Claims And Issues

Hurricanes and Florida Property Insurance Preparedness.

   Hurricane Season officially begins on Tuesday, June 1, 2010.  Apparently, Citizens Property Insurance Corporation, which is run by the State of Florida, and most private Property Insurance Companies are prepared.  However, in the event of a major Hurricane with accompanying Property Damage, a different story may arise out of Florida's Catastrophe Fund which is designed to pay out in the event of huge Hurricane Losses, and out of many private Property Insurance Companies which may not withstand the event.  See generally Julie Patel, "How Prepared is Florida's Property Insurance Market for a Major Hurricane?" (South Florida Sun-Sentinel.com, Friday, May 28, 2010).

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Subpoenas Gone Wild? Not.

    A subpoena must be tailored to the issues or the subject-matter of the litigation.  Thus, in Nicholas v. Oklahoma Farm Bureau Mutual Insurance Co., Download Nicholas v. Oklahoma Farm Bureau Mutual Insurance Co. (W.D. Okla. Case No. CIV 09.10, Opinion Filed March 10, 2010) also published as 2010 WL 916001 *4 (W.D. Okla. March 10, 2010)(Westlaw subscription required to access Westlaw), a Homeowner's Insurance Company's subpoena served upon another Homeowner's Insurance Company was quashed where the subpoena duces tecum was not limited to other claims involving the subject-matter of the Bad Faith litigation at bar, i.e., the subpoena duces tecum was overbroad and quashed because it was not limited to claims for damages to the roof which was the subject of the pending litigation.

   The Online Docket of this case reflects that a Joint Stipulation For Dismissal With Prejudice was filed on May 19, 2010 and that an Order of Dismissal With Prejudice was filed the next day, May 20, 2010.

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Jawboning Health Insurance Early for Adult Children: What's Plan B?

   The Secretary of Health and Human Services, and other officials in the Obama Administration, are reportedly asking Employers to voluntarily include Health Coverage early for adult children in the Health Insurance Plans they offer their Employees.  This is before a new Federal Law, the Healthcare Reform Act, requires them to do that. Many Plans do not face renewal for 8 months or so.  See Robert Pear, "Employers Urged to Act Now to Expand Health Plans" p. A12, col. 1 (New York Times Nat'l ed., Friday, May 28, 2010).

   The Chamber of Commerce is reportedly opposed.  The Chamber of Commerce is on record as supporting the obligations of Employers to offer the Health Insurance Coverage for adult children of Employees  as soon as Employers have to comply with Federal Law.  Not one second sooner.  See id.

   In the meantime, according to the same newspaper report Health Insurance Companies who offer Health Insurance Policies, as distinct from Employers who may or may not provide Health Insurance Plans, are in favor of complying with Federal Law now.  Jawboning Health Insurance Companies is apparently a plan from the Obama Administration.  Health Insurance Companies received headlines for complying with an Administration request previously to follow the new Healthcare Reform Act's limitations on Rescission of Insurance Policies, by agreeing to follow that new Federal Law some 3 or 4 months before it takes effect.  See "Rescission as Post-Claims Health Insurance Underwriting Renounced, Reformed," posted here on May 7, 2010.

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National Association of Insurance Commissioners in Orlando in October, 2010.

   The National Association of Insurance Commissioners has scheduled a National Meeting in Orlando, Florida.

   The NAIC will convene in Orlando in October, 2010.  The agenda is being finalized and so is unavailable at the time of this post.  When the NAIC makes its agenda available, it will be the subject of at least one post here.

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Federal Consumer Products Safety Commission Names Chinese Drywall Names.

   Going 'round the issue of whether there is any Insurance Coverage for Chinese Drywall Claims, and if so what kind, the Federal Consumer Products Safety Commission has named the manufacturers of  'particularly offensive' Chinese Drywall featured in these Claims.  See Nirvi Shah, "U.S. Names Chinese Drywall Brands With Worst Emissions/The Consumer Product Safety Commission Hopes to Force the Makers to Take Responsibility for Their Products.  It has Received Many Complaints About Hydrogen Sulfide Coming From Chinese Wallboard" (Los Angeles Times Online, Thursday, May 27, 2010).

