Claims And Issues

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

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

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

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

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

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

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

Id.

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

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Confrontation Rights in Insurance Cases Involving Expert Witnesses?

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

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

    Time will tell.

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

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Health Insurance: Coverage, Claims, Rescission.

    What some term "post-claims underwriting" has been the subject of previous posts.  The term refers to Rescission of Life Insurance Policies and of Health Insurance Policies after large Claims are made on the policies.  The usual Rescission action by an Insurance Company under one of these Policies involves a misrepresentation of material information in the application.  If the Rescission is successful, the Policy is voided as though it never existed, the Policyholder receives the entire Premium back, and the Claim is not paid under that Policy.

    Reportedly, three Health Insurance Companies whose CEO's testified recently to a U.S. House of Representatives subcommittee about Rescission had thereby "canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims over a five-year period."  Lisa Girion, "Health Insurers Refuse to Limit Rescission of Coverage" (Los Angeles Times Online, Wed., June 17, 2009).

    It is pretty clear that Rescission does not appear as an option in most instances until a Claim is made on the Policy.  Until a Claim is made on the Life Insurance or Health Insurance Policy in question, there is simply no reason for the Insurance Company to more closely scrutinize the information on the application that led to the Policy being issued in the first place.  If the application survives that scrutiny, there ordinarily should be no Rescission; if the application does not survive that closer scrutiny, then there may be a Rescission action taken or filed by the Insurance Company.  Either way, the Claim is usually the triggering event for closer scrutiny of the application.

    On the other hand, Life and Health Insurance Companies often say that they look at Rescission as a weapon against intentional misrepresentation and fraud.  Yet, when asked point-blank at the House Subcommittee Hearing recently if they would be willing to limit their Rescission actions to intentional misrepresentation, each of the Insurance Company CEO's said, "No."  Id.

    One Member of Congress is quoted in the linked article as observing that "[t]his is precisely why we need a public option."  Id.  

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Health Insurance Theft.

    Identity theft of your and your clients' Health Insurance identification information is explored by Walecia Konrad, "Patient Money/A New Ailment:  Medical ID Theft/Treatment at Your Expense, Or at Least Your Insurer's" p. B1, col. 2 (New York Times Nat'l ed., "Business Day" Section, Saturday, June 13, 2009).  Two potentially helpful web sites mentioned in the linked report are www.annualcreditreport.com (just be careful about fees, first) and the Federal Trade Commission's identity theft site, which is http://www.ftc.gov/bcp/edu/microsites/idtheft/.

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Notice Under Policies First-Party and Third-Party.

    Notice provisions in insurance policies require "notice" to the insurance company that there is a loss or a claim.  In basic terms, and depending especially upon the type of Policy involved, notice provisions can be liberally construed in favor of effecting coverage, or not.  Whether liberally construed or not, provisions for notice of loss are subject to conflict among the Courts.  The judicial conflict in question is whether the insurance company can prove, or must be proven to have been prejudiced where the notice is late.

    In what appears to be the majority view on this question, breach of the notice of loss provision results in a presumption of prejudice to the insurance company, but the presumption is rebuttable:

If the insured breaches the notice provision, prejudice to the insurer will be presumed, but may be rebutted by a showing that the insurer has not been prejudiced by the lack of notice.

Bankers Ins. Co. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985)(subscription required;  first-party case; claim of policyholder to personal injury protection benefits as a result of an auto accident).  Note well:  After diligent search online, this case was not to be found online in a free web site.

    This holding has been followed in a third-party case, or one involving a liability insurance policy provision and a claim against the insured rather than a claim by the insured.  Assurance Co. of America v. Lucas Waterproofing Co., 581 F. Supp. 2d 1201, 1207 (S.D. Fla. 2008)(subscription required); download the official Opinion issued by the Court on this issue in this case:  Download Assurance v. Lucas Waterproofing Co (S.D. Fla. 2008). at page 8 of the official Opinion..

    The conflicting and apparent minority judicial viewpoint on this notice issue is that the insurance company should prove prejudice resulting from an alleged breach of a provision requiring notice of a loss.

   

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"Your Money, FOR Your Life".

    Bettors have a rigged game going.  They call it "Stranger Originated Life Insurance".  Strangers originate Life Insurance Policies on other people in exchange for settling with the Policyholder while the Policyholder is still alive, of course.  "Life settlements" are paid when people with likely longevity are involved and "viatical settlements" are made when longevity is not likely.  Fancy words.  Here is what they mean for lawyers and for people.

