Claims And Issues

GRANTING A MOTION TO UNSEAL A STIPULATED BLANKET PROTECTIVE ORDER.

 In In Re Syngenta Actions (Poletti v. Syngenta AG), No. 3:15-cv-01221-DRH,  2018 WL 309837 (S.D. Ill. January 5, 2018), the Court granted a motion by Syngenta to unseal three sets of documents because, Syngenta contended and the Court agreed, they were improperly designated "confidential" or "highly confidential" under a stipulated blanket protective order.  Stipulated blanket protective or secrecy orders are frequently entered in cases involving insurance coverage issues and insurance bad faith claims.

That means of course that while Syngenta previously agreed to the procedure of keeping evidence from public view by marking the evidence as either "confidential" or "highly confidential," Syngenta contended in this case that the party marking the evidence (Cargill, in this case) marked them improperly as "confidential" or "highly confidential."  Syngenta asserted that the way this practice was performed in this case violated the public's right to an open court system.

Syngenta's challenge put the burden squarely on Cargill to show "good cause" for its  confidentiality designations.  "Accordingly, Cargill’s duty to establish good cause for its confidentiality designations was triggered when Syngenta raised an issue with respect to the challenged documents."  In Re Syngenta Actions (Poletti v. Syngenta AG), No. 3:15-cv-01221-DRH, 2018 WL 309837, at *1 (S.D. Ill. January 5, 2018).

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FLORIDA PLAINTIFF'S MOTION TO REDACT AND SEAL OWN COMPLAINT, DENIED.

In MSP Recovery Claims, Series LLC v. Ace American Ins. Co., No. 17-23749-CIV-SEITZ, 2017 WL 6622648 (S.D. Fla. December 22, 2017), the Court was confronted with a plaintiff's motion effectively to redact and seal its own complaint.

The plaintiff was the assignee of 67 of its clients.  The plaintiff wanted the Court to hide the identity of its 67 clients in this case.  "Plaintiff’s clients are entities known as Medicare Advantage Organizations (MAOs) seeking to recover reimbursement for medical costs from other companies under the Medicare Act. Plaintiff’s clients assigned their rights to recover payment to Plaintiff."  MSP Recovery Claims, Series LLC v. Ace American Ins. Co., No. 17-23749-CIV-SEITZ, 2017 WL 6622648, at *1 (S.D. Fla. December 22, 2017).

 The defendant insurance carrier was sued as an alleged "primary payer" of Medicare payments.  In its complaint, the plaintiff enumerated the defendant's many alleged failures to reimburse the 67 assignees with what amounts to publicly funded Medicare money.  "Defendant opposes the Motion [DE 23] stating in part that the Plaintiff’s client-assignors are government contractors and listed on a public website. Having reviewed the Motion and the Opposition, the Court finds that the Plaintiff has not met its burden for redacting the sixty-seven clients in its Complaint and denies Plaintiff’s Motion."  MSP Recovery Claims, Series LLC v. Ace American Ins. Co., No. 17-23749-CIV-SEITZ, 2017 WL 6622648, at *1 (S.D. Fla. December 22, 2017).

What if the 67 contractor-clients-assignees had not been identified by Medicare on a public website?  Would the plaintiff have met its burden for redacting and sealing its own complaint?

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FILED RATE DOCTRINE AND ... UIM CLAIMS?

I have written about the possibility, even likelihood, that the "filed rate doctrine" defense will be raised in what might be called "standard" insurance cases.  Well, now it has happened.

Ms. Helen Bhasker brought a lawsuit against Kemper Casualty Insurance Company, Unitrin Specialty Financial Indemnity Company, Financial Indemnity Company, and Elite Financial Insurance, among others.  She alleged claims for statutory unfair insurance practices, negligence, and breaches of contract, among other things.  Her essential claim at least as far as the filed rate doctrine is concerned, was that she was issued Underinsured Motorist (UIM) coverage that was "illusory."  The defendants argued that she could not challenge the premiums she paid by claiming that she paid premiums for no coverage.

Treating this affirmative defense once again as grounds for a motion to dismiss, the defendants and the Court took up the filed rate doctrine mantra.  In this case, the Court rejected that mantra for many reasons.

