Claims And Issues

More On "Cooperation" in or Under First-Party, Property Policies: ...

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  ... Namely, Regarding Provisions Specifically Addressing EUO's and Production of Documents.

   A Federal District Court in Florida has held in an unreported Opinion: 

Florida law is clear that while a total failure to comply with policy provisions made a prerequisite to suit under the policy may constitute a breach precluding recovery from the insurer as a matter of law, if the insured cooperates to some degree or provides an explanation for its noncompliance, a fact question is presented for resolution by a jury.

Download Horizons Condominium Ass'n v. QBE Insurance Corp. (M.D. Fla. Case No. 6.06cv418, Opinion Filed January 29, 2007), attached Official Slipsheet Opinion at 8. 

   That case involved wind damage claims from Hurricanes Charlie, Frances, and Jeanne in August and September, 2004.  Download Horizons Condominium Ass'n v. QBE Insurance Corp. (M.D. Fla. Case No. 6.06cv418, Opinion Filed January 29, 2007) at 3.  To put the language regarding "cooperation" under the First-Party Policy which was at issue there in context, the Federal Court denied the Insurance Company's Motion for Summary Judgment because of genuine issues of material fact about whether and how much the Policyholder complied with requests to produce records or "permitted the insurer to conduct any requested examinations under oath, which QBE states are requirements under the policy."  Download Horizons Condominium Ass'n v. QBE Insurance Corp. (M.D. Fla. Case No. 6.06cv418, Opinion Filed January 29, 2007), at 7.  [Emphasis added.]

   The Courts hold that ordinarily there is no generalized "duty to cooperate" under a First-Party Policy of the kind involved in the Horizons case.  The Horizons Court itself tried to make it clear that "policy provisions [which were] made a prerequisite to suit under the policy [i.e., a condition precedent before the Policyholder could bring suit under the policy contract]" were the issue at bar in that case.  This is also made clear by the Federal Court's citation to one Florida State Court case in which an Insured produced "volumes" of documents in response to its First-Party Insurer's request for documents under a provision of the Insurance Contract, and in actual fact underwent  an EUO or Examination Under Oath, in the case of Haiman v. Federal Insurance Co., 798 So. 2d 811, 812 (Fla. 4th DCA 2001)(subscription required; not available on the Fourth District Court of Appeal's public web site).

Regarding the concept of "Cooperation" under First-Party Insurance Policies not being a generalized obligation to "cooperate," but instead a requirement, express or implied, under specific Policy provisions, see generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 10.02 (Second Edition Shepard's/McGraw-Hill; 2009 Supplement West Publishing Company).  For specific treatment of Examination Under Oath requirements, and of provisions for production of documents under First-Party Policies, see id. §§ 10.04 and 10.05, respectively.  See also John K. DiMugno, Steven Plitt, and Dennis J. Wall, "CATClaims for Natural and Man-Made Disasters," Ch. 2 by Dennis Wall and in particular § 2:5 (West Publishing Company, 2009 Supplement).

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"Failure to Comply With EUO Conditions of Policy": Cooperation Clause?

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   In a recent decision, a Federal Judge interpreting Florida Law denied an Insurance Company's Motion for Summary Judgment to the extent it was based on the Policyholder "refusing to submit to additional Examinations Under Oath (EUO), [and] failing to cooperate in the investigation," in pertinent part.  Download Vision I Homeowners Ass'n v. Aspen Specialty Ins. Co. (S.D. Fla. Case No. 08-81211, Opinion Filed December 22, 2009), attached Official Slipsheet Opinion at 10.  In denying the motion, the Federal Court held that there were genuine issues of material fact surrounding the insured's cooperation.  If the insured cooperated in the taking of an EUO, or additional EUO's as in this case, then in the view of the Federal Court "several issues of fact exist as to whether [the insured] complied with the policy provisions."  Download Vision I Homeowners Ass'n v. Aspen Specialty Ins. Co. (S.D. Fla. Case No. 08-81211, Opinion Filed December 22, 2009), at 12.

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Late Notice Defense in a Florida First-Party Hurricane Case.

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   The law of Late Notice in Florida was summarized by a United States District Judge in a recent ruling on a Motion for Summary Judgment:

In order to prevail on a late notice defense, "a party must therefore show that there are no genuine issues of material fact regarding 1) what the Policy required with respect to notice, 2) when notice was provided, within the meaning of the Policy and Florida law, 3) whether notice was timely, and 4) whether prejudice exists, either by operation of the unrebutted presumption or otherwise."

Download Vision I Homeowners Ass'n v. Aspen Specialty Ins. Co. (S.D. Fla. Case No. 08-81211, Opinion Filed December 22, 2009), attached Official Slipsheet Opinion at 8.  On the record in that case at that time, the District Judge denied the Insurance Company's Motion for Summary Judgment with respect to its Defense of Late Notice.

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The "Volcker Rule" Updated by ... Mr. Paul Volcker.

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   This updates a post here of January 25, 2010 and a post on Insurance Claims Bad Faith Law Web Log also on January 25, 2010.

   There is no more authoritative Update of the "Volcker Rule" than to hear the words of the man himself.  The "Volcker Rule" was coined by President Obama when he announced his support for Mr. Paul Volcker's ideas to, among other things, separate proprietary trading in which the client is not involved in the outcome of the trading, from commercial banking.

