Insurance Claims And Issues

Enhanced Penalties Amendments Did Not Yet Apply, Louisiana Court Holds.

     After many complaints of delays and denials of Insurance Coverage Claims for damages in Louisiana after Hurricanes Katrina and Rita, the 2006 Louisiana Legislature passed amendments to the Louisiana Penalties (or 'Bad Faith') Statute, La. R.S. § 22:658.  "Effective August 15, 2006, La. R.S. 22:658(B) was amended to provide for a fifty percent, rather than a twenty-five percent penalty, and to provide for reasonable attorney's fees and costs."  Aronson_v. State Farm Fire & Casualty Co. (La. Ct. App. 4th Cir. Case No. 2007CA0573, Opinion Filed October 10, 2007).pdf, also available by subscription, at 2007 WL 3015571 *7.

     These statutory amendments have been held to apply to the Insurance Company's conduct at the time of its action, and not simply at the time that it may ultimately pay or deny Coverage.  Aronson, see attached Official Opinion and, by subscription, see 2007 WL 3015571 at *9.

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Insurance Issues: Web Log Posts and Insurance News Reports.

     Posting to a web log involves choices I never imagined.  I prefer fact-based and reasoned analysis of Insurance Issues to opinions.  You know what they say about opinions.  Everybody has one of those, also.

     Fact-based and reasoned analysis of Insurance Issues, in turn, involves time.  Lots of time.  That is why most of my posts, and probably all of my early posts here, are detailed.  Some are downright long.  Can you imagine the amount of time it took to write those posts?

     Recently, I have experimented with providing some analysis and still providing facts for readers, but limiting my reporting to newly decided cases and leaving the discussion of overall trends to others for the most part.  This is not unique to me.  Others have noted the distinction between reporting and most 'blogging'.

     One commentator recently wrote a thought-provoking column about the differences between posts on a web log, and reporting news.    Here is a link to "Blogs:  All the Noise That Fits/The Hard-Line Opinions on Weblogs Are No Substitute for the Patient Fact-Finding of Reporters" by Michael Skube (The Los Angeles Times, Sunday, August 19, 2007).

     My readers can make their own minds up about two recent reports which address Insurance Issues, as to where facts might end and opinions begin--if opinions are expressed at all in these recent reports in two different media.  Here is a link to Bloomberg.com for an article by David Dietz and Darrell Preston, "Home Insurers' Secret Tactics Cheat Fire Victims, Hike Profits" ("Last Updated August 3, 2007").

     And here is a link to the Friday, August 17, 2007 broadcast on NOW on the Public Broadcasting System:  "Home Insurance 9-1-1".

     Which one, either, or both displays the facts vs. opinions?

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Florida Statute Allows Additional Bad Faith Action, Florida Court Holds.

     A new Florida decision is the subject of a post on this date at Insurance Claims Bad Faith Law Blog.   The new decision highlights the total necessity of familiarity in the area of Insurer Good Faith - Bad Faith issues, with local law governing Bad Faith Claims and Causes of Action for the reasons discussed by the Court in this new Florida case:  Download Anthony_Rogers_M.D. v. Chicago Insurance Co. (Fla. 4th DCA Case No. 4D06-1255, Opinion Filed 05.16.07).7.pdf.

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Settlements of Bad Faith Claims ....

                 .... When is That Settlement Confidential and Protected,
                 And When is it Concealment and Void?
There may be an issue under Florida law, whether a settlement of Bad Faith Claims can be kept confidential by the parties as a provision of their settlement agreement, even with a Court's approval.   Under Florida Statute Section 69.081(4):

Any portion of an agreement or contract which has the purpose or effect of concealing a public hazard, any information concerning a public hazard, or any information which may be useful to members of the public in protecting themselves from injury which may result from the public hazard, is void, contrary to public policy, and may not be enforced.

     A "public hazard" under this statute includes any "person" or "procedure" "that has caused and is likely to cause injury."  Fla. Stat. § 69.081(1).    No Court shall enter an order or judgment, it is provided in this statute, "[e]xcept pursuant to this section," which order or judgment has, among other things, "the purpose or effect of concealing a public hazard" or "of concealing any information which may be useful to members of the public in protecting themselves from injury which may result from the public hazard."  Id. (3).

    Time and the Courts will tell which settlement of Bad Faith Claims is confidential and protected, and which is concealment and void.

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Changes in Latitude, Changes in Insurance ...

   Do Not Necessarily Mean Bad Faith or That Statutes  Confer Lawsuits.