The lengthy but surprisingly concise summary of Ms. Bhasker's claims and of the Court's resolution of the defendants' motion to dismiss (which included the straight-faced defense that in this case Ms. Bhasker "voluntarily paid" the UIM premiums for little or no coverage), is as follows:

    The Court held a hearing on July 24, 2017. The primary issues are: (i) whether New Mexico’s filed rate doctrine bars Plaintiff Helen Bhasker’s negligence claims, claims under New Mexico’s Unfair Practices Act, N.M. Stat. Ann. § 57-12-1 (“UPA”) violations, claims under New Mexico’s Unfair Insurance Practices Act, N.M. Stat. Ann. § 59A-16-1 (“UIPA”), and claims of breach of contract alleging that Financial Indemnity Company (“Financial Indemnity”) sold her illusory underinsured motorist insurance (“UIM”); (ii) whether, if New Mexico applies the filed rate doctrine to consumer-protection claims against insurers, Bhasker can seek premium-based damages, which depends on whether Bhasker’s UIM coverage was illusory; (iii) whether, if the UIM coverage is not illusory, Bhasker’s claims fail as a matter of law, because the UIM coverage offers benefits in some situations; and (iv) whether the voluntary payment doctrine bars Bhasker’s claims. The Court concludes that: (i) the filed rate doctrine does not bar Bhasker’s claims, because the Supreme Court of New Mexico would not apply the filed rate doctrine to claims against insurers alleging unfair or deceptive business practices; (ii) even if New Mexico applied the filed rate doctrine to those claims, Bhasker and the proposed class could still seek premium-based damages, because the Supreme Court of New Mexico would determine that the UIM coverage was illusory in light of little coverage it provides; (iii) even if the UIM coverage is not illusory, Bhasker’s claims may proceed, because they do not require that the UIM coverage be illusory; and (iv) the voluntary payment doctrine does not bar Bhasker’s claims, because she alleges that she did not know all the material facts. Accordingly, the Court denies the MTD.

Bhasker v. Kemper Cas. Ins. Co., No. CIV 17-0260 JB/JHR, 2018 WL 354675, at *1 (D.N.M. January 10, 2018).

The rest of the Court's opinion in this case is not quite as concise.  With so many parties and consequently with so many lawyers, the arguments they made drag on for 38 Westlaw pages before you reach the notes.

With respect to the filed rate doctrine in particular, the Federal Court in this case was apparently faced with an open question of New Mexico State law, namely, whether New Mexico would apply the filed rate doctrine in insurance cases.  In the absence of direct authority compelling an affirmative answer to that question, the Federal Judge refused to impose the filed rate doctrine on New Mexico:

[I]f consumers cannot sue insurers that deliberately lie about their policies unless the consumers can frame their damages theories in some tortuous way that manages to not implicate the rates, then insurers are unlikely to face civil liability for their deceptive practices. It is difficult to imagine the Supreme Court of New Mexico shielding insurers from virtually any liability claim alleging deceptive practices in the face of an expressly created private right of action for such claims simply to ensure that courts never bump up against an approved insurance rate.  Therefore, the Court concludes that the Supreme Court of New Mexico would join the courts that have permitted consumers’ claims to proceed against insurers for unfair and deceptive business practices.

Bhasker v. Kemper Cas. Ins. Co., No. CIV 17-0260 JB/JHR, 2018 WL 354675, at *32 (D.N.M. January 10, 2018).

The Court still left one question unanswered despite this exhaustive and exhausting opinion required by the case:  Why was an affirmative defense grounds for a motion to dismiss?

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DOCUMENTS UNSEALED IN FACE OF PRESUMPTION OF PUBLIC ACCESS.

Dr. Martin Luther King Jr. was born on this date in 1929.  It is a Federal Holiday!

The following sealed documents were at issue.  The same kinds of documents are frequently sealed in the court files of insurance coverage and insurance bad faith cases.

