Insurance Claims And Issues

Stealth Regulation: Federal Creeps Into Power Over Insurance?

    President Obama and the Treasury Department reportedly have included Federal Regulation over all Insurance Companies that fall into some financial categories in their plans to address the current collapse of financial relationships.  Under the plans, a new Federal "Office of National Insurance" would be made "within the Treasury Department to monitor the industry, represent U.S. interests in international insurance agreements, and look for gaps in state oversight."  Erik Holm, "Obama's Insurance Proposal May Grab Power From States (Update 1)" (Bloomberg.com, Friday, June 19, 2009).

    The "initial read" announced in a Press Release by the National Association of Insurance Commissioners is both deliberately optimistic and understandably afraid.  First, the NAIC Press Release praises the Obama Administration's plan for apparently focusing on systemic risk problems -- for which Insurance Companies are not at all responsible.  Then, the Commissioners "urge inclusion of state regulators to offer expertise and information on the insurance markets." Press Release, National Association of Insurance Commissioners, "NAIC Praises Preservation of State Regulation Under Obama Administration's Plan" (June 17, 2009).  This sounds very like whistling in the dark.

    What do the Federals currently holding power mean when they announce that they have plans "to monitor the [Insurance] industry"?  Or when they announce that they plan to "look for gaps in state oversight"?  "State oversight" of what, exactly?  Parenthetically, if the current Federals want to "look for gaps," presumably in the financial world, they could profitably start with the preexisting Federal Regulators themselves.

    What effect if any will the McCann-Ferguson Act have on the Obama Administration's plans?  The McCann-Ferguson Act is the Federal law enacted decades ago that reserves regulation of the business of Insurance to the States.  These plans invite research and review.

    Time will tell.

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Options to Consider When Health Insurance is Not Available.

    Lawyers and other professionals who counsel people concerning Healthcare options should consider counseling people who have no Health Insurance to consider exploring the resources identified by David Colker, "Surviving Recession/Resources For Those Without Health Insurance" (Los Angeles Times Online, Sunday, June 21, 2009).

    COBRA is an expensive and unique option available to terminated employees who have lost their Health Insurance from their employers and who otherwise qualify for COBRA, as explained for example by Kathy M. Kristof, "Personal Finance/Under COBRA, Act Quickly to Retain Health Plan After Job Loss" (Los Angeles Times Online, Sunday, June 21, 2009).

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Surety Settlement Found in Bad Faith in Florida.

    "Whether a surety has settled a claim in good faith or not, of course, depends on the particular facts of the case."  Download Auto-Owners Insurance Co. v. Southeast Floating Docks, Inc. (11th Cir. Opinion Filed June 16, 2009).

    In the Auto-Owners case, the Eleventh Circuit Court of Appeals held that a jury could find on the record evidence that, under Florida law, the surety settled a bond claim in bad faith.  The record evidence, according to the Eleventh Circuit, included bases for jury findings that among other things investigation and assessments as to the merits and strengths of the bond claim were ignored, that settlement for the full amount of the bond claim did not match the strength of that claim, and the "secretive nature of the negotiations" indulged in by the surety to settle the bond claim.  The Eleventh Circuit Court of Appeals held that although evidence of "an unreasonable and inadequate investigation and handling of a claim, standing alone, may be insufficient to support a finding of bad faith, the jury in the case also heard evidence to support an inference Auto-Owners had an improper and self-interested motive to settle a claim."  Download Auto-Owners Insurance Co. v. Southeast Floating Docks, Inc. (11th Cir. Opinion Filed June 16, 2009).

    The implications of this holding on the law of Insurer Bad Faith are pretty clear:  Whenever a settlement is even remotely suspicious, and is used as the basis for a claim of Bad Faith against an Insurance Company which is why the underlying claim was settled as it was, that settlement is potentially subject to the legal standards imposed under the holding in this new Eleventh Circuit decision.

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Resources for Counseling Clients About Life Insurance Companies' Likely Lifespans.

    You may share with me the sense that counseling about Life Insurance Coverage also often includes counseling about how to find out which Life Insurance Companies are most likely to be around next year, or next decade.  A suggested list of helpful resources and links is provided by Kathy M. Kristof, "Personal Finance/How to Check Your Life Insurer's Health" (Los Angeles Times Online, Sunday, June 28, 2009).

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Health, Care, Public Health Option, Medicare...Or Exclusions?

    How much of a model Medicare will be for a Public Health Option among the Plans being debated in Congress, is unclear.  The issues are addressed generally by Reed Abelson, "Medicare's Mixed Legacy" p. 4, col. 4 (New York Times Nat'l ed., "Week In Review" Section, Sunday, July 5, 2009).

    A good resource for understanding the way Medicare itself works is the web site of the Medicare Rights Center.

    The web site of America's Health Insurance Plans is the web site of perhaps the largest organization of Health Insurance Companies.    

    Another perspective is provided by the web site of the Commonwealth Fund, described in the linked newspaper article as "a New York nonprofit group that favors the creation of a public plan."

    When researching the possible outcomes of having an optional Public Health Insurance Plan, another potentially valuable resource is provided by the Center for Studying Health System Change.

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Beginning to Learn and Counsel About Long-Term Care Insurance.

       Happy Fourth of July!

    Here are some resources which offer potential value to those of us that counsel concerning Insurance Coverage and other Insurance issues, and to our clients.