    Strangers take out an Insurance Policy on your Life and they pay the Premiums.  Or strangers take over the payment of your Life Insurance Premiums in exchange for the Policy proceeds.  "Strangers" means just that, they do not know you and they have no interest in you.  Until you die.  Then they claim the proceeds of the Life Insurance Policy which they paid you money to take out.  Seems like a good deal for you, on its face:  You get their money to use during your life, or you get out from under paying Life Insurance Premiums, and they get Life Insurance Policy proceeds you cannot use after you are dead.

    From an insurability standpoint, considering first whether there is any "insurable interest" in your Life justifying the payment to ghoulish investors of your Life Insurance proceeds rather than to, say, any other beneficiary you may designate, there is a question as to why the law or your Life Insurance Policy should recognize these people's claim on your Life Insurance proceeds?

    From a safety standpoint, kindly be aware that the trade in other people's Life Insurance is largely unregulated.  Some of that trade is reportedly illegal.  There is a risk to investors, too, that they will be the victim of shoddy practices or worse, of downright fraud.  Kind of like the fact that there are now demonstrated risks in buying food or consumer goods made in China.

     See generally Benjamin Popper, "The Big Money/Betting on Death" (Washington Post.com, Sunday, June 21, 2009).

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Successful Handling of Insurance Claims and Coverage Disputes.

    Successful outcomes in handling Claims and Insurance Coverage disputes owe a lot to experience.  Share your experience and leave a Comment Online on the Claims Magazine web site through this link to a recent article about Claims Handling co-authored by Dennis J. Wall and by W. Michael Latzo of Generali (Retired), Handling Construction Defect Claims (June, 2009).  Your Comments will be gratefully appreciated by the Authors and by all who read them.

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Hartford, Lincoln National First Two to Tap TARP for Life.

    Due to its failing Life Insurance operations, as previously posted here, Hartford Financial Services Group just became the first of the 6 Life Insurance Companies that eagerly sought and received approval for Federal Taxpayer Bailout Money, to receive TARP injections.  Andrew Frye, "Hartford to Accept as Much as $3.4 Billion From TARP (Update 5)" (Bloomberg.com, Friday, June 12, 2009).

    And Lincoln National just became the second of the 6 Life Insurance Companies to receive TARP botoxins.  See Cyrus Sanati, "Lincoln National to Take Bailout Money and Issue Stock" p. B2, col. 1 (New York Times Nat'l ed., "Business Day" Section, Tuesday, June 16, 2009).

    Time will tell what cover TARP will provide for The Hartford and the Lincoln National Life Insurance operations, and what effect The Hartford and the Lincoln National Life Insurance operations will have on TARP.

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It's "American INTERNATIONAL Group".

    Some people think that AIG is an insurance company.  Wrong.

    First of all, "AIG" stands for American International Group.  Not American Insurance Group, as many people think.

    Next, AIG is a group of companies.  Over 270 of them.  Only 71 of those are Insurance Companies.  That is a little over 1/4 of the group of companies known as AIG.  AIG is not a "company" at all.  Not even after it changed its name recently.

    Not one of the 71 Insurance Companies owned by AIG failed.  Not one of those 71 Insurance Companies became insolvent, or stopped paying Claims, or caused one penny of the Current Collapse.  Not one of them.

    Further, AIG was regulated.  Its failures were not a product of no regulation, but of poor regulation.  AIG was regulated by the Office of Thrift Supervision, a branch of the Federal Government.  AIG failed.  OTS failed too.

    To say again, not one of the 71 Insurance Companies owned by AIG failed.  They were and are each and all regulated too.  By State Insurance Commissioners.  Not one of them failed.

    AIG's financial problems came out of securitization and Credit Default Swaps.  The Federal Government did not regulate CDS's.  AIG failed.  To say again, OTS, a branch of the Federal Government, failed too.

    The remedy if any for AIG's failed condition does not lie with the Federal Government accumulating more regulatory power over AIG's Insurance Companies.  It lies instead with the Federal Government branches each and all performing their jobs to regulate what they were already given to regulate, and did not regulate. 

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Attorney's Fees Awarded in Florida After Appraisal, Suit, Payment.

    Universal Property and Casualty Insurance Company issued a Homeowner's Insurance Policy to Robert and Nancy Lewis in Florida.  Hurricane Wilma struck the Lewis's home in October, 2005, causing damage.  In 2006, over a year later, Universal contested Coverage.  Mr. and Mrs. Lewis hired a lawyer who sent Universal a courtesy copy of a draft complaint for First-Party Bad Faith. 