The District Judge identified the documents at issue in this case, in her decision in November, 2017, and she explained in her opinion how and why the documents came to be sealed in the first place:

    As the Court of Appeals explained, (Mandate at 3), in 1983, a member of the demolition-workers union filed a class action against various parties involved in demolishing the Bonwit Teller building, which was torn down to build Trump Tower. The class members settled with the various defendants in 1998, and the Court sealed four documents connected to that settlement: (1) a transcript of an October 26, 1998 conference (ECF No. 409) (the “Settlement Transcript”); (2) a plaintiffs’ brief filed on November 9, 1998, (ECF No. 410); (3) a district court order approving the settlement dated December 30, 1998, (ECF No. 411); and (4) an amended district court order approving the settlement dated February 9, 1999 (ECF No. 412). (Id. at 3-4).

Hardy v. Kaszycki & Sons, No. 83-cv-6346 (LAP), 2017 WL 6805707, at *1 (S.D.N.Y. November 21, 2017).

The District Judge held that the presumption of public access outweighs the asserted privacy interests here.  As the District Judge wrote in this case:  "For reasons explained below, the Court finds that the Trump Parties have failed to identify any interests that can overcome the common law and First Amendment presumptions of access to the four documents at issue."  Hardy v. Kaszycki & Sons, No. 83-cv-6346 (LAP), 2017 WL 6805707, at *1 (S.D.N.Y. November 21, 2017).

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P.P.S. TO P.S. SENATOR DIANNE FEINSTEIN AND THE TRUTH SHALL MAKE YOU FREE!

This is a post-postscript to the article posted here on Wednesday, January 10, 2018.  Here is a link to Seth Meyers Late Night show featuring The Ballad of "Sneaky Dianne".  Enjoy!

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WHAT DO COURTS DO WHEN THE EVIDENCE IS BLACKED OUT?

There are even times when judges say that the record does not show WHO redacted the evidence or WHY.

The case of Sepulveda-Rodriguez v. Metlife Grp., Inc., No. 8:16CV507, 2017 WL 6628116, at *1 (D. Nebr. December 28, 2017) involved competing motions for summary judgment.  This was an ERISA case involving claims based on coverage.  The claims included prayers for statutory penalties, for benefits under the allegedly covered administrative plan, and three claims for equitable relief including "relief in the nature of surcharge, reformation and equitable estoppel." 

The record before the court included various plan documents and it also included other materials, which the court described as follows:

In addition to the Plan documents, the record contains 27 pages of Metropolitan internal records, numerous medical records authorization forms, the decedent’s medical records dating back to 2008, and correspondence to and from the plaintiff’s counsel.⁴

Sepulveda-Rodriguez v. Metlife Grp., Inc., No. 8:16CV507, 2017 WL 6628116, at *2 (D. Nebr. December 28, 2017).

In its footnote 4, the court took note of the fact that much of this additional information in the record was redacted, meaning of course that it was blacked out.

However, there was no indication in the record as to who blacked the information out or why they did it.  Here is what the court said:

The internal claim records are somewhat cryptic and include various acronyms and insurance jargon. The internal documents include emails, various computer screen shots, “inquiry snapshots” that apparently document telephone calls and refer to correspondence and emails, and a digital “comments list,” which apparently documents intra-company communications and work-flow. The record also contains computer printouts, in the nature of spreadsheets, of digital records that ostensibly show responses to medical history questions, but there is no explanation of the meaning of the coded responses or any way to correlate the answers to questions. See e.g., id. at 244-45. Some documents in the record are highlighted and redacted but there is no record of who highlighted or redacted them.

Sepulveda-Rodriguez v. Metlife Grp., Inc., No. 8:16CV507, 2017 WL 6628116, at *2 n. 4 (D. Nebr. December 28, 2017).

Perhaps even more astonishing, the court did not demand an explanation but instead the court went on to rule anyway.  The court granted the plaintiff's motion for summary judgment and denied the two defendants' motions for summary judgment.

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P.S. AND THE TRUTH SHALL MAKE YOU FREE.

In a postscript to an article on Insurance Claims and Bad Faith Law Blog posted yesterday, Tuesday, January 9, 2018, I reported something that deserves to be reported here as well.

Here is a copy of the transcript of testimony by GPS Fusion founder Mr. Glenn Simpson behind closed doors to the Senate Judiciary Committee on August 22, 2017.  It is apparently redacted and future posts will explore how much.

