Claims And Issues

NO, actually, THEY are TAKING YOUR HEALTHCARE COVERAGE AWAY.

Before the Affordable Care Act was passed in 2010, this country and the availability of healthcare in it looked very different from the way it looks now.  Then, health insurance coverage was almost totally unavailable without excluding pre-existing conditions, placing limits on benefits every year and over a lifetime, and setting premiums so high that most people simply could not afford to pay them and so they famously visited hospital emergency rooms instead.

    The Affordable Care Act expanded access to health insurance in a number of important ways, including:
• Inventing and shaping marketplaces for private health insurance ;
• Stretching both the extent and the financial accessibility of health insurance coverage with a new requirement that health insurance plans offered to individuals and small groups include a minimum level of “essential health benefits” including emergency care, hospitalization, maternity and newborn care, outpatient services, mental health treatment, rehabilitative services and devices, prescription drugs, preventive services, and pediatric care, and
• Barring discrimination against individuals based on their health status, eliminating exclusions for pre-existing conditions, and mandating through a "guaranteed-issue provision" that health-insurance providers "must accept every employer and individual in the State that applies for such coverage."

    Congress has considered many bills since 2010 when the ACA was first enacted, which would "repeal, defund, delay, or otherwise amend the ACA—including legislation that would have repealed the entire Act." Although many bills were introduced during that time to repeal the individual mandate and even to repeal the entire ACA, they never had the votes. The substance remains unchanged through the time of this writing in 2020.

    And now it's on to the U.S. Supreme Court once again, and let's see if they have the votes there to "repeal, defund, delay, or otherwise amend the ACA."

To be continued tomorrow on Claims and Bad Faith Law Blog.  Adapted by the author from his new Chapter 18E forthcoming in the Spring of 2020 in the book, CATASTROPHE CLAIMS:  INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS (Thomson Reuters).  Please Read The Disclaimer. ©2020 Dennis J. Wall.  All Rights Reserved.

WILL INSURANCE COVER THE FLORIDA GATORS' GRADUATION CEREMONY?

A faculty 'marshal' was reportedly tasked with keeping the University of Florida graduation ceremony going last Saturday.  Some students danced as they received their diplomas, apparently not an unknown occurrence in 2018.

Some of the dancing students are Black.  One of them has applied for law school.  Whatever the graduation marshal's motivation, he grabbed the student and hustled him off the graduation stage.  There were other dancing students whom the marshal physically moved off the stage.  The testimony varies in terms of the media reporting; some say that all of the students who were physically removed were Black, some say White students and Asian students were treated the same way.  Read about the incident and see the photographs here and here.

We do not know the motivations, as I said, but this incident sparks several insurance coverage issues dependent on intention nonetheless.

An insurance policy's assault and battery exclusion may or may not bar all coverage for assault and battery in Florida.  So if the University of Florida's liability insurance policies have assault and battery exclusions, will those exclusions bar a duty to defend if any students sue the University for their injuries arising out of an alleged assault and battery?  It depends on what the allegations are, the Court held in  AIX Specialty Ins. Co. v. Sombreros, LLC, No. 8:17–cv–843–T–26TBM, 2018 WL 1635643, at *6 (M.D. Fla. April 5, 2018).

If there is no allegation of intent nor any policy requirement of intent, then the assault and battery exclusions may not bar any duty to defend just as the assault and battery exclusion in  did not bar a duty to defend in that Florida case either.

To say again, we do not know the marshal's motivation here.  But from an insurance coverage perspective, could there be coverage for a Section 1983 action based on deprivation of civil rights on the U.F. stage last Saturday, or on some other basis linked to racial discrimination?  The short answer is that Courts have recognized coverage is possible for Section 1983 and other actions based on discrimination.

But in Florida, there is no insurance coverage as a matter of public policy for intentional religious discrimination under a Florida Supreme Court ruling.  Ranger Ins. Co. v. Bal Harbour Club, Inc., 549 So.2d 1005 (Fla. 1989).

By extension, and depending on the evidence in any particular matter including the ceremony that played out in Gainesville, Florida last Saturday, there should be no insurance coverage for intentional racial discrimination in Florida either.

As always, the facts matter at least in Court.  Also, once again, motivation matters for insurance coverage questions.  See Lime Tree Village Community Club Ass'n, Inc. v. State Farm Gen. Ins. Co., 980 F.2d 1402 (11th Cir. 1993).  Parenthetically, my clients and I successfully argued in favor of insurance coverage under Florida law in the Lime Tree coverage case.

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

JUDGMENT ON PLEADINGS FOR POLLUTION EXCLUSION INCLUDING NO DEFENSE DUTY.

RLI issued an umbrella liability insurance policy with a pollution exclusion.  In the eyes of a court, that exclusion barred all coverage including any duty to defend an underlying lawsuit filed against the policyholder, the City of Visalia, California, concerning an alleged pollution site.  The case is RLI Insurance Co. v. City of Visalia, No. 1:17-cv-01205-LJO-EPG, 2018 WL 1381808 (E.D. Cal. March 19, 2018), appeal docketed, No. 18-15668 (9th Cir. April 18, 2018).