    Universal then reportedly demanded an appraisal.  The Lewises filed their lawsuit.  Without awaiting a Trial Court Order or Judgment confirming the Appraisal Award, "it is undisputed that the insurer paid the claim.  Florida law squarely holds that 'payment after suit was filed operates as a confession of judgment ... entitling [the insured] to attorney's fees.'"  Lewis v. Universal Property & Casualty Ins. Co., 34 Fla. Law Weekly D1104 (Fla. 4th DCA Case No. 4D08-2516, Opinion Filed June 3, 2009)(subscription required), link to the official report from the Court's web site here.  The quoted language is found on page 4 of the slipsheet opinion.  The Fourth District therefore held that "the insureds were entitled to an award of section 627.428 attorney's fees" in that case.  Id. at 5.

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Trustees, AIG Nominate 6 Directors for 06.30.09 Annual Meeting Vote.

    Last month, AIG issued a Press Release to announce that 6 new Directors to be added to its Board would be voted on at AIG's June 30, 2009 Annual Meeting. The AIG Press Release provides some biographical information about these persons.

    Here is some more information about them.

    Five of these individuals were proposed by Trustees appointed by and responsible to the New York Federal Reserve Board.  The remaining candidate was proposed by AIG’s current management.  Several things stand out about this group.

First, this is a mixed group of political connections, some with mr. Bush and some with Mr. Obama.

Second, it is astonishing to find out the otherwise unreported connections they have, as a group, with the organizations feeding at the Public Trough known as Federal Bailout Monies.

Further, it is not possible from an exhaustive review of available press reports and of AIG’s own Press Release to tell for certain which was chosen by the current Trustees and which was nominated by AIG itself.

Harvey Golub.  Who nominated this man, mr. Bush? dick Cheney perhaps?  Former Chair and CEO of American Express.  Trustee, American Enterprise Institute. Chair, Reader’s Digest Association.  Past Director, Dow Jones.  Told The Motley Fool that some changes to a business organization “involve knowing when to cannibalize yourself, and when to put some of your own assets at risk.”  Wrote Opinion piece in the Wall Street Journal questioning Congress’s “fundamental lack of understanding”.  See, e.g., http://www.people.forbes.com/profile/print/harvey-golub;  Motley Fool June 27, 2007 Interview by Emil Lee, “Lessons From a Legend:  Harvey Golub”; Opinion by Harvey Golub, “I Vote No Confidence in Congress, “ Wall Street Journal, Nov. 5, 2008, http://online.wsj.com/article/SB122584345511799173.html. 

 

LAURETTE T. KOELLNER.  This person may be the choice of  AIG and its outgoing CEO, Mr. Edward Liddy.   Executive V.P. of Internal Services at Boeing when Boeing settled a Class Action Sex Discrimination Lawsuit by agreeing to reform its allegedly gender-biased existing “’performance evaluations, salary reviews, promotions and other employee relations practices’.”   Boeing is based in Chicago.  Master in Business, or M.B.A., Stetson University, DeLand, Florida.  Bachelor's, Business Mgt., University of Central Florida.  Director, Sara Lee Corp.  See, e.g.,  Caroline Daniel reporting from Chicago, “Boeing Agrees to $72.5m Settlement in Sex Bias Case” (Financial Times, July 17, 2004)(subscription possibly required), found at www.ft.com/cms/s/; http://www.zoominfo.com.

Christoper S. Lynch.  Identified as an “independent consultant,” almost totally unstated in the Press Release or in newspaper reports for whom or for what.  Little definitive information available about him still.  The available information is interesting.  An accountant.  Held senior positions for years at KPMG before retirement in May, 2007.  “Mr. Lynch was the lead and audit signing partner for some of KPMG’s largest financial resources clients.”  Appointed as a Director of Freddie Mac effective December 18, 2008.  (mr. Bush of course was still in power at the time of Mr. Lynch’s appointment.)  After assuming Director’s office at Freddie Mac, also became Chair of Freddie Mac’s Audit Committee, and a Member of its Compensation & Human Resources Committee.  Five months later, also nominated as a Director of AIG.  See, e.g., http://www.portfolio.com; Hugh Son, “AIG Names Six for Board as Trustees Assert Control (Update 3)” (Bloomberg.com, May 19, 2009), found at http://www.bloomberg.com/apps/news?pid=20670001&sid=a8FELs122BG4.