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The Change: Health Insurance is Cool.

   One of the lasting effects of Healthcare Reform legislation may be on people between the ages of 19 and 29.  This cohort, if you will, dislikes the idea of paying Health Insurance Premiums.  So much so that this is one of the things they argue about with their parents, namely, why they do not have Health Insurance.

   All in all, there may be a societal change in the offing, moving from a place where young persons are identified in part by not paying Health Insurance Premiums and not having Health Insurance Coverage, to a future place where young people embrace the pursuit of Health Insurance Coverage to such a degree that they are willing to pay Health Insurance Premiums to have it.

   "Insurance is Cool."  See generally Roni Caryn Rabin, "Big Gains for Young People in Health Law" p. D6, col. 3 (New York Times Nat'l ed., "Health" Section, Tuesday, May 25, 2010).  Who woulda guessed?

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Claim Manager Held Not Subject to Kentucky Bad Faith Claims.

   In a case of first impression, a Federal Judge held that a State Farm Claim Team Manager did not engage "'in the business of insurance'" and so was not subject to personal liability for alleged Bad Faith Claim Handling under Kentucky Law in  Fulkerson v. State Farm Mut. Auto. Insurance Co., 2010 WL 2011566 (W.D. Ky. Opinion Filed May 20, 2010)(Westlaw subscription required to access Westlaw).

Personal liability issues of claim adjusters in cases decided across the United States are examined in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" §§ 3:14 and 7:5 (Shepard's/McGraw-Hill First Edition; West Publishing Company Second Edition and 2010 Supplement).

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American Law Institute to Issue Restatement of Principles on Insurance.

   At the Annual Meeting of the American Law Institute in Washington, D.C., earlier this month, it was announced that the ALI is going to address Insurance in one of its projects.  The word is that there will be a future Restatement of Principles issued by the ALI on Insurance.

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Gaming the Muni System: Another Kind of Muni Bond Insurance?

   Bid-rigging on auctions for Guaranteed Investment Contracts or "GIC's" are another class of protection for financial interests, according to a comprehensive article by Martin Z. Braun and William Selway, "Conspiracy of Banks Rigging States Came With Crash (Update 1)" (Bloomberg.com, Tuesday, May 18, 2010).  This article is nicely condensed in a newspaper blog post by Robert Trigaux on Wednesday, May 19, 2010 on "Ventures" Blog in the St. Petersburg Times.

   Reportedly, Bloomberg has unearthed a "conspiracy" of "kickbacks" "in which financial advisers to municipalities colluded with" banks and traders to guarantee that the banks and traders paying kickbacks would land contracts to manage the income raised by the auction of Taxpayers' Guaranteed Investment Contracts.  Bloomberg reports that its investigation was massive:

   The workings of the conspiracy -- which stretched from California to Pennsylvania and included more than 200 deals involving about 160 state agencies, local governments and non-profits -- can be pieced together from the Justice Department's indictment of CDR [CDR Financial Products, Inc.], civil lawsuits by governments around the country, e-mails obtained by Bloomberg News and interviews with current and former bankers and public officials.

Martin Z. Braun and William Selway, Bloomberg.com, supra. 

   This gives a new twist to the meaning of "Bond Insurance".

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Credit Default Swaps Continued ... Unregulated, Unreserved, The Uninsurance?

   Credit Default Swaps are Insurance.  For a long time, readers and I have been examining what you might call "the three R's":  Regulation, Reserves, and Insurable Interest.  (Okay, that is really Two R's and Two I's.)  The problem with Credit Default Swaps, at least for you and for me, is that they do not have any of them:  No Regulation, No Reserves, and no Insurable Interest.