In a statement with which those who regularly read decisions from the Eastern District of California are familiar, this opinion too begins with a description of the desperate continuing staffing needs of the Eastern District of California including a need for more District Judges to handle the caseload.  The statement contains a clear warning that there are so few District Judges in the Eastern District that, as in many other Federal Districts, setting criminal trials takes priority over setting trials in civil cases, and District Judges from other Districts may be asked to preside over some or many cases to clear the backlog.  This warning may or may not be getting attention from those with responsibility for public appropriations.

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

AFFIRMATIVE COVERAGE DEFENSES "EVERYBODY KNOWS," LIKE PIPES FREEZE IN INDIANA.

 In Manago v. Auto-Owners Ins. Co., No.:2:16-CV-267-RL-JEM, 2018 WL 1704465 (N.D. Ind. April 9, 2018) (Martin, USMJ), the plaintiff policyholder filed a motion to strike certain affirmative defenses raised by her first-party insurance carrier.  The plaintiff claimed coverage and also bad faith.  However, this article will focus on the affirmative defenses which the carrier raised against the coverage claim in particular, and the Magistrate Judge's rulings finding them legally sufficient in this case.

As you read through this article, bear in mind what the plaintiff-policyholder "had to know," at least in the eyes of the Magistrate Judge.  The issue consistently in question here was whether the insurance carrier had pled enough facts in its affirmative defenses in this particular case.

The insurance carrier in this case affirmatively defended against the plaintiff's coverage claim and against that part of the plaintiff's claim for attorney's fees in particular, with these generalized statements:

Defendant’s first affirmative defense is a statement that the complaint “fails to state a claim upon which relief can be granted.” The eighth is similar, but focuses solely on attorney’s fees, reading, “Plaintiff’s prayer for attorney’s fees and costs fails to state a claim upon which relief may be granted because Plaintiff is not entitled to recover attorney’s fees to establish or contest insurance coverage.”

Since at one time the Federal Rules of Civil Procedure previously authorized a generalized statement that the complaint fails to state a claim upon which relief can be granted, the U.S. Magistrate Judge deciding these issues ruled that the carrier's defense to a coverage claim was legally sufficient and would not be stricken.  Manago v. Auto-Owners Ins. Co., No.:2:16-CV-267-RL-JEM, 2018 WL 1704465, at *1 (N.D. Ind. April 9, 2018).

By the same token, or by a parity of reasoning if you prefer, the Magistrate Judge ruled that the very similar generalized statement that the plaintiff's particular claim for attorney's fees did not state a claim was similarly legally sufficient.

In that case, the carrier also raised certain exclusions in the policy, which the plaintiff contended were not sufficiently alleged as affirmative defenses because they were raised only as conclusions without facts.

The Magistrate Judge disagreed with the plaintiff and denied the plaintiff's motion to strike the following defenses which included an exclusion in this case for freezing pipes in Indiana:

15. There is no coverage for the claims alleged in Plaintiff’s complaint under the [carrier's] Policy because the claims are excluded under the Policy’s express exclusion of coverage for damages caused by or contributed to by any power, heating, or cooling failure or interruption.
16. There is no coverage for the claims alleged in Plaintiff’s complaint under the [carrier's] Policy because the claims are excluded under the Policy’s express exclusion of coverage for any loss caused by or contributed to by the freezing of plumbing systems while the building is vacant or unoccupied when the insured does not shut off the water supply and drain the systems and appliances.
17. There is no coverage for the claims alleged in Plaintiff’s Complaint under the [carrier's] Policy because the claims are excluded under the Policy’s express exclusion of coverage for any loss caused by or contributed to by the freezing of plumbing systems while the building is unoccupied when the insuredfails to maintain heat in the building.

    While certain facts in these affirmative defenses are not specifically pled, the defenses themselves contain sufficient detail to put Plaintiff on notice as to what facts Defendant will seek to prove in its defense. These defenses will therefore not be stricken.

Manago v. Auto-Owners Ins. Co., No.:2:16-CV-267-RL-JEM, 2018 WL 1704465, at *3 (N.D. Ind. April 9, 2018).

The Magistrate Judge was by no means done.  The plaintiff's motion to strike the carrier's affirmative defense simply that the plaintiff had other insurance was also denied.  Far from being conclusory, in the eyes of the Magistrate Judge, this affirmative defense was legally sufficient to put the plaintiff on notice of the facts that the carrier would prove in support of this defense.  The carrier alleged that the plaintiff had no coverage from the defendant “'to the extent that the insured has other valid and collectable insurance or other insurance available to the insured'[.]”   This defense was sufficient for the Magistrate Judge because the plaintiff would be in a position to know whether she had other insurance:

Given that the existence or identity of any additional policy of insurance held by the insured is a fact more likely to be in Plaintiff’s control than in Defendant’s, the Court finds that this affirmative defense is sufficiently pled.

Manago v. Auto-Owners Ins. Co., No.:2:16-CV-267-RL-JEM, 2018 WL 1704465, at *3  (N.D. Ind. April 9, 2018).

