Claims And Issues

UNTIMELY PRE-SUIT NOTICE OF LOSS, UNTIMELY PRE-SUIT PROOF OF LOSS ...

... Plus unrebutted presumption of prejudice to Property Insurance Company = Summary Judgment for the Insurance Company.

      In Kramer v. State Farm Fla. Ins. Co., 2012 WL 2913189 *4 (Fla. 4th DCA July 18, 2012), Download Kramer v. State Farm Florida Ins. Co. (Fla. 4th DCA Case No. 4D10.3978, Opinion Filed July 18, 2012) PUBLIC ACCESS, untimely pre-suit notice of alleged loss and untimely pre-suit sworn proof of loss raised a presumption of prejudice to the Defendant Property Insurance Company.

     When the presumption was not rebutted, the appellate court affirmed a Summary Judgment entered in favor of the Insurance Company in that case.  Kramer v. State Farm Fla. Ins. Co., 2012 WL 2913189 *4 (Fla. 4th DCA July 18, 2012).

The Fourth District clarified its opinion in an earlier case which could have been construed to make the presumption of prejudice from 'late notice' virtually incapable of being rebutted.  This clarification is thoroughly and accurately summarized in Property Insurance Coverage Law Blog, here.

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NO COVERAGE, NO BREACH, NO BAD FAITH.

     In Lewis & Clark Bank v. Stewart Title Guar. Co., 2012 WL 2946717 (D. Or. July 17, 2012)(Acosta, U.S.M.J.), Download Lewis & Clark Bank v. Stewart Title Guaranty Co. (D. Or. Opinion and Order of USMJ by consent to jurisdiction, 07.17.12) PUBLIC ACCESS, a Federal District Court applied a rule similar in its consequences to the rule applied by Courts holding that where there is no Coverage, there can be no Bad Faith.

     In the Lewis & Clark Bank case, the Bank sued its Title Insurance Company for alleged Breach of Contract, and for Attorney's Fees.  The Bank filed a motion to amend its complaint to include a claim "to allege a claim for breach of the contractual duty of good faith and fair dealing in addition to" those alleged claims.  Lewis & Clark Bank v. Stewart Title Guar. Co., 2012 WL 2946717 *10 (D. Or. July 17, 2012).  [Emphasis added.]

     The Federal District Court viewed the alleged contractual duty of Good Faith and Fair Dealing under Oregon State law as potentially an independent claim of alleged Breach of Contract.  However, in this case the motion for leave to amend was denied as "futile".

    The reason the proposed amendment would be futile in this case, was that the contract breaches alleged and the damages claimed as a result of them, were identical, and the Court had already held that there was no Breach of Contract because the Title Insurance Company had performed its obligations under "the express provisions of the contract".  Following from that holding, the Court further held that "the proposed amendment is futile in that the Bank is unable to recover the lost profits based on a claim for breach of the covenant of good faith and fair dealing."  Lewis & Clark Bank v. Stewart Title Guar. Co., 2012 WL 2946717 *10 (D. Or. July 17, 2012).

 

The rule applied by Courts holding that where there is no Breach of Contract, there can be no Bad Faith, is examined in Third-Party Cases in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 3:105 (Third Edition, West, 2011 with 2012 Supplement in process), and the rule is examined in First-Party Cases in id., § 9:25.

 

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MORE TO COME: PRESENT, FUTURE COSTS; FUTURE CONTRACEPTION AND CATHOLICS.

     Following the decision of the U.S. Supreme Court on the Constitutionality of the Affordable Care Act, there is more to come.  Challenges to a regulation that has not taken effect and may never take effect, are already with us.

     One of those challenges was dismissed in Nebraska ex rel. Bruning v. United States Dep't of Health & Human Serv's, 2012 WL 2913402 (D. Neb. July 17, 2012), Download Nebraska ex rel. Bruning v. United States Dept of Health & Human Servs (D. Neb. July 17, 2012) PUBLIC ACCESS, AND HIGHLIGHTED.  The many plaintiffs who filed this among many other lawsuits across the country challenged a prospective regulation that would have included contraceptive services among the evidence-based "coverage of preventive health services" required to be included in Group Plans subject to the Affordable Care Act.  HHS issued public notices that the regulation will not take effect at the earliest until 2013, and that before then, the regulation may be amended, again, to accommodate further objections.