   Organizations which would potentially be affected include Goldman Sachs and JP Morgan Chase, both of which "have proprietary trading desks and private equity units."  Chrystia Freeland and Francesco Guerrera, "'Volcker Rule' Gives Goldman Stark Choice" (Financial Times Online at FT.com, Friday, February 12, 2010).  In an interview for the Financial Times piece, Mr. Voelcker is quoted as saying:

The implication for Goldman Sachs or any other institution is, do you want to be a bank?  If you don't want to follow those rules, you want to go out and do a lot of proprietary stuff, fine, but don't do it with a banking license....  Don't expect the support you would get from being a bank within the club of insured deposits and access to the Federal Reserve and all the loving attention you get as a bank organization....  [However, you would not] escape from all oversight and regulation."

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More on Expert Witnesses in Presenting Property Insurance Claims.

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   See the previous post here on February 10, 2010, "Expert Witnesses on the Handling of Property Insurance Claims".

   In a recent ruling, a United States District Judge applied settled Federal Law to permit the Opinion Testimony of an Expert Witness "regarding damage to and replacement of windows and sliding glass doors" in Download Vision I Homeowners Ass'n v. Aspen Specialty Ins. Co. (S.D. Fla. Case No. 08-81211, Opinion Filed December 28, 2009), attached Official Slipsheet Opinion at 4.  In reaching this ruling, the Federal Judge reviewed the Federal Law surrounding the admissibility of Expert Witness Opinion Testimony and held that it "is reliable and relevant, and thus admissible, when: (1) the expert is qualified to testify competently regarding the matters he intends to address; (2) the methodology by which the expert reaches his conclusions is sufficiently reliable; and (3) the testimony will assist the trier of fact."  Download Vision I Homeowners Ass'n v. Aspen Specialty Ins. Co. (S.D. Fla. Case No. 08-81211, Opinion Filed December 28, 2009), at 2-3.

   The admissibility and use of Expert Witness Opinion Testimony in all kinds of cases, including Insurance Cases, are addressed in both §§ 8:17 and 12:18 by Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" (Second Edition Shepard's/McGraw-Hill; 2009 Supplement Thomson/West Publishing Company).

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Derivative Contracts (Some) Feature Bond Insurance, So ... Regulate as Insurance.

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   Derivatives contracts are complex.  So complex that in order to understand them, the great majority of commercial investors (let alone average people) have to hire "quants" or mathematical gurus to guide them through the complexities.

   The complexity of derivatives contracts is not to be minimized nor denied.  They are deliberately made complex.  Since they are so complex, they have largely escaped regulation.

   Including Insurance Regulation.  Derivatives contracts offer "insurance, for example, on trading positions".  Louis Uchitelle, "Elders of Wall St. Favor Tight Rein" p. B1, col. 2 (New York Times Nat'l ed., "Business Day" Section, Wednesday, February 17, 2009).

   A good explanation of the purposes and results of derivatives contracts is given by Christopher Emsden, "Derivatives Promise Pain for Italians" p. C2, col. 6 (Wall Street Journal, "Money & Investing" Section, Thursday, February 18, 2010) subscription required to access Online Edition.

   Mr. Emsden explains in his report that the debts assumed under derivatives contracts can last for 20 to 30 more years.  Greece reportedly used them on a large scale to avoid European Union Rules on the amount of debt member states are allowed to carry.  Municipalities in Italy have reportedly entered into $48,000,000,000.00 or $48 Billion worth of derivatives contracts.  "That is equivalent to almost a third of all debt held by Italy's regions, provinces and municipalities."  Id.  Italian municipal governments often used derivatives contracts "to protect public bond issuers against adverse interest-rate movements," Mr. Emsden reports.

   Not being very well versed, myself, in the world of derivatives contracts or in finance for that matter, I take this to mean that the municipal governments used derivatives contracts to insure against unwanted increases in the interest rates that they would have to pay on their bonds; in the event that the interest rate exceeded a certain amount, derivatives contracts would provide insurance which would pay all or part of the excess.

   Different kinds of derivatives contracts may serve the different purposes of different kinds of Insurance Policies.  The kind of derivatives contracts that are used by munis "to protect public bond issuers against adverse interest-rate movements" walk and talk like Bond Insurance.  Munis in the United States have suffered with Bond Insurance Companies and Credit Rating Companies, as readers of this space know.  See generally the posts filed on this site in the Category of "Bond Insurance".  It appears that in the future, munis in the U.S. may soon feel the same pain that munis in Italy are reportedly experiencing, with derivatives contracts, i.e., unregulated Bond Insurance.

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Credit Default Swaps: Unregulated, Certainly. Insurance? You Bet.

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   Credit Default Swaps, or "CDS's," are a form of derivatives contracts.  They offer "insurance, for example, on trading positions".  Louis Uchitelle, "Elders of Wall St. Favor Tight Rein" p. B1, col. 2 (New York Times Nat'l ed., "Business Day" Section, Wednesday, February 17, 2009).

   As readers of this space know well, CDS's are unregulated Credit Insurance, unregulated until recently.  Last year, the New York State Insurance Commissioner announced that a form of CDS's that functions like Credit Insurance will from now on be regulated as Insurance in New York.  See for example the previous post here on March 18, 2009,  "New York Times Concurs:  Credit Default Swaps Are Unregulated Credit Insurance," and related posts here in the Category of "Credit Insurance".  See also the posts of December 24, 2009 and February 10, 2010 on Insurance Claims Bad Faith Law Blog.