Those who have knowledge already, at least in the eyes of the Court, are not likely to be successful in such cases by arguing that allegations assuming their knowledge are conclusions only, and nothing more.  As in this case, a Magistrate Judge quite possibly will be convinced in such a case that mere conclusions are legally sufficient affirmative defenses under the circumstances.

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

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.

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

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?

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

STANDARD CIVIL AUTHORITY EXCLUSION NOT APPLIED IN KANSAS CASE.

The standard property insurance policy exclusion for loss resulting from an order of a civil authority did not apply, the Kansas Court of Appeals has held, to damage caused to a residence by law enforcement officers' efforts to apprehend a suspect.  The case is Allen v. Marysville Mut. Ins. Co., 404 P.3d 364 (Kan. Ct. App. 2017).

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

HURRICANES, DEDUCTIBLES, AND EXCLUSIONS.

Hurricane Irma insurance claims keep rising in Florida, but most of these claims will reportedly not be paid by carriers because they will not exceed the standard hurricane deductible.

On the other hand, exclusions may or may not apply even if the claims exceed any applicable deductible.  In Wheeler v. Allstate Ins. Co., 687 F. App'x 757 (10th Cir. 2017) (case involved Utah substantive law), an exclusion in a homeowner's policy did not apply with respect to short-term damage caused by water seeping into the home over weeks, months, or even years.  In this case, the policyholder successfully contested the seepage exclusion with respect to "short-term damage (i.e., damage fully inflicted in 13 days or less) to his cabin[.]"

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

NOTE TO HARVEY, IRMA & MARIA: "FLOOD" INCLUDES BROKEN WATER MAIN.

A first-party property insurance policy containing both specified perils or multiperils coverages, and specified perils or multiperils exclusions, if you will, was not rendered ambiguous as a result, in Comley v. Auto-Owners Ins. Co., NO. 2016-CA-001305-MR, 2017 WL 4448528 (Ky. Ct. App. October 6, 2017; Stated Not Final And Not to be Cited As Authority in Kentucky Courts).

The facts of that case center around a water main outside the plaintiff's property.  The water main broke and inundated plaintiff's-policyholder's house and personal property with damage.  Kentucky's intermediate appellate court held that the water damage exclusion for a "flood" did not require natural causes in order for the exclusion to apply.

Accordingly, the policy at bar was not ambiguous and the policyholder's claimed damage was excluded "water damage," the Kentucky Court of Appeals held in that case.

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2018 OPEN ENROLLMENT RUNS FROM NOVEMBER 1 THROUGH DECEMBER 15.  READY?

If you or your clients do not have health insurance coverage, check out and sign up at www.healthcare.gov.

You may not have heard the word that health care coverage is available -- right now, today, even as you read these words.  It's your right.  It's the law of the land!

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

DEATH AND COVERAGE IN FLORIDA: A CONTINUING STORY.

First installment, "They Called But No-One Came:  Liability Insurance Coverage Questions":  Monday, 09.18.17.  The second of three installments focused on liability insurance coverage questions regarding the Florida power company, "IS YOUR GENERATOR WORKING?" also at http://insuranceclaimsissues.typepad.com/insurance_claims_and_issu/2017/09/is-your-generator-working-the-first-installment-they-called-but-no-one-came-liability-insurance-coverage-questions-monda.html .  In this the final installment, we will address liability insurance coverage questions concerning the Florida nursing home.

Here is the story that continues to develop behind our insurance coverage questions.  I cautioned from the beginning of the first installment that this is a developing story,  that we do not know all the facts, and that much more remains to be reported as time goes on.

Those cautions have been borne out in the past week since I posted my first article in this series.  There are now eleven people who reportedly died after Hurricane Irma struck Florida and specifically struck a Florida nursing home.   The nursing home's air conditioning went out.  It got hot.  Very hot.

Eleven people have died from the heat.

A number of people and corporations played a role in this story.  Together we addressed liability insurance coverage questions regarding the Florida governor in the first installment, and in the second installment we addressed some liability insurance coverage questions surrounding the Florida power company.  In this last installment, together we will address liability insurance coverage questions involving the Florida nursing home.  To write again what I wrote at the outset:  What follows is from the reporting so far on what happened.   The reporting is not complete even now.  There are competing stories on lots of points.  As yet, only some things have been finalized, but they are enough to see the outlines of some important liability insurance coverage questions.

The focus of this series of articles is not on whether there may be any good claims of potential liability, but on whether there are claims to potential liability insurance coverage.

1. The Florida nursing home: Questions of Liability.

The Florida nursing home seems to be a target of opportunity for placing blame on what went wrong at the nursing home that resulted in eleven people dying when the nursing home's air conditioning failed during Hurricane Irma.  Yet it should never be overlooked that there are many actors in this play.

"Somewhere in between, the misery of a nursing home teetering toward tragedy was reported to every official channel, but no attempt was made to transfer the residents to a safer place, or even to the air-conditioned hospital practically next door."  Ellen Gabler, Sheri Fink & Vivian Yee, "At Florida Nursing Home, Many Calls for Help, But None That Made a Difference" (New York Times online, posted Saturday, September 23, 2017), also available at https://www.nytimes.com/2017/09/23/us/nursing-home-deaths.html?hpw&rref=us&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well.

