony must be reliable -- and timely disclosed in accordance with applicable Court Orders and Rules.

 

Part of  a Series.  To be continued ....

 

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Health Insurance Rate Increases: ACA's Small Business Health Options Program.

   The Affordable Care Act requires individuals to purchase Health Coverage.

   Lost in the confusing melee over that so-called "mandate," the ACA also provides for many other things.  One of them is the Small Business Health Options Program, or "SHOP".

   Many of SHOP's features have been informatively analyzed elsewhere.  See, e.g., Chris Fleming's post on February 9, 2012 on Health Affairs Blog, "Small Business Health Insurance Exchanges:  Potential and Pitfalls," and links in it to other sites.

   The purpose of this post is to focus attention on one 'mandate' in the ACA's SHOP provisions that deserves to be understood.  SHOPs are statutorily required to provide Employees of small businesses with a range of lower-cost health plans than might otherwise be available to them.  If the SHOPs do not succeed in reaching that goal, among others, then the SHOPs will go out of business.

"Reduced Healthcare Premiums, or Bust!"

The author is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Law Committee.

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Health Insurance: Regulations in Final Form ... Now. Not Later. Now.

   The Secretary of Health and Human Services has recently issued new Rules and Regulations, one after another.  Unlike at least one other, more controversial Regulation, these are now in final form and they did not draw political fire or the attention of a religious organization.

   One Regulation with immediate effect is to require Health Insurance Plans and Companies to issue Summaries of Benefits and Coverage.  These forms are standardized.  They are intended to be written and distributed in an "easy-to-read, easy-to-understand" format.  The effective date is September, 2012 but the Regulation is in final form now.  See Noam N. Levey, "New Rules For Health Plans Require Clear Summaries of Benefits" (Los Angeles Times Online, Friday, February 10, 2012).

   Another new Regulation would require 80 percent of collected Premium money to be used to fund actual Healthcare.  The remaining 20 percent can be used by Health Insurance Companies to pay so-called overhead expenses, such as CEO salaries.  If a consumer pays Premiums greater than the 80-20 "medical loss ratio" mandated by the Regulation, she, he or it is entitled to a refund of the excess amount the next year.  Parenthetically, California has adopted a similar Regulation but the California Regulation calls for the calculation of 80% - 20% to be made when a Health Insurance Company files for its Rates in a given year, while the Federal Regulation apparently is based on a calculation which is made instead after consumers have paid the annual Premium.  See "Regulation:  Health Insurers Must Put More Premiums Into Medical Care" (Insurance Journal Online, Thursday, February 9, 2012).

   More Regulations?  Yes.  Many will benefit your clients.  Take a look at them.  More to come, as they say. 

The author is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Litigation Committee.

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UMBRELLA CARRIER SUES INSURED'S DEFENSE COUNSEL: DISMISSAL REVERSED, COMPLAINT REINSTATED.

   On an appeal from a Trial Court Order granting a Motion to Dismiss, a lopsided majority of the Mississippi Court of Appeals, en banc, reversed the dismissal and reinstated the Complaint in  Great American E & S Insurance Co. v. Quintairos, Prieto, Wood & Boyer, P.A., 2012 WL 266858 (Ct. App. Miss. January 31, 2012, Download Great American E & S Insurance Co. v. Quintairos, Prieto, Wood & Boyer, P.A. (Ct. App. Miss. January 31, 2012)(en banc) PUBLIC ACCESS.  (The Defendant in this case is a Florida-based Law Firm.)

   The Court of Appeals' original opinion was modified and withdrawn en banc in a decision stating that rehearing was "denied".  In that case, the Plaintiff was an Umbrella Carrier and the Defendant was a law firm retained by the Primary Carrier to defend their mutual Policyholder.    After settling the subject underlying lawsuit for an undisclosed sum, see id. at *2 ¶ 15 (there were three other cases alleged by the Plaintiff in which the Plaintiff was allegedly damaged by the same law firm's conduct of the defense, in addition to the underlying case at issue in this appeal, id. at *3 ¶ 16), the Umbrella Carrier-Plaintiff sued the Defendant Defense Counsel on Counts of alleged Negligent Misrepresentation, Legal Malpractice, various Negligence Counts, and Equitable Subrogation.