   A stray phrase has recently surfaced that Credit Default Swaps "in essence, work like bond insurance ...."  Mary Williams Walsh, "Risky Trading Wasn't Just on the Fringe at A.I.G." (New York Times Online, February 1, 2010).  No, they don't.  They not only act like unregulated Credit Insurance, but to lawyers and regulators -- and investors/Policyholders -- they are Credit Insurance.  The differences can be material.  But not in regard to what counts right now.

   Everyone agrees that CDS's have gone unregulated and that they are Insurance.  Had CDS's been regulated properly, perhaps we would not still be living through the Great Recession but we would instead be looking back at it.

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Presenting Insurance Claims: Notice Under Property, Other First-Party Policies ...

   ... Continued.

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 This is the second in a series of posts on Presenting Insurance Claims.  The series begins with issues related to making Insurance Claims under Property and other First-Party Insurance Policies. This post is a very recent update of a Section from my Chapter on "Claim Handling Issues," in "CAT Claims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company)(COPYRIGHTED.  ALL RIGHTS RESERVED,  NO REPRODUCTION OR ANY OTHER USE OF THIS MATERIAL MAY BE MADE FOR COMMERCIAL PURPOSES.):

Asterisks (***) indicate material omitted for ease of reference:

CAT Claims: Insurance Coverage for Natural and Man-Made Disasters

Database updated November 2009--UPDATED FEBRUARY 2010

John K. DiMugno, Steven Plitt, Dennis J. Wall

 

Chapter

2. Claim Handling Issues

by Dennis J. Wall, Esquire

 

COPYRIGHTED MATERIAL.  NO USE OR REPUBLICATION OF THIS MATERIAL MAY BE MADE IN ANY FORM AND IN ANY MEDIUM WITHOUT WRITTEN ADVANCE PERMISSION.  ALL RIGHTS RESERVED.

 

§ 2:3.Notice as condition precedent, or not, to first-party property insurance coverage

* * *

 

...Continued ...

 

Whether liberally construed or not, provisions for notice of loss have triggered a conflict among the courts in whether the insurance company can or must be proven to have been prejudiced where the notice is late. In one view, perhaps the majority view, 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.[9]

 

A competing view among the courts requires the insurance company to prove prejudice resulting from an alleged breach of a provision requiring notice of a loss.[10]

 

Regardless of whether prejudice is proven or rebuttably presumed, “the total failure to comply with the notice and proof of loss conditions will excuse insurer liability due to the failure of a condition precedent.”[11] This holding has been applied in a case where the policyholder submitted a claim for earthquake damage in California, but withdrew the claim, and then presented the earthquake damage claim a second time—eight years later. In this case, the California appellate court treated the second presentation of the claim as though it had never before been presented, including the one and only notice of the loss which was given in this case eight years before.[12]

 

Finally, in some cases, judicial interpretation of the policy provision requiring notice of loss may also involve judicial interpretation concerning the substance of the given claim. For example, in a recent Texas case, an intermediate Texas appellate court held that a particular “first-party claim under a homeowner's insurance policy” was subject to a properly applied “manifestation trigger of coverage theory.” In other words, the claim in that case was governed, apparently, by when the damages first manifested themselves in the sense that they were easily capable of being perceived, recognized, and understood.[13] The loss in that case involved rot, mold, or fungi. The notice of loss provision was governed by the same “manifestation trigger” upon which the entire coverage claim depended, the Texas appellate court held in that case.[14]

‌   ‌

 * * *

[FN9]Bankers Ins. Co. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985) (case involved policyholder's claim to personal injury protection benefits as a result of an auto accident). Accord in a third-party claims situation, i.e., under a liability insurance policy provision:  Assurance Co. of Am. v. Lucas Waterproofing Co., 581 F. Supp. 2d 1201, 1207 (S.D. Fla. 2008).

 

   Even then, there can be questions of fact which preclude the entry of summary judgment on late notice.  It was held, for example, in the case of Vision I Homeowners Ass'n v. Aspen Specialty Ins. Co., 2009 WL 4927162 *4 (S.D. Fla. Opinion Filed December 22, 2009):

 

In order to prevail on a late notice defense, "a party must therefore show that there are no genuine issues of material fact regarding 1) what the Policy required with respect to notice, 2) when notice was provided, within the meaning of the Policy and Florida law, 3) whether notice was timely, and 4) whether prejudice exists, either by operation of the unrebutted presumption or otherwise."  [Citation omitted.]  The Court concludes that Aspen cannot carry that burden on this record.

 

[FN10]See, e.g., Churchill v. Factory Mut. Ins. Co., 234 F. Supp. 2d 1182, 1190 (W.D. Wash. 2002) (claim by shopping center owner for mold and water intrusion damage): “In order for an insurer to rely on late notice as a defense, the insurer bears the burden of establishing that it suffered actual prejudice.” In this case, the defense of late notice was not successful; in this case, the defense was “dismissed.” Churchill v. Factory Mut. Ins. Co., 234 F. Supp. 2d 1182, 1190 (W.D. Wash. 2002).