After so many people died, the Florida governor insisted that his Florida Agency for Health Care Administration adopt emergency rules requiring nursing homes to have backup generators.  But that is not the way it was before Irma and before so many people died.

There were calls to require emergency backup generators at Florida nursing homes long before Hurricane Irma was a little breeze somewhere in the Atlantic Ocean.  The expense of operating a Florida nursing home caused these calls to go without any meaningful response.  To put it another way, money talked and people in power listened.

"Very few nursing homes had generators powerful enough to keep the air-conditioning running. In 2006, Florida lawmakers considered requiring nursing homes to maintain generators to ensure comfortable temperatures during disasters. But the industry raised concerns about the cost, according to The Miami Herald, and the bill died. Last week, after the Hollywood Hills deaths, Mr. Scott announced new rules requiring those generators."  Ellen Gabler, Sheri Fink & Vivian Yee, New York Times supra.

Certainly, the Florida nursing home is experiencing its share of allegations that it was either the sole cause or a contributing cause of these people's horrible deaths.  The current owners of the Florida nursing home have run a facility that received below-average ratings from Medicare even before Irma.  And they have experienced allegations related to Medicare and nursing homes before Irma, as well, including allegations of kickbacks.  See Ellen Gabler, Sheri Fink & Vivian Yee, New York Times supra (reporting that the current owners of the Florida nursing home "were among defendants who paid $15.4 million in 2006 to settle federal and state civil claims that they had paid kickbacks to doctors in exchange for patient admissions.").

No evidence of previous wrongdoing including kickbacks, even if admissible, would prove the allegations of wrongdoing now.  What evidence there is to prove the allegations now will depend in the end on what evidence is uncovered or introduced in the inevitable lawsuits that are the result of these tragic deaths.  See, e.g., "Report:  Before Deaths, Nursing Home Called Rick Scott's Emergency Number Three Times, To No Avail" (Tampa Bay Times staff, posted online on Friday, September 15, 2017), also available at http://www.tampabay.com/news/politics/stateroundup/report-nursing-home-called-rick-scotts-emergency-number-three-times-to-no/2337665.

("On Friday, a Miami law firm filed a complaint against the Hollywood facility ....); "'Red Flag' Calls Signaled Post-Irma Deaths at Nursing Home" (Associated Press copyrighted story published online in The New York Times on Saturday, September 16, 2017), also accessible at https://www.nytimes.com/aponline/2017/09/16/us/ap-us-hurricane-irma-nursing-home-deaths-.html (reporting that a family member of a surviving resident "hired an attorney after her 93-year-old mother became severely dehydrated on Wednesday.").

Our focus here remains on the liability insurance coverage questions arising from this tragedy.  In this final installment of a continuing series of articles, our particular focus here is on liability insurance coverage questions which confront the Florida nursing home.

2. Liability Insurance Coverage Questions and the Florida nursing home.

The liability insurance coverage questions surrounding the Florida nursing home in this circumstance are similar to the liability insurance coverage questions that surround the Florida power company which were previously asked here.

The questions that follow are not all the questions that can or will be raised concerning the Florida nursing home's liability insurance coverages.  Some of these questions may not apply.

"Occurrence":  Was there an accident neither expected nor intended from the standpoint of the insured, in this instance, neither expected nor intended from the standpoint of the Florida nursing home?  This is where the history of Medicare inspections and evaluations of the Florida nursing home may prove relevant.

In the context of Directors and Officers coverage if any for the operators of the Florida nursing home:  Is there any covered conduct at issue on the part of the Florida nursing home's directors and officers?  Alternatively or additionally, is any potentially "covered conduct" excluded because of the availability of liability insurance coverage, if any, under other liability insurance policies available to the directors and officers?

The number of occurrences, if any.  Was there one or were there 11 or more "occurrences," if any?  Was there one occurrence (if any) because, say, there was at least arguably one practice and procedure at the Florida nursing home which resulted in the damages that might be complained of here?  Or were there at least 11 occurrences (again, if any) because so far 11 people have died?  Or if there were any occurrences under the insurance policies at issue, were there more than 11, counting all the people who were injured but who have not died?

Time will tell, and it bears repeating:   Over time the answers to liability insurance coverage questions like these will likely be given by the Florida courts.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

"IS YOUR GENERATOR WORKING?"

The first installment, "They Called But No-One Came: Liability Insurance Coverage Questions": Monday, 09.18.17. This is the second of three installments. This installment will address liability insurance coverage questions regarding the Florida power company. In the final installment, we will address liability insurance coverage questions concerning the Florida nursing home.

Here is the story behind our insurance coverage questions:

Eight people died in a nursing home in Hollywood, Florida during Hurricane Irma. The nursing home's air conditioning went out. It got hot. Very hot.

Eight people died from the heat.

A number of people and corporations played a role in this story. We addressed liability insurance coverage questions regarding the Florida governor on Monday, and today we address some liability insurance coverage questions surrounding the Florida power company. Our last installment will address liability insurance coverage questions involving the Florida nursing home. Their continuing stories will be featured here throughout the coming week, along with their related liability insurance coverage questions.

