Claims And Issues

MEMO TO VALERIE JARRETT, RE: HEALTH COVERAGE.

          Valerie Jarrett is an adviser to President Obama.  She advises the president on many subjects including Health Insurance Coverage.

          It is unknown what if any particular qualifications or experience Ms. Jarrett has on Health Insurance.  It is known, however, that she is the featured participant at meetings on Obamacare even when the Obamacare meetings include Secretary of Health and Human Services, Hon. Kathleen Sebelius.  So far as is known, as well, these meetings have been held at the White House, not far from Ms. Jarrett's office, and not at HHS where Secretary Sebelius is in charge.  See, e.g., "'AS GOES OHIO' ... HOW GOES OHIO WITH MEDICAID, EXACTLY?" published here on April 3, 2013.

          Clearly, the latest deadline of Saturday, November 30th, for a working www.healthcare.gov website will not work. 

          The only important working reason, as distinct from political reasons, to want to make www.healthcare.gov work, is that the Affordable Care Act a/k/a Obamacare is an opportunity to make a contribution to people who cannot afford health coverage and who do not have health coverage.  That reason is enough to make the website work, but if the website continues to fail by Saturday, November 30th as it seems certain to do, there is still plenty of time and there are plenty of options to implement the law for the benefit of the people who need it to work.  See "FIVE DAYS LEFT," November 25, 2013, published here.

© 2013 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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FIVE DAYS LEFT.

          The President of the United States has promised that www.healthcare.gov will be up and running by November 30, 2013.  Many applicants are still finding difficulties in using the site to register, research, and sign up for health insurance coverage.  See Abby Goodnough, "Applicants Find Health Website is Improving, But Not Fast Enough" p. A17, col. 1 (New York Times Nat'l ed., Thursday, November 21, 2013).

          There will be a temptation during the next five days to count down to nearly certain failure to fix www.healthcare.gov by this coming Saturday.  Many will give in to that temptation.  But no amount of playing can obscure the fact that signing up for health care is not a game.

          For many, it means being able to survive.  Not just by receiving medical treatment.  Those fortunate enough to receive medical treatment often need help to pay the medical bills.

          No, "countdown to November 30th" is not a game.  It does not even have meaning.

          The real opportunity offered to many people in the United States by Obamacare is what's at stake, not artificially chosen deadlines and websites controlled by political advisers.

          If we are going to be tempted to count down this week, then let's concentrate instead on what counts, on what remains after this week ends.

 

© 2013 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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EMINENT DOMAIN AND THE PUBLIC ENTITIES POLICY.

          Cities across the country face a budding catastrophe.  In staggering numbers, houses are rapidly falling into ruin and homes are in foreclosure.  Empty dwellings that once were neighborhood homes and a part of the tax base, are largely inhabited now by criminals.

          To combat the rising crime rates and to solidify the home-ownership goals of their citizens, many cities are considering eminent domain.  Their consideration involves a twist from what might be thought of as traditional uses of eminent domain, however.  This case provides a good example of such traditional uses of eminent domain, in which the cities' powers of eminent domain could be exercised in condemning the property, throwing out the homeowners in the process, paying off the investors holding any mortgages and other liens, and hoping to resell the property.  This is always a losing economic proposition for the cities, it seems.

          Enter the consideration of exercising powers of eminent domain, with a twist from the traditional use of those powers.  Cities are currently considering whether to exercise powers of eminent domain to first negotiate with mortgagees and, if the negotiations are not successful, then condemning the mortgages and paying the same price as the cities offer in the negotiations except that now they are offering the same price in an eminent domain proceeding.  This creative use of eminent domain would terminate the mortgagees' rights over the properties in the process -- and thereby also terminate the mortgagees' rights over the homeowners.  The homeowners, neighbors all and taxpayers too, would not have to leave their homes or their neighborhoods.

          Not willing to stand for this invasion of their asserted rights to foreclose, and voicing no objections to traditional uses of foreclosures and of eminent domain during the course of both of which homeowners are evicted, "Wall Street and real estate interests" have filed lawsuits against cities which have exercised powers of eminent domain in this way, and they have threatened lawsuits against cities which have the audacity even to consider using eminent domain in this way.  See Shaila Dewan, "More Cities Consider Using Eminent Domain to Halt Foreclosures" p. B4, col. 1 (New York Times Nat'l ed., Saturday, November 16, 2013).

          Public Entities and Officials Liability Insurance Policies may provide some protection to many of these cities and municipal officials who are sued by the litigious "Wall Street and real estate interests".  Public Entities Insurance provides very similar coverage as Directors and Officers Liability Insurance Coverage provides to the private sector -- ironically, very similar coverage as the D&O Coverage passionately invoked by many of the same "Wall Street and real estate interests" who have been sued since they helped to cause the Great Recession in the first place.

