Claims And Issues

WE WANT INFORMATION. WANT TO KNOW WHAT WE WANT? CALL!

The headline of this post essentially describes one insurance company's request for "certain underwriting information" to policyholders in Mills v. AAA Northern Cal., Nev. & Utah Ins. Exch., 3 Cal. App. 5th 528, 207 Cal. Rptr. 3d 626 (Cal. 3d DCA 2016).

With one crucial added insert in the envelope, so to speak, that determined the outcome in this case regardless of the words used by the California courts here.

The insurance company offered the policyholders a choice:  Exclude their son from coverage under their automobile insurance policy by filling out and returning the enclosed form, or add him to their policy by calling the carrier.  If the carrier did not get either the filled-out form or a call, the carrier announced in the letter that it would cancel the policy.

The parents-policyholders did not call the carrier.  The carrier cancelled the policy.  Then another child of the policyholders had an auto accident.  She made a claim for Uninsured Motorist benefits.  The auto carrier denied coverage because the policy was not in effect.  The injured daughter continued to claim coverage under the auto policy and sued.

The case dealt with statutory interpretation.  California Regs explain a California Statute which allows for early cancellation of an insurance policy so long as there is "a substantial increase in the hazard insured against."

The Regs classify a non-response by the insured as a substantial increase in the hazard, after 30 days have passed following a "reasonable written request to the insured, [for] information necessary to accurately underwrite or classify the risk."

Four judges in California said that the carrier's letter and enclosure in this case was a "reasonable request" before the carrier cancelled the policy early.  (This was the view of three judges on the DCA and one trial judge.)

The rulings on appeal and in the trial court in this case were so specific to the California Statute and Regs on early cancellation, that they may not affect the outcome of requests for information on an ordinary application for insurance in the first place.  On the other hand, it is not difficult to foresee future insurance applications in California and elsewhere in which the carrier includes a question following the rulings in this case:

We need further information from you in order to process your application. Want to know what we need from you?  Call us and we'll tell you.  Otherwise, we might issue the policy and then deny coverage because you didn't tell us what we want to know.

It can't happen here, right?  Maybe in California.  Maybe not.  But not anywhere else, right?

Please Read The Disclaimer.  ©2016 by Dennis J. Wall.  All Rights Reserved.

NONDISCLOSURE OF MATERIAL FACTS MEANS NO COVERAGE FOR SECURITIES FIRM.

          The California Appellate Court gives us a concise summary of why the answers to a securities firm’s application for professional liability insurance, resulted in no coverage as soon as a claim was made on the policy:

When the securities firm applied for professional liability insurance, it disclosed one of the customer claims but not the facts that would support other potential customer claims arising out of investments through the same entity as that involved in the disclosed claim. The insurer refused to defend the securities firm against undisclosed claims because the policy's application included an exclusion for nondisclosure of facts that might lead to a claim. In affirming the judgment, we hold that the trial court correctly entered judgment in favor of the insurer on the ground that there was no insurance coverage because all of the undisclosed claims arose out of the same events as the disclosed claim and therefore the facts underlying the undisclosed claims should have been disclosed.

Crown Capital Securities, L.P. v. Endurance American Specialty Insurance Co., ___ Cal. Rptr. 3d ___, 2015 WL 1607164, *1 (Cal. 2d DCA April 10, 2015).

          In this case, the California Appellate Court identified the determinative language in the application as an “exclusion.”  Similar language, requiring the applicant to disclose facts which might lead to a claim, is found in most if not all applications for insurance of all kinds.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall.  All Rights Reserved.  No Claim to Original State of California Works.

 

POSTSCRIPT TO More IGNORANCE OF INSURANCE IS DANGEROUS TO OUR HEALTH.

A postscript to an article posted here earlier today.

           A p.s. about "retroactive" insurance coverage.  Many health insurance companies may be providing applicants more time, until January 10, 2014, to pay their premiums for health insurance coverage beginning on January 1, 2014.  But three things:  First, they are not happy about it.

          Second, many health insurance companies may be extending the time for accepting premiums, but no health insurance companies have agreed to issue "retroactive" coverage after a loss or, in this case, after an illness or an injury.