   Parenthetically, according to the en banc majority opinion, the Umbrella Carrier settled the subject underlying case after learning, among other things, "that none of the Quintairos partners or trial attorneys had been admitted to practice law in Mississippi," and "that Quintairos had not retained local counsel".  Id. at *2 ¶ 14.

   The en banc Court reversed the Trial Court's Order of dismissal on each of these Counts.

   The Negligent Misrepresentation claim was supported, in the majority's view, by allegations that the Defense Counsel misinformed the Umbrella Carrier in evaluating the likely damages in the event of a Judgment against the Insured:

Thus, Great American claims: Quintarios [sic] had falsely represented that the settlement value of the cases was worth substantially less than the amount that would implicate Great American's coverage; Great American relied on the false representations; Great American had no reason to take action to protect itself; and Great American was damaged as a result of the misrepresentations.

Id. at *4 ¶ 25.  "Accordingly, this Court finds that there is a set of facts that would entitle Great America [the Umbrella Carrier-Plaintiff in this case] to relief."  Id. at *4  ¶ 26.

   Great American's separately stated claim for Legal Malpractice also stated a claim or cause of action, in the eyes of the Court on rehearing en banc.  This ruling seems to have been based on the same common nucleus of alleged operative facts, so to speak:

   ¶ 34. We conclude that if Great American was provided defense counsel's evaluation of the “settlement value” of the plaintiff's lawsuit, as is alleged in Great American's amended complaint, such information would appear to be considered the rendition of professional legal services by a lawyer.

* * *

Therefore, we find that the allegation in the amended complaint that defense counsel, including Quintaros [sic] provided attorney-client privileged communications to Great American may provide a set of facts upon which Great American may be able to prove that an attorney-client relationship existed.

Id. at *6 ¶ 34.  [Emphasis by the Court of Appeals of Mississippi.]

   Author's Note at this point in the post:  There are few if any cases in which Defense Counsel will not provide to the Insured's Excess or Umbrella Carrier, her, his, or their evaluations of both the liability and damages exposure faced by the Insured Defendant.  As a direct result, the implications of this particular ruling in this case are huge.

   The en banc Court of Appeals also held that even though the amended complaint at bar contained claims that were not dismissed by the Trial Court's Order, which were alleged "for negligence, gross negligence, and negligent supervision," still the Trial Court's Judgment was reversed and the Defendant law firm's motion to dismiss should have been denied as to these claims, too.  Id. at *9 - *10 ¶¶  43-48.

   Finally, the Plaintiff Umbrella Carrier also stated a legally cognizable claim against the Defendant Law Firm for Equitable Subrogation, the Court held.  Since the Plaintiff settled on behalf of its Insured, the Court held that the Plaintiff is equitably entitled in this case of first impression under Mississippi law, to step into the shoes of its Insured and "should be allowed to go forward with its claim in the insured's place."  Id. at *12 ¶ 55.

   The holding in this en banc decision is on the cutting edge of an emerging issue in Insurance jurisprudence:  Whether an Excess or Umbrella Insurer can legally assert claims "against the law firm that was hired to defend the insured."  Id. at *1 ¶ 2.  In answering this question in the affirmative, the Court of Appeals placed Mississippi in the ranks of those jurisdictions in which Defense Counsel can be sued for 'malpractice' by Excess or Umbrella Insurers of the Defendants (Insureds) which the lawyers have been retained to defend.  See generally Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith §§ 3:70 (Requirements for Fulfillment or Enforcement of Good Faith Duty:  Conduct of Defense -- Informing the Insured:  Counsel") and 3:71 ("--Negligence of Trial Counsel") (West Publishing Co. Third Edition 2011).

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