 

[FN11]1231 Euclid Homeowners Ass'n v. State Farm Fire and Cas. Co., 135 Cal. App. 4th 1008, 1018, 37 Cal. Rptr. 3d 795, 802 (2d Dist. 2006).

 

[FN12]1231 Euclid Homeowners Ass'n v. State Farm Fire and Cas. Co., 135 Cal. App. 4th 1008, 1018, 37 Cal. Rptr. 3d 795, 802–03 (2d Dist. 2006).

 

[FN13]See Allstate Ins. Co. v. Hunter, 242 S.W.3d 137, 144 (Tex. Ct. App. Fort Worth 2007).

 

[FN14]Allstate Ins. Co. v. Hunter, 242 S.W.3d 137, 144 (Tex. Ct. App. Fort Worth 2007).

 

© 2010 Thomson Reuters UPDATED.

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Wall Street, Health Insurers Raise Profits, Premiums ... and Lose Customers.

  

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  Publicly traded Health Insurance Companies maximize profits.  Therefore they raise Health Insurance Premiums in the short term, although they lose customers in the long term.  "[T]hey are driven to raise prices for their health plans to satisfy investors, which in turn drives away customers."  Noam Levey, "Healthcare/Health Insurers Take Heat for Rise in Profits" (Los Angeles Times Online, Thursday, February 11, 2010).

   A report issued on Thursday, February 11, 2010 by Health Care for America Now contains some revealing statistics:  Download Health_Insurance_profits.Health Care For America Now Report.021110.  Health Care for America Now is an advocacy organization which favors overhauling Healthcare and Health Insurance.  The statistics come from information filed by the subject Health Insurance Companies with the Federal Securities and Exchange Commission.  On the whole, then, the statistical evidence in the report seems highly reliable.

  Four of the five largest Health Insurance Companies which were identified in the report, reportedly lost a total of 2.7 million people to the ranks of the uninsured between 2008 and 2009.  One, Aetna, gained 1.2 million customers.  Between the linked newspaper article and the Health Care for America Now report, the five largest Health Insurance Companies, and the city and State of their headquarters, are:

• Wellpoint, headquartered in Indianapolis, Indiana (and parent corporation of Anthem Blue Cross which recently raised its Premiums hugely), with a reported 7.3% profit margin.

• United Health Group, headquartered in Minnetonka, Minnesota.  "UnitedHealth alone insured 1.7 million fewer people through employee-based or individual coverage."  Download Health_Insurance_profits.Health Care For America Now Report.021210, at 3.

• Cigna, of Philadelphia, Pennsylvania, and a reported 7.1% profit margin.

• Aetna, of Hartford, Connecticut.

• Humana, of Louisville, Kentucky, and a profit margin of 3.4%.

See, e.g., Noam Levey, Los Angeles Times, supra; Download Health_Insurance_profits.Health Care For America Now Report.021110.

   For as long as profits drive Premiums, can publicly traded Health Insurance Companies provide the Coverage you and your clients require, at prices you can afford?  This is a question which does not appear to be adequately addressed by either of the pending U.S. Senate or House Healthcare bills.

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Presenting Insurance Claims: Notice Under Property, First-Party Policies.

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 This is the beginning of a series of posts on Presenting Insurance Claims.  The series begins with issues related to making Insurance Claims under Property and other First-Party Insurance Policies. This post is a very recent update of a Section from my Chapter on "Claim Handling Issues," in "CAT Claims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company)(COPYRIGHTED.  ALL RIGHTS RESERVED,  NO REPRODUCTION OR ANY OTHER USE OF THIS MATERIAL MAY BE MADE FOR COMMERCIAL PURPOSES.):

Asterisks (***) indicate material omitted for ease of reference:

CAT Claims: Insurance Coverage for Natural and Man-Made Disasters

Database updated November 2009--UPDATED FEBRUARY 2010

John K. DiMugno, Steven Plitt, Dennis J. Wall

 

Chapter

2. Claim Handling Issues

by Dennis J. Wall, Esquire

 

COPYRIGHTED MATERIAL.  NO USE OR REPUBLICATION OF THIS MATERIAL MAY BE MADE IN ANY FORM AND IN ANY MEDIUM WITHOUT WRITTEN ADVANCE PERMISSION.  ALL RIGHTS RESERVED.

 

§ 2:3.Notice as condition precedent, or not, to first-party property insurance coverage

* * *

Notice to the property insurance company is a condition to obtaining coverage for a particular loss under most, if not all, property insurance policies. It is a clear lesson from reviewing the decided cases that prompt notice in the eyes of the judge is essential to presenting a potentially successful claim to coverage.[1] Successful policyholders have provided notice of loss in the reported case law within 10 days of Hurricane Katrina,[2] as just one example. There are many insurance coverage questions involved in catastrophe and other large claims. Whenever possible, notice to the insurance company of the loss should not be one of those issues.[3]

 

In the language used by lawyers and by courts, notice of loss is a condition precedent to coverage under a first-party policy of insurance.[4] In a case often cited for this proposition, it has been written that the purposes of a provision for notice of loss include overtones connected with prompt investigation by the insurance company and its setting of a proper reserve[5] for the particular claim:

 