          Third, and most important to applicants, the deadline for enrollment is today, December 23, 2013 "even as the Obama administration has urged insurers to allow retroactive sign-ups into next month."  Alex Wayne and Alex Nussbaum, "Insurers Balk at Obamacare Concessions as Health-Risk Pool Thins" (Bloomberg News at businessweek.com, posted online on Monday, December 23, 2013).

          There they go again, "retroactive sign-ups".  Not happening.

MERRY CHRISTMAS AND HAPPY HOLIDAYS IN 2013, AND HAPPY NEW YEAR IN 2014!

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

Please Read The Disclaimer.

SO, "NO ONLINE PORTAL, NO HEALTH INSURANCE?"

Who told you that?

          The problems with www.healthcare.gov, the government's website portal into the Affordable Care Act a/k/a Obamacare, are well known and well-publicized.  It almost seems like if the beleaguered website portal does not work, then there is no health insurance.

          Not so.

          Although seemingly reluctant to earn their new-found premium dollars, America's Health Insurance Plans can accept applications by U.S. Mail, by Fax, by EMail, and by telephone.  Whether they let anyone know before the current signup period ends, may be another story, but it is true that America's Health Insurance Companies can offer you coverage consistent with the ACA and that you can apply for that coverage right now.

          You just may not be able to enter the narrow portal at www.healthcare.gov right now is all.

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

Please Read The Disclaimer. 

Crop Insurance and Federally Undefined "Material" Misrepresentations in the Application.

   Crop Insurance is flying under the radar of most Insurance Coverage practitioners.  It is reportedly a highly lucrative business, heavily subsidized by the Federal Government.  See Ron Nixon, "Report Says a Crop Subsidy Cap Could Save Billions" p. A15, col. 3 (New York Times Nat'l ed., Thursday, April 12, 2012).

   A mom and dad tried to set their son up with a Crop Insurance Policy, but the attempt was not successful when the Crop Policy was rescinded by a Federal Court.  Among other evidence in the record of that case, the Federal Court pointed out that apparently the son did not invest very much in the crop which he was applying to insure before he made a claim for a big loss on it.  Skymont Farms v. Federal Crop Insurance Corp., 2012 WL 1193407 *1 (E.D. Tenn. April 10, 2012), Download Skymont Farms v. Federal Crop Ins. Corp. (E.D. Tenn. Case No. 4.09cv65, Memorandum and Order of Lee, U.S.M.J.) PUBLIC ACCESS.

   However, the Federal Court faced the task of defining what a "material" misrepresentation would be in an application for Crop Insurance, because Congress had not defined the term.  Without a Federal definition, the Federal Court turned to State Insurance Law for a definition, held that the application for Crop Insurance at bar met the definition because the son just did not display an insurable interest for the Crop Insurance he was applying for, and ordered that the Crop Insurance Policy was rescinded -- without payment of the son's claim, of course.  Id. at *8 - *10.

   This decision is of interest at the present time for reasons beyond Crop Insurance and that extend to Health Insurance.  The Patient Protection and Affordable Care Act, or "ACA," one provision of which is currently under constitutional review by the U.S. Supreme Court, contains a provision governing Rescission of Health Insurance policies and plans subject to the ACA.  It does not contain any definition of what constitutes a "material" misrepresentation sufficient for Rescission of such Health Coverage.

Please Read The Disclaimer.

Rescission: "Known" Loss or Just Plain Loss Not "Fortuity", Enough?

   A Title Insurance Policy was rescinded on the facts in the record in Nourachi v. First Am. Title Insurance Co., Download Nourachi v. First American Title Insurance Co. (Fla. 5th DCA Case No. 5D09.2554, Opinion Filed August 6, 2010) PUBLIC ACCESS also published as 2010 WL 305662 (Fla. 5th DCA August 6, 2010)(Westlaw subscription required to access Westlaw).  The basis for the Court's holding in this 2-to-1 decision was succinctly stated in the majority opinion:

Where a party does not rely on a title insurance company to advise it of encumbrances prior to acquiring title to property, it may not recover on a material title defect of  which it had actual knowledge and which it failed to disclose to the insurer at the time it applied for the title policy.

Nourachi v. First American Title, 2010 WL 3056602 at *1.  [Emphasis in original.]

