Insurance Claims And Issues

Insurance Claims and Issues -- Author's Note: Commercial Advertising Not Authorized, Never Endorsed.

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Canadians Wade into Sandy Losses With Their Own Computer Models.

    Canadian Catastrophe Computer Modelers are wading into Sandy losses.  Aon Benfield estimates "$72 Billion in total economic loss" resulting from Sandy.  "Aon Benfield's cat modeling arm" estimates that of that amount,  total "insured losses" caused by Sandy "are estimated to be $30 billion.  The $30 Billion estimate of the Cat Modelers includes roughly $7.2 billion" in Flood Insurance payouts.   "$72 billion in total economic loss from Hurricane Sandy:  Aon Benfield" in "Daily News" posted online on May 14, 2013 by Canadian Underwriter.ca.

    The industry publication reports confusing and apparently competing facts but apparently concludes that Sandy may not trigger Hurricane Deductibles.  On the other hand, their Computer Modelers are convinced that (excluded) flood and surge caused much more damage than (covered) wind perils.  Id.

Please Read The Disclaimer. 

Related articles

After Sandy, Underwriters, CAT Models View Northeast Like Southeast: NAPCO

LATE NOTICE DID NOT BAR EXPERT OPINIONS. IT BARRED COVERAGE.

          Experts can conclude 4 1/2 years later that they can testify to opinions including, say, on the issues left long ago by Hurricane Wilma as in the case of  Yacht Club on the Intracoastal Condo. Ass'n, Inc. v. Lexington Ins. Co., 2013 WL 1932152 (S.D. Fla. May 10, 2013).

          However, the fact that Experts can come to opinions 4 1/2 years after the event does not establish that notice was prompt.  It establishes only that the experts say they can testify to opinions.  Yacht Club on the Intracoastal Condo. Ass'n, Inc. v. Lexington Ins. Co., 2013 WL 1932152 *4-*6 (S.D. Fla. May 10, 2013).

Please Read The Disclaimer.

D&O COVERAGE EXCLUSION OF DIRECTOR DECISIONS ON CEO PAY?

          Decisions by Directors on CEO pay based on revenue over short performance periods are being called into question.  Alternatives are available, including basing CEO pay on return on the shareholders' investment and over a longer period of time than is currently used by most Directors.

          It seems clear that deliberately or negligently choosing a pay scheme for CEOs based on a model detrimental to shareholders while other, superior models are available is a breach of fiduciary obligations at common law or in equity.  This is a pretty clear result at least in most jurisdictions outside of Delaware, for example.

          Is there an Exclusion for D&O Coverage of such Directors' conduct, such as an excluded breach of fiduciary duties for example?

          The issues of CEO pay, performance periods, and Directors decisions concerning them are raised by Gretchen Morgenson, "Fair Game / Directors Disappoint By What They Don't Do" p. 1, col. 1 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, May 12, 2013).

Please Read The Disclaimer.

Related articles

Delaware's duty of disclosure

SANDY INSURANCE CLAIMS PENDING, ALTHOUGH SANDY IS LONG GONE.

          According to currently reported figures from the United States Small Business Administration, over 3,300 "small businesses and nonprofits" have received "federal emergency loans" totaling $377 Million as a result of damage claims filed after Sandy. 

          According to recently reported estimates from the Insurance Information Institute, approximately "200,000" apparently also referring to "small businesses and nonprofits," filed insurance claims under various coverages for damage to real property including office buildings and fixtures presumably, damage to personal property including "commercial vehicles and other business assets".  See Angus Loten, "For Entrepreneurs, Sandy Still Tests Survival" p. B6, col. 1 (Wall Street Journal "Small Business" Section, Thursday, May 2, 2013).

          The cited newspaper report also addresses anecdotal evidence of what would clearly be Business Interruption Coverage losses if the reported businesses have such Coverage.

          Sandy came in October.  Sandy Insurance Claims are still pending in May, and it is a reasonable estimate that various Sandy Insurance Claims will still be pending in weeks to come.

Please Read The Disclaimer.

Addressing Medicaid in Experience.

    Volume 23 of Experience magazine of the ABA Senior Lawyers
Division addresses "Elder Law Part III, Health Care, continued ...."

    I contribute a "Report from the ACA Battlefront / Medcaid, the ACA, and the Supreme Court," at 23 Experience 14 (2013).

Please Read The Disclaimer.  

Related articles

No Medicaid expansion means businesses will pay

Primary and excess carriers: Working definitions of primary, excess insurance.

          Nothing illustrates the distinction between primary and excess policies more clearly than the respective notice provisions of these policies:

    The notice provisions found in primary and excess insurance policies are often not the same. Because excess coverage is contingent on exhaustion of the primary insurance policy, “excess insurers generally do not require notification of occurrences until the excess policy is reasonably likely to be implicated.” Lumbermens Mutual Casualty Co. v. RGIS Inventory Specialists, LLC, 682 F.3d 46, 52 n. 4 (2d Cir.2010) (per curiam) (emphasis added) (citation omitted); see also Evanston Ins. Co. v. Stonewall Surplus Lines Ins. Co., 111 F.3d 852, 861 (11th Cir.1997) (“Excess policies [ ] usually require an assured to give notice of claims that appear ‘likely to involve’ the excess.”). Not so for primary insurance policies. Primary insurers generally only require notification of any occurrence or law suit that may (as opposed to one that is reasonably likely to) give rise to a claim covered under the policy.[1]

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[1] American Guarantee & Liab. Ins. Co. v. Simon Roofing & Sheet Metal Corp., 2013 WL 961158 *4 (S.D. Fla. March 12, 2013).  [Emphasis by the Court.]

Please Read The Disclaimer.

 

EXAMINATION UNDER OATH IN FLORIDA.

          A condominium association-policyholder produced a person to testify on its behalf at its examination under oath (EUO).  The association had a pending claim for property damage from Hurricane Wilma under its commercial property insurance policy with QBE.  In addition, the condominium association filed a Civil Remedy Notice (CRN), a condition precedent to pursuing a statutory bad faith action under Florida law.

          The policy required, in a standard provision in such insurance policies, among other things that the policyholder submit to examination under oath (EUO).

          However, although the person provided by the association was "its treasurer," the person "knew very little about the claim and did nothing to prepare for the EUO."[1]

          QBE, the commercial property insurer, "provided evidence that [the association's representative who testified at the EUO] did not fully participate in the EUO....  Plaintiff has not rebutted such evidence.  Thus, Plaintiff has not met its burden for summary judgment, and accordingly, Plaintiff's motion will be denied on this issue."[2]

          This is an issue certain to arise again at Trial, should this case proceed that far.

Please Read The Disclaimer.  

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[1] Cypress Chase Condo. Ass'n "A" v. QBE Insurance Corp., 2013 WL 1191413 *6 (S.D. Fla. March 22, 2013).

 

[2] Cypress Chase Condo. Ass'n "A" v. QBE Insurance Corp., 2013 WL 1191413 *6 (S.D. Fla. March 22, 2013).

 

When Travel Insurance Doesn't Travel So Well.