An insurance company is entitled to require notice at the earliest time practicable after a loss has occurred. Prompt notice permits the insurer to investigate the facts on which the claim is predicated and to adjust its books in order to maintain a proper reserve fund in light of the insured's claim.[6]

 

“As a general rule,” notice of loss provisions “are liberally construed” in favor of the policyholder who is required to provide the notice.[7] Often, a notice of loss provision requires the policyholder to notify the insurance company of a loss as soon as practicable, which has been interpreted by the courts to mean “that notice had to be given within a reasonable time of [i.e., after] the discovery of loss.”[8]

 

* * *

 

[FN1]See Townhouses of Highland Beach Condominium Ass'n v. QBE Ins. Corp., 504 F. Supp. 2d 1307, 1309 (S.D. Fla. 2007): “On or about October 24, 2005, Hurricane Wilma struck Highland Beach, Florida …. Plaintiff sustained damages in excess of 1.5 million and timely reported its claim for damages to Defendant.”

   The Townhouses Court also determined that Florida would allow a cause of action which Florida State Courts had never previously allowed, namely, a cause of action or claim for breach of an implied warranty of Good Faith and Fair Dealing at Common Law, separate and apart from the Statutory Claim for First-Party Bad Faith made available under Florida Statute Section 624.155.  Later decisions even in the same Southern District of Florida have held that this is plain wrong:  "The Court has considered the cases cited by Plaintiff and determined that those cases incorrectly applied Florida law."  Portofino South Condominium Ass'n of West Palm Beach, Inc. v. QBE Insurance Corp., 2009 WL 3366065 (Page references unavailable at this time)(S.D. Fla. Opinion Filed September 24, 2009).

 

[FN2]See Colonial Living Center, L.L.C. v. Hanover Ins. Co., 2007 WL 1741812 *1 (E.D. La. June 11, 2007).

 

[FN3]See National Athletic Sportswear, Inc. v. Westfield Ins. Co., 2007 WL 3286858 *3 (N.D. Ind. Nov. 5, 2007), aff'd & opinion adopted, 528 F.3d 508 (7th Cir. 2008): “The Plaintiff reported the theft and loss of property to Defendant on a timely basis.” In this case, the insurance company prevailed on all issues because the policyholder was held by the Indiana Federal Court to breach the insurance policy by refusing to submit to an examination under oath purportedly required by the policy. National Athletic Sportswear, Inc. v. Westfield Ins. Co., 2007 WL 3286858 *6–*12 (N.D. Ind. 2007), aff'd & opinion adopted, 528 F.3d 508 (7th Cir. 2008). First-party property insurance policy requirements for examinations under oath are discussed in § 2:5, infra.

 

[FN4]E.g., Kenneth v. Nationwide Mut. Fire Ins. Co., 2007 WL 3533887 *6 (W.D. N.Y. 2007) (homeowners insurance policy); seeUtica Mut. Ins. Co. v. Fireman's Fund Ins. Companies, 748 F.2d 118, 121 (2d Cir. 1984) (case involved New York law and a fidelity bond).

 

[FN5] For an in-depth discussion of the role played by reserves in the handling of first-party property insurance claims, see§ 2:11, infra.

 

[FN6]Utica Mut. Ins. Co. v. Fireman's Fund Ins. Companies, 748 F.2d 118, 121 (2d Cir. 1984) (case involved a fidelity bond and New York substantive law).

 

[FN7]Della Porta v. Hartford Fire Ins. Co., 118 A.D.2d 1045, 1047, 500 N.Y.S.2d 831, 832 (App. Div. 3d Dep't. 1986) (case involved notice of a burglary).

 

[FN8]Della Porta v. Hartford Fire Ins. Co., 118 A.D.2d 1045, 1047, 500 N.Y.S.2d 831, 832 (App. Div. 3d Dep't. 1986).

 

© 2010 Thomson Reuters UPDATED.

 

TO BE CONTINUED ....

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Appealing Health Insurance Claim Denials.

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   According to a newly reported newspaper article by Walecia Konrad, "Patient Money/Fighting Denied Claims Requires Perseverance" (New York Times Online, Saturday, February 6, 2010), three things can be done by persons whose Health Insurance Claims have been denied:

• Appeal the Health Insurance Company's denial as outlined in the Policy or Plan.  The Insurance Commissioner of Kansas is quoted in the linked newspaper article as reporting that slightly over one-half of the Health Insurance Coverage Appeals "'work in our state.'"  "Fighting Denied Claims Requires Perseverance," supra.
• If your client's or your Appeal is denied, seek out an external review board, where available.  All but five (5) States reportedly allow denied appeals to be considered anew by  independent medical experts who sit on an external review board.  The five missing States are identified as Alabama, Mississippi, Nebraska, South Dakota and Wyoming.
• Recall that the Health Insurance Company that denied your or your client's Claim is likely regulated by the Insurance Commissioner in your State.

   Preparation for these processes is outlined further in the linked newspaper article, here.  

Sources of information and possible assistance with these potential remedies include:

• The State's Department of Insurance.  In Florida, this is known now as the Office of Insurance Regulation and its web site address is www.floir.com.

• Advocacy for Patients With Chronic Illness at  www.advocacyforpatients.org.

• Patient Advocate Foundation at www.patientadvocate.org and 1.800.532.5274.

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Expert Witnesses on the Handling of Property Insurance Claims.