What follows is from the reporting so far on what happened.  The reporting is not complete even now. There are competing stories on lots of points. As yet, only some things have been finalized, enough to see the outlines of some important liability insurance coverage questions.

The focus of this series of articles is not on whether there may be any good claims of potential liability, but on whether there are claims to potential liability insurance coverage.

1. The Florida power company: Questions of Liability.

Eight people died in a nursing home in Florida when the air conditioning went out. "Survival also depended on phone tag between nursing-home administrators, state officials and utility providers." Aaron Davis, Katie Zezima & Mark Berman, "Officials at Nursing Home Where 8 Died Say They Called Florida Gov. Rick Scott 3 Times For Help" (Washington Post via Chicago Tribune posted on Friday, September 15, 2017), also available at http://www.chicagotribune.com/news/nationworld/ct-florida-nursing-home-deaths-rick-scott-20170915-story.html.

The nursing home called the power company when a transformer blew out and the air conditioning stopped. This was the first of several calls the Florida nursing home says it made to the Florida power company. "Report: Before Deaths, Nursing Home Called Rick Scott's Emergency Number Three Times, To No Avail" (Tampa Bay Times staff, posted online on Friday, September 15, 2017), also available at http://www.tampabay.com/news/politics/stateroundup/report-nursing-home-called-rick-scotts-emergency-number-three-times-to-no/2337665.

The Washington Post report via the Chicago Tribune linked above reflects that "[t]he nursing home provided ticket numbers for service requests that it had placed with" the Florida power company. "The Post was able to confirm two of the requests using state records and the utility's website." Id.

The same reporting further reveals what was not widely reported previously: The nursing home personnel were not the only ones who called the Florida power company. At least one relative of a nursing home resident, perhaps joined by others, "repeatedly called" the power company. "I told [the power company] the generators were going to give up soon. And it happened." Id. [Emphasis added.]

Finally, people also called 911, more than once, before anyone died. "'Red Flag' Calls Signaled Post-Irma Deaths at Nursing Home" (Associated Press copyrighted story published online in The New York Times on Saturday, September 16, 2017), also accessible at https://www.nytimes.com/aponline/2017/09/16/us/ap-us-hurricane-irma-nursing-home-deaths-.html.

The Associated Press story which has just been hyperlinked above, summarizes the calls to the Florida power company to restore power for the air conditioning in the sweltering heat: "The [nursing home] said the hurricane knocked out a transformer that powered the air conditioning. The center said in a detailed timeline of events released Friday that it repeatedly was told by [the Florida power company] that it would fix the transformer, but the utility did not show up until Wednesday morning, hours after the first patients began having emergencies."

For its part, before it stopped issuing statements or answering questions the Florida power company said that the nursing home "was supposed to have an operational generator."

As noted, the reporting is not complete even now. However, not one report has recorded that the power company ever asked this question to anyone at the nursing home:

Is your generator working?

The power company said in a statement using the passive voice, that "'other critical facilities were identified as higher priorities.'" Tampa Bay Times, supra.

"The utility refused to answer any specific questions about the nursing home case." Associated Press, supra. While the Florida power company conveyed "'our deepest sympathies,'" the power company "did not answer questions regarding the calls the nursing home said were made." Washington Post via Chicago Tribune, supra.

"'At the time this incident occurred, you have to remember when the first patients were dying, there were 150 nursing homes across the state that did not have power.'" Jim Defede, CBS4News, Miami, quoted in Tampa Bay Times, supra.

 

2. Liability Insurance Coverage Questions and the Florida power company.

The questions that follow are not all the questions that can or will be raised concerning the Florida power company's liability insurance coverages. Some of these questions may not apply. Answers, if any, may be forthcoming in newly filed lawsuits. See Tampa Bay Times, supra ("On Friday, a Miami law firm filed a complaint against the Hollywood facility ....); Associated Press, supra (reporting that a family member of a surviving resident "hired an attorney after her 93-year-old mother became severely dehydrated on Wednesday.").

Depending on the type of policy involved, including whether it is a "claims made and reported" policy or an "occurrence-based" policy, the foremost question of liability insurance coverage regarding the power company may involve this one:

"Occurrence": Was there an accident neither expected nor intended from the standpoint of the insured, in this instance, neither expected nor intended from the standpoint of the Florida power company?

Like unto it, the question arises in the context of Directors and Officers coverage if any: Is there any covered conduct at issue on the part of any of the power company's directors and officers? Or is such coverage excluded by the availability of liability insurance coverage, if any, under other liability insurance policies available to the directors and officers?

Is there potential liability of the Florida power company here only for breach of contract, which is ordinarily excluded under standard liability insurance policies? Or is the power company's potential liability the kind that it would have even if there had been no contract?

Finally, now a very significant question from the outset: the number of occurrences, if any. Was there one or were there 8 or more "occurrences," if any? Was there one occurrence (if any) because for example there was one practice and procedure at the power company which resulted in the damages that might be complained of here? Or were there 8 occurrences (again, if any) because 8 people died? Or if there were any occurrences under the insurance policies at issue, were there more than 8, counting all the people who were injured but who did not die?

