Claims And Issues

But, When A Court Declares What Evidence is Required to Bar All Coverage ...

         ... After That, It Is Good Business to Act Accordingly.

     Mr. Joe Nocera, the knowledgeable "Talking Business" columnist for The New York Times, writes that "A Contract Is a Contract, Right?"  Here is a link to Mr. Nocera's insightful column:  Joe Nocera, "A Contract Is a Contract, Right?"  (Talking Business, New York Times, Saturday, February 24, 2007, p. B1, col. 1). 

     Mr. Nocera knows a lot about how to conduct business, and it shows.  The theme of his column is that many events in Mississippi bring pressure on an Insurance Company to make Homeowner's and other Property insurance contracts pay claims of Policyholders so that they can rebuild after Hurricane Katrina.    The Insurance business climate in Mississippi is not the same as in Louisiana and Alabama, Mr. Nocera points out, and in those states Hurricane Katrina (among other Hurricanes) also caused great damage.  Mr. Nocera's column involves political reality in Mississippi, and Mr. Nocera's business experience heightens that reality.

     However, the column does not reflect reality of the courtroom in Mississippi.  It does not accurately represent key rulings of a Federal Judge, instead seemingly bending the description of those rulings to fit the theme of contract manipulation.  Instead, the focus should have remained on how an Insurance Company can adjust to current business conditions in Mississippi -- which in Mississippi clearly and indisputably now include the reality of a Federal courtroom.

     Mr. Nocera first alleges that the Federal Judge, the Honorable L.T. Senter, Jr., stuck an Insurance Company with Punitive Damages amounting to $1,000,000.00.  That is false.  Reality is not hidden in this instance; it was posted here on February 1, 2007 involving an Order entered in the Broussard case on January 31, 2007 by Judge Senter which states the matter clearly.

     A Federal Jury assessed punitive damages in the Broussard case.  The amount which the Jury assessed was $2,500,000.00.  Judge Senter reduced that amount to 40% of the Jury's original assessment, to $1,000,000.00.  The Federal Judge did not 'stick' anybody with anything in this regard; the result of the Judge's action is in the Insurance Company's favor here.

     Mr. Nocera further writes that the Policyholder attorneys attempted a 'tactic' in the Broussard case; they attacked the Insurance Company's standard Flood Exclusion and their 'tactic' failed.  The reality is that Judge Senter rejected the Policyholder attorneys' legal arguments against the Flood Exclusion.  The Court upheld the standard Flood Exclusion.

     Last,  Mr. Nocera voices his impression that the evidence should not reflect that the Insurance Company followed a practice of denying Coverage to Policyholders based on the Flood Exclusion.  Mr. Nocera's conviction appears to be honestly held.  So does the conviction of the Federal Jury appear to be honestly held.  The Jury did not assess Punitive Damages in the Broussard case because of a Flood Exclusion in and of itself, however.

     The Jury assessed Punitive Damages because there was undisputed evidence of the Insurance Company's claims handling, that the Insurance Company never made one settlement offer even in the many months after Judge Senter ruled that the Flood Exclusion alone would not bar ALL Coverage unless the Insurance Company proved that ALL of the damages claimed by the Policyholders were caused by Flood.

     These facts I have just mentioned were not easily found.  The results of my own efforts to find them are posted here.  See my posts of January 12, 2007 and February 1, 2007 in particular, along with my earlier posts here on January 9, 24, 27, and 28, 2007.  The reality in the Federal Courtroom in Mississippi is reflected there.

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CatClaims Insurance Premiums and the "Law of Unexpected Results".

     Many Policyholders in Florida live in the Central part of the State.  Many blame recently increased Premiums for all forms of CatClaims Insurance Coverage on Floridians who work and live in the coastal areas, since that is where the Hurricanes of 2004 and 2005 struck -- although Charley hit many parts of Central Florida hard in 2004.

     This year at least some Policyholders, particularly the elderly, decided that recent Insurance Premium increases are just too much to bear.  They have decided to go "bare", that is, not to renew their Policies because they cannot pay or choose not to pay the new Premiums.  Some elderly Floridians have decided that they would stand the risk of facing new CatClaims in the few years they have left ahead of them, in a part of Florida where few CatClaims have ever been generated.

