Claims And Issues

ALL RISKS LAW IN JURY INSTRUCTIONS GOOD EVERYWHERE FROM FLORIDA COURT.

An important thing to remember about "all risks" coverage of any kind is that the party claiming that coverage does not have to prove the specific peril that caused its loss.  The all risks coverage claimant's burden of proof including that the loss was "fortuitous" is simply to "establish that the damage at issue occurred during a period in which the damaged property had insurance coverage," one of Florida's intermediate courts held in early 2018. This seemingly simple statement is one with which most judges in the U.S. would agree.  Research I am doing for a forthcoming article on the Fortuitous Burden in All Risks Coverage suggests that some judges would add that to be fortuitous, the loss must not be caused by the insured's own fraud or intentional act, or by a risk inherent in the thing that was damaged, but they would generally agree with the Florida court's pronouncement that the party claiming all risks coverage does not have to negative these things, only to put on proof that its loss was fortuitous and the burden will then shift to the all risks insurance carrier to prove, if it can, that the loss was excluded under the policy.

Rather than summarizing the Florida court's lengthy statement of how a jury should be instructed on the burdens of proof in an all risks insurance coverage case, for your ease of reference I will set out the words of the Florida court itself, here:

Instead, the proper allocation of the shifting burden of proof in a case of this type, involving an all-risk insurance contract where more than one potential cause of damage was raised by the parties, is as follows:

1. The insured has the initial burden of proof to establish that the damage at issue occurred during a period in which the damaged property had insurance coverage. If the insured fails to meet this burden, judgment shall be entered in favor of the insurer.
2. If the insured's initial burden is met, the burden of proof shifts to the insurer to establish that (a) there was a sole cause of the loss, or (b) in cases where there was more than one cause, there was an “efficient proximate cause” of the loss.
3. If the insurer meets the burden of proof under either 2.(a) or 2.(b), it must then establish that this sole or efficient proximate cause was excluded from coverage by the terms of the insurance policy. If the insurer does so, then judgment shall be entered in its favor. If the insurer establishes that there was a sole or efficient proximate cause, but fails to prove that this cause was excluded by the all-risk insurance policy, then judgment shall be entered in favor of the insured.
4. If the insurer fails to establish either a sole or efficient proximate cause, and there are no applicable anti-concurrent cause provisions, then the concurrent cause doctrine must be utilized. Applying the concurrent cause doctrine, the insurer has the initial burden of production to present evidence that an excluded risk was a contributing cause of the damage. If it fails to satisfy this burden of production, judgment shall be entered in favor of the insured.
5. If the insurer does produce evidence that an excluded risk was a concurrent cause of the loss, then the burden of production shifts to the insured to present evidence that an allegedly covered risk was a concurrent cause of the loss at issue. If the insured fails to satisfy this burden of production, judgment shall be entered in favor of the insurer.
6. If the insured produces evidence of a covered concurrent cause, the insurer bears the burden of proof to establish that the insured's purported concurrent cause was either (a) not a concurrent cause (i.e., it had no (or a de minimis ) causal role in the loss), or (b) excluded from coverage by the insurance policy. If the insurer fails to satisfy this burden of proof, judgment shall be entered in favor of the insured.

Conclusion

Because the jury instruction given below was erroneous, we reverse and remand for a new trial.

Jones v. Federated Nat'l Ins. Co., 235 So. 3d 936, 2018 WL 443892, 2018 Fla. App. LEXIS 561, *11-*13 (Fla. 4th DCA January 17, 2018).

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IF SECRETARY JAMES MATTIS FOLLOWED AN UNLAWFUL ORDER: DEFENSES TO COVERAGE?

Suppose Secretary of Defense James Mattis was given an unlawful order?   Other names for unlawful orders include "illegal orders" and "unjust orders".  When I was growing up, the standard question was whether a German soldier who was given an unlawful order to round up people and put them into concentration camps and kill them should obey or if the German soldier stood on high moral ground by refusing to obey those unjust orders.

Nowadays the question is forward-looking, not backward-looking.  The question is posed in modern times more immediately as well, such as orders to bomb Tehran in Iran, or to bomb with a missile strike launched against Pyongyang, North Korea?  The question in these cases is really whether starting a so-called preventive war to eliminate a long-term future threat based on currently perceived, unchanged conditions would constitute an unlawful order? 