     Travel Insurance may not be everything it's marketed to be.  After Premium payments come Claims sometimes.  People pay the Premiums or they do not have the Insurance.  For their part, sometimes the Travel Insurance Companies seem single-minded in their pursuit of reasons to deny paying the Claims when they come.  These issues are illustrated in an anecdotal piece by an experienced columnist who certainly seems to present all the facts accurately in this piece:  David Lazarus, "A Roadblock to Collecting Travel Insurance Benefits" (Los Angeles Times Online, posted Tuesday, April 23, 2013).

Please Read The Disclaimer.

RELEASES DON'T ALWAYS RELEASE Continued.

The effects of Releases are explored in an article published on Insurance Claims and Bad Faith Law Blog on April 9, 2013, "MISCONDUCT INDUCING FHA INSURED MORTGAGES LITIGATION ALLOWED DESPITE SETTLEMENT AGREEMENT".

          The District Court in the case of National Heritage Foundation, Inc. v. Philadelphia Indemnity Insurance Co., 2012 WL 5331570 *1 (E.D. Va. October 25, 2012), concisely described the question presented in that case and the Court's resolution of it, as follows:

   In this diversity insurance dispute, plaintiff insured makes certain claims for coverage and indemnification under policies issued by defendant insurer, while defendant insurer contends, at this stage, that the claims are barred by a release plaintiff signed in settlement of an earlier lawsuit between the parties. At issue therefore, on cross motions for summary judgment, is the scope of the release. For the reasons that follow, the release, properly construed, bars some, but not all of plaintiff's claims, and thus the parties' summary judgment motions must each be granted in part and denied in part.

       In that decision, a previous Settlement Agreement with a Release barred the Policyholder's recovery from its Directors' and Officers' Insurer of the Policyholder's claimed defense costs incurred in certain prior claims, but did not bar recover of settlement amounts paid by the Policyholder.   National Heritage Foundation, Inc. v. Philadelphia Indemnity Insurance Co., 2012 WL 5331570 *5-*7 (E.D. Va. October 25, 2012).

       The moral of drafting Releases:  Be careful what you Release, or you may not get it.

Please Read The Disclaimer.

GOOD FAITH IN SETTLEMENT AS A MATTER OF PUBLIC POLICY.

    

          A Liability Insurer was sued in New York for allegedly failing to settle underlying claims within the Liability Policy Limits.  The basis of the Bad Faith Claim was apparently that by not settling, the Defendant caused the entry of Judgment in excess of Policy Limits -- principally an assessment of Punitive Damages against the Insured, it would appear.

          In a very short opinion on appeal, the Appellate Division of the New York Supreme Court reversed a Trial Court Order denying the Insurance Company's Motion for Summary Judgment.  The Appellate Division directed the Clerk to enter Judgment dismissing the Complaint.  "[D]efendant is entitled to summary judgment based on public policy precluding an insured from recovering the punitive damages portion of any judgment which may have resulted from the insurer's bad faith failure to settle".  Seldon v. Allstate Insurance Co., 2013 WL 978689 *1 (N.Y. App. Div., 1st Dep't, March 14, 2013).

          In effect, the Defendant Liability Carrier in that case acted fairly and in Good Faith in Settlement as a matter of public policy.

Please Read The Disclaimer.

PART PAYMENT OF PROPERTY INSURANCE CLAIMS STILL REQUIRES POL, EUO.

          Courts have looked carefully at whether Insurance Companies involved in First-Party Bad Faith Cases addressed the clearly covered parts of Coverage Claims, particularly those involving Property Insurance Claims.

          In order to invite this level of attention from Insurance Companies and Courts alike, however, there is more involved than making a Claim and saying to the Property Carrier that part of it is covered, you go figure out what part and pay it.

          Proofs of Loss in such cases must still be as accurate as they would otherwise be required to be under the local law, or Coverage will be forfeit by a Court holding that the Policyholder failed to comply with this condition precedent to recovery under the Policy.  See, e.g., Garden-Aire Village South Condominium Ass'n v. QBE Insurance Corp., 2013 WL 864570 *4 Point 47 (S.D. Fla. March 8, 2013)(Policyholder Condominium Association presenting Hurricane Wilma Claim "did not comply with the Proof of Loss requirements because it submitted items for insurance coverage that were not in fact damaged by Hurricane Wilma.  First, it asked for replacement of every single window, not just those damaged by the storm.  When pressed to clarify whether it was submitting claims for undamaged windows, [the Condominium Association's attorney] refused, suggesting that insurance coverage had been demanded at least in part for windows that had not been damaged by Hurricane Wilma....  Second, Plaintiff claimed damages that its own contractor ... had said were not Wilma-related.  Both overstatements violated Plaintiff's post-loss obligation regarding the proof of loss.").

          In addition, the Policy's requirements concerning Examinations Under Oath remain in effect in such cases, of course, and if a Court determines that the EUO provisions have not been complied with in a given case, the Policyholder runs the risk once again of forfeiting all Coverage where compliance with a Policy's EUO provision is a condition precedent to Coverage, as was the case in Garden-Aire Village South Condominium Ass'n v. QBE Insurance Corp., 2013 WL 864570 *5 Point 71, *6 Points 72-75 (S.D. Fla. March 8, 2013).

          In short, it is generally true that in most jurisdictions Property Insurance Carriers and other First-Party Insurance Companies have a legally enforceable obligation to pay clearly covered parts of claims made upon the Policies they issue.  However, in order to trigger payment in such circumstances there is more involved than simply making a Claim and saying to the Property Carrier that part of the Claim is covered, you go figure out what part and pay it.  When conditions precedent to recovery under the Policy are met, including where Proofs of Loss and Examinations Under Oath are conditions precedent and are met in the given case, the Policyholder's Claim to Coverage may not necessarily be a guaranteed success depending on other facts and the applicable law, but in such cases the First-Party Policyholder's Coverage Claim can continue to  move forward beyond these stopping points.

 

Please Read The Disclaimer.

PUNITIVE DAMAGES, ATTORNEY'S FEES CLAIMS CONTINUE IN OREGON CASE.

          In a case with a long litigation history including appeals to the Supreme Court of Oregon and to the Supreme Court of the United States over Punitive Damages, the Plaintiff in the class action case over Insurance payments recently petitioned for:

1. Attorney's fees and costs "incurred for the appellate work done on review before this court [the Supreme Court of Oregon]";
2. A "supplemental fee award" for "the cost of litigating the fee petition";
3. A second "supplemental fee award" for "the cost of defending against a petition for certiorari in the United States Supreme Court after this court [again, the Supreme Court of Oregon] issued its decision"; and
4. "[A] $5,000 incentive fee for his service on review as class representative."

Strawn v. Farmers Insurance Co., 353 Or. 210, 2013 WL 655063 *1 (February 22, 2013).

     The Oregon Supreme Court granted most of the relief requested, but not all of it:

1. "$72,724.75 in attorney fees and expenses not part of [previously awarded] attorney fees ($70,299.90 and $2,424.85 respectively";
2. "[A]nother $297,850.74 in attorney fees and expenses not part of [previously awarded] attorney fees ($291,012.10 and $6,838.64 respectively on all three fee petitions)"; and
3. "[A] $5,000 class incentive fee to be paid from the punitive damages award in this case."
4. However, the Court denied Mr. Strawn's, the Plaintiff's-Appellant's-Policyholder's, request for class administration fees "without prejudice to Strawn seeking an award of those fees by appropriate application to the trial court."