Arthur Martinez.  Trustee, Northwestern University in Evanston (Chicago), Illinois.  Trustee, Chicago Symphony Orchestra.  Chaired Dutch bank, ABN Amro, which ran into troubles with Mergers and Acquisitions, in 2007.  At the bank’s Annual Meeting in April, 2007, questions arose about takeover offers and bids and how they were being treated by management, when Mr. Martinez “sought to deflect questions he felt were either inappropriate or irrelevant”.  Ian Bickerton and Peter Thal Larsen, “Shareholders Storm ABN Amro Stage” (Financial Times, April 26, 2007)(subscription possibly required), found at http://www.ft.com/cms/s.  The bank “isn’t legally required to put the sale” to shareholders, “Chairman Arthur Martinez said.”  Jeroen Molenaar and Martijn van der Starre, “ABN Amro Investors Threaten Lawsuit on Takeover Plan (Update 1)” (Bloomberg.com, April 26, 2007), found by searching  http://www.bloomberg.com.  Director of Liberty Media Corp. with fashion designer Diane Von Furstenberg until a settlement agreement was offered to dissident shareholders who sued the corporation, part of the settlement offer including removal of Mr. Martinez from the Board.  Chair, Home Shopping Network.  From 1990 to 1992, Vice Chair and a Director for Saks Fifth Avenue.  From 1995 to 2000, Chair, President, and CEO of Sears, Roebuck.  Currently a Director at Liz Claiborne, Inc.  See, in addition, LMC Silver King, Inc. v. Barry Diller, Delaware Chancery Court Docket (Wilmington, Delaware); http://people.forbes.com/profile/print/arthur-c-martinez.

Robert S. Miller, Esquire.  A lawyer.  Also holds an M.B.A.  Executive Chair, Delphi Corp., a well-known parts supplier for General Motors Corporation which just entered Bankruptcy with the blessing of the current Administration.  Previously, C.F.O. and Vice Chair at Chrysler Corporation, which of course has its own current Bankruptcy Proceedings.  Mr. Miller “was the architect of the Loan Guarantee Act that included negotiations with 400 lenders and the U.S. government to secure the bailout of the troubled automaker [Chrysler, in the 1980’s].”  Surfaces at financially troubled corporations as officer or Director or both participating in their recovery if any, including Reliance Group Holdings which included Insurance operations.  “The company’s main subsidiary, Reliance Insurance, was taken over by the Pennsylvania Insurance Department and all of its operations are in run-off.”  Also “Special Advisor” to Aetna, Inc. for 7 months or so in 2000.  Chaired auto supplier Federal-Mogul Corporation through Bankruptcy.  Director, United Airlines, which filed for Bankruptcy.  Experienced in Waste Management Inc.  After he took over Delphi Corporation, accused United Automobile Workers of causing Delphi to be “uncompetitive” with “high labor costs’ including Health Insurance.  See, e.g., http://www.symantec.com/about/profile/management/directors; http://biz.yahoo.com;  http://people.forbes.com/profile/print/robert-s-miller; Jeremy W. Peters, “Delphi Picks a New Chief, Who Pledges to Cut Costs” (New York Times Online, June 24, 2005), at http://www.nytimes.com/2005/06/24/business/24delphi.html?pagewanted=print; Micheline Maynard, “G.M. Board Gives Chief Some Time” (New York Times Online, April 4, 2006), at http://www.nytimes.com/2006/04/04/business/04auto.html?sq=ROBERT S MILLER&st=.

LAST BUT NOT LEAST:

Douglas M. Steenland, Esquire.  Trained as a Washington, D.C. lawyer. Joined Northwest Airlines as its General Counsel.  Became CEO of Northwest Airlines when former CEO moved to United HealthCare.  See, e.g., search http://travel.latimes.com/; http://people.forbes.com/profile/print/douglas-m-steenland; http:the.honoluluadvertiser.com/article/2004/Oct/02/bz/bz29a.html.

          Based on this information not spread out in the AIG Press Release nor in general reporting, which way do you think these people would vote if confirmed as Directors on the AIG Board:  For the Federal Taxpayers’ interests, or for the interests of the people who are already AIG’s highest paid officers and employees?

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Life Insurance Reserves Manipulations: Will State Regulators Reward Failures?

"We're not willing to answer your questions."  Stephen P. Horvat, Jr., Esquire, on behalf of Midland National Life Insurance Company, quoted by David S. Hilzenrath, "Politics Puts Insurance Regulators in a Bind" (Washington Post.com, Friday, June 12, 2009). 

    An assault on Life Insurance Companies' Reserves requirements began nearly five (5) years ago, in late 2004, it is reported by David S. Hilzenrath, "Politics Puts Insurance Regulators in a Bind" (Washington Post.com, Friday, June 12, 2009).  What is not reported in the linked article is that Life Insurance Companies' Reserves requirements were adopted and in effect for years before.

    On the eve of a meeting of the National Association of Insurance Commissioners to consider the latest steps in loosening Life Insurance Companies' Reserves requirements -- which directly affect the ability of Life Insurance Companies to pay Claims on their Life Insurance Policies -- the linked article reports these fairly recent developments in this story:

December, 2004:  The NAIC begins "to make the shift".