Time will tell, and over time the answers to liability insurance coverage questions like these will likely be given by the Florida courts.

Please Read The Disclaimer. ©2017 by Dennis J. Wall. All Rights Reserved.

 

THE INSURED'S CONTRACT TELLS WHETHER THE INSURED'S "WORK" WAS "COMPLETED."

A standard "completed work exclusion" in a liability insurance policy did not apply to a damage claim based on an insured railroad maintenance company spraying herbicide two times per year and making spot checks of a railroad crossing.  The appellate panel wrote that, purely and simply, the insured's work under its contract in this case was not completed:

By its plain language, the Crossing Contract describes—as the District Court found—an ongoing and continuous maintenance and monitoring obligation, rather than a contract for a series of limited and discrete tasks, such as defoliation of vegetation. Liberty acknowledges that this characterization of the Crossing Contract is correct.

Liberty Surplus Ins. Corp. v. Norfolk S. Ry., 684 F. App'x 788 (11th Cir. 2017) (case involved Georgia substantive law).

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

EXCLUSION MOVES EARTH, MOVES COURT, EXCLUDES COVERAGE.

Another Court has added its decision to the majority interpretation of the standard earth movement exclusion in  a property policy.  The decision has just been officially published.

Coverage for building damage caused by soil and rock sliding down hill is excluded by the language of a standard earth movement exclusion, the Court held in Erie Ins. Prop. & Cas. Co. v. Chaber, 801 S.E.2d 207 (W. Va. 2017).

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

MAINTAINING THE MAINTENANCE EXCLUSION IN A PROPERTY POLICY.

In Dougherty v. Allstate Prop. & Cas. Ins. Co., 681 F. App'x 112 (3d Cir. 2017) (case involved Pennsylvania substantive law), a maintenance exclusion in a property insurance policy barred coverage for an insured's claim for water damage to his home.  A pipe in the insured's home froze and burst, causing both the damage and the claim to coverage; the carrier contended that the insured's failure to maintain his furnace caused the frozen pipe to burst.

Here is the language of the maintenance exclusion as quoted by the court:

Allstate denied Dougherty’s claim, invoking the policy’s “maintenance exclusion.”  This exclusion provided in pertinent part that Allstate would not “cover loss to the property ... consisting of or caused by ... [p]lanning, [c]onstruction or [m]aintenance, meaning faulty, inadequate or defective ... maintenance.”

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

VOUCHERS: ACCIDENTS NEITHER EXPECTED NOR INTENDED, OR KNOWN LOSSES?

Vouchers take the place of public schooling so that people can pay for charter schooling.

Vouchers are paid by taking money from public school taxes.  This seems to be the trade-off for the prospect that the children of parents holding vouchers will perform well academically if they do not have to attend public schools but can choose to attend charter schools instead.

However, years of studies show that "private school vouchers may harm students who receive them." The most recent study reporting the same dismal results came in June from a proponent of school choice.  See also here.

This calls into question the availability of insurance coverage for those who enable or even mandate such choices.  Many kinds of insurance policies contain the equivalent of the Commercial General Liability or CGL "occurrence" definition, which many States including Florida equate with the standard CGL Exclusion 1:

There is to put it simply no coverage for an occurrence which is not an accident neither expected nor intended from the standpoint of the insured.

In the case of school vouchers, the relatively poor academic performance of voucherized students seems to qualify as an event that should not be covered by insurance.  This has ramifications on several different fronts.

Hedge Funds and other Investors in Charter Schools, and Charter School Administrators.  These people certainly have, or should carry, Errors and Omissions (E&O) or Directors and Officers (D&O) coverage or the equivalent.   If they push vouchers knowing of their consequences at this time, there seems to be a real insurance coverage issue over whether their choices could even potentially be covered as accidents neither expected nor intended from their standpoint.

School Boards and School Board Members.  Boards and their Members carry or should carry something like School Officials Professional Liability Policies, whatever the policies might be called.  Putting aside questions of immunity, if any, there is still a very real question of whether School Boards and their Members can claim insurance coverage in the face of years of such poor test results that choosing vouchers for children may not be capable of an argument that such choices, again, are accidents neither expected nor intended from the standpoint of the insured.

"Known Loss Doctrine" proponents.  Some judges and many lawyers have argued that insurance coverage is or should be "excluded" whenever the policyholder knows that a loss has happened for which the policyholder is now claiming coverage.  There is rarely any such exclusion written in any insurance policy, but the argument is made often, usually by people who do not practice insurance coverage law.

Insurance is not available however unless there is a risk to be covered.  In this situation, there does not seem to be much risk of the outcome with vouchers.  Once vouchers are chosen, the outcome seems to follow.  This may present another situation for the so-called "known loss doctrine," not as a supposed "exclusion" but simply because insurance arguably does not exist to cover known losses.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

AMBIGUOUS EXCEPTIONS TO EXCLUSIONS IN NEW JERSEY INTERPRETED FAVORING COVERAGE.