   Now, Floyd Norris of the New York Times has written an excellent column in which he points out that these three defects were defective by design, again, at least defective for you and for me:

   Credit-default swaps are, in reality, insurance.  The buyer of the insurance gets paid if the subject of the swap cannot meet its obligations.  The seller of the swap gets a continuing payment from the buyer until the insurance expires.  Sort of like an insurance premium, you might say.

   But the people who dreamed up credit-default swaps did not like the word insurance.  It smacked of regulation and of reserves that insurance companies must set aside in case there were claims.  So they called the new thing a swap.

Floyd Norris, "Naked Truth on Default Swaps" p. B1, col. 1 (New York Times Nat'l ed., "Business Day" Section, Friday, May 21, 2010).  [Emphasis added.]

    Mr. Norris also points out in his column that Credit Default Swaps were designed to be sold without requiring that the buyer have a recognized, Insurable Interest in the credit payment or default, one way or the other.  Except that the buyer of a Credit Default Swap benefits from default on the extended credit in question, and does not profit so much -- if at all --from repayment of the loan.  See id.

   This scheme resulted in many funds and financiers profiting from credit defaults even though they had no interest in the outcome greater than the desire to make money.  Hmmm.  Sounds like an accurate general description of a cause of the Great Collapse through which we are now living.

   For previous posts here on this subject, please see the Category, "Credit Insurance" on this Blog.  In particular, please see the previous posts on March 19, 2010 addressing the issue of requiring Reserves  for Insurance-like financial products, and on March 4, 2010, which addresses other Regulatory requirements of Insurance that might be applicable to Insurance-like financial products in addition to Reserves, and which has many links going back to posts in March, 2009.

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Discovery Request by Insurance Company Compelled in Hurricane Damages Case.

  In the case of Abdin v. American Security Insurance Co., Download Abdin v. American Security Insurance Co. (S.D. Fla. Case No. 09.81456, Opinion Filed March 29, 2010) also published as 2010 WL 1257702 *2 (S.D. Fla. March 29, 2010), the Federal Court was confronted with an Insurance Coverage Claim for Hurricane Damage under a Homeowner's or other Property Insurance Policy (it is not clear which type of Policy was at issue, nor does that fact make any difference really to the holding mentioned in this post at this time).  The Federal Court ordered that the Policyholder-Plaintiff had to respond to the following Request for Production of documents and tangible things which was served by the Insurance Company in that case:

All original documents, including but not limited to receipts, cancelled checks or any other documents which evidence any repairs to the insured property at any time since you have owned it.  This request includes, but is not limited to, all documents and records evidencing the repairs to the insured property subsequent to the September 4, 2004, and July 18, 2008 losses.  This request contemplates the original invoices from contractor.

   The requested documentation, in the view of the Court in this case, "are necessary for Defendant to understand the scope of the damages claimed and to aid in the determination of whether the repairs and damages claimed are related to Hurricane Frances.  Plaintiff is instructed to respond to this discovery request." 

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Health Insurance Companies Have Plans for Rules: 'Overhead is Treatment!'

   Health Insurance Companies and Health Insurance Plans have positions staked out on Rules and Regulations under the new Health Care Reform Act.  Their plans for lobbying on "nonquantitative treatment limits," among other things, were examined here on May 10, 2010.  Now they plan to do battle on two issues on a field which they calculate will be empty of opposition.

   First, reportedly Health Insurance Companies and Plans have plans to spell out "unreasonable premium increases" in favor of just about any Premium increases.  Congress left it to the Rules and Regulations which will be promulgated by the Department of Health and Human Services, to provide definition to that phrase.  The effects of the future Rules and Regulations can be enormous.  Under the new Health Care Reform Act, Health Insurance Premium increases carry a condition precedent before the Increases go into effect, if ever:  Justification for such Health Premium Increases must first be submitted to Federal and State officials for review.  See Robert Pear, "Health Insurers Lobbying to Shape Overhaul Rules" p. 20, col. 1 (New York Times Nat'l ed., Sunday, May 16, 2010).