March, 2005:  Life Insurance Companies put together a lobbying operation they call the Affordable Life Insurance Alliance.

"Early 2005":  A newly elected Insurance Commissioner from North Dakota, sympathetic to relaxing Life Insurance Companies' Reserves requirements, becomes Chair of the NAIC Life Insurance Committee.

May, 2005:  The Alliance holds either a "fundraiser" or a "reception," depending in part on who provides the description, for the subject North Dakota Insurance Commissioner.

July, 2005:  The Chair of the NAIC Life Insurance Committee, who is the same North Dakota Insurance Commissioner, reportedly announces that he is changing the agenda of an upcoming meeting to devote it entirely to Reserves requirements.

August, 2005:  The NAIC Life Insurance Committee Chair/North Dakota Insurance Commissioner holds a Hearing "at which members of the [Life] insurance industry pressed their case."

Other events occur in the interim, detailed somewhat in the linked newspaper report, until 2007, when the North Dakota Insurance Commissioner resigns, "and became an insurance industry consultant".  In 2009, reportedly "he has served as spokesman for a coalition of [Life] insurers arguing that the Securities and Exchange Commission should leave regulation of certain annuities to the states."  Id.

    Although not mentioned in the linked newspaper report, it was posted here previously that in the Spring of 2009, the National Association of Insurance Commissioners voted to relax long-standing Reserves requirements established by the NAIC for Life Insurance Companies.

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American Health Choices (Insurance) Act: Modified Federal Regulation Proposed.

    A draft American Health Choices Act was unveiled on Friday, June 5, 2009 by Senator Edward M. Kennedy, the Chair of the Senate Committee on Health, Education, Labor and Pensions.  Among its many provisions, a couple have been reported that will affect Regulation of Health Insurance Companies.

    One such provision is reportedly specific.  The Federal Government will regulate the "marketing of insurance policies" if the Act is adopted in its present form. Robert Pear, "Sweeping Health Plan is Drafted by Kennedy/Subsidies and Penalties Are Proposed" p. A12, col. 5 (New York Times Nat'l ed., Saturday, June 6, 2009).  Presumably, the "insurance policies" in question are Health Insurance Policies only.

    Another provision will have an effect on Regulation of Health Insurance Companies, and its intended effects have been widely reported.  Another provision of the draft Act would enact a Public Health Insurance Plan backed by the Federal Government to promote competition among Private Health Insurance Companies to lower Premiums and increase Health Coverage.  Id.

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Organization of Doctors Opposes Public Health Plan ... Again.

    The leaders of the American Medical Association have announced that they oppose any competition to Private Health Insurance Companies from a Public Health Insurance Plan of any kind.  See Robert Pear, "Doctors' Group Opposes Public Health Insurance Plan" p. A17, col. 1 (New York Times Nat'l ed., Thursday, June 11, 2009).

    As my Uncle George would say, God rest his soul:  "What's new?"

    Didn't the AMA oppose Medicare 44 years ago?

    Oh, it is also reported that the AMA is pushing legislation in Congress "to increase their Medicare fees."  Id.

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First-Party Bad Faith Claims Doubtful, Florida Supreme Court Considers.

    Never in recorded history has a Florida State Court held that there is a cause of action at common law based on allegations of a First-Party Insurance Company's bad faith and unfair dealing.  In perhaps three (3) decisions in the United States District Court for the Southern District of Florida, it has been held in contrast -- under Florida State Law -- that there might be a claim or cause of action for alleged breach of an implied covenant of good faith and fair dealing.  The Southern District decisions have effectively halted Florida State Courts from deciding cases against First-Party Insurance Companies until the Florida Supreme Court speaks.

    In a recent case, Florida's Third District Court of Appeal denied a Petition for Writ of Certiorari to review a Florida Trial Court's denial of a motion to dismiss presenting this question, in pertinent part:

    The first question presented is whether an insured may prosecute a common law claim for breach of the covenant of good faith and fair dealing by an insurer based on the alleged failure of the insurer to investigate and assess the insured's claim within a reasonable time.  Such a claim is alleged by the homeowners to be an independent basis for recovery, one distinguishable from a statutory bad faith claim under section 624.155(1)(b), Florida Statutes (2008).  Citizens maintains that the "breach of the covenant of good faith and fair dealing" claim is merely a "disguised" statutory bad faith claim and that no such common law claim is recognized in Florida.