Strawn v. Farmers Insurance Co., 353 Or. 210, 2013 WL 655063 *19 (February 22, 2013).

     Sometimes a party decides that it just has to litigate even if litigation is expensive.  Of course, that decision ought to take the consequences of failure into the evaluation, just in case.  Even then, a party may decide that the percentage chances in litigation still make litigation worthwhile in that particular case.

Please Read The Disclaimer.

U.S. ATTORNEY PURSUES POLICY OF RECOVERING FHA MORTGAGE INSURANCE LOSSES.

 

This post updates the article published on Insurance Claims and Bad Faith Law Blog on Sunday, April 7, 2013, "FIRREA is Not a Furry Creature for D&O Insurer DJA".  See also the post on Insurance Claims Bad Faith Law Blog published on Tuesday, April 9, 2013, "MISCONDUCT INDUCING FHA INSURED MORTGAGES: LITIGATION ALLOWED DESPITE SETTLEMENT AGREEMENT ".

 

          The Department of Justice appears to have begun a policy of filing civil lawsuits to recover Insurance payments made by the Federal Housing Administration (FHA).  These lawsuits involve allegations against Directors and Officers of Mortgage loan originators inducing the FHA to insure Mortgages which has cost the FHA millions of dollars and will cost the FHA more in past and future Insurance payments on account of the bad and baseless Mortgages in question.  The enforcement of this policy clearly appears to be left to the local United States Attorneys.

For example, such a lawsuit was filed on Thursday, April 4, 2013 by the United States Attorney's Office for the Southern District of New York.  In it, the United States based its action on the following legal sources:  "The Government brings this action seeking damages and civil penalties under the False Claims Act, 31 U.S.C. §§ 3729 et seq., the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), 12 U.S.C. § 1833a, and the common law."  (Paragraph 1, page 2, Complaint, United States v. Movtady and Golden First Mortgage Corp., Filed April 4, 2013, S.D.N.Y. Case No. 13-cv-02227, 32 pages).  Download Complaint.United States of America v. Movtady and Golden First Mortgage Corp. (SDNY Filed 04.04.13, Case No. 13.cv.02227)

          The "common law" Claims include alleged "Gross Negligence," negligence, and Breach of Fiduciary Duty.

          If successful, this civil action and other lawsuits like it, may return substantial amounts of money to the Federal Treasury, which of course means returning substantial amounts of money to the Federal Taxpayers.  The United States Attorney's Office seeks not only Compensatory Damages in this Complaint, but also Penalties and Treble Damages.  The total award could be as much as $100 Million.

Please Read The Disclaimer.

GEORGIA ON MY MIND THREE TIMES: NATIONAL RULES WIN.

          In a recent decision, Georgia law as applied in that case matched national rules and decided the outcome.  First, an Insurer could not both deny a claim for defense and attempt to reserve the right to assert a different defense in the future.  Bank of Camilla v. St. Paul Mercury Insurance Co., 2013 WL 1333519 *5 (M.D. Ga. March 29, 2013).

           In that case, the Federal Court held that the Insurer did not deny a claim for defense.  It was instead a claim for advancement of defense costs which were not covered, and so there was no breach of contract when the Insurer did not advance those defense costs.

           Second, defense coverage depends only on the allegations of  the underlying liability complaint.  Bank of Camilla v. St. Paul Mercury Insurance Co., 2013 WL 1333519 *9 (M.D. Ga. March 29, 2013).

           In this case, the Federal Court held that the allegations of the ULC did not trigger defense coverage.

           Finally, since there is no Coverage in this case, the Federal Court concluded that not only the breach of contract claims should be dismissed, so should the claims for alleged Bad Faith be dismissed as well.  Bank of Camilla v. St. Paul Mercury Insurance Co., 2013 WL 1333519 *11 (M.D. Ga. March 29, 2013).

 

          Please Read The Disclaimer.

THE BASIS OF ALL LEGAL OPINIONS MUST BE THE ACTUAL EVIDENCE:

PART TWO.

This completes an article begun here on Wednesday, April 3, 2013.

 "There's considerable disagreement among sociologists as to what the consequences of raising a child in a single-sex family, whether that is harmful to the child or not."

Associate Justice Antonin Scalia, quoted during oral argument at the United States Supreme Court in the case of Hollingsworth v. Perry/United States v. Edith Schlain Windsor.

 No, there isn't:

"The social science consensus is both conclusive and clear:  children fare just as well when they are raised by opposite-sex parents."

Amicus Brief of the American Sociological Association, the opening sentence of the CONCLUSION on page 31 of  their Brief filed in the United States Supreme Court in the case of Hollingsworth v. Perry/United States v. Edith Schlain Windsor.  [Emphasis added.]

 http://www.asanet.org/documents/ASA/pdfs/12-144_307_Amicus_%20%28C_%20Gottlieb%29_ASA_Same-Sex_Marriage.pdf

 

          Judges are not the only ones who sometimes provide legal opinions basically by ignoring or even contradicting actual evidence to the contrary.  Other people besides Judges sometimes also offer legal opinions despite all the actual evidence to the contrary.  The author is frequently retained as an expert witness on disputed insurance issues.  At the trial of one such case, it came to light that a particular insurance company, its adjusters, claim managers, and counsel were all convinced that its insurance policy did not provide coverage because of a particular exclusion which is often found in policies of the kind at issue in that case.  However, there was no such exclusion in the policy at issue.   See also Claims Management Magazine (August 2012), available for free access on the Publications page of my website.

          In conclusion, there are both definite and also immeasurable costs associated with legal opinions which are not supported or which are even contradicted by the actual facts in the situation.  Lawyers understandably charge their clients more for protracted litigation than they do for early resolution of legal disputes.

         The legal system followed in every known jurisdiction in the United States is based on proof of facts, and there is a good reason historically:  Judgments and opinions have less value to people other than the people who issue the judgment or render the opinion if the judgments and opinions are based on fantasy or foregone conclusions rather than on proven facts.  As the Iowa Supreme Court observed in their unanimous opinion in a recent case, in which the Iowa Supreme Court recognized that statutory restrictions on same-sex marriage are valid only when supported by the actual evidence in the case:

Plaintiffs presented an abundance of evidence and research, confirmed by our independent research, supporting the proposition that the interests of children are served equally by same-sex parents and opposite-sex parents. On the other hand, we acknowledge the existence of reasoned opinions that dual-gender parenting is the optimal environment for children. These opinions, while thoughtful and sincere, were largely unsupported by reliable scientific studies.

 Varnum v. Brien, 763 N.W.2d 862, 899 (Iowa 2009).

           The costs of lives ruined by baseless legal opinions are also immeasurable consequences of this failure.  Just because these costs cannot be calculated does not mean that there are no costs.  There are.

Please Read The Disclaimer.