The many plaintiffs in this case were two individuals who claimed to be employees of a religious employer, i.e., of a Catholic Diocese; three organizations which alleged that they are Catholic organizations and therefore "religious employers," and seven States including some far from Nebraska where this case was filed, such as Florida, South Carolina, and Texas.

     The problem with all their claims is that the plaintiffs' complaint showed on its face that they each and all lacked standing.  And more.  The individual and organizational plaintiffs which claimed to be Catholic appeared from their complaint to be absolutely, totally exempt from the regulation.

     The District Judge granted the Defendants' Motion to Dismiss against the individual plaintiffs, the organizational plaintiffs, and finally against the State plaintiffs as well, because they each and all failed to allege facts tending to establish that they presented an actual case or controversy arising from an injury in fact, not merely from speculation, "guesses" or conjecture.  Bruning v. United States Dep't of Health & Human Serv's, 2012 WL 2913402 *11, *12, *13-*15, *16, *24 (D. Neb. July 17, 2012).

     Noting that the question of "ripeness" was now moot in light of these rulings on standing, the District Judge nonetheless offered guidance to the parties that their present claims are not ripe in any case:

     None of the plaintiffs have established that Article III's standing requirements have been met.  Therefore, there is no case or controversy before me, and the remaining issues raised by the defendants in support of their motion to dismiss are moot.  Nevertheless, it merits mention that even if the plaintiffs were able to establish standing to sue, their claims are not ripe.

Bruning v. United States Dep't of Health & Human Serv's, 2012 WL 2913402 *20 (D. Neb. July 17, 2012).

     As to the State plaintiffs in particular, they too failed to allege facts tending to establish an injury in fact.  "Instead, the State plaintiffs' theory of standing is based on layers of speculation."  Bruning v. United States Dep't of Health & Human Serv's, 2012 WL 2913402 *16 (D. Neb. July 17, 2012).  At a time of great economic hardship, you have got to wonder why States as far away from where this case was filed as Florida, South Carolina, and Texas are, journeyed so far at such cost to their Taxpayers to waste money making arguments that any good lawyer would have predicted would almost certainly fail.  As they most certainly did.

    P.S.  Attacking the District Judge who wrote this opinion would probably not be wise.  Among other things, he is a veteran of World War II, he was appointed by President Richard Nixon, and he has received more awards throughout his long legal and judicial career than Carter has pills, as they say.

Dennis Wall is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Litigation Committe.  He will be a co-presenter of a webinar, "The U.S. Supreme Court Decision on Constitutionality of the Affordable Care Act," for West Legal Education Center.  The webinar will be broadcast live today beginning at Noon E.T.  from the West Legal Ed Center web site, and will thereafter be available 24/7, registration for any of which is available through West Legal Ed Center for a charge.

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UNINTENDED CONSEQUENCES OF THE "CRAZY QUILT" SEVEN JUSTICES VOTED FOR.

    Unintended consequences have begun to surface from a "crazy quilt" pattern of voting by the Justices of the U.S. Supreme Court in their recent decision on the Constitutionality of the Affordable Care Act.  Seven Justices, lacking a single coherent reason for their decision, voted to hold unconstitutional the Affordable Care Act's penalty for refusing a corresponding grant of Federal monies to the States unless the States expand their Medicaid numbers by expanding their Medicaid eligibility standards.  The penalty would have forfeited all matching Federal grant money for the entire Medicaid program, and not just for the Medicaid expansion.

     Now, the governor of Maine has declared that the Supreme Court's decision allows him to reduce Medicaid rolls in Maine for any and all Medicaid benefits.  The governor has plans to eliminate existing Medicaid eligibility of 15,000 parents, and of 6,150 19- and 20-year-olds, and "prescription drugs and health care coverage" of an unspecified number of "elderly and disabled people".  Abby Goodnough and Robert Pear, "Maine Debate Hints at Rift on Medicaid After Ruling" p. A14, col. 1 (New York Times Nat'l ed., Thursday, July 19, 2012).