Products and Workmanship Exclusions were interpreted to apply to exclude coverage for a policyholder's claimed loss but for exceptions to the exclusions, in National Mfg. Co. v. Citizens Ins. Co. of Am., No. 13-314, 2016 WL 7491805 (D.N.J. December 30, 2016) (stated Not for Publication; precedential value apparently limited accordingly in District of New Jersey).

However, the District Judge found ambiguities in the exceptions to the exclusions.  Therefore the Judge granted the policyholder's motion for summary judgment that there is insurance coverage for the claimed loss:

The exceptions contained in the Products and Workmanship Exclusions at best render the exclusions ambiguous and at worst incomprehensible. In light of causes of loss that are covered, the exclusions, and the exceptions to the exclusions, the policy language is circular. Under the Covered Cause of Loss section, all risks of direct physical loss are covered unless an exclusion or limitation applies. The exclusions then negate coverage under the Policy, unless the exceptions apply. The exceptions to the exclusions return the policyholder to the very place he started—the Covered Cause of Loss. The process then begins anew—covered causes of loss, exclusions, exceptions to the exclusions, and a return to covered causes of losses. Hence, the circular nature of the policy language.

National Mfg. Co. v. Citizens Ins. Co. of Am., No. 13-314, 2016 WL 7491805, at * 11 (D.N.J. December 30, 2016) (stated Not for Publication; precedential value apparently limited accordingly in District of New Jersey).

An alternative holding reached by other courts in other cases (and in other jurisdictions) is that exceptions to exclusions in an insurance policy cannot create (or provide) coverage.  Under the District Court's analysis in National Manufacturing, however, exceptions effectively broaden coverage beyond the exclusions in which they are written.

There is an argument that that is the very reason that the exceptions were written, in other words, to broaden coverage and soften or limit the reach of the exclusions.  Such is the approach effectively taken in National Manufacturing.  It remains to be seen, of course, whether the approach taken by the Court in that case has persuasive value beyond the precedential value if any of the particular decision in that case.

Please Read The Disclaimer.  ©2017 by Dennis J. Wall.  All Rights Reserved.

MUD IS MUD. DEMOLITION BY MUD IS NOT AN EXPLOSION, EITHER.

A panel of the Tenth Circuit Court of Appeals affirmed a summary judgment entered in favor of an insurance carrier in Paros Prop's, LLC v. Colorado Cas. Ins. Co., ___ F.3d ___, No. 15-1369, 2016 WL 4502286 (10th Cir. August 29, 2016).

The claim to coverage arose out of "torrential rainfall" in Boulder, Colorado and "a violent flow of water, mud, and debris [which] thundered down a hillside" coming to a stop after it wrecked a commercial building.

MUD IS MUD.

The owner's insurance policy excluded damage to the building under a "'Water Exclusion Endorsement,' which excludes from coverage any damage caused by the following water-based sources:

1. Flood, surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind (including storm surge);
2. Mudslide or mudflow; ..."

Paros Prop's, LLC v. Colorado Cas. Ins. Co., ___ F.3d ___, No. 15-1369, 2016 WL 4502286, at *7 (10th Cir. August 29, 2016) (emphasis added).

In support of the claim to insurance coverage here, the owner-policyholder argued that the water which drove the mud in this case was "'diverted by man-made parking lots, roadways, drainpipes, and culverts'."  The Tenth Circuit panel in this case was unmoved, holding:

The Owner does not, and could not, make any argument that the avalanche was not a mudslide. And under the Policy it makes no difference whether any water causing the avalanche had been diverted by manmade features; mudslide damage is excluded whether the mudslide “is caused by an act of nature or is otherwise caused.”

Paros Prop's, LLC v. Colorado Cas. Ins. Co., ___ F.3d ___, No. 15-1369, 2016 WL 4502286, at *8 (10th Cir. August 29, 2016).

DEMOLITION BY MUDSLIDE IS NOT AN EXPLOSION.

Next the owner in this case argued that the building was damaged by an explosion.  The policy at issue exempted damage caused by an explosion caused by water, from this exclusion:

But if any of the above, in Paragraphs 1. through 5., results in fire, explosion or sprinkler leakage, we will pay for the loss or damage caused by that fire, explosion or sprinkler leakage (if sprinkler leakage is a Covered Cause of Loss).

Id. In short, the Policy does not cover damage caused by water, but does cover damage caused by an explosion caused by water.

Paros Prop's, LLC v. Colorado Cas. Ins. Co., ___ F.3d ___, No. 15-1369, 2016 WL 4502286, at *7 (10th Cir. August 29, 2016).  Unfortunately for the owner's chances of insurance coverage, the appellate panel disagreed with the owner and agreed with the District Judge that there was no exempted explosion on the undisputed material facts of this case:  "We disagree that demolition by an external cascade of water, mud, and debris is an explosion under the Policy."   Paros Prop's, LLC v. Colorado Cas. Ins. Co., ___ F.3d ___, No. 15-1369, 2016 WL 4502286, at *8 (10th Cir. August 29, 2016) (emphasis by the Court). 

For these reasons, the Tenth Circuit panel affirmed a summary judgment entered in favor of the insurance carrier in this case.  In order to reach this result, however, the panel had to get beyond the carrier's untimely removal of the case from Colorado State Court in the first place.  The District Court reached the correct result on the merits in the eyes of the appellate judges, and they concluded that the District Court had jurisdiction at the time the lower court ruled, so they affirmed.