WHY WE NEED ACTUAL EVIDENCE FOR LEGAL OPINIONS, INCLUDING COVERAGE:

 

PART ONE.

"There's considerable disagreement among sociologists as to what the consequences of raising a child in a single-sex family, whether that is harmful to the child or not."

Associate Justice Antonin Scalia, quoted during oral argument at the United States Supreme Court in the case of Hollingsworth v. Perry/United States v. Edith Schlain Windsor.

 No, there isn't:

 

"SCHOLARLY CONSENSUS IS CLEAR:  CHILDREN OF SAME-SEX PARENTS FARE JUST AS WELL AS CHILDREN OF OPPOSITE-SEX PARENTS."

 Amicus Brief of the American Sociological Association, reproduced here from the first page of their Brief in the original all-caps typeface and font, filed in the United States Supreme Court in the case of Hollingsworth v. Perry/United States v. Edith Schlain Windsor.

  

         The author is an insurance coverage lawyer who for thirty-five years has read and listened to Judges and lawyers and their legal opinions.  I have seen legal opinions which have been reached only by ignoring or even contradicting the proven facts.  In many of those instances the legal opinions naturally enough concerned insurance coverage. 

          Judges often provide examples of  this procedure.  For example, "all risks" property insurance policies contain a broad coverage agreement followed by many exclusions.  When guiding a client or a Court through the provisions of an all-risk policy, it is critical for insurance coverage lawyers to advise that the list of excluded causes of loss in an all-risk property policy guides the determination of coverage, whether for damage incurred during a catastrophic event like Katrina or Sandy, or in a fire or sinkhole collapse.

          The effect of this framework is to place the burden of proving an exclusion on the property insurance company after the policyholder meets the considerably lesser burden of proving coverage in the first place.  Still, some Courts occasionally twist the applicable burdens of proof to require an all-risk property insurance policyholder to prove that exclusions do not apply to the claim.  In such cases, the Courts involved do not quote the insuring agreement in the actual policy in front of them, and they cannot quote it to support a legal opinion that the policyholder under such a policy (or under any policy, for that matter) must prove that exclusions do not apply.  There is no such language written in the standard actual all-risks policy.  See Dennis J. Wall, § 7:1, "Introduction and Interpretation," in JOHN K. DiMUGNO, STEVEN PLITT  & DENNIS J. WALL, et al., CATClaims:  Insurance Coverage for Natural and Man-Made Disasters (West November 2012 ed.).

          Another example of legal opinions that are not supported or are even contradicted by the actual facts, is provided by Courts which hold that a policyholder claiming a covered loss must prove that the loss was "fortuitous"-- even though the policy of insurance is not written to  require it.  Every claimed insurance loss must be accidental and not intentional; that has been a no-brainer as it were for a very long time.  So, it is nothing new for policyholders to prove that their insurance claim is not for a loss that they intentionally caused, lest insurance pay not for a loss but for a crime or the equivalent.

          What is new is for Courts to require that property insurance claimants meet some legal burden of proof, selected and shaped only by the Courts involved, that "all risks" means "fortuitous loss" -- even though the insurance policy does not say anything of the kind.  See  Dennis J. Wall, § 7:4, "'Fortuitous,'" in JOHN K. DiMUGNO, STEVEN PLITT & DENNIS J. WALL, et al., CATClaims:  Insurance Coverage for Natural and Man-Made Disasters (West November 2012 ed.).

To be continued .....

Please Read The Disclaimer.

"AS GOES OHIO" ... HOW GOES OHIO WITH MEDICAID, EXACTLY?

         An influential White House aide's announcement of a change in public healthcare was announced on a date sometime before Friday, March 22, 2013.  The announcement was that the Obama Administration will authorize vouchers to be paid with Federal Taxpayer Medicaid money.  See "Aide Revisits Medicaid, ACA:  Vouchers By Another Name" posted here on March 25, 2013, with a postscript posted here on Friday, March 29, 2013.  This apparent change in public healthcare policy with respect to Medicaid and the Affordable Care Act, as reported in The New York Times, was privately announced over the telephone between White House aide Valerie Jarrett and Ohio Governor Kasich.   See Robert Pear, "Expanding Medicaid With Private Insurance / A Sharp Departure On Health Care Law" p. A14, col. 6 (New York Times Nat'l ed., Friday, March 22, 2013).

       This change in healthcare policy was publicly announced for the first time on Friday, March 29, 2013, although there was no specific mention of Ohio in it or in its linked Frequently Asked Questions.    See Cindy Mann, CMS Deputy Administrator and Director, "Continuing to Work With States to Build New Systems of Health Coverage" (posted on Center for Medicaid and CHIP Services Blog on Friday, March 29, 2013).

        It is a frequently asked question what if any change to Medicaid will take place in Ohio.  In fact, there has been no public announcement at all concerning healthcare law and Medicaid policy change, if any, in Ohio or anywhere else with the single exception of Arkansas.

         In Ms. Mann's blog post, she wrote that "[p]remium assistance has been a longstanding option in both Medicaid and CHIP and is one way to accomplish those shared goals."

        Maybe.  Maybe this is nothing more than a recent application of a pre-existing healthcare policy without any effect on the ACA passed into law by Congress.

       That is not how this policy changed is being perceived.  "The plan is a departure from the 2010 Affordable Care Act, which calls for an expansion of government-run Medicaid, the health program for the poor."  Alex Wayne, "Some U.S. States Can Shift Medicaid Funds to Exchanges" (Bloomberg.com, Saturday, March 30, 2013).  See, in addition, Editorial, "Using Medicaid Dollars for Private Insurance / There Are Major Benefits And Big Risks In What Some Republican-led States Want To Do" p. A16  (New York Times Nat'l ed., Monday, April 1, 2013).

To be continued on Insurance Claims and Bad Faith Law Blog ......

 

 

SAY IT AIN'T SO, SHEILA: THE FDIC'S SECRET SETTLEMENTS.

          I am currently reading with interest Sheila C. Bair's book, "Bull By The Horns".  It is a description of the time spent in office by the Federal Deposit and Insurance Corporation's former Chairman, written by the Chairman herself to describe her office.  During her tenure, which ended on or about July 6, 2009, much of the Financial Crisis exploded on our economy.

           While I am reading Ms. Bair's account of her tenure, reports have surfaced concerning secret FDIC settlements made on her watch with Directors and Officers who allegedly caused or contributed to the cause of the Great Financial Fiasco.  In apparent violation of Federal law, the FDIC agreed to keep the settlements secret unless a specific request was made for disclosure of that particular settlement.  See, e.g.,  E. Scott Reckard, "FDIC Begins to Reveal Settlements Related to Financial Crisis" (Los Angeles Times Online, posted March 19, 2013); William K. Black, "Business Blog / Which Aspect of the FDIC's Litigation Failures is The Most Embarrassing and Damaging?" (Huffington Post, posted March 12, 2013).  Reportedly, Ms. Bair was leading the FDIC "when most of the settlements were completed".  See Scott Reckard, Los Angeles Times, supra.

           Sheila Bair does not mention the fact of FDIC settlements with Directors and Officers of failed banks in her book, let alone that the FDIC agreed to keep them secret, or at least I cannot find any mention of them in her book.  We shall now, perhaps, all hear her side of the story soon.