   Second, battle will be waged -- again, on what the Health Insurance Companies and Plans plan on being a battlefield without opponents, after the bruising battles waged over Health Care Reform in the first place -- to define another undefined phrase, "minimum loss ratios".  (In the linked newspaper article, this phrase is inadvertently also referred to as "medical loss ratio".)  This phrase too is important and it too was left undefined by Congress, so that it must be defined in the Rules and Regulations which are currently under consideration.  Congress was apparently definitive, however, it making this provision effective January 1, 2011.  It "requires that a minimum percentage of premium dollars be spent on true medical costs related to patient care -- not retained by insurers as profit or used to cover administrative expenses.  Insurers must refund money to consumers if they do not meet the standards, known as minimum loss ratios."  Id.  [Emphasis added.]

   Rather than face the prospect of huge amounts of refunds, the Plan is to include just as much Overhead in the cost of Medical Care in the "minimum loss ratio" as it will hold.

   It is an open question at this time as to how much was promised to Health Insurance Companies and Plans, in addition to the promise of a mandate for a greater number of Health Insurance Premium payers, if ever the Rules and Regulations were part of the deal in the first place?  If not, then the question becomes how strongly will the Obama Administration support Secretary Kathleen Sebelius in determining these Rule Definitions? 

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Varmint Removal Costs, Vermin Damage Not Covered, Says Homeowners Insurers Organization.

   Home Insurance Protection against "the costs of getting rid of bedbugs, as with rats or cockroaches, are considered part of the maintenance associated with owning a home."  Jennifer Saranow Schultz, "Bucks Blog/Home Insurance and Bedbugs" p. B4, col. 5 (New York Times Nat'l ed., "Business Day" Section, Saturday, May 8, 2010).  In addition, Damages caused by vermin and various varmints are not covered say many if not all Homeowners Insurance Companies.  "In general," according to the Insurance Information Institute, "losses caused by creatures including birds, vermin, rodents or insects aren't covered by standard policies."  Id.

EwwwYuk!

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American Law Institute Induction Today in Washington, D.C.

   On Monday, May 17, 2010 I will be in Washington, D.C., where I will be inducted into the American Law Institute.  I backed into this honor and sometime I will tell you why and how.  It is certainly an honor and I appreciate it.

   If anyone needs to get ahold of me in the interim, please call my office at 407-699-1060.  They will get me your message that you need to talk to me today, and I will try to call you back today.  Otherwise, I will call you back later this week.  Thank you.

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Coverage Dispute "Reasonable Basis" to Avoid Georgia "Bad Faith" Penalties.

  Penalties for "Bad Faith" are not authorized under the Georgia "Bad Faith" Penalties Statute in cases where the Insurance Company in question has "'any'" reasonable ground to contest a claim and the case presents disputed questions of fact.

   It has been held that, under this rule of law, "a reasonable basis" to contest a claim includes a legitimate contention that the claim is not a "covered loss".  Lawyers Title Ins. Corp. v. Griffin, 2010 WL 774990 *4 (Ga. Ct. App. Case No. A09A1874 March 9, 2010)(Westlaw subscription required to access Westlaw):  "Given that Lawyers' non-payment was based on its contention that Griffin did not have a covered loss under the Policy, Lawyers had a reasonable basis to refuse Griffin's demand."

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Abstention in Insurance Cases: When, and When Not.