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   There is an interesting and informative web log entitled, "Property Insurance Coverage Law Blog".  It is published by Merlin Law Group located in Tampa, Florida.  They are a Firm of Policyholder/Plaintiff Attorneys and, as I wrote above, their blog is interesting and informative.  In a recent post, they asked me to comment on Expert Witness Testimony in Insurance Cases.  I cannot do better than what I wrote and updated recently about "Claim Handling Issues," in "CAT Claims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company)(COPYRIGHTED.  ALL RIGHTS RESERVED,  NO REPRODUCTION OR ANY OTHER USE OF THIS MATERIAL MAY BE MADE FOR COMMERCIAL PURPOSES.):

Asterisks (***) indicate material omitted for ease of reference:

John K. DiMugno, Steven Plit, Dennis J. Wall

Chapter 2. Claim Handling Issues

by Dennis J. Wall, Esquire

§ 2:1.Introduction and interpretation

* * *

Courts often follow the claim adjustment process in reaching their decisions in noncatastrophe cases, although not necessarily in the same order in which insurance companies actually adjust claims.[1] There is every reason to think that courts will follow the same process when they are confronted with catastrophe claims.[2]

* * * On the other hand, hurricanes and other catastrophes are often predicted to follow the crippling lead of hurricanes such as Charley, Frances, Ivan, and Jeanne in 2004 and of Hurricanes Katrina, Rita, and Wilma in 2005. The effect of catastrophic events like these, and the reason for this book, are very well described by a federal judge in Mississippi who has been flooded (you should pardon the expression) with catastrophe claims in the two years that have followed Hurricane Katrina and Hurricane Rita to date. The author of this Chapter inputs the following lengthy passage with some trembling in his fingers on the keyboard. Long quotations are not a substitute for analysis. Further, long quotations are often boring to a lot of readers. For the first time, perhaps in recorded history, the author of this Chapter nonetheless offers the following long quotation in this text. The federal judge who wrote it originally cannot legitimately be accused of a want of analysis, and the following observations are certainly not boring to most people concerned with catastrophes, in any case:

In the wake of an insured's catastrophic loss of his dwelling and possessions in an event such as a hurricane, an event that poses two different risks (flood damage and wind damage), it is not unreasonable for the insured to seek to collect all his available insurance coverages, and it is not unreasonable or otherwise improper, when he does not know and cannot readily ascertain the actual cause of his losses, for the insured to assert that all of his losses may be payable under either policy. Faced with uncertainty, the insured may turn to any of his coverages for indemnity. In this situation it would be unrealistic and unfair to impose a burden on the insured to segregate his damages between wind and water losses at the peril of losing his insurance coverage if he errs in this endeavor. It is far more reasonable in these circumstances to allow the insured to make a claim for all his losses under both flood coverage and wind coverage if the damages cannot be readily segregated or if the source of the damage is uncertain. The question whether the insured's damages are recoverable, and, if so, under which policy, must ultimately be resolved through either negotiation or litigation.[4]

 

[FN1] See Smith v. Westfield Ins. Co., 2007 WL 1740816 (E.D. Pa. June 15, 2007), in which the court's decision reflects the identical steps ordinarily taken by insurance companies in adjusting first-party property insurance claims, though not necessarily in the same sequence. With regard to the initial step, confirming coverage, in the court's eyes a coverage determination itself involves four distinct steps:

   The determination of coverage here involves four steps. The first step is whether there has been a loss …. The second  step is whether the loss falls within a policy exclusion …. The third step is whether the ensuing loss is itself excluded by a specific policy provision …. The fourth step is whether there is an exception to the mold exclusion.

Smith v. Westfield Ins. Co., 2007 WL 1740816 *2 (E.D. Pa. June 15, 2007) [Emphasis by the Court.] See generally DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:5 (2d Edition Thomson/West Publishing).

 

[FN2] See, e.g., Schmermund v. Nationwide Mut. Ins. Co., 2008 WL 5169396 *2 (S.D. Miss. 2008) (case involved Hurricane Katrina claim): “There are too many unanswered questions with respect to the manner in which this claim was handled and the decisions that were made.”

 

* * *

 

FN4] Robichaux v. Nationwide Mut. Ins. Co., 2007 WL 2783325 *2 (S.D. Miss. 2007). This does not mean that policyholders should ever obtain double recoveries, i.e., that insureds should ever recover twice for the same element of damage, even as part of a catastrophe claim:

A payment under an insurance policy, whether it is a flood policy or a homeowners policy, offsets, dollar for dollar, the total losses the insured has experienced. The insured's total loss constitutes an upper limit on his recovery from all his insurance policies, and this upper limit is reduced, dollar for dollar, by the payment and acceptance of insurance benefits. This prevents any double recovery, i.e., any recovery of two insurance payments for a single loss.

   But the payment and acceptance of insurance benefits does no more than that, and the assertion of a right to recovery, in the face of legitimate doubt or uncertainty as to the risk that caused the loss, does not estop an insured from claiming and collecting other insurance benefits that prove to be covered by a separate policy.