           In response to a recently published newspaper report in the Los Angeles Times, the FDIC has begun posting information concerning its previously secret settlements on its web site.  The documents will be posted in increments.  As of March 29, 2013, the initial postings consist of  about 45 sets of documents (not simply individual settlements, but in some cases, groups of settlements).  They are collectively labeled by the FDIC as "Professional Liability Agreements by State Since 2008".  The FDIC site also contains a list of 53 "Professional Liability Lawsuits" filed by the FDIC against "officers and directors, attorneys, accountants, appraisers, brokers or others" and "fidelity bond carriers and title insurance companies," between July 2, 2010 and March 7, 2013.

           Examining the 45 pdf's posted to date will take awhile.  If I find anything 'newsworthy' in them, I will post my reviews of these settlement documents as I am able to complete my reviews.  In the meantime, the settlement which has attracted the most popular interest at the present time is the December, 2012 settlement between the FDIC and Michael Perry, who was CEO of failed IndyMac Bank located in California.  IndyMac's failure "cost the [FDIC] $13 billion -- the biggest loss in its 80-year history."  Scott Reckard, Los Angeles Times, supra.  [Emphasis added.]

           The FDIC reportedly secretly settled its claims against Mr. Perry for his agreement to personally pay $1 Million, plus an agreement by Mr. Perry not to engage in the banking industry (for awhile, at least) and also with provisions guaranteeing the FDIC's pursuit of IndyMac's "liability insurers" for $11 Million more.  Professor William K. Black, Huffington Post, supra.

           The Perry settlement was so good that it was announced in EMails sent to news organizations -- reportedly by Mr. Perry's lawyers, not by the FDIC.  The terms of this particular settlement were therefore public knowledge in December, 2012 when the settlement was reached between Mr. Perry and the FDIC.  See Kevin LaCroix, "IndyMac CEO Settles FDIC's Failed Bank Suit" (The D & O Diary, posted December 17, 2012).   

           In contrast, one alleged seller and/or deliverer of Mortgages to IndyMac Bank, Quicken, agreed to pay 6.5 times as much money, or $6.5 Million, to settle the FDIC's claims against it, and "[w]ithout admitting liability".  (See the 65th page in the 230 page pdf labeled, "IndyMac2", among the FDIC's "Professional Liability Settlement Agreements by State Since 2008".)

           On the whole, it seems less expensive to be a failed CEO than it does to be a failed Mortgage 'seller and/or deliverer'.  On the whole, as well, there are many legal entanglements with secret settlements that make these agreements unwise, and the price of keeping them secret exorbitant.  This is a good rule of thumb to follow when making all types of insurance settlements, it seems:  As a general rule at least, keep them open and transparent.  See generally DENNIS J. WALL, 1 LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:107, "Settlement of Third Party Bad Faith Claims:  Confidentiality (protected) or Concealment (Void)" (West Third Edition; 2013 Supplement in process); 2 id. § 9:28, "Settlement of First Party Bad Faith Claims:  Confidentiality (Protected) or Concealment (Void)".    

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Postscript to "Aide Revisits Medicaid, ACA: Vouchers By Another Name".

Good Friday 2013

Who told you that it is necessary to destroy Medicaid in order to save it?  See the article posted here on Monday, March 25, 2013, "White House Aide Revisits Medicaid, ACA:  Vouchers By Another Name".    

    Other adventures in Medicaid dismantling have already begun.  In Tennessee, being among the first to make a telephone call to the Tennessee Department of Human Resources may allow Tennesseeans to enroll in Medicaid in that State.  However, if they do not dial quickly, they lose.  See "Just When I Thought I Had Seen Everything, Dialing for Coverage" posted on March 26, 2013 on HealthLaw Prof Blog.  See, in addition, Ankita Rao, "Tight Medicaid Eligibility Leads to More Adults Delaying Care," posted on Capsules The Kaiser Health News Blog on Wednesday, March 27, 2013.

    At the same time, the Governor of Tennessee and the Department of Health and Human Services have weighed in on dismantling Medicaid,  in addition to restricting access to it.  The Governor is the more explicit of the two, saying that he will not recommend the expansion of Medicaid for Tennesseeans until he is told by HHS that it will allow the use of Federal Taxpayers' Medicaid funds to be payed to commercial health insurance companies, rather than being used as authorized for Medicaid.  One of the guarantees that the Tennessee governor reportedly is demanding from HHS is that the indigent persons who receive Medicaid shall pay for it, "if they can afford to."  See Abby Goodnough, "Governor of Tennessee Joins Peers Refusing Medicaid Plan" (New York Times Online, posted Wednesday, March 27, 2013).  

   Memo to the governor:  Medicaid is a program for poor people.  If they could afford to pay for Health Insurance Coverage, they would not qualify for Medicaid.

    In the meantime, "HHS has signaled it is willing to consider proposals by governors to use Medicaid dollars to buy private plans for residents as an alternative to forgoing the funds altogether and leaving those people uninsured."  Louise Radnofsky, "Tennessee Holds Off On Medicaid Expansion" p. A4, col. 2 (Wall Street Journal, Thursday, March 28, 2013), subscription required by the Wall Street Journal in order to obtain Online access.

    During the Vietnam War, an anonymous Army officer famously remarked that "It was necessary to destroy the village in order to save it."

    Now, some State and Federal officials and White House aides are similarly remarking, for all intents and purposes, that it is necessary to destroy Medicaid in order to save it.

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Exercising An Opportunity to be Heard on Lender Placed Insurance.

          The Federal Housing Finance Agency ("FHFA") has issued a Notice that it invites our Comments on restrictions it should consider placing on Lender Placed (Force Placed) Insurance under Mortgages involving Fannie Mae and Freddie Mac:  Download LPIregister32613.pdf.FHFA Notice of Restrictions Proposed on Lender Placed Insurance Terms and Conditions.  The FHFA is the Conservator for these two government sponsored enterprises ("GSEs").

          Specifically, the FHFA is interested in hearing from anyone interested in these areas in which the FHFA is considering restrictions on Lender Placed Insurance:

The specific practices related to lender placed insurance that FHFA has determined pose risks to the Enterprises or run contrary to the duties of the Conservator and for which actions are specified are practices where there are concerns regarding conflicts between parties to the insurance agreement, including:

1. Certain Sales Commissions. The Enterprises shall prohibit sellers and servicers from receiving, directly or indirectly, remuneration associated with placing coverage with or maintaining placement with particular insurance providers.

2. Certain Reinsurance Activities. The Enterprises shall prohibit sellers and servicers from receiving, directly or indirectly, remuneration associated with an insurance provider ceding premiums to a reinsurer that is owned by, affiliated with or controlled by the sellers or servicer.

 Id. at 4.

           The Comment period will end 60 days from publication of the FHFA Notice in the Federal Register.  In an abundance of caution, I am calendaring Friday, May 24, 2013 or the 60th day by my calculations after the Notice was signed by the FHFA Acting Director on March 25, 2013, in order to be absolutely certain my input makes the FHFA deadline.