Citizens Property Insurance Co. v. Bertot, 34 Fla. Law Weekly D1109 (Fla. 3d DCA Case Nos. 3D08-2952 & 3D08-2467, Opinion Filed June 3, 2009)(subscription required), link to official report from the Court's web site here.  The quoted language is found on page 2 of the slipsheet opinion.

    However, the Third District refused to decide the issue.  The reason is that an appeal was taken from the seemingly contrary Orders of Federal Judges in up to three previous cases in the Southern District of Florida, in which the Federal Eleventh Circuit certified much the same question to the Florida Supreme Court to answer.  See id. at 4.  Further, although the Third District had issued Certiorari in cases in which Trial Courts had denied motions to dismiss statutory bad faith claims against First-Party Insurers, in the case at bar it was clear that there was no statutory bad faith claim and the Florida Appellate Court declined to review a Trial Court Order denying a motion to dismiss a complaint in which only common law causes of action are alleged.  Id. at 5.

    The Florida Supreme Court's determination of this issue is eagerly awaited by Florida lawyers, by their clients, and by Florida Judges sitting on State Courts and on Federal Courts.

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American Health Insurance Choices Act: The "Essential Benefits".

    There is a tension between Physicians and Health Insurance Companies over medical care.  Physicians want what their Patients need, but often feel compelled to prescribe what Insurance Companies will pay for.  Health Insurance Companies insist that their overhead costs including Claims payments are too high.  See, e.g., Harris Meyer, Kaiser Health News, "Many Health Insurers Have Their Own Assessment Panels" (McClatchy Washington Bureau Online, Friday, June 5, 2009):  "As many patients discover, doctors don't have the last word on treatment. Insurers generally deny coverage for anything they think hasn't been proved to work."

    A little-noticed provision of the American Health Choices Act draft would require "essential benefits" to be offered by Health Insurance Companies.  The draft Act would not appear to say what Premium to charge for these essential benefits, but that they be offered to insureds under Health Insurance Policies.  What are "essential benefits" would be determined by a panel of Experts, who would have only the power to recommend to Congress and not the power to make the law.  If Congress did not reject the recommendations of the Experts, then in general terms the essential benefits would be required to be offered, perhaps provided, by the Health Insurance Companies.  It certainly seems a starting point if not the final word on this idea.

    Further, the draft Act reportedly includes definitions of certain "essential benefits" categories, including:

    Doctors' medical services;

    Hospital care;

    Maternity care;

    Newborn services;

    Prescription drugs; and

    Mental health "and substance abuse services."  Robert Pear, "Sweeping Health Plan is Drafted by Kennedy" p. A12, col. 5 (New York Times Nat'l ed., Saturday, June 6, 2009).

    Perhaps the "essential benefits" provision has not generated much focus because of the Act's main sponsor and author:  Senator Edward M. Kennedy.  More attention seems to have been paid to his name than the draft Act's provisions.

    Parenthetically, a staff person in Senator Kennedy's office reportedly describes the draft American Health Choices Act as "'a draft of a draft.'"   Id.;  Ceci Connolly, "Kennedy Readies Health-Care Bill" (Washington Post.com, Saturday, June 6, 2009). That seems hesitant.  A "draft of a draft" must be something like flight testing a trial balloon.

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President Obama's Message: Public Health Insurance Option Vital to Choice.

    President Obama's message on Health Insurance choices is a simple one.  In his letter dated June 2, 2009 to Senators Kennedy and Baucus, he wrote:

I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans.  This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.

[Emphasis added.]  If a Public Health Insurance Option can do all that, it is worth doing.  As was reported about a compromise proposal suggested by Senator Chuck Schumer of New York:  "The question, at a time of deep concern over health costs, is whether that proposal would compromise away the full potential of a public plan to suppress provider payments and control the growth of premiums."  Kevin Sack, "State Coverage Model No Help For Uneasy Insurance Industry" p. 18, col. 1 (New York Times Nat'l ed., Sunday, June 7, 2009).

    For press, pundit, and popular reaction, see, e.g., Ceci Connolly, "Kennedy Details Vision for Health Care/Government Subsidies Would Help Families; Insurance Firms' Profits Could Decline" (Washington Post.com, Sunday, June 7, 2009);  "Obama Presses Case for Healthcare Overhaul" posted by Foon Rhee on Boston Globe's Political Intelligence Blog, Saturday, June 6, 2009; Wayne Muramatsu, Letter to the Editor, "Private Insurers Are Like Wolves Guarding the Henhouse" (Los Angeles Times Online, published Sunday, June 7, 2009).  