     Despite the linked article's headline reference to a "debate" in Maine, there does not appear to be a debate, actually.  The governor was not available for an interview, and his spokesperson could not state a rationale for the governor's position.  Id.

Dennis Wall is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Litigation Committe.  He will be a co-presenter of a webinar, "The U.S. Supreme Court Decision on Constitutionality of the Affordable Care Act," for West Legal Education Center.  The webinar will be broadcast live today beginning at Noon E.T.  from the West Legal Ed Center web site, and will thereafter be available 24/7, registration for any of which is available through West Legal Ed Center for a charge.

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The Supreme Court's Medicaid Expansion Holding, Viewed:

National Fed. of Independent Bus. v. Sebelius, 2012 WL 2427810 (U.S. June 28, 2012).

First View:  On Constitutional Grounds.

“Under the Affordable Care Act, Medicaid is transformed into a program to meet the health care needs of the entire nonelderly population with income below 133 percent of the poverty level.  It is no longer a program to care for the neediest among us, but rather an element of a comprehensive national plan to provide universal health insurance coverage.”  Page *35 (Roberts, C.J., for the Court).

 

Second View:  On Policy Grounds. 

“Medicaid should be a last-resort safety-net program and not a mechanism to reduce the number of uninsured.  We have to hope our economy keeps improving and more people get back to work and therefore have access to private health insurance.”

A Florida State Senator, quoted by Abby Goodnough, “Lines Are Drawn Over Opting Out of Medicaid Plan / Florida Battleground / Opposition to Expansion is Election Issue After Court Ruling” p. A1, col. 2 (New York Times Nat’l ed., Friday, July 13, 2012).

Dennis Wall is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Litigation Committe.  He will be a co-presenter of a webinar, "The U.S. Supreme Court Decision on Constitutionality of the Affordable Care Act," for West Legal Education Center.  The webinar will be broadcast live today beginning at Noon E.T.  from the West Legal Ed Center web site, and will thereafter be available 24/7, registration for any of which is available through West Legal Ed Center for a charge.

Please Read The Disclaimer.

Medicaid Expansion, Insurance Exchanges Under the ACA ... And More.

     Now that the United States Supreme Court, in its recent decision, has made Medicaid Expansion voluntary under the Affordable Care Act, Governers of the several States are unsurprisingly divided over whether to accept Federal reimbursement of 100% of the costs of expansion in the first few years of implementation, followed by a declining percentage of Federal reimbursement of those costs over time -- to a low of 90% reimbursement by 2020.  See Michael A. Memoli, "Governors Divided Over Medicaid Expansion / The Usually United National Governors Assn. Can't Seem to Agree on the Provision in Obama's Healthcare Law That Makes Available Billions of Federal Dollars to Boost Coverage for the Poor." (Published Online by the Los Angeles Times on Saturday, July 14, 2012).

     Here is a Video offered through the Los Angeles Times website explaining how insurance exchanges work under the Affordable Care Act.

     And here is a sampling of newspapers from across the United States, of Editorials on the Supreme Court's Healthcare Decision.

Dennis Wall is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Litigation Committe.  He will be a co-presenter of a webinar, "The U.S. Supreme Court Decision on Constitutionality of the Affordable Care Act," for West Legal Education Center.  The webinar will be broadcast live beginning at Noon E.T.  from the West Legal Ed Center web site on Friday, July 20, 2012, and will thereafter be available 24/7, registration for any of which is available through West Legal Ed Center for a charge.

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Condominium Carrier's Negligence Claims, Owner's Subro Rights Waiver No Bar.

    Waverly Woods owned a plot of land it wanted developed for condominiums.  Waverly Woods retained Rhodes Development Group as the general contractor for the project.  The owner-contractor construction contract contained a waiver of subrogation against the contractor and all subcontractors for damages caused by fire.