          Here are the portals through which the FHFA will receive our incoming input:

FHFA will accept public input through its Office of Housing and Regulatory Policy (OHRP), no later than [INSERT DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER], as the agency moves forward with its deliberations on appropriate action. Communications may be addressed to Federal Housing Finance Agency, OHRP, Constitution Center, 400 Seventh Street SW., Ninth Floor, Washington, DC 20024, or emailed to LPIinput@fhfa.gov. Communications to FHFA may be made public and posted without change on the FHFA Web site at http://www.fhfa.gov, and would include any personal information provided, such as name, address (mailing and email), and telephone numbers.

Id. at 4-5.

This is our opportunity to have our voices heard!  Won't you  join me in insuring that this opportunity is placed on Lender Placed Insurance?

A similar announcement will be posted tomorrow, Thursday, March 28, 2013, on Insurance Claims and Bad Faith Law Blog.

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WHITE HOUSE AIDE REVISITS MEDICAID, ACA: VOUCHERS BY ANOTHER NAME.

           An influential aide to the President is reportedly telling State officials that the Obama Administration will encourage, and will not object, to the previously unauthorized use of Medicaid subsidies to pay Premiums to Private Insurance Companies.  The use of this Federal money is not authorized by the Affordable Care Act.  I am not aware of any other Federal Statute authorizing it.  The Health Insurance Coverage provided by private, commercial Health Insurance Carriers is almost always less than the Coverage that Medicaid provides (which is one reason Congress enacted Medicaid in the first place).

          This is certainly a policy shift which echoes the use of Federal Funds to pay money directly to investment banks once the Troubled Assets Relief Program ("TARP") passed Congress on the representation that TARP funds would be targeted to relieve troubled homeowners in the general public.  Now, Federal Medicaid money will reportedly be shifted by the Obama Administration from paying for Medicaid.  Instead, the Federal Medicaid subsidies will be made available to purchase commercially provided Health Insurance from private Health Insurance Companies.  See Robert Pear, "Expanding Medicaid With Private Insurance / A Sharp Departure On Health Care Law" p. A14, col. 6 (New York Times Nat'l ed., Friday, March 22, 2013).

          To rephrase a line from a poem by Robert Frost, "You can't call it Medicaid, 'cause it ain't."

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THE EXPERT WITNESS: SELECTING AND MANAGING A VITAL RESOURCE.

          Miracle Temple Christian Academy accepted partial payment of its Property claim.

          Its Property Insurance Carrier, Church Mutual, paid the part of Miracle Temple's claim which both parties agreed was covered.  That amount came to a covered loss of $28,065.50, less a $1,000.00 Deductible.  Miracle Temple Christian Academy v. Church Mutual Insurance Co., 2013 WL 820588 *2 (E.D. Pa. March 6, 2013).

          In making this partial payment of all the undisputed covered elements of its Policyholder's Property Loss Claim, Church Mutual was arguably acting in demonstrably verifiable Good Faith under the majority view which holds that Property Carriers should demonstrate their Good Faith by paying undisputed, covered portions of Property Insurance Claims.  The majority view and arguments pro and con are discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:27,  "Insurer's Payment of Undisputed Covered Amounts--Part Payment of Property Insurance Claims" (West Publishing Co. Third Edition, 2013 Supplement in process).  It is presumably for this reason that Miracle Temple dismissed both its Bad Faith Claim and its Fraud Claim early on after it filed suit against Church Mutual, proceeding only on its Claim for alleged Breach of Contract.

          Miracle Temple sued Church Mutual to recover "the remaining disputed loss."    Miracle Temple Christian Academy v. Church Mutual Insurance Co., 2013 WL 820588 *2 (E.D. Pa. March 6, 2013).  Church Mutual filed a Motion for Summary Judgment, arguing that Miracle Temple's remaining loss was due to excluded "wear and tear" and that Miracle Temple had failed to present any proof otherwise.

          Miracle Temple countered with an Expert Report.  After examining the Expert's Opinions and the bases for them expressed in that Report, the Court concluded that the Expert's Opinions "are specific enough that, in combination with the other evidence presented, the jury could find that there was additional damage to Miracle Temple's property that is not excluded by the normal wear and tear provision of the policy.  In short, though the circumstances under which [the Plaintiff's Expert] conducted his investigation were far from ideal, these shortcomings do not preclude his investigation from being based on adequate facts or data."   Miracle Temple Christian Academy v. Church Mutual Insurance Co., 2013 WL 820588 *4-*5 (E.D. Pa. March 6, 2013).  The District Court accordingly denied the Property Carrier's Motion for Summary Judgment in that case.

The Expert Witness:  Selecting and Managing  A Vital Resource is one of the articles in Property Casualty 360 (March 12, 2013), for example, featuring best practices concerning your Expert Witnesses and other parties' Expert Witnesses.  You can read these best practices online or print them, free, from the Publications Page of my website.

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THE SUPREME COURT AND THE ACA REGULATION'S CONTRACEPTIVE PROVISION.

THE QUESTION THAT THE COURTS – BUT ONE -- IN DECISIONS ISSUED IN RELIGIOUS CHALLENGES TO THE CONSTITUTIONALITY OF AN ACA HEALTH INSURANCE COVERAGE REG, SO FAR ALL SEEM TO SIDESTEP:

          “[T]his Court declines to reach the question of whether a secular limited liability company is capable of exercising a religion within the meaning of RFRA [Religious Freedom Restoration Act of 1993] or the First Amendment.”

          O’Brien v. United States Dep’t of Health & Human Serv’s, 2012 WL 4481208 *4 (E.D. Mo. September 28, 2012).  See Tyndale House Publishers, Inc. v. Sebelius, 2012 WL 5817323 *5 (D.D.C. November 16, 2012); Legatus v. Sebelius, 2012 WL 5359630 *5 (E.D. Mich. October 31, 2012).

           The one case found to date in which a Court did not sidestep this issue is Hobby Lobby Stores, Inc. v. Sebelius, 870 F. Supp. 2d 1278 (W.D. Okla. 2012), injunction pending appeal denied, 2012 WL 6930302 (10th Cir. December 20, 2012), and injunction pending Supreme Court appellate review denied, 133 S. Ct. 641 (U.S., December 26, 2012)(Sotomayor, J.).

           “Churches and other religious organizations or religious corporations have been accorded protection under the free exercise clause, [citations omitted], because believers ‘exercise their religion through religious organizations.’  [Citation omitted.]  However, Hobby Lobby and Mardel are not religious organizations. Plaintiffs have not cited, and the court has not found, any case concluding that secular, for-profit corporations such as Hobby Lobby and Mardel have a constitutional right to the free exercise of religion.”

 Hobby Lobby Stores, 870 F. Supp. 2d at 1288.  [Emphasis added.]

 

These and many other issues will be addressed today by the author at a Webinar from Noon to 1:00 P.M. ET, "Religious Issues in the Supreme Court:  The Affordable Care Act's Contraceptive Provision," broadcast live by West Legal Ed Center (and available there on demand 24/7 for a limited time).  See also Dennis J. Wall and John K. DiMugno, "Challenging the Contraceptive Provision / A Plea For Good Medicine and Pleader Credibility," posted on Friday, March 15, 2013 on Legal Solutions Blog.