    For some summaries of what President Obama and others are doing, or planning to do, in this arena see, e.g., Lisa Wangsness, "Across US, Voters Hold Healthcare Talks/Grass-Roots Effort Aims to Get Bill OK'd" (Boston Globe Online, Sunday, June 7, 2009); Sheryl Gay Stolberg, "Obama to Forge a Greater Role on Health Care" p. 1, col. 6 (New York Times Nat'l ed., Sunday, June 7, 2009); Dan Eggen, "'Single-Payer' Supporters Challenge Democrats" (Washington Post.com, Saturday, June 6, 2009).

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Insurance Coverage and Other Issues for Homeowners and Condominium Associations.

           Troublesome issues over Insurance Coverage for Homeowners and Condominium Unit Owners may come from failed Insurance Coverage lawsuits or from Members not kept advised by the Board.  Sometimes both:  See "Associations/Homeowner Association Members Face Huge Assessment for Legal Fees" by Stephen Glassman and Donie Vanitzian (Los Angeles Times Online, Sunday, May 31, 2009).  The linked newspaper report prints this sound thought:  Even with the limited alternatives, the board needs to perform due diligence in obtaining at least a second legal opinion on its options and the proposed settlement.

 

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President Obama's Bill of Health Insurance Too.

    President Obama has sent a message to the two Senators who have been tasked to bring Health Insurance to the nation.  Senator Edward Kennedy is one of the two Senators who received President Obama's letter.  Kennedy chairs the U.S. Senate Health, Education, Labor and Pensions Committee.  He is already reporting a Bill out of his Committee that includes a prominent Public Health Insurance Plan backed by the Federal Government as an option to drive competition among Health Insurance Companies to cut Premiums and make Health Coverage robust.

    senator Max Baucus is the other Senator who received President Obama's message.  Baucus chairs the Senate Finance Committee, which has not reported a Bill because Republican Senators on that Committee are refusing to compromise on the issue of a Government Health Insurance Plan.  (They adamantly oppose it.)

    President Obama's message to both Chairs is that he too supports extending to people the option of choosing a Public or Government Health Insurance Plan.  Opponents in the Senate reportedly vow never to compromise now (they did not compromise before, either).  See Robert Pear, "Obama Open to Mandate That People Own Coverage" p. A14, col. 5 (New York Times Nat'l ed., Thursday, June 4, 2009).

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Innovations for Insurance Regulation? Credit Collapse II, Wall Street at it Again.

    Reportedly, Insurance is one of the hangups in Federal Regulation of the Institutions responsible for the currrent Credit Collapse.  One of the supposedly "difficult and unresolved" questions "is how the federal government should more aggressively regulate insurance companies, which are now exclusively" regulated -- successfully, for Centuries it should be pointed out -- by "a patchwork" of State Insurance Commissioners.  Stephen Labaton, "An Overhaul of Financial Rules is Taking Shape" p. B1, col. 3 (New York Times Nat'l ed., "Business Day" Section, Tuesday, June 2, 2009).  There seem to be at least three problems with the idea of the Federal Government expanding into the business of Insurance Regulation.

    One is that the Federal Government has no experience in it.

    A second is that the Federal Government's record on Regulation stinks.

    The third problem is that Insurance Companies had next to nothing to do with causing the current Credit Collapse in the first place.

    Still, "the financial lobby is lobbying hard against" regulation of Derivatives, including regulation of Credit Insurance Policies which were not so cleverly disguised as Credit Default Swaps, "arguing that too much regulation would thwart financial innovation."  Id.  Right.  Their "innovation" is what has caused this painful economic situation, a pain which they do not seem to realize exists, let alone share.

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Discovery and Privileges in Bad Faith Cases: The Florida Experience.

^►In Allstate Indem. Co. v. Ruiz, 899 So. 2d 1121 (subscription required) (Fla. 2005), link to the official report here, the Supreme Court of Florida addressed "application of work product privilege" in a first party bad faith case.  The Supreme Court receded from (overruled in part) case law precedent "because it has unnecessarily produced the application of artificial and disparate discovery rules to first- and third-party bad faith actions.... There simply is no basis upon which to distinguish between first- and third-party cases with regard to the rationale of the discoverability of the claim file type material."

            In part, the Florida Supreme Court's Ruiz decision was based on the enactment of Florida's Bad Faith Statute, now codified as Fla. Stat. § 624.155 (2008), which, the Court held, eliminated any distinction in Florida between third-party bad faith actions and allegations of first-party bad faith.