   The case of Lawyers Title Ins. Corp. v. Doubletree Ptrs., L.P., Download Lawyers Title Insurance Corp. v. Doubletree Partners, L.P. (E.D. Tex. Case No. 4.08cv243 01.20.10 Order of District Judge Adopting Report and Recommendation) and Download Lawyers Title Insurance Corp. v. Doubletree Partners, L.P. (E.D. Tex. Case No. 4.08cv243 12.30.09 Report and Recommendation of Magistrate Judge) also published as 2010 WL 278877 (E.D. Tex. January 20, 2010)(Westlaw subscription required to access Westlaw) was filed by a title insurance company for declaratory relief regarding "certain policy exclusions, relied upon by Plaintiff in denying the claim," or, alternatively, for reformation to have the title insurance policy reformed to include the exclusions.  Id. at *1.  The Defendant-Policyholder filed a motion to dismiss and argued for abstention due to a pending State Court proceeding, in part here pertinent.

   The Court in that case noted that there are two standards governing abstention in Federal Court.  Id. at *2.  One standard involves "broad discretion" where only declaratory relief is involved, and another standard, "which is more restrictive," applies when the Federal Court action involves "coercive" or "any non-declaratory claim for relief".  Id.   The latter standard involves some six (6) factors, id. at *3, all of which were considered and all of which were held to weigh against abstention in that Insurance case.  Id. at *3-*5.

   The Lawyers Title Insurance decision provides a good source of the factors pertinent to Abstention issues in Insurance Cases.

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Federal Declaratory Judgment in Florida Insurance Case, With Default Added.

   In Colony Insurance Co. v. Village at Dadeland Condominium Ass'n, Download Colony Ins. Co. v. Village at Dadeland Condo. Ass'n (S.D. Fla. Case No. 09.22369.cv 04.15.10 Report and Recco Of Magistrate Deny Marcus Motion Dismiss and Stay), also published as 2010 WL 1817038 (S.D. Fla. Report and Recomendation of Magistrate Judge 04.15.10), a Magistrate Judge outlined the many factors Federal Courts in Florida take into account in deciding whether to grant or deny motions to dismiss and stay Insurance Declaratory Relief Actions as in this case:

   In this connection, the Eleventh Circuit has provided general guidance as to the factors that should be considered when deciding whether or not to dismiss a federal declaratory action in favor of a state court action: (1) the state's interest in deciding the matter; (2) whether a judgment in the federal action would completely resolve the controversy; (3) whether the declaratory action would clarify the parties' legal relations; (4) whether the federal action amounts to fencing; (5) whether a ruling in the federal action would increase friction between federal and state courts; (6) whether a superior remedy exists; (7) whether underlying facts are important to an informed resolution of the matter; (8) whether the state court is better situated than the federal court to evaluate those facts; and (9) the nexus, if any, between the underlying issues and state law/policy, and whether federal common or statutory law requires a resolution of the declaratory action.

Recently this Report and Recommendation was adopted by the District Judge.  Download Colony Ins. Co. v. Village at Dadeland Condo. Ass'n (S.D. Fla. Case No. 09.22369.cv 05.04.10 Order Of District Judge Denying Marcus Motion to Dismiss and Stay), also published as 2010 WL 1817034 (S.D. Fla. Order of District Judge 05.04.10).  There is more to the story.

   The Magistrate Judge wrote another Report and Recommendation on April 15, 2010.  This one was filed the next day, April 16, 2010.  This separate Report and Recommendation was to grant the Insurance Company's Motion to Default its Policyholder, the Defendant Village at Dadeland.  Download 04.15.10 Report and Recommendation.Colony Ins. Co. v. Village at Dadeland Condo. Ass'n (S.D. Fla. Case No. 09.22369.cv 04.15.10 Report and Recco Of Magistrate Judge).  This Report and Recommendation too was adopted by the District Judge by another Order on May 4, 2010.  The District Judge granted the Relief Requested in the Plaintiff Insurance Company's Complaint for Declaratory Relief, and:

... and the Court finds Plaintiff does not owe any duty of defense or indemnification to Defendant Village at Dadeland Associates, LLC for the allegations contained in the underlying lawsuit.