In the meantime, this transcript was unilaterally released so the American public could read the testimony for themselves, by Senator Dianne Feinstein, the Ranking Member on the Senate Judiciary Committee.

Be prepared if you print it:  The transcript runs to 312 pages.  Now you can read for yourself what he testified!  You are there!

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DISCOVERY BEHIND A DEFENSE IN ALABAMA.

In Hibbett Patient Care, LLC v. Pharmacists Mut. Ins. Co., No. CA 16–00231–WS–C, 2017 WL 4817992, at *1 (S.D. Ala. January 26, 2017) (Cassady, USMJ), the plaintiffs "bring three causes of action against PMIC, which include breach of contract, bad faith failure to investigate, and bad faith denial of a claim."  The plaintiffs requested production of all writings concerning a certain lawyer's evaluation of claims for an insurance company, after the defendant insurance company apparently raised advice of this counsel as a defense.

The Magistrate Judge granted production but limited it to the case before the Court:

Request for Production No. 17

    Plaintiffs’ Request for Production No. 17 asks Defendant to “produce all writings pertinent to [the lawyer in question] or his law firm’s evaluation of any Pharmacists Mutual claim” from the past ten years. (Doc. 36–1, ¶ 17).

Hibbett Patient Care, LLC v. Pharmacists Mut. Ins. Co., No. CA 16–00231–WS–C, 2017 WL 4817992, at *5 (S.D. Ala. January 26, 2017) (Cassady, USMJ).

          The Court's well-reasoned ruling on production in response to this request for production, is well worth quoting:

Accordingly, the motion to compel is GRANTED to the extent that Defendant shall produce for inspection all writings pertinent to [the  lawyer's] or his law firm's evaluation of claims involving Alabama insureds that were presented to PMIC within five years of the date of the evaluation that is relevant to this action. In addition, the evaluations and other writings responsive to this request are also limited to those involving policies of insurance that may be characterized as similar to the policy issued to the Plaintiffs.

    Therefore, the motion to compel with regard to Request for Production No. 17 is GRANTED IN PART AND DENIED IN PART. The production of information is limited to similar policies of insurance written to Alabama residents that were presented within five years prior to the evaluation by [the lawyer] that is relevant to this action.

Hibbett Patient Care, LLC v. Pharmacists Mut. Ins. Co., No. CA 16–00231–WS–C, 2017 WL 4817992, at *6 (S.D. Ala. January 26, 2017) (Cassady, USMJ).

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DISCOVERING UNDERWRITING FILES: NOT IN PENNSYLVANIA DEC ACTION OVER COVERAGE.

An insured was not entitled to discovery of its liability carrier's underwriting files in the carrier's action for declaratory relief, in Westfield Ins. Co. v. Icon Legacy Custom Modular Homes, 321 F.R.D. 107 (M.D. Pa. 2017).

The carrier's dec action revolved around the language of the policy it issued.  In seeking discovery of underwriting materials, the policyholder defendant did not show that the policy was ambiguous regarding the language at issue.  The Court in that case accordingly held that there was no basis for discovery of the carrier's underwriting files without such a showing.

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DISCOVERY OF UNDERWRITERS' FILES:  NOT IN FEDERAL CASE IN PENNSYLVANIA.

EXCESS AND UMBRELLA IN OHIO.

Under Ohio law, more than one order or sale of the same type of allegedly defective product gave rise to multiple occurrences under a commercial Follow-Form Excess Liability insurance policy issued by American Guarantee. The American Guarantee excess policy followed the form of the primary Commercial General Liability (CGL) policy issued by Arch.

"As a follow-form excess insurance policy, the American Guarantee Policy 'incorporates the terms and conditions of the underlying insurance,' and defines 'underlying insurance' to include the Arch Policy." Big Lots Stores, Inc. v. American Guar. & Liab. Ins. Co., 240 F. Supp. 3d 725, No. 2:14–cv–02635, 2017 WL 821671 (S.D. Ohio March 2, 2017).

Under the Arch primary policy, which was incorporated into the American Guarantee Follow-Form Excess policy, multiple sales gave rise to multiple occurrences. So it was also true of the American Guarantee excess policy which followed it, the federal court held in this case involving Ohio substantive law.

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