      On Friday morning, February 2, 2007, a line of tornadoes which were the first Catastrophic weather disturbances to be measured by a new scale, ripped through parts of Central Florida with 160 mile-an-hour winds.  Some of the areas where the tornadoes struck were retirement locations and some of the residents are among those who recently decided to run the risk of future CatClaims and "go bare".  Now they have no home and no Insurance Coverage, at all.

     These and related developments are discussed in a fact-laden news article by Lynn Waddell, "Insurers Don't Expect Problems After Twisters" (New York Times Nat'l Ed., Tuesday, February 6, 2007, p. A17, col. 2).
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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.

                                            Please read the Disclaimer.

Tort Claims, With or Without CatClaims Insurance.

     Rising damages from Catastrophes cause rising tort claims.  These claims are in addition to CatClaims for Insurance Coverage.  Their coming after Hurricane Katrina, for example, is commented on for many months including in this article originally published a month after Katrina struck, and updated in 2006:  Dennis J. Wall, "Flood Exclusions in Windstorm Policies:  Knowing the Insurance Coverage Issues"  The Briefs 9 (2006).

     The Army Corps of Engineers is being sued in the United States District Court for the Eastern District of Louisiana.  The allegedly damage-causing project is called "Mr. Go" or "the Mississippi River Gulf Outlet".  It is a canal or channel completed in 1965.  Its defects have been raised since then, including assertions that it gives salt water an inland route and that it has destroyed natural storm barriers such as swamps and marshes.  A Federal Judge is reported to rule that the lawsuit may proceed without immunity, in an article by John Schwartz, "Court Clears Way For Suit On New Orleans Flooding" (New York Times, Nat'l Ed., Saturday, February 3, 2007, p. A10, col. 1).
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"Good Heavens -- It's Not Health Insurance! Is it?"

This Post was originally done on October 21, 2006.  A Postscript is added, below, on February 3, 2007:

    Health insurance is regulated by the government.  Freedom of religion is not so regulated.  A current New York Times news article raises an interesting question:  When do earthly activities make something health insurance, or make it heavenly.  Whatever the outcome in any one of these particular situations, the Insurance issue is just one issue involved.  The major issues are announced in the headlines of the news article:  "A Business Under God's Law, Church Mission Operates Beyond the Reach of Regulators" by Diana B. Henriques, page C1, column 2 (New York Times Nat'l Ed. October 20, 2006).  Here is a link for public access to it online:  Diana B. Henriques, "A Business Under God's Law ...." (New York Times October 20, 2006).

Postscript on Saturday, February 3, 2007:

Lawyers for the State of Kentucky argue to a Kentucky (State) Circuit Court Judge that the operation at issue above, is declared to be the business of insurance in 4 states:  Montana, Illinois, Wisconsin and South Dakota.  The Kentucky Judge alone holds that the operation is not a regulated business of insurance.  The lawyers argue that the Judge should reconsider his two-week old ruling.  For an informative update to the  October, 2006 report see Diana B. Henriques, "Regulators Challenge Kentucky Ruling Favoring Religion-Based Health Plan" (New York Times, Friday, Feb. 2, 2007, Business Day Section page C4, col. 1).

                                      REMINDER:  Please read Disclaimer.
 

Punitive Damages Re-assessed.

     The assessment of Punitive Damages in the Broussard Federal case in the Southern District of Mississippi has been reduced by 60%.

     As posted in this space on January 12, 2007, a Jury assessed $2,500,000.00 in Punitive Damages in that Hurricane Katrina - First-Party Bad Faith case.  The Federal Judge, Senior Judge L.T. Senter, Jr., entered an Order on January 31, 2007 which reduces the Punitive Damages to $1,000,000.00.

     The Federal Court's Order is based on a Mississippi statute and the United States Constitution.  The Federal Court  "recognizes the factors established in Miss. Code Ann. § 11-1-65, but is also cognizant of due process considerations under the United States Constitution."  Page 3 of Order entered January 31, 2007 in the case of Norman J. Broussard and Genevieve Broussard v. State Farm Fire and Casualty Co. (S.D. Miss. Case No. 01.06CV6).

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