  Download Colony Ins. Co. v. Village at Dadeland Condo. Ass'n (S.D. Fla. Case No. 09.22369.cv 05.04.10 Order Of District Judge Granting Default.Holding on Relief Requested).

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"Good Faith Disagreement" Over Insurance Coverage Not Actionable Unfair Practice.

   Under the Massachusetts "Regulation of Business Practices for Consumer Protection," or 'Unfair Practices Act,' colloquially known as "Chapter 93A" or simply "93A," it has been held that "a good faith disagreement" over Insurance Coverage or, as in that case, over the Coverage-related Defense of Late Notice, is not an actionable violation.  House of Clean, Inc. v. St. Paul Fire & Marine Ins. Co., Download House of Clean, Inc. v. St. Paul Fire and Marine Insurance Co. (D. Mass. Case No. 07.10839 Opinion Filed April 2, 2010) also published as 2010 WL 1372474 *7 (D. Mass. April 2, 2010)("Arrowood responds that a good faith disagreement between an insurer and an insured regarding coverage or prejudice [from arguably late notice in that case] does not constitute a violation of [Mass. Gen. Laws] Chapter 93A....  Arrowood is correct.").

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ERISA "Reverse Preempts" Secondary Health Benefits Claim.

   In Download Chorosevic v. Metlife Choices (8th Cir. Case No. 09.1880, Opinion Filed April 2, 2010).pdf, also published as Chorosevic v. Metlife Choices, Inc., 600 F.3d 934 (8th Cir. 2010)(subscription required), it was held that failure to exhaust administrative remedies under ERISA bars Secondary Health Benefits Claims alleged as a Class Action.  The exhaustion holding came out of ERISA and not out of the Class Action allegations, although these presented separate issues separately addressed by the Federal Courts.

   The Eighth Circuit Court of Appeals listed three features of the doctrine of exhaustion of remedies that the Court considered in reaching its decision in this case:

   1.  Exhaustion is a legal question.  The Federal Appellate Court reviewed the issue anew ("de novo"), i.e., on its own without deference to the Trial Court on this question.

   2.  "Exhaustion of available remedies enables employers and ERISA-covered plans 'to obtain full information about a claim for benefits, to compile an adequate record, and to make a reasoned decision.'"

   3.  For the same reasons, the doctrine benefits reviewing Courts by providing a complete record of fact with which to begin their review.

Chorosevic v. Metlife Choices, 600 F.3d at 941.

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Health Insurance and Mental Health Parity Coverage Rules Proposed, Opposed.

   Health Insurance Companies and large Employer trade groups opposed Mental Health Parity in Health Insurance Coverage.   A major reason was economic.  They took the position that individuals should pay more for Mental Health treatment than they covered.  They lost.  In 2008, Congress enacted Mental Health Parity so that Claims for the treatment of mental disorders are treated by Health Insurance Companies more or less the same as Claims for the treatment of physical disorders.

   Now, Health Insurance Companies and large Employer trade groups oppose the enactment of Rules and Regulations which would implement the Mental Health parity legislation.  Some have filed lawsuits asking Courts (filled with activist Judges?) to block the Rules.  They have announced that their motives are good and that although they are willing to obey the Mental Health Parity Federal Law, it is deja vu all over again:  The Law would cost them more in coverage than they want to pay, and individuals should pay more for Mental Health treatment than they, the Health Insurance Companies and large Employer trade groups, are willing to cover.

   In particular, they target something called "nonquantitative treatment limits".  Under the proposed Rules and Regulations, this would include regulation of the Health Insurers' and Health Plans' "techniques ... to manage care, the criteria for selection of health care providers and the rates at which they are paid."  Robert Pear, "Fight Erupts Over Rules Issued for 'Mental Health Parity' Insurance Law" p. A15, col. 1 (New York Times Nat'l ed., Monday, May 10, 2010).  Here is how those elements break down, and who is responsible for them without the new Rules.