Recently, in the case of XL Specialty Ins. Co. v. Aircraft Holdings, LLC, 929 So. 2d 578, 582 (1st DCA 2006), review dismissed, 993 So. 2d 510 (Fla. 2008)(subscription required), link to the official report of XL here,  Florida's First District Court of Appeal was of the opinion that the Ruiz holding of the Florida Supreme Court did not also address the issue of attorney-client privilege.  Accord, West Bend Mut. Ins. Co. v. Higgins, 34 Fla. Law Weekly D653a (Fla. 5th DCA Case No. 5D08-2987, opinion filed March 27, 2009)(subscription required), link to the official report of West Bend here.

 

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Senator Kennedy's Bill of Health Insurance.

    In an op-ed piece published late last week in The Boston Globe, Senator Edward Kennedy wrote about the outlines of Health Insurance Bill written in his Committee.  Kennedy chairs the U.S. Senate Health, Education, Labor and Pensions Committee.  His Committee's Health Insurance Bill has five (5) prominent features:

    1.  Choices.  The Bill includes provisions for the Federal Government to negotiate low Premiums and Copays, bar denials of all Coverage because of pre-existing conditions, and fashion a new Public Health Insurance Program administered by the Federal Government, all efforts to spur Private Health Insurance Companies into competition one with another, and with the Federal Program.

    2.  Cost reduction.  

    3.   Prevention.  This ambitious feature capitalizes on growing sentiment to improve the outdated Medicalcare Model in the United States.  The Bill apparently will not only provide incentives to Medicalcare Providers to focus on and to provide preventive care, but also will provide incentives to Health Insurance Companies to pay for it.

    4.  Backstop adaptations.  The Bill will provide financial support for adaptations to be put in the homes of elderly and disabled people to enable them to live at home rather than in public institutions.

    5.  Training.   Medicalcare Providers will become "a 21st-century workforce for a modern and responsive healthcare system."

These are the five most prominent features of the Bill.  See Edward M. Kennedy, "Health Bill Would Fix What's Broken" (Boston Globe Online, Thursday, May 28, 2009).

    The feature most widely reported is the one single feature that is most strongly opposed by Health Insurance Companies:  Competition by making the choice of a Government Health Program available.  See, e.g., Ceci Connolly, "Kennedy's Health-Care Measure to Require Employers to Chip In" (WashingtonPost.com, Friday, May 29, 2009); Laura Litvan and Nicole Gaouette, "Kennedy Health Plan Would Include Public Insurance (Update 2)" (Bloomberg.com, Friday, May 29, 2009).

    The "Kennedy Bill" is apparently ready to be introduced on Tuesday, June 2, 2009 at a meeting of the Committee's Democratic majority, and on Friday, June 5, 2009 at a meeting of the full Committee.  Connolly, supra.

    A potentially competing bill is under discussion by the Senate Finance Committee, chaired by senator Max Baucus, who is reportedly in talks with Republican Senators who are all opposed to public Health Insurance.  See Robert Pear, "2 Democrats Spearheading Health Bill Are Split" p.A7, col. 6 (New York Times Nat'l ed., Saturday, May 30, 2009).  It is not reported whether any of these Senators speak for other Republicans who are not in the Senate, nor is the number of people reported for whom they speak.

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The Hurricanes Are Coming, The Hurricanes Are Coming!

    Is your Insurance Coverage prepared for Hurricanes?  The Hurricane Season officially begins on Monday, June 1, 2009.  Ready?  Explore the issues addressed in this report from Slate, by Martha C. White, "Hurricane Prudence/Is the Battered Insurance Industry Ready for the Storm Season?" (Sunday, May 31, 2009).

    The two main issues addressed in this report are the reasons why Property and Casualty Insurance Companies are so much sounder financially than Life Insurance Companies, and some of the changes in Florida Insurance since the 2004 and 2005 Hurricane Seasons struck the State.

    Speaking of Florida and incoming Hurricanes, President Barack Obama reports that Federal Government statistics reflect that "a huge percentage of people" has not experienced a Hurricane.  The statistics reflect that nearly half of the population on the Eastern Seaboard have recently moved to cities there, without experiencing a Hurricane.  See Steven Thomma, "Obama:  Hurricane Readiness is Residents' Responsibility" (McClatchy Newspapers Online, Friday, May 29, 2009).   The Federal Government has provided a potentially useful web site for information and/or planning for Hurricanes:  www.ready.gov.

    Florida newspapers are providing their Hurricane guides at about this time.  Check out in particular "What You Should Know About Your Insurance" in the Orlando Sentinel Hurricane Guide (Sunday, May 31, 2009).  And see also this piece in the Orlando Sentinel's Guide, "How to File an Insurance Claim After the Storm," or contact one of the many Florida State Government agencies, and Private Insurance Companies, listed at "Hurricane Central" on the web site of the Florida Insurance Council, www.flains.org.

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