To try to answer that question from an insurance coverage perspective, which is after all what we do here on this blog, let's first assume that the official is not immune from liability or suit.

Would insurance policies potentially cover following an illegal order like this?

To answer this insurance coverage question, let's move beyond the James Mattis of the title to this article.  Let's move beyond him personally, even in a hypothetical case like this one, to any official or officer and ask the same question:  Would insurance policies available to the official potentially cover the official for following an unlawful order such as bombing Tehran or Pyongyang based only on the current world situation?

Here are some issues that would arise under any insurance policy that may be available to the official who obeys an unjust order.

Is it "fortuitous" as affording "all risk" coverage?  As I will explore more deeply in a forthcoming article, judges often say that there is a good reason to deny coverage for "all risks" if the event that causes damage was not "fortuitous."

By using this word, courts mean that it is not fortuitous on its face when the event that caused the damage claim was inherent in the thing itself, such as an opal which becomes cracked which is an apparently normal and usual event.

Judges in other courts and other cases, and even the same judges in the same cases, also use the word to mean that if the event that caused the damage was not due to an external cause but instead was due to an inherent defect in the thing itself rather than an external cause, such as where the insured brings it about by her or his own act.  In such a case, they hold, there can be no insurance coverage.

Following an unjust order to begin an unprovoked unjust war can legitimately be held up as the opposite of fortuitous, and so uninsurable in any case.

Is it an accident causing damage neither expected nor intended from the standpoint of the insured?  Courts unfamiliar with first-party insurance concepts like "all risks" coverage often analogize the insurance requirement that a loss be "fortuitous," to the third-party requirement that the risk insured must be an "accident." 

If third-party policies were available to the official who follows an order to nuke Tehran or Pyongyang right now, then just as the resulting damages can legitimately be held up as the opposite of fortuitous under an all-risks first-party policy, so the official's conduct should legitimately be held the opposite of a covered "accident" under a third-party policy.

Would the "war risk" exclusion apply?  This is an interesting question.  The war risk exclusion probably applies to damages from war.  Arguably it should not apply to damages resulting from a decision to follow someone else's unlawful order even if following that order means war.

If this construction were followed in our hypothetical situation, the war risks exclusion probably would be held inapplicable to the official's decision to follow the unlawful order.

Public policy.  This is not a path that most courts are happy to follow when considering insurance coverage questions.  Courts generally shy decisively away from public policy questions in the context of passing on insurance coverage questions.

However, as can be seen from our brief discussion here of "fortuitous," the very nature of insurance coverage itself is involved in this particular question.  When judges say that a risk or damage is "fortuitous" or not, they are really passing on whether the risk or damage was insurable in the first place.

Further, the Florida Supreme Court has held that intentional religious discrimination is something that cannot be insured as a matter of public policy.  Ranger Ins. Co. v. Bal Harbour Club, Inc., 549 So. 2d 1005 (Fla. 1989).

It is not much of a leap from that decision to also declare that the decision to bomb Tehran or Pyongyang under present conditions ought not to be insurable as a decision to follow an unlawful order.

Hopefully, these hypothetical questions will all remain only theoretical, as they are now.

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OPEN THE EVIDENCE ENVELOPE, PLEASE.

In an Amended Order in Multidistrict Litigation against pharmaceutical manufacturers, one judge unintentionally perhaps highlighted the need for disclosure, not concealment, of evidence.  Insurance coverage questions may become difficult if not impossible to decide if this pattern continues.

The Amended Order came in this MDL case:  In Re:  Abilify (Aripiprazole) Product Liability Litigation, No. 3:16-md-2734, 2018 WL 1357914 (N.D. Fla. March 15, 2018).  It was an opinion denying motions for summary judgment because the Court ruled that there were genuine issues of material fact.

"Plaintiffs allege that, after taking Abilify as prescribed, they developed impulsive and irrepressible urges to engage in certain harmful behaviors, including impulsive gambling, eating, shopping, and sex.  Defendants deny the allegations and maintain that Abilify could not, and did not, cause Plaintiffs' impulse control problems."  In Re:  Abilify (Aripiprazole) Product Liability Litigation, No. 3:16-md-2734, 2018 WL 1357914, at *1 (N.D. Fla. March 15, 2018).