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16,000! And Counting! And, SO WHAT?

   Newspaper headlines, television news and EMails are ablaze with the astonishing report that the Dow has reached 16,000!  And counting!

   So what?  Does that really affect the outcome of your life, or the outcomes of your clients' lives?

    Less prominent are stories about the deaths and destruction caused by unforeseen tornadoes and storms in Illinois, Indiana, Missouri, and Kentucky.  And fewer are the reports on whether any or all of this loss is covered by catastrophe insurance of any kind.

   But by all means, blare out the 16,000! 

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"MERE STATEMENTS OF LAW" AS AFFIRMATIVE DEFENSES: INSURANCE POLICY INTERPRETATION.

   Where "'mere statements of law'" provide notice of a defendant's interpretation of an insurance policy, they comply with the current Federal Rules of Civil Procedure and so they should not be stricken from the defendant's affirmative defenses in an answer filed in a declaratory judgment action, it was held in Clarendon Am. Ins. Co. v. All Bros. Painting, Inc., 2013 WL 5921538 (M.D. Fla. November 4, 2013)(Smith, USMJ).

    It may be a good time for the Federal Rules of Civil Procedure to be amended to encourage "plausible" allegations of fact in an affirmative defense, just as they have been held to require plausible allegations of fact in a complaint.

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BAD FAITH: DENYING MORTGAGOR'S REASONABLE EXPECTATIONS.

          There are many ways in which bad faith manifests itself, apart from so-called insurer bad faith.  A list is never going to be complete.  It is in the nature of the beast of bad faith.  See generally Dennis J. Wall, 1 Litigation and Prevention of Insurer Bad Faith §§ 2:1 - 2:9 (various Contrasting Good Faith Requirements) (Thomson Reuters West, Third Edition and 2013 Supplement).  "No statement about these terms expresses greater truth than this:  '[T]he terms "good faith" and "bad faith" mean different things in different contexts."  Id., volume 2, §9:3, "The Question of Bad Faith".

          "While a comprehensive listing of the examples of bad faith is not possible," a Federal Court in Pennsylvania recently pointed out, nonetheless "the Pennsylvania courts have recognized that certain patterns of conduct may evidence bad faith."  Jackson v. Wells Fargo Bank, N.A., 2013 WL 5945732 * 14 (W.D. Pa. November 6, 2013).  The patterns of conduct that have been recognized by Pennsylvania (and many other) Courts as evidencing bad faith include:

• Evasion of the spirit of the bargain.
• Lack of diligence and slacking off.
• Willful rendering of imperfect performance.
• Abuse of a power to specify terms; and
• Interference with or failure to cooperate in the other party's performance.

          To this list-in-progress may be added the recognition in that same case of "allegations that give rise [to] a plausible showing that W.F. Bank [Wells Fargo Bank] charged a SFHD [Standard Flood Hazard Determination] fee that significantly was above actual cost and not entirely consumed by the specific services provided at closing."  Jackson v. Wells Fargo Bank, N.A., 2013 WL 5945732 * 15 (W.D. Pa. November 6, 2013).  That case revolved around a central issue of whether flood insurance was required under the mortgage loan for the particular home involved in the transaction.  The Federal Court's quoted holding was to deny Wells Fargo Bank's motion to dismiss the plaintiffs' bad faith claim (in Pennsylvania, included within a breach of contract claim) that they were charged for a flood hazard determination which included the cost of an illegal kickback or markup.

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Is Liability Coverage a Fairly Debatable Defense to Bad Faith?

      In a recent appellate decision, Philadelphia Indemnity Insurance Co. v. Youth Alive, Inc., 732 F.3d 645 (6th Cir. 2013), a panel of the Federal Sixth Circuit tried to answer an open question of State law in Kentucky.  The question is still open in Kentucky after this opinion.

    The question is whether a "fairly and reasonably debatable" defense to a claim of bad faith failure to settle the underlying claim will be extended to a third-party insurance company's interpretation of coverage under its policy, at a time when the liability insurer is faced with settlement decisions in a claim in suit against its insured.  Unfortunately, this case did not fairly present that question.

    In Youth Alive, the liability insurance company did not deny coverage.  Instead, the liability insurer defended its insured under a reservation of rights.  Simultaneously the carrier filed and prosecuted a declaratory judgment action ("DJA") to argue its coverage position and request a declaration of no coverage from a Court, but the carrier settled the underlying case before it received a declaration one way or the other on its coverage interpretation.  The liability insurer participated in or agreed to a settlement of the underlying case against its insured, and the carrier paid the settlement amount, all before coverage was determined.