   There are three elements addressed by Health Insurance Companies and Plans in imposing their own "quantitative treatment limits" on Health Coverage for Mental Health treatments:

   1. "Patients may be unable to find mental health experts in their health plan's network of providers."  Robert Pear, "Fight," New York Times, Monday, May 10, 2010, supra.  The Health Plans' network of providers is the responsibility of the Health Plan.

   2. "If they go outside the network, they typically pay more."  Id.  This is due to the rates paid by Health Insurers to medical providers who are "outside" of their network.  This practice has previously been posted here.  Again, the Health Insurance Companies alone determine who is, and who is not, in their network of chosen providers.

   3. "And if they cannot afford it, they may not receive treatment at all."  Id.  The whole point of the Mental Health Parity legislation was to avoid this outcome due to different practices for Mental Health Insurance Claims than are applied by Health Insurance Companies to determine Coverage for Physical Health Insurance Claims.

   Reportedly, "advocates for patients generally support" the proposed Rules, along with the American Medical Association, the American Psychiatric Association, and the Members of the U.S. House of Representatives who sponsored and supported the Mental Health Parity Law in the first place.

   There must be a Memorandum from someone to Health Insurance Companies and to large Employer trade groups that says that 'no losing argument is too good to stop using.'  Sometimes a losing argument that keeps on losing is, well, nothing more than a losing argument.

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Rescission as Post-Claims Health Insurance Underwriting Renounced, Reformed.

     Intent is not required for Insurance Rescission in most jurisdictions.   Various Health Insurance Companies individually announced at the end of April that, in effect, although they never targeted such a practice on sick Insureds who make Claims on their Health Coverage, they would stop doing it  -- although they were vague about exactly when they would stop basing Rescission actions on anything other than intentional fraud.  See, e.g.,  Lisa Girion, "WellPoint and Blue Shield of Calif. to Stop Dropping Sick Policyholders" (Los Angeles Times Online, Wed., April 28, 2010).

   Next came reports that the head of America's Health Insurance Plans, or "AHIP," had sent a letter to otherwise unidentified "top House Democrats" renouncing the previous Rescission practice.  These reports were also vague about when Health Insurance Companies would limit their use of Rescission to cases of actual intentional fraud without targeting sick people who make Health Insurance Claims, other than that they would stop on an unknown date "in May".  These reports are too many and too vague to usefully link here, and they contain no further information in any case.

   In reality, these announcements are not really what they seem.  In the recently enacted Federal Health Care Reform Act, Rescission is still permitted.  However, it will be limited in the case of Health Insurance Policies and Programs to actual, intentional fraud.  Merely erroneous representations will not be enough to rescind Health Insurance Coverage under the new Federal Law, even if the inadvertently wrong representations were "material".  That reform is scheduled to take effect in September, 2010.  The Health Insurance Companies are making headlines, then, by announcing that sometime soon they will follow the Federal Law 3 or 4 months earlier than they will be required to follow it.

   And that's a fact.

 Dennis J. Wall will be speaking about "Insurance Rescission" at the Orange County (Florida) Bar Association in Orlando on May 26, 2010.

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Ambiguities, Exclusions, Arguments With Lots of Forms and Endorsements.

  

   Two frequently advanced arguments occurred in the same Federal Case recently.  The Federal Judge ended up denying the Defendant Insurance Company's Motion to Dismiss, granting the Plaintiff's Motion for Leave to Amend, and denying the Insurance Company's Motion for Summary Judgment.  The two arguments in question led directly to those outcomes:

1.  Ambiguity in an exclusion, especially where as in that case there are also arguably a lot of policy forms and endorsements ("Plaintiff asserts, inter alia, that the insurance policy relevant to this action is itself a 'masterpiece of obfuscation,' containing no less than forty policy forms and endorsements, thereby raising questions of material fact sufficient to defeat a motion for summary judgment."  Masonic Association of Utica, N.Y. v. West American Insurance Co., Download Masonic Association v. West American Insurance Co. (N.D.N.Y. Case No. 6.08cv00552 Memorandum-Decision and Order Filed March 30, 2010) also published as  2010 WL 1223177 *4 (N.D.N.Y. March 30, 2010)(Westlaw subscription required to access Westlaw); and

2. Unsettled substantive Insurance Law regarding the Property Coverage, as for example, the Property Coverage issues of "collapse" versus "hidden decay," also in Masonic Association of Utica, N.Y. v. West American Insurance Co., 2010 WL 1223177 at *4.