Robichaux, 2007 WL 2783325 at *2–*3. The date of this decision, September 21, 2007, is 22 days after the date of the decision of a panel of the Fifth Circuit Court of Appeals in the case of Leonard v. Nationwide Mut. Ins. Co., 499 F.3d 419 (5th Cir. 2007), cert. denied, 128 S. Ct. 1873 (U.S. April 14, 2008). The federal district judge took this occasion to write the above-quoted remarks in the context of an order denying a motion for reconsideration of an order of remand, not usually the occasion for an opinion at all, but certainly the occasion for an opinion under the circumstances extant on that date. In Leonard, the appellate panel affirmed a judgment entered by the same federal trial judge in a Mississippi case but in which the panel wrote a long opinion stating its authors' disagreement with the Mississippi federal trial judge's reasoning which would have invalidated an anticoncurrent cause clause under Mississippi law. The three members of the Fifth Circuit panel in Leonard are Texas lawyers. In basic terms, an anticoncurrent cause clause such as Nationwide's clause sought out and embraced by the appellate panel in Leonard, would force an insured to segregate her, his or its damages between wind and water losses at the peril of losing his insurance coverage for damages caused by wind if she, he or it errs in this endeavor. See § 7:5, infra.

 

From Dennis J. Wall, "Claim Handling Issues," § 2:1, from Chapter 2 in "CAT Claims:  Insurance Coverage for Natural and Man-Made Disasters" published by West, a Thomson Reuters business, and UPDATED.

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Great Recession, Overhaul 'Hangover' Depress Health Insurance Companies, Hospitals.

  **Author's Note:  If you have reached this blog through a list that carries advertising, your computer may or may not be put at risk either through the list or through the advertising.  I do not accept or authorize any advertising of any kind on any list or post.  Placing advertisements with or near any of my web log posts is prohibited.  Further, I do not recommend any products or services advertised with or near any of my posts or any list of my posts.**

   If  your clients are out of a job, they already know that the Great Recession is bad for their personal profit margins.

   Health Insurance Companies know this, too.  Commercial Underwriting and Premiums for Employer-based Group Health Insurance Plans are down because so many Employers have fired Employees and there is less Premium money available for these Plans, period.  See this Associated Press Copyrighted Story by Tom Murphy, published as "Year May Challenge Insurers" (Boston Globe Online, Sunday, February 7, 2010).

   In addition, the linked article reports as a possibility something most people familiar with the Health Insurance Industry know for certain:  The pending "health care overhaul" still pending in the United States Congress is another factor in an expected further decline in profit margins of "some"  -- if not all -- Health Insurance Companies. Id.

   The overhanging Health Care legislation in Congress is also reportedly a huge factor in a continuing increase in hospital costs because "the cost of doing nothing in Washington translates into tens of billions of dollars each year in medical bills that go unpaid by patients with little or no insurance."  Reed Abelson, "Bill Stalled, Hospitals Fear Rising Unpaid Care" p. B1, col. 5 (New York Times Nat'l ed., "Business Day" Section, Tuesday, February 9, 2010).

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Mediation With Full Authority in Good Faith, Including Mediating Insurance Issues.

 Author's Note: 

After writing this post, the author first became aware that at least one entrepeneur is aggregating these posts, along with others, and using them to sell advertising.  The author has never authorized anyone to sell advertising in connection with any posts on this Web Log.  There has never been a charge or fee of any kind for any post that I have ever written on any Web Log, including my own.

Advertising in connection with any posts I have authored in the past or will author in the future is not authorized.  It is prohibited. 

Further, the author does not recommend any services or products which have had their ads linked to any posts or to any list of posts anywhere on any web site now or ever.  Those products and services are unknown to me.  I have nothing whatsoever to do with any of them, and never have.

 

   On Insurance Claims Bad Faith Law Blog, I discuss my experience both as a Certified Mediator and as Counsel at Mediations under the Florida Rules of Civil Procedure, especially Rule 1.720(b).  (Rule 1.720(b) can be found on the link I have embedded, above, to the Florida Supreme Court's online publication of the Florida Rules of Civil Procedure, at the page numbered "CIV-79," which is page 111 of the linked pdf document.)

   In Florida, the parties to a Mediation have the option to stipulate that the Insurance Company representative need not physically attend or have the "full authority" described in the Rule, or in fact to "stipulate otherwise," i.e., to stipulate to anything other than what is provided in paragraphs (1), (2) or (3) of Rule 1.720(b).

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Bond Insurance Still Has a Market?

   Under Ten Percent (10%) of the "municipal bond market" insures municipal debt with Bond Insurance.  See Jeremy R. Cooke, "Arizona, Chicago Bond Sales Show Insurance Demand Persists" (Bloomberg.com, Thursday, January 14, 2010).

   It is reported that recent "municipal debt sales" by "Arizona" and the City of Chicago reflect a "demand" for Bond Insurance, however.  Id.

   Previous posts in this space document much of the history and fall of Bond Insurance Companies, before, during, and after the Great Recession through which we are now living.

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Attorney's Fees, Using Reserves Without Disclosure, and Good Faith.

   The Directors who serve on the Boards of Condominium Associations and Homeowners' Associations have certain duties.  In many jurisdictions (check your local laws), these duties include duties of Good Faith in how if at all they use the Association's Reserves:

The association board's duties include performing due diligence and acting in good faith when it comes to preparing a budget and anticipating increases in assessments. 