    Counseling clients about Long-Term Care Insurance, or any other form of Insurance Coverage, can involve a large learning curve.  A good starting point is with this informative newspaper article by Walecia Konrad, "Patient Money/Getting Insurance For One's Frailest Years" p. B6, col. 1 (New York Times Nat'l ed., "Personal Business" Section, Saturday, June 27, 2009).

    A potentially helpful resource noted in the linked article is the Federal Web Site www.longtermcare.gov.

    Another potentially helpful link is to the web site of the National Association of Insurance Commissioners at www.naic.org, where you can download and counsel others to download as well, a free booklet, "A Shopper's Guide to Long-Term Care Insurance".  While on that site, you and your clients can learn about "Long-Term Care Insurance, What You Should Know".

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Directors and Officers Coverage Comes With Big Bills, Major Issues.

    Directors and Officers Liability Insurance Coverage is notoriously "complex".  It requires specialized handling and experience.  See Saskia Scholtes, "Insurers Face $6Bn Bill for D & O Claims" (Financial Times Online, Tuesday, June 23, 2009).

    Coverage disputes include allocating the available Policy Limits between and among the Policyholder and other Insureds.  Saskia Scholtes, "Insurers Face $6Bn Bill for Board Protection" (Financial Times Online, Monday, June 22, 2009).

    Accordingly, Directors and Officers Insurers have responded by, among other things, raising Premiums and decreasing Coverage. Id.; Suchita Nayar, "More Questions Than Answers in Financial Insurance" (Financial Times Online, Sunday, June 21, 2009).

    The increase in Premiums and decrease in Coverage come at a time when the number of Claims against Directors and Officers is increasing and in particular "investor claims related to mismanagement and failure to disclose risks ... are on the rise."  Id.

    Not a time for the fainthearted, nor the inexperienced.

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Attorney's Fees Denied To Florida Insured Unsuccessfully Seeking Certiorari.

    Florida's Attorney's Fees Statute is Section 627.428.  It requires an "insured or beneficiary" to prevail in the event of an appeal.  An intermediate Florida Appellate Court has just held that this Florida Statute does not authorize Florida Appellate Courts "to grant fees to an insured who does not succeed in his or her application for certiorari."  Grider-Garcia v. State Farm Mutual Automobile Insurance Co. (Fla. 5th DCA Case No. 5D08-3793, Opinion Filed June 12, 2009), attached slipsheet Official Opinion at 4.

    The Florida intermediate Appellate Court followed the Supreme Court of Florida's ruling in the case of Brass & Springer, P.A. v. United Automobile Insurance Co. (Fla. 2006) approving a construction of Section 627.428 which resulted in a denial of Attorney's Fees on Appeal "to a party that did not prevail".  Grider-Garcia, attached slipsheet Opinon at 4.

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72 Percent Favor Health Equality, 20 Percent Continue to Fear.

        72 percent of people in this country support a Public Health Insurance option.  20 percent oppose that option.  Kevin Sack and Marjorie Connelly, "In Poll, Wide Support for Government-Run Health" (New York Times Online, Sunday, June 21, 2009).  The reasons for this difference highlight many interesting things.

    It seems that 20 percent or so ruled this country for the past 8 years.  It is an article of faith among the 20 percent that no-one want to pay taxes, for anything.

    It is also an article of faith among them that the Federal Government is a failure, not Wall Street or private corporations.

    Neither of these shibboleths is shared by the 72 percent of the people  who favor a Public Health Insurance Option.

    The 72 percent are wiliing to pay higher taxes if it means that all the people in this country can have Health Insurance.  This overwhelming, under-reported majority also put their faith more in the Federal Government than in private industry, at least when it comes to Health Insurance.  This is what they place their faith in, the 72 percent of people who support a Public Health Insurance option:

    The poll found that most Americans would be willing to pay higher taxes so everyone could have health insurance and that they said the government could do a better job of holding down health-care costs than the private sector. 

Id.

    The 20 percent can still mostly have their way, even when there is a Public Health Insurance option, and it is an easy solution.  The 20 percent must decline to participate in Public Health Insurance for themselves and their families.  This should also be the rule followed in good conscience by those members of congress who vote against a Public Health Insurance option yet continue to take the benefits of their Congressional Health Insurance Program -- which of course is run by the Federal Government.  This will reduce taxes.  And it will be consistent with their words. The 20 percent and their followers can thereby feel better about themselves, and so can the rest of the people.

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Confrontation Rights in Insurance Cases Involving Expert Witnesses?

    In a criminal case, a slim majority of the United States Supreme Court has upheld the right of a criminal defendant to confront her or his accusers under the Confrontation Clause of the U.S. Constitution in Melendez-Diaz v. Massachusetts (U.S. Case No. 07-591, Opinion Filed June 25, 2009).  In this typically long opinion, the focus of the Court's ruling was on "testimonial statements" by crime lab experts that accompany reports used in criminal trials.  Id.

    This case was decided under the Confrontation Clause of the United States Constitution, as noted.  However, this is the same United States Supreme Court that re-ordered the reception and admissibility of Expert Witness Testimony in Federal Courts, of course.  Its decisions in the arena of Expert Witness Opinions have been followed by many State Courts as well.  Will this new decision find application in the field of Expert Witness Testimony in civil cases?  In particular, how will this new decision by the highest Court in the land affect the admissibilty of Expert Witness Opinions in Insurance and Insurance Bad Faith cases?

    Time will tell.

    Note:  The Author is frequently retained as an Expert Witness in Insurance cases including Claims Handling, Coverage, and Good Faith and Fair Dealing.

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