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Fact-Based Florida Bad Faith: UPDATE.

This updates a post here on November 14, 2009.

  Where under Florida law a Court can hold that the record evidence reflects that the liability insurance company made a legitimate request for the injured claimant's medical records as part of an investigation to determine the claimant's injuries and damages before initiating settlement negotiations, delay in offering a $15,000.00 Policy Limit was held reasonable and the facts defeated a Bad Faith Claim in Aboy v. State Farm Mut. Auto. Ins. Co., Download Aboy v. State Farm Mutual Automobile Insurance Co. (S.D. Fla. Case No. 09cv21400 Opinion Filed January 5, 2010) also published as 2010 WL 727967 *4 (S.D. Fla. January 5, 2010), granting Insurance Company's Motion for Sumary Judgment.  The online Docket of this case reflects that an Appeal is pending in the Eleventh Circuit Court of Appeals.

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Expert Witnesses For The Defense: Daubert Them at Trial Time.

   Concerning Expert Witness Testimony in Insurance Cases:  One approach is to evaluate the admissibility of expert opinion testimony at trial.  See Holmes v. National Union Fire Ins. Co., Download Holmes v. National Union Fire Insurance Co. (S.D. Miss. Case No. 3.06cv00546 Opinion Filed March 25, 2010) also published as 2010 WL 1233417 *3 (S.D. Miss. March 25, 2010)(Westlaw subscription required to access Westlaw).

Admissibility of Expert Witness Testimony in litigated cases, Lawyers' arguments about putting on Expert Witness Testimony, and the approaches taken by testifying Expert Witnesses themselves, are all examined in Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith §§ 8:17 and 12:18 (Shepard's/McGraw-Hill First Edition; West Publishing Company Second Edition and 2010 Supplement in process). 

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"Bad Faith" Attorney's Fees By Any Other Name, Denied.

   In Gold Coast Prop. Mgt., Inc. v. Valley Forge Ins. Co., Download Gold Coast Property Mgt, Inc. v. Valley Forge Insurance Co. (S.D. Fla. Case No. 09.60029.civ Order of U.S.D.J. Approving Magistrate Judges Report and Recommendations Filed 02.05.10) and Download Gold Coast Property Mgt. Inc. v. Valley Forge Insurance Co. (S.D. Fla. Case No. 09.60029.civ Report and Reccos of U.S. Magistrate Judge 01.22.10) also published as 2010 WL 473197 *2-*3 (S.D. Fla. February 5, 2010)(Westlaw subscription required to access Westlaw), a U.S. District Judge adopted a Report and Recommendation of a U.S. Magistrate Judge to deny all sorts of "Bad Faith" Attorney's Fees.  The Magistrate Judge seems to have been confronted with every possible basis for "Bad Faith" Attorney's Fees that Federal Courts have ever been asked to face in any case.

   The Magistrate Judge reported that he found insufficient record evidence of "bad faith" required to invoke 28 U.S.C. § 1927 sanctions including attorney's fees, and also required for exercise of any independent authority of the Court, and also required for the Federal Rule of Civil Procedure 37 mandate for a "good faith" discovery conference or attempt to confer before filing motion for sanctions.

   The online docket of the Gold Coast case reflects that a Notice of Settlement was filed on February 8, 2010, followed on March 8, 2010 by the filing of both a Stipulation for Dismissal With Prejudice and an Order approving the Stipulation.

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