 

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Force-Placed Insurance vs. Implied Covenant of Good Faith, Fair Dealing ....

.... Continued.  This is the concluding post of an article which began on Insurance Claims and Bad Faith Law Blog on March 5, 2013.

     In contrast, this defense is regularly argued in other cases which also contain express contracts.  Courts have found that this argument may be an obstacle but it is not an insurmountable obstacle for most Courts in most cases.

     Most Courts still hold even where an express contract is present that breach of the implied covenant can be alleged in these force-placed insurance cases.  They require however that the lender's alleged scheme (and these cases almost certainly will present allegations of a lender's scheme) (1) "contravenes" the purpose of a provision in the parties' express contract and (2) obstructs the borrower's "reasonable expectations" of how that lender would act in exercising the authority conferred by the express provision to force the placement of insurance.  Montanez v. HSBC Mortgage Corp., 2012 WL 2899371 *7 (E.D. Pa. July 17, 2012).

     When such allegations are pled, most Courts hold that such allegations state a claim of breach of the implied covenant upon which relief can be granted.  E.g., Cannon v. Wells Fargo Bank, N.A., 2013 WL 764964 *12 (D.D.C. March 1, 2013); Williams v. Wells Fargo Bank N.A., 2011 WL 4901346 *4 (S.D. Fla. October 14, 2011); Abels v. JPMorgan Chase Bank, N.A., 678 F. Supp. 2d 1273, 1278-79 (S.D. Fla. 2009); see, e.g., Lass v. Bank of America, N.A., 695 F.3d 129, 138 (1st Cir. 2012)(Massachusetts law); Kolbe v. BAC Home Loans Servicing, LP, 695 F.3d 111, 123 (1st Cir. 2012)(New Jersey law).

     Further, in many force-placed insurance cases, borrowers-plaintiffs allege breach of implied covenant claims as breach of contract claims, or the Courts in force-placed insurance cases treat these claims as breach of contract claims.  Rule 12(b)(6) motions to dismiss implied covenant claims are regularly denied whenever a motion to dismiss a breach of contract claim would be denied under that Federal Rule.  E.g., Ellsworth v. U.S. Bank, N.A., 2012 WL 6176905 * 15, *18 (N.D. Cal. December 11, 2012)(Beeler, USMJ); McNeary-Calloway v. JP Morgan Chase Bank, N.A., 863 F. Supp. 2d 928, 954-55 (N.D. Cal. 2012)(Spero, USMJ, exercising jurisdiction by consent; holding under both California and New Jersey law that the separate plaintiffs simultaneously alleged sufficient claims both for breach of contract and for breach of the implied covenant of good faith and fair dealing); Webb v. Chase Manhattan Mort. Corp., 2008 WL 2230696 *16 n.8 (S.D. Ohio May 28, 2008)("Under Ohio law, there is no tort cause of action for breach of the covenant of good faith that is separate from a breach of contract claim.  Therefore, if a breach of duty of good faith and fair dealing is asserted as part of a contract claim, it must be alleged as part of that contract count; it cannot stand alone.").

These posts are adapted for Insurance Claims and Bad Faith Law Blog and Insurance Claims and Issues Weblog from a forthcoming article in Insurance Litigation Reporter.

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ALL, PART PAYMENT DELAYED OF FLORIDA PROPERTY INSURANCE CLAIMS ... The Conclusion.

This is the conclusion of an article begun in a post on Insurance Claims Bad Faith Law Blog on Sunday, March 10, 2013.

           The provision of Florida Statute Section 627.70131(5)(a) which pertains to this discussion sets out a 90-day window within which to pay certain claims:

 (5)(a)Within 90 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer which reasonably prevent such payment.

          The charter fishing boat Joe Cool was recently the subject of a Claim under this Statute.  The Joe Cool was hijacked and damaged.  Certain parties made Insurance claims, although the actual Policyholder was not one of the parties making the Insurance claims at issue.

          A Florida Appellate Court pointed out that these Claims were not subject to Florida Section 627.70131(5)(a) for three good reasons.  First, the Florida Statute applies only to residential property insurers.  Great Lakes Reinsurance (U.K.) PLC v. Branam, 2013 WL 811677 *6 (Fla. 3d DCA March 6, 2013)(STATED NOT FINAL UNTIL RELEASED FOR PERMANENT PUBLICATION).   In making this ruling, the Appellate Court only followed the restrictions expressed in Subsection (4) of the same Florida Statute:  "(4) For purposes of this section, the term “insurer” means any residential property insurer."  In this case, Great Lakes was acting as a Marine Insurer and the Florida Statute did not apply for that reason.

          Second, Subsection 627.70131(5)(a) applies to Claims received "'from a policy holder.'"  Great Lakes Reinsurance (U.K.) PLC v. Branam, 2013 WL 811677 *6 n.5 (Fla. 3d DCA March 6, 2013).  [Emphasis by the Court.]  As noted above, the claims at issue were not received from a Policyholder.

          Third and perhaps most important, Florida law did not apply in this case according to the Appellate Court.  New York law applied here.  Even under New York law, there were no such applicable deadlines the Florida Appellate Court ruled, and the Claims at bar were legally insufficient.  The Appellate Court therefore reversed the Trial Court's denial of the Carrier's Motion for Entry of Directed Verdict and remanded with instructions to enter Judgment for Great Lakes.    Great Lakes Reinsurance (U.K.) PLC v. Branam, 2013 WL 811677 *6-*7 (Fla. 3d DCA March 6, 2013).

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INSURANCE COMPANY'S LETTER SAYING "EXCESS" IS NOT A DENIAL, SAYS ILLINOIS DCA.

          A District Court of Appeal in Illinois holds that a letter from a First-Party Insurance Carrier to its Insured which says that the Carrier's Coverage is "excess" to the Coverage of another Carrier because of their competing "other insurance" clauses, is not a denial of Coverage.  Burress-Taylor v/ American Security Insurance Co., 2012 Ill. App. (1st) 110554, 980 N.E.2d 679, 685-86 ¶¶ 20 & 21, 2012 WL 5292848 *5 ¶¶ 20 & 21 (Ill. 1st DCA October 26, 2012)("Nothing in the letter indicates that plaintiff's claim was denied....  At most, the letter apprises plaintiff of the status of her claim and the policy's limits.  This is not tantamount to a denial.").

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"THE WAGES OF SIN" ... IS PAYING THE OTHER PARTY'S ATTORNEY'S FEES Continued.

This is the conclusion of an article which began with the post here on Wednesday, February 27, 2013.

      A little over one month after the lawsuit was filed, and approximately one month after the homeowner's Motion for Leave to Amend to Add a Punitive Damages Claim was filed, the Carrier paid the homeowner "the depreciation amount it had previously withheld from the appraisal award."  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 (Fla. 3d DCA February 20, 2013).  This amount was $49,000.00.  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *2 (Fla. 3d DCA February 20, 2013). 