The Court held that there were genuine issues of material fact surrounding these allegations and denials in a huge record of apparently conflicting evidence:

Now, having carefully considered the law, the voluminous record, and the parties' arguments, the Court concludes that Plaintiffs have satisfied their burden to demonstrate that a genuine dispute of material fact exists as to whether Abilify can cause uncontrollable impulsive behaviors in individuals taking the drug.

In Re:  Abilify (Aripiprazole) Product Liability Litigation, No. 3:16-md-2734, 2018 WL 1357914, at *1 (N.D. Fla. March 15, 2018).

The problem is that the public cannot possibly know what the apparently conflicting evidence actually was.  The opinion is riddled with holes for redacted evidence, like this one:  "Moreover, the record reflects [*** REDACTED ***]."    In Re:  Abilify (Aripiprazole) Product Liability Litigation, No. 3:16-md-2734, 2018 WL 1357914, at *26 (N.D. Fla. March 15, 2018).  Say again, please; what is it that the record reflects?

We simply do not know a lot of what witnesses testified and documents revealed.  "Portions of the briefing and record in this matter were filed under seal. This redacted version of the Court's Order omits references to information included in sealed materials."  In Re:  Abilify (Aripiprazole) Product Liability Litigation, No. 3:16-md-2734, 2018 WL 1357914, at *1 n.1 (N.D. Fla. March 15, 2018).  If a judge omits references to evidence, yet tells us that the Court's ruling is based on what appears to the Court to be contradictory evidence, what value does that serve and whose?

Arguably not the value of the public, who pay to maintain the judicial system.

In particular, how can insurance coverage questions be resolved in this situation?  Does the blacked-out evidence show that consequences or side-effects from using this drug were perhaps neither expected nor intended from the standpoint of the pharmaceutical companies, and thus not a covered "accident" or "occurrence"?

Is it possible that there is an exclusion applicable to this evidence?

How can we know answers to questions like these without seeing the evidence?

And whose interests are served by blacking out the evidence in cases like this?

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ARE LOSSES FROM CLIMATE CHANGE "FORTUITOUS"?

Insurance carriers have denied claims and are facing more claims for losses "related to accelerating climate-related disasters, such as California's fires last fall, and lawsuits that target fossil fuel companies as some of the world's largest greenhouse-gas emitters."  Reportedly, not one penny has been paid out in insurance proceeds in lawsuits alleging damage from climate change.

Don't hold your breath (unless you're standing outside, in certain areas), but newly filed lawsuits may affect that outcome, including a new lawsuit filed "by California cities and based on public nuisance law, seeks to hold Exxon, BP, and other oil companies accountable for flooding caused by sea level rise."  Jacques Leslie, "Insurers Are Backing Fossil Fuel Companies and Then Charging You For Climate Change Risks" (Los Angeles Times Online, Tuesday, March 13, 2018).

If insurance carriers routinely and successfully deny claims for damage allegedly caused by climate change, how can Exxon, BP, and other oil companies sued in the reported new lawsuit as "accountable for flooding caused by sea level rise," claim that these losses are "fortuitous"?  That they were all the results of an "accident"?

Or that an act of humanity ought to be treated by insurance law as an act of God?

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DOCTOR, DOCTOR! HEALTH INSURANCE CLAIMS DURING GRACE PERIOD HELD COVERED.

In Pelliccia v. Anthem Ins. Cos., 90 N.E.3d 1226 (Ind. Ct. App. 2018), the policyholder is a doctor.  He made a claim for health insurance benefits himself under his own health insurance policy.

His carrier countered that it was retroactively cancelling the policy for nonpayment of premium.  The policy provided a 30-day grace period to bring the premium payments current.

The doctor made a claim on his health insurance policy within the grace period.   The carrier refused to pay the claim because the policy was being  cancelled retroactively.

The Indiana Court of Appeals held that by the express terms of the policy, claims within the 30-day grace period of cancellation for nonpayment of premium were to be paid like any other claim during the life of that policy.

So the doctor's claim for health insurance must be paid, in that case.

Please Read The Disclaimer.  ©2018 by Dennis J. Wall.  All Rights Reserved.