    Waverly Woods formed a condominium association, Park View, sometime after the construction contract was reached.  Waverly Woods turned the condominiums over to Park View, which purchased an unspecified "insurance policy" from Community Association Underwriters of America or "CAUA".

    Then a fire broke out while a drywall contractor was putting up drywall.  Park View made a claim for fire damage to the condominium units.  CAUA paid the claim.  CAUA filed suit, as Park View's subrogee, against the drywall contractor and others it claimed were negligent and caused the fire which caused the damage which caused CAUA to pay Park View's insurance claim.  Community Ass'n Underwriters of Am. v. Rhodes Dev. Grp., 2012 WL 2861272 *1 (3d Cir. July 12, 2012)(Pennsylvania substantive law), Download Community Assn Underwriters of Am. v. Rhodes Dev. Grp. (3d Cir. July 12, 2012) PUBLIC ACCESS.

    The Defendants raised the waiver of subrogation as a defense to CAUA's negligence claim against them.  The District Judge granted their Motion for Summary Judgment on that ground.  On appeal, the Third Circuit reversed.  Under Pennsylvania law, the Third Circuit held, if Park View was an intended third party beneficiary of the construction contract (and two judges were pretty clearly convinced that it was), still Park View and thus its subrogee, CAUA, were not barred from pursuing negligence claims, only claims under the construction contract:

It is established law in this Circuit that “a third party beneficiary will only be bound by the terms of the underlying contract where the claims asserted by that beneficiary arise from its third party beneficiary status.” E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187, 197 (3d Cir.2001). As a consequence, the waiver of subrogation clause only applies to CAUA (a non-party to the contract) to the extent that it asserts claims arising under that contract.

 

Id. at *2.

 

The decision drew a strong concurrence from Judge Rendell, based on the Restatement of Contracts (Third)'s treatment of intended third party beneficiaries.  The Restatement has been adopted in Pennsylvania.

 

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Mental Health Insurance Coverage Mandated Consequence of Affordable Care Act.

    Universal mental health insurance coverage is a consequence of the individual mandate to purchase health insurance under the Affordable Care Act.  It is celebrated by Dr. Richard A. Friedman in "Mind/ Good News for Mental Illness in Health Law" p.D6, col. 3 (New York Times Nat'l ed., "Science Times" Section, Tuesday, July 10, 2012).   A big reason for his celebration, he points out in the linked newspaper column, is that "about half of Americans will experience a major psychiatric or substance disorder at some point".  Id.

    Given that statistic, the universality of mental health coverage is achieved under the ACA by a combination of provisions, including:

• Eliminating the pre-existing conditions exclusion.  Most adult Americans with "serious psychiatric illnesses" experienced the initial onset of their illness between the ages of 14 and 25.
• Young people can remain on their parents' Health Insurance Coverage until they turn age 26.  "By this age, the bulk of psychiatric illness has already developed," Dr. Friedman writes.
• Further, mental disorders ordinarily last a lifetime.  Another provision of the ACA eliminates lifetime limits.  This has a major effect on mental health insurance coverage, particularly putting an end to a limit to "60 days of inpatient hospitalization".  Id.

 

    Eliminating these benefits by repealing the ACA without any replacement provisions for them would not be evidence of mental health, pure and simple.

The author has been a co-presenter at numerous seminars on Affordable Care Act issues sponsored by the American Bar Association and West Legal Education Center.  He will be a a co-presenter on the Affordable Care Act After the Supreme Court Decision, a Webinar produced by West Legal Ed Center, on Friday, July 20, 2012 from Noon to 1:00 PM ET.

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AETNA'S HEALTHY ANONYMOUS CONTRIBUTIONS SEEMINGLY CONTRADICT HEALTH INSURANCE COMPANY'S WORDS.