    In a recent decision under Michigan substantive law, the Federal Sixth Circuit Court of Appeals says that higher premiums do not necessarily mean Bad Faith.  Here is a citation to this recent decision:  Burl and Cathy McLiechey v. Bristol West Insurance Co., etc., ___ F.3d ___, 2007 WL 219983, 2007 Fed. App. 0049P (6th Cir. Case No. 06.1228, Opinion Filed January 30, 2007)(subscription required).  As of this writing, no link is available to a public report of this decision online after repeated trying.

     Although the nature of the Policyholders' policy is a fact buried deep in this opinion, the case involved unspecified "automobile" insurance.  The Policyholders, Mr.  and Mrs. Burl and Cathy McLiechey, filed their lawsuit in Michigan State Court.   The Defendant Insurance Company removed the lawsuit to Federal Court.  The Federal Trial Court dismissed the McLiechey's complaint.  They appealed.

     The first sentence written by the Federal Appeals Court describes what moved Mr. and Mrs. McLiechey to file a lawsuit:  "Bristol West Insurance Company changed Burl and Cathy McLiechey's insurance policy after the McLiecheys moved into a higher risk area, received a worse credit rating, and had a two week lapse in insurance coverage due to a temporary inability to pay premiums."

     Mr. and Mrs. McLiechey alleged three claims against their Insurance Company on these facts.  Two of the claims are based on Michigan Statutes that, the McLiecheys assert, gave them the right to sue their Insurance Company on these facts.  In their third claim, Mr. and Mrs. McLiechey allege  "that Bristol West breached an implied covenant of good faith and fair dealing".  The McLiecheys did not appeal from the Federal Trial Judge's ruling that they did not state a claim for Bad Faith upon which relief could be granted.  That left the two statutory claims to be addressed by the Federal Appeals Court.

    The Sixth Circuit holds in this new decision that the two Michigan Statutes relied on by Mr. and Mrs. McLiechey -- (1) Mich. Comp. Laws § 500.2101 which is "Chapter 21 of the Michigan Insurance Code, also known as the Essential Insurance Act, which regulates the setting of insurance rates" and (2) "the Michigan Consumer Protection Act, Mich. Comp. Laws § 445.901 et seq."  -- do not give them or anyone else in a situation like theirs, a right to sue their Insurance Company.

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CatClaims, Coverage, Part Disclaimer With Part Payment ....

                            and Florida Statutory Bad Faith.

    Two days before this post, Florida's First District Court of Appeal issued a Catastrophe Claim decision in a First Party Bad Faith case.  The decision does not represent new law but it is significant.  The results are a reminder to people who have handled Claims of this kind and a caution to people who have not.  Here is a link to the case:  http://opinions.1dca.org/written/opinions2006/11-15-06/05-5503.pdf.

    Hurricane Ivan totalled the residence of Mr. and Mrs. Roy and Kerry Golmon in 2004.  Vanguard is the Golmons' Homeowner's Insurance Company.  Vanguard paid part of its policy limits for the residence, a fact which is buried in the opinion, but left unpaid some of the loss to Mr. and Mrs. Golmons' dwelling, and Vanguard did not pay any part of the Golmons' other claimed losses such as Other Structures, Personal Property, and Loss of Use among others.  Vanguard denied any remaining Coverage on the ground that is at the heart of many, many CatClaims Coverage disputes:  Vanguard refused to pay the full policy limit(s) "because the loss to the Golmons' property was caused by both wind damage, which was covered under the policy, and flood damage, which was not covered." 

    The Golmons sued Vanguard for breach of contract and for Florida Statutory Bad Faith.  Vanguard filed a motion to dismiss the Statutory Bad Faith counts which the Trial Court denied.  On appeal, Florida's First District applied established law to hold two things:  First, in Florida establishing Insurance Coverage is a necessary first step or condition to pursuing these Statutory Bad Faith Claims and, in addition, the Insurance Company would be prejudiced if it was forced to defend itself simultaneously on the Contract Claim and on the Bad Faith Counts.  The First District reached these twin holdings regardless of the fact that "Vanguard's attorney conceded at the hearing that the insurer had some liability under the policy".  (Vanguard paid part of its policy limit for loss that Vanguard apparently admitted is covered under its policy.)  The First District held that the Trial Court's finding that Insurance Coverage is undisputed in this case, is erroneous:  "Both the existence of liability and the extent of damages are elements of a statutory cause of action for bad faith that must be determined before a statutory cause of action for bad faith will lie."

    In quashing the Trial Court's Order, however, the First District strongly suggested that the Trial Court should consider abating but not dismissing the Bad Faith Claims against Vanguard while the case goes forward on the Contract Claims in which the issue of Coverage will be determined.
 
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.