Claims And Issues

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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Federal Court in New York to U.S.: Nothing for Defense, and No Tribute.

       

       Federals' Alleged Alarming Strong-Arm Tactics At Center of Dispute.

     In the name of the United States, the department of Justice investigated at least 19 former partners and employees of KPMG, LLP, an accounting firm.  KPMG paid for 16 of the former partners' and employees' legal expenses at that time.

      In the name of the United States, the department of Justice filed a criminal tax fraud prosecution against the KPMG former partners and employees.  KPMG stopped paying defense expenses at the time they were indicted.

     The department did not make KPMG a defendant in the criminal proceeding.  The department of Justice had announced that it would deem "a firm's voluntary payment of wrongdoing agents' legal expenses a factor favoring prosecution of the firm."  (See page 5 of 25 pages of the Second Circuit's slipsheet opinion issued on May 23, 2007 found on the Second Circuit official web site under: "Decisions" Tab, select applicable timeframe button, then select May 23, 2007 Decision in "Jeffrey Stein, et al v. KPMG, LLP".)

     The Federal Trial Judge assigned to the criminal proceeding "found that the government had used the threat of prosecution to pressure KPMG into cutting off payment of the appellees' legal fees and thereby violated Fifth and Sixth Amendment rights to a fair trial and the effective assistance of counsel."  (Id. at 6.)  The Trial Judge's solution was for the former partners and employees to sue KPMG in a civil action under State law for a breach of contract in failing to pay attorneys' fees and expenses, over which the District Court would assert ancillary (or side) jurisdiction in the criminal  proceeding.

     The Second Circuit reversed "the proceeding challenged in this appeal -- a state law contract action against a non-party within a federal criminal proceeding -- [as being] well outside the subject matter jurisdiction conferred by Congress on the federal courts."  (Id. at 12.)  Instead, said the Federal Appeals Court, "dismissal of the indictment is the proper remedy" for a denial of substantive due process and, as for any denial of Sixth Amendment rights to counsel, "appellees may seek relief on appeal if they are convicted."  (Id. at 20.)

     The Federal Appeals Court was clearly skeptical of the chances for success of a civil action for alleged breach of contract under State law, but it did not state a policy or conviction, in the name of the United States or otherwise, about the outcome, one way or the other, if the breach of contract action is pursued.   Further, the Court said nothing at all about the chances of success for any action involving Insurance Claims for defense expenses incurred in criminal proceedings under the circumstances by KPMG, or any of the defendants who are former partners and employees of KPMG.

    
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World Trade Center Insurance Claims Settlement: Revisiting Confidentiality vs. Concealment.

  A post in this space on May 23, 2007 addressed the issue of Confidentiality vs. Concealment in or of Settlements of Insurance Claims under Florida law.  It is reported on May 24, 2007 that confidentiality provisions are found in a global settlement of unspecified World Trade Center Insurance Claims resulting from 911:  Charles V. Bagli, "Insurers Agree to Pay Billions at Ground Zero," New York Times Online, May 24, 2007. It is unclear whether these confidentiality provisions apply to things other than the amount each insurance company participating in the settlement will pay.  The settlement agreement purports to address Insurance Coverage Claims, it is also reported, but it is not known at this time whether the confidentiality provisions and the settlement itself address other claims or allegations.
    
     Whether and when confidentiality provisions of this or similar settlement agreements are forced into public disclosure in discovery remains to be seen, including under Florida's and similar laws governing disclosure of public hazards.

     For a brief discussion of possible disclosure despite confidentiality provisions in settlement agreements including Insurance Bad Faith claims, see Insurance Claims Bad Faith Law Blog, May 24, 2007.

Less on Hurricanes: "Just Say No".

                              Studies Multiply and Preparation is All:
                           "Just Say No To Hurricanes" As Public Policy.

   

     A post here yesterday focused on reports and studies, and funding of activities other than Hurricane preparedness and risk reduction before the 2007 Hurricane season begins on June 1, 2007.  The magazine Nature also presents a publicly accessible news report about the coming Hurricane season including publicity by NOAA, in Alexandra Witze, "Torrid Hurricane Season In Store," Nature, 23 May 2007.  For a fee, the magazine will allow internet access to this separately published study:  Jeffrey P. Donnelly & Jonathan D. Woodruff, "Intense Hurricane Activity Over the Past 5,000 Years Controlled by El Nino and the West African Monsoon," 24 May 2007, www.nature.com.  The new study is reported in Andrew C. Revkin, "Study Finds Hurricanes Frequent in Some Cooler Periods," New York Times Online, May 24, 2007.   

     The reported focus of the new study is on the effect of natural variation on the number and intensity of Hurricanes over time, without ocean temperatures varying greatly.  The authors reportedly conclude that intense warming activity has a great effect on the intensity of the resulting storms in any case.

     The newspaper article further reports that studies of catastrophic storms  multiply and there seems to be universal agreement on three things:  One, devastating Hurricanes are caused by a combination of warming oceans and natural variations; Two, risk is rising to coastal areas of the United States, and Three, government action to reduce the exposure of people, homes and businesses to this risk is very small.

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Advertising Risk and Trade Branding.

     Some advertising money is spent for name recognition, or branding.  Marsh & McLennan is brokering some of its advertising money to identify itself with risk.  Whether risk will be accepted as a positive value, remains to be seen.  See Joseph B. Treaster, "Advertising/Trying to Find the Upside After a Scandal," New York Times, Col. 1, P. C3, Wednesday, May 23, 2007.

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Hurricanes, Predictions, and Potential for Catastrophes.

     Hurricane researchers at North Carolina State University predict 4 to 5 major (Category III or higher) Hurricanes in the 2007 Season, out of 8 to 9 total Hurricanes and 12 to 14 named storms.  The NC State model used for such predictions is based on 100 years of data.  Last year in 2006, the NC State researchers were the only ones to accurately predict 5 Hurricanes, NC State announced:  NC State News Release on April 19, 2007.

     The National Oceanic and Atmospheric Administration ("NOAA") is making changes due to its poor track record for Hurricane predictions last year in 2006.  NOAA recently issued its own prediction of 3 to 5 Category III or higher storms, 7 to 10 Hurricanes, and 13 to 17 named storms in the 2007 season, which begins June 1, 2007 and runs through November 30, 2007:  NOAA.05.22.07.

     A satellite used to track severe storms by the Hurricane Center, a division of NOAA, is working on a backup transmitter, it is reported.  The backup transmitter presents problems leading to a possible breakdown.  No replacement satellite is planned, it is also reported.  See, for example, Brian Skoloff, "Hurricane Chief:  NOAA Wasted Millions," Washington Post Online, Thursday, May 17, 2007.

     "Hurricane Hunters" is the nickname for aircraft which are flown into potentially catastrophic storms to provide data on the strength and severity of such storms.  NOAA describes these flights as integral to the assessment of Hurricanes and other potentially catastrophic storms in this 2003 description on the NOAA web site of Hurricane Hunter Aircraft. Hurricane Hunter flights  have recently been reported to be cut back and budgeted for fewer flights in 2007.

     NOAA's budget provides  $4,000,000.00 in publicity, alone, for a celebration of its 200th anniversary in 2007, it is reported:  Brian Skoloff, "Hurricane Chief:  NOAA Wasted Millions," Washington Post Online, Thursday, May 17, 2007.

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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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