Stephen Glassman and Donie Vanitzian, "Associations/Owners Feel Left in the Dark on Use of Reserves for Legal Bills" (Los Angeles Times Online, Sunday, January 31, 2010).   The linked newspaper column specifically addresses a question concerning what may be inadequately disclosed use of Reserves to pay Attorney's Fee Bills.

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Federal Deposit Insurance Corporation's Bank Seizures Burgeon (a Bunch).

   In 2008, a year when the Great Recession was just beginning, 25 banks failed and required the support of the Federal Deposit Insurance Corporation.

   In 2009, with the Great Recession in full swing, 140 banks failed and required FDIC intervention.

   In the first 29 days of 2010, reportedly 12 banks failed and the FDIC stepped in to support them.  The most recent additions to the list of bank failures were two banks in Georgia and one in Florida.  Reuters Report published as "F.D.I.C. Seizes Two Failing Banks in Georgia and One in Florida" p. B2, col. 1 (New York Times Nat'l ed., "Business Day" Section, Saturday, January 30, 2010).

   "The F.D.I.C. expects 2010 to be the peak year for bank failures as a result of the financial crisis." Id.  At the current rate, in 2010 we can expect over 150 banks to fail and require the guarantees of insurance for their Depositors that are provided through the Federal Deposit Insurance Corporation.

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Insurance for Autism? Some Resources to Find Out.

   Insurance is a hard row to hoe to find Coverage for autism treatments.  Even in States in which Insurance Coverage for autism treatments is not currently available, other resources may be found.  Check out the web site of the Autism Society of America, on the "Find State Resources" tab, here.

   Reportedly fifteen (15) States have enacted laws requiring Coverage for autism treatments.  In two (2) more, such legislation is pending.  Walecia Konrad, "Patient Money/Dealing With the Financial Burden of Autism" p. B6, col. 1 (New York Times Nat'l ed., "Business Day/Personal Business" Section, Saturday, January 23, 2009).

   Medicaid Coverage may also be available for "fairly serious cases".  Id.  It is worth exploring for you or for your Clients.  Here is a link to the web site of the Federal Government's Medicare and Medicaid Services.  There is also a link to the Medicare and Medicaid Services Web Site on the site of the Autism Society, link above.

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Annuities: Life Insurance Alternative for the "Sandwich Generation"?

   To start off with, the "Sandwich Generation" is a description of the generation caught between caring for their elderly parents, and caring for their young children.  "Sandwiched" in between these responsibilities, the "Sandwich Generation" is searching for alternatives to Life Insurance Policy benefits that mostly pay out when the Policyholder is dead.  They are looking for regular payouts that are made during their lives.

   Recently, Vice President Joe Biden outlined many initiatives being put forward by the Obama Administration to increase the chances of income security during a person's later years of life.  One idea is to promote "automatic individual retirement accounts" in which Employers would invest a certain amount for Employees who could choose to opt out.  Mr. Biden's remarks were seconded by President Obama's remarks to the same meeting of the White House's Middle Class Task Force.  Mr. Biden is the Task Force Chair.  Remarks of the Vice President and of the President to the Middle Class Task Force Meeting on January 25, 2010.  The proposal for automatic individual retirement accounts with an opt-out provision is also described in the White House's "Fact Sheet:  Supporting Middle Class Families" (Undated, Released approximately January 25, 2010),  at 3.  Parenthetically, the undated "Fact Sheet" also describes the proposed "automatic" enrollment in individual retirement accounts as "voluntary".  Id. at 1, 3.

   The "Fact Sheet" also contains an announcement that the Obama Administration, in a search for lifetime income options or supplements to Life Insurance Policy and other Insurance benefits alone, is:

Promoting the availability of annuities and other forms of guaranteed lifetime income, which transform savings into guaranteed future income, reducing the risks that retirees will outlive their savings or that their retirees' living standards will be eroded by investment losses or inflation.

Id. at 3.

   The Obama Administration's apparent endorsement of Annuities has blown cobwebs off a long-standing retirement vehicle.  As a result, Insurance Companies that sell Annuities have understandably become excited about the prospects of selling more Annuities than they otherwise might have.  Ron Lieber, "Your Money/Annuities Get Obama Fist Bump" p. B1, col. 1 (New York Times Nat'l ed., "Business Day" Section, Saturday, January 30, 2010).

   By all means, proceed to explore Annuities for the Sandwich Generation and other people as well.  You and your clients would do well to proceed with caution, however.  The market for Annuities is filled not only with Annuities but with widespread confusion and potential risk.  Understanding the risk is key to controlling it.

   The linked newspaper article links to a list of many Guaranty Funds and agencies of State Governments which will, in varying amounts and degrees, pay some amounts toward Annuity payments in the event that the Insurance Company issuing the Annuity becomes insolvent.  The linked list is in turn provided by "ImmediateAnnuities.com," an "online immediate annuities broker".  The list also provides a list of telephone numbers of the various States' guaranty funds.  You and your clients can telephone the guaranty agencies directly to confirm what the guaranty fund, if any, in your State of choice will insure in the event of insolvency and for how much, if at all.

   Further, you and your clients would also do well to travel to web sites and other resources that provide information about Annuities, such as www.BuyaPension.com, which is referenced in the linked newspaper article also.

  Reportedly, financial planners and stock brokers may not be such a good source of accurate information about Annuities:  They do not receive a commission if you and your clients put your money into Annuities.

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