    The Youth Alive  panel opinion on this question is made dicta by the record facts.  This question of first impression in Kentucky still awaits a definitive answer, preferably from the Kentucky State Courts.  Parenthetically, in some other jurisdictions in the United States, the answer to this question is a resounding "yes" in first-party cases, 2 Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 11:17, "Fairly or Reasonably Debatable Claims" (Third Edition and 2013 Supplement Thomson Reuters West), and also a "yes" in some cases in some jurisdictions even in third-party cases.  Id. volume 1, §5:16, "Fairly or Reasonably Debatable Claim".  See also id., volume 1, §§ 5:26 and 5:51.

Related features of the Youth Alive panel opinion were the subjects of an article on Sunday, November 10, 2013 in Insurance Claims and Bad Faith Law Blog.

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Today is Veteran's Day, 2013.  Remember today all those who died in service to their country including Chaney, Schwerner and Goodman! 

BAD FAITH BY PRIMARY CARRIER AFTER TRIAL, NOT BEFORE TRIAL.

FEDERAL COURT AWARDS $400,000.00 TO PLAINTIFF EXCESS CARRIER IN FLORIDA.

           Westchester Fire Insurance Company and Mid-Continent Casualty Company insured the same policyholder, Continental Manufacturing.  Continental purchased a primary liability policy from Mid-Continent and an umbrella liability policy from Westchester.

          After a judgment was entered upon a verdict against Continental in excess of Mid-Continent's primary policy limits, Westchester sued Mid-Continent for alleged bad faith, alleging both common law and statutory claims.

          After a bench trial, the Court entered judgment for the Defendant Mid-Continent as to its conduct before the underlying trial.  Mid-Continent's pretrial settlement conduct in the underlying case was not bad faith, the Court found based on the evidence presented in the bad faith bench trial.

          However, Mid-Continent's conduct after the underlying trial was a different story, said the Court, which found that Plaintiff Westchester proved by a preponderance of the evidence that Mid-Continent acted in bad faith after the underlying verdict against their common insured, by not telling Westchester that there was a settlement demand after the verdict.  Both the underlying verdict and the post-verdict settlement demand were above the primary carrier's policy limits and within the umbrella liability carrier's limits.

          The defense counsel in the underlying case, who was retained by Mid-Continent to defend Continental, informed Mid-Continent by EMail that he had received a post-verdict settlement demand.  Although the defense attorney had "cc'd" Westchester "on previous reports regarding the underlying action," the defense counsel did not include Westchester on this EMail to Mid-Continent.  Mid-Continent's claims adjuster testified in the bench trial on bad faith that she "inadvertently" did not include Westchester in her EMail back to defense counsel.  She could not notify Westchester by hitting "Reply to All" on his EMail since Westchester was not on the original EMail of course, and she did not affirmatively forward it or independently write to or telephone Westchester, in other words.  See Westchester Fire Ins. Co. v. Mid-Continent Cas. Co., 2013 WL 3189053 *4 (S.D. Fla. June 21, 2013).

          Finding bad faith on the part of the primary liability carrier after the underlying trial, the Federal Court entered judgment in favor of the plaintiff umbrella carrier in the amount of $390,173.00.  Westchester Fire Ins. Co. v. Mid-Continent Cas. Co., 2013 WL 3189053 *1 (S.D. Fla. June 21, 2013).

To be continued on Insurance Claims and Bad Faith Law Blog, www.insuranceclaimsbadfaith.typepad.com.    Please Read The Disclaimer.

Coverage for ALL Claims, Because Insured Condominium Not Provided Policy?

"NAHH," says Court, "it doesn't work that way."

   In Raintree Village Condominium No. 11 Ass'n v. Great Am. Ins. Co., 2013 WL 5304054 (M.D. Fla. September 20, 2013), the policyholder, Raintree, a condominium association, contended "that it was not provided anything related to the subject policies."  Raintree Village Condominium No. 11 Ass'n v. Great Am. Ins. Co., 2013 WL 5304054 *6 (M.D. Fla. September 20, 2013).  Accepting this contention as true (although the Court in that case pointed out that the condominium association cited to the policy language in its Civil Remedy Notice of Insurer Violations), the Court considered Raintree's legal argument based on this assertion of fact:  Florida Statute Section 627.421 (1) requires delivery to the insured, and since Raintree's liability insurance policy assertedly was not delivered to Raintree, then Raintree's liability insurance company should therefore be liable for "all possible claims" under the policy.  Raintree Village Condominium No. 11 Ass'n v. Great Am. Ins. Co., 2013 WL 5304054 *6 (M.D. Fla. September 20, 2013).

  The Court stated two reasons when it rejected this contention in that case.  First, the Court could not locate any Florida case that ever agreed with that contention.  Second, said the Court, that contention makes no sense.  Raintree Village Condominium No. 11 Ass'n v. Great Am. Ins. Co., 2013 WL 5304054 *6 (M.D. Fla. September 20, 2013).

To have a chance of success in Court, insurance coverage contentions should make sense.  Just saying.

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