      Aetna will reap huge benefits from a large new pool of Policyholder Premium money mandated by the Affordable Care Act.  Like the officials of other Health Insurance Companies, Aetna's President publicly supports the ACA.  At the same time, however, Aetna is donating money to groups that spend it to defeat or repeal the ACA.  Aetna has reported its contributions to Insurance Commissioners.  See Mike McIntire and Nicholas Confessore, "Groups Shield Political Gifts of Businesses / Tax-Exempt Recipients / Eclipsing 'Super PACs,' Because Donors Can Avoid Disclosure" p. 1, col. 6 (New York Times Nat'l ed., Sunday, July 8, 2012).

     Aetna's behavior and its separate contributions to Chamber of Commerce campaigns have also placed Aetna's contributions under increased public scrutiny.  For example, Aetna contracted with a group of shareholders led by a Nun.  The group of shareholders is the Mercy Investment Program.  The Nun is Sr. Valerie Heinonen.  In a written agreement, Aetna reportedly settled some claims of shareholders by contracting with Mercy Investment "to disclose trade associations to which it made large contributions."  One contribution of shareholder money disclosed by Aetna was a contribution of $3 Million to the Chamber of Commerce, a contribution which Aetna described as a lobbying expense.

That was then, and now is now.  Now, Aetna reportedly describes the same $3 Million contribution of shareholder money as "educational activities."  See id.

Aetna "would not say" whether it will disclose its 2011 contributions to the Chamber of Commerce, at all.  "Sister Valerie Heinonen, the director of shareholder advocacy for Mercy Investment Services, said that a failure to do so would violate the company's pledge."  Id.

Aetna, why are these contributions in your shareholders' best interests?

And why do you work so hard to keep your contributions of shareholders' money, secret?

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Happy Independence Day! Practicing the Word, One More Day...

... More Than One Day.

Starting on the first day of Summer, 2012, the United States Conference of Catholic Bishops has called for a "Fortnight of Faith," which will end on the Fourth of July.  As residents of the United States, and particularly but not alone for Catholics, this is our opportunity to enjoy the advertising efforts that have gone into this project.  This is our opportunity to make the Fortnight of Faith an observance of Truths that have stood for Centuries.  As a part of that effort, this post is part of a continuing series of blog posts intended to focus on exactly that, making the next two weeks an observance, not of political disputes, but of universal and eternal truths.

I was hungry, and you gave Me food;

Thirsty, and you gave Me drink.

I was a stranger and you made Me welcome,

Naked and you clothed Me.

I was sick, and you  visited Me;

In prison, and you came to see Me.

               ...

Whenever you did this for the least of my Sisters and Brothers, you did it for Me.

Matthew 25:35-36, 40.

Happy Independence Day!

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"Fortnight of Faith": Practicing the Word Monday, July 2, 2012.

Starting on the first day of Summer, 2012, the United States Conference of Catholic Bishops has called for a "Fortnight of Faith," which will end on the Fourth of July.  As residents of the United States, and particularly but not alone for Catholics, this is our opportunity to enjoy the advertising efforts that have gone into this project.  This is our opportunity to make the Fortnight of Faith an observance of Truths that have stood for Centuries.  As a part of that effort, this post is part of a continuing series of blog posts intended to focus on exactly that, making the next two weeks an observance, not of political disputes, but of universal and eternal truths.

And when you pray, do not pray as the hypocrites do, for they love to pray standing in the synagogues and on street corners, that people may see them.  Amen, amen, I say unto you, they have their reward.

But when you pray, enter into your private room and when you have closed the door, pray to your Father in secret, and your Father, who sees all that is done in secret, shall reward you openly.

Matthew 6:5-6.

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Anticipated Life Expectancy Long Term Care Payments Not Controversy Amount.

    The amount in controversy is determined for removal to Federal Court as of  the time of removal.  In a recent decision, expected  payments under Long Term Care Insurance over the anticipated life expectancy of the Policyholders did not satisfy the amount-in-controversy requirement for removal from State Court based on Federal Courts' diversity jurisdiction.  Tober v. Transamerica Life Ins. Co., 2012 WL 2413766 *2 (S.D. Fla. June 26, 2012)(Order Remanding Case to State Court and Denying Plaintiffs' Request for Attorney's Fees).

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