   So far, so good.  Then the Court went farther:  "Our decision is also consistent with the general principle that a party may not insure against a loss that he knows has already occurred and that he fails to disclose to the insurer."  Id. at *5.  The concurring opinion seems to be in accord.  The dissent focused instead on the actual language of the insurance policy before the Court in that case.  Id. at *9.

   There was no "known loss" Exclusion in the Policy in that case.  There generally if not always is no such Exclusion to be found in any Insurance Policy in any case.  Is it the fact that the loss for which Coverage is claimed is "known" that defeats the role of Insurance, or is it the fact that there was a previous "loss" that occurred before the Insurance Policy was issued to insure against a risk of something that had already happened and which Insurance will not be allowed by public policy to pay for?

   Or is the "failure to disclose to the insurer at the time it applied for the policy" that forms the basis for Rescission?  The dissent in this case pointed out that "[a]lthough the policy [at issue there] contains an exclusion for known and undisclosed claims, it expressly excepts from that exclusion claims that may be discerned from the public record."  Id. at *9.  [Emphasis added.]  The Policy at issue in that case was, after all, a Title Insurance Policy.  The Title Insurance Company's Underwriters apparently had no problem with effectively requiring their employer to search the public records before issuing Policies.  The majority in this case did have a problem with that, however, and in the face of clear Policy language relied on by the dissenting Judge, two Judges affirmed the Trial Court's Rescission Judgment anyway.

   Sometimes the facts are egregious enough in the eyes of Courts to manifestly require a certain result in order to do justice in their eyes if not in the eyes of most reasonable people, for that matter, that the facts will sometimes overwhelm Insurance Policy language, with or without an analysis of the Policy itself.  This is a lesson that is not lost on experienced Insurance Coverage practitioners.

Please Read The Disclaimer.

 

Links to Tips For Saving Outlays on Automobile Insurance.

   In this report by Ivan Penn, "Daily Q&A:  How Can I Save Money on Car Insurance?" (St. Petersburg Times Online, Friday, January 8, 2010), some tips are given to do just as the article's headline suggests, including potential savings arising from:

   Your age.

   Your credit history.

   Vehicle Type.

   Agent's Commission.

There is also a link in this report to SmartMoney Magazine for reportedly more tips:  www.smartmoney.com/spending/autos/10-Things-Your-Auto-Insurer-Wont-Tell-You/.

Please Read The Disclaimer. 

California Postclaims Disability Insurance Underwriting Class Action Revisited.

    On December 4, 2007 California's Second District Court of Appeal certified this 20-page opinion for publication "following rehearing":  Ticconi_v. Blue Shield of California (Cal. 2d DCA Dec. 4, 2007).pdf.  On January 3, 2008 according to the Court's docket available online, the Court granted a petition for rehearing.  Rehearing is pending at this time.

    On December 4, 2007 the Second District issued a ruling in the Ticconi case in which the California Appellate Court reversed a Trial Court's Order that denied a motion to certify a Class Action.  The Plaintiff-Policyholder in that case, Mr. Augusto Ticconi, alleged that he applied for and received "a policy of short-term health and accidental insurance from Blue Shield Life.  Blue Shield Life markets such policies as temporary, 12-month coverage to individuals, such as college students or those changing jobs, who need insurance while they are waiting for permanent coverage."  The attached official opinion does not have page numbers.  This quote is taken from the bottom of the second page ("page 2") of the linked pdf of the California Appellate Court's official opinion.

    Allegedly after Mr. Ticconi presented more than $100,000.00 of medical bills to Blue Shield Life for payment under the Policy, Blue Shield Life rescinded the Policy on the ground of misrepresentations in the application.  Id. at "page 3".   However, Blue Shield Life did not attach the application to the Policy or endorse the application on the Policy as a California Statute required it to do.  For that reason, arguably it could not rely on the application as the source of any representations.   In essence, Mr. Ticconi alleged that Blue Shield Life did this sort of thing frequently enough to justify a Class Action concerning what amounted to "postclaims underwriting" of Disability or Health Insurance subject to California Statutes.

    "Postclaims underwriting of disability, i.e., health insurance ... is flatly prohibited" by the California Insurance Code, wrote California's Second District Court of Appeal in its original opinion in this case.  Id. at "page 8".

    As was noted at the beginning, the original opinion in this case is the subject of a rehearing which is pending at this time.

Please Read The Disclaimer.