     After determining the issue of the homeowner's entitlement to Attorney's Fees, and after three days of testimony from the homeowner's attorney, from an Expert Witness for the homeowner, and from an Expert Witness for the Homeowner's Insurance Company, the Trial Court considered the homeowner's attorney's claim for 225 hours of time at $650.00 per hour.  Following Florida law in such matters, the Trial Court entered "a very detailed Order." The Trial Court used a required lodestar approach to enhanced attorney's fees in such cases "and the eight factors required to be used in an attorney's fees hearing, pursuant to Rule 4.1-5(a), Rules of Professional Conduct." The Trial Court also consulted several Florida Supreme Court decisions controlling these points.  The Trial Court awarded "150 hours at $450.00 per hour plus a multiplier of 2.0 with costs and expert fees."  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *2 (Fla. 3d DCA February 20, 2013).

     The resulting award of Attorney's Fees totals $138,000, "close to three times the amount of the recovered depreciation amount."  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *2 (Fla. 3d DCA February 20, 2013).

     The Homeowner's Carrier then made a firm decision.  It decided that it would be a good idea to appeal the award in this case.

     The Florida Appellate Court disagreed.  It affirmed the award.

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Related articles

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"THE WAGES OF SIN" IS ... PAYING THE OTHER SIDE'S ATTORNEY'S FEES.

      Hurricane Katrina caused wind damage to a Miami home on August 25, 2005.  The homeowner filed a claim with his homeowner's carrier.  The homeowner, who did not have legal counsel at the time, went to arbitration with his insurance company.  And the homeowner won.  A neutral Umpire and the insured's chosen appraiser rendered an appraisal award in the homeowner's favor on November 2, 2006.  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 (Fla. 3d DCA February 20, 2013)(STATED SUBJECT TO REVISION OR WITHDRAWAL UNTIL RELEASED FOR PERMANENT PUBLICATION).

     The Homeowner's Carrier's representatives said that the Carrier could not tell whether the Appraisal Award included a deduction for depreciation, however.  It attempted to contact the Umpire more than once, without getting a reply.  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 (Fla. 3d DCA February 20, 2013).  At this point, the Carrier in this case had several options.

     The Carrier could have asked its own chosen Appraiser whether the Appraisal Award included a deduction for depreciation.  It did not ask.  In fact, the Florida Appellate Court commented on this decision in a way which I do not recall ever seeing before in a reported opinion from any Court anywhere in the country.  "We note that, and wonder why," said the Court in this case, "the record before this Court is devoid of any explanation from the insurer's appraiser as to this question." Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 n.1 (Fla. 3d DCA February 20, 2013).  [Emphasis added.]

     The Homeowner's Carrier could also have sought declaratory or other relief from a Florida Court to resolve the depreciation deduction issue.  It did not.  See   Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 n.2 (Fla. 3d DCA February 20, 2013).

     Instead, the Carrier "unilaterally" calculated what would be the amount of depreciation to deduct from the homeowner's claim.  The Carrier then deducted that amount from the amount of the Appraisal Award and sent a check for that amount to the homeowner.

     The homeowner retained a lawyer and filed suit against the Carrier on March 2, 2007.  The homeowner's Complaint is in three counts for alleged Breach of Contract, Bad Faith, and to Confirm the Appraisal Award.  Six days after filing the Complaint, the homeowner's lawyer sent the Carrier a copy of a letter along with a Motion to Amend the Complaint to add a Punitive Damages Claim against the Carrier.  The letter was from the neutral Umpire to the homeowner's attorney "stating that depreciation had already been deducted from the final appraisal award."  The homeowner's attorney, parenthetically, received the Umpire's letter approximately one week before the lawsuit was filed against the Carrier.  Sunshine State Insurance Co. v. Davide, 2013 WL 616226 *1 (Fla. 3d DCA February 20, 2013).

 

To be continued ....

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Essential Health Benefits Final Rule: Mental Health Covered. Autism?

    The Department of Health and Human Services has issued its final Rule defining required "essential health benefits" under the Affordable Care Act.  Download FINAL RULE.HHS.ESSENTIAL HEALTH BENEFITS.022113  Early reporting is not so certain about what it includes.

     It is apparently certain that the final Rule includes something called "Mental Health" Coverage as an Essential Health Benefit.  "Essential health benefits" is a shorthand description of what every Policy and Plan subject to the ACA is supposed to include, unless exempted.  It is apparently less certain what this actually means.  In other words, it is apparently unclear what the new Rule means in its reference to "Mental Health" Coverage.  In particular, it may not be known for some time whether and to what degree Coverage for Autism is going to be a required Essential Health Benefit in future Health Insurance Policies and Plans.  See Robert Pear, "New Federal Rule Requires Insurers to Offer Mental Health Coverage" p. A15, col. 1 (New York Times Nat'l ed., Thursday, February 21, 2013).

    One way to search out the place of Autism in the complex regulatory world spawned by the ACA is to ask advocates.  "Autism Speaks, an advocacy group, said so far only half the states planned to include the therapy [referring to an unidentified therapy for Autism]."  See Jennifer Corbett Dooren, "Health Law Gets New Clarity" p. A2, col. 1 (Wall Street Journal, Thursday, February 21, 2013)(subscription required to read the full article online).  Compare Wall Street Journal, supra, with New York Times, supra (in which the senior policy analyst at the same Autism Speaks is cited as authority for the statement that 32 States have laws requiring Coverage of Autism treatments).

    As we move forward implementing the new final Rule, along with the rest of the ACA's provisions, Rules, and Regulations, it will become more clear whether Essential Health Benefits include treatment for Autism and exactly what Essential Health Benefits treatment of Mental Health actually involves.  We will keep checking in, and we will share the results of our searches with you here.

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A VISIT TO THE ADJUSTMENT PROCESS, CONTINUED.

This post continues the article begun here on Presidents' Day, Monday, February 18, 2013.

 

           In any case, the insurance company's adjuster fulfills the adjustment responsibilities of the insurance company, in whole or in part, by first determining coverage; second, by ascertaining the cause of loss, and third, identifying the policyholder's likely damages as a result of the loss. An adjuster for the insurance company may perform or contract with other persons to perform other tasks, but those are the main tasks ordinarily required of insurance companies that issue property insurance policies. In performing one or more of these tasks, the adjuster for the insurance company may hire contractors to stem the damage at or to inspect the site of the claimed loss, and issue reservations of rights or disclaimer letters to the policyholder.  See, e.g., Superior Aluminum Alloys, LLC v. U.S. Fire Ins. Co., 2007 WL 1850841 *2 (N.D. Ind. June 25, 2007) (“After Superior submitted the loss to U.S. Fire, it assigned the claim to its adjuster and hired a senior analyst to evaluate Superior's damages.”), app. dismissed per online docket (7th Cir. 2007);  Allstate Ins. Co. v. Hunter, 242 S.W.3d 137, 139 (Tex. Ct. App. Fort Worth 2007).

 

See generally Dennis J. Wall, § 2:2, "Overview of the Participants in the Claims Handling Process" in John K. DiMugno, Steven Plitt, and Dennis J. Wall, CATClaims:  Insurance Coverage for Natural and Man-Made Disasters"(West, November, 2012 ed.)

 

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