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

WEAR AND TEAR MEANS any WEAR AND TEAR, NOT "ABNORMAL."

An exclusion in a homeowner's insurance policy for damage caused by "wear and tear" does not have the word, "abnormal," in it.  The exclusion is not limited to only "abnormal" wear and tear.  It applies to all wear and tear, including the wear and tear that contributed to the homeowners' roof damage in the case at bar.  The Tenth Circuit Court of Appeals therefore affirmed a Colorado Federal District Judge's Summary Judgment for the homeowner's carrier in Gallegos v. Safeco Ins. Co. of Am., 646 F. App'x 689, 694 (10th Cir. 2016) (case involved Colorado substantive law).

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

THE "EARTH" IN AN EXCLUSION: NO COVERAGE, NO BAD FAITH CLAIM.

Image courtesy of NASA.

The "earth" in a typical earth movement exclusion means "all natural materials that comprise the surface of the earth, including rocks and soil," said the Montana Supreme Court.  That being the situation, the Court held that the policy at bar thus excluded coverage for damage caused by a large rock falling down a hillside into the insured’s cabin.  Parker v. Safeco Ins. Co. of Am., 384 Mont. 125, 376 P.3d 114 ¶ 22 at 119 (2016).

There being no coverage, there could be no claim for bad faith in this case, either.  Specifically, in this case there could be no claim under the Montana Unfair Trade Practices Act as a result of the holding that there was no insurance coverage under the earth movement exclusion here.  Parker v. Safeco Ins. Co. of Am., 384 Mont. 125, 376 P.3d 114, ¶ 33 at 121 (2016).  This is a pretty universal holding:  Where there is no coverage, there can be no claim for insurer bad faith.

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

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GOT A LENDER FORCE-PLACED INSURANCE CASE?

JUDGE RAKOFF DEFINES SUPERSTORM SANDY EXCLUDED "FLOOD" UNDER AMTRAK'S POLICIES.

Judge Jed Rakoff applied a policy's limiting language of "flood" without objection in National R.R. Passenger Corp. (a/k/a "Amtrak") v. Arch Specialty Ins. Co., 124 F. Supp. 3d 264, 267 n.3 (S.D.N.Y. 2016) (case involved New York substantive law), appeal docketed, No. 15-2358 (2d Cir. July 24, 2015):

Defendant Westport Insurance Co. issued a policy that defines flood as “surface water, flood waters, waves, tide or tidal waters, sea surge, tsunami, the release of water, the rising, overflowing or breaking of defenses of natural or manmade bodies of water or wind driven water, regardless of any other cause or [e]vent contributing concurrently or in any other sequence of loss.” Insurers' 3/9/2015 56.1 Statement ¶ 9. Amtrak does not dispute that this definition covers at least some of the damages it sustained during Superstorm Sandy.

Judge Rakoff did not say so, but the above-quoted "flood" definition appears to come from Westport's "flood" exclusion which plainly comes equipped with an Anti-Concurrent Case Exclusion.  As Judge Rakoff pointed out in his opinion, there were two definitions of "flood" under Amtrak's many insurance policies at issue in that case.

"The Court finds that both definitions of the term 'flood' unambiguously encompass inundation of normally dry land that is caused by storm surge."    National R.R. Passenger Corp. (a/k/a "Amtrak") v. Arch Specialty Ins. Co., 124 F. Supp. 3d 264, 269 (S.D.N.Y. 2016), appeal docketed, No. 15-2358 (2d Cir. July 24, 2015).

The District Court accordingly denied Amtrak's motions for summary judgment, and granted in part and denied in part the carriers' motions for summary judgment.  The Second Circuit's docket shows that it has set oral argument in the appeal in this case for August 19, 2016.

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

THE PENDING OR PRIOR LITIGATION EXCLUSION.

In United States Liab. Ins. Co. v. Kelley Ventures, LLC, 137 F. Supp. 3d 1312 (S.D. Fla. 2015), a federal court told me a lot about an exclusion with which I just was not familiar before I read this case, which includes the "pending or prior litigation exclusion."

The court's education on this little-known exclusion is short and to the point:

            Pending or Prior Litigation Exclusion

As a matter of law, USLI is relieved of its duty to defend under the Pending or Prior Litigation Exclusion. This Policy provision excludes from coverage, in relevant part, “[a]ny pending or prior ... claim [or] demand ... of which an Insured had written notice before the inception date of this Policy.” DE 1–5. Unlike the Policy application itself, the Pending or Prior Litigation Exclusion is not qualified by the Insured's “knowledge and belief.” Rather, it simply excludes from coverage a claim or demand in writing that the insured received before the Policy coverage began.

United States Liab. Ins. Co. v. Kelley Ventures, LLC, 137 F. Supp. 3d 1312, 1318 (S.D. Fla. 2015).

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of "Insurance Claims and Issues" (forthcoming Thomson Reuters 2016).  All rights reserved.

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NOT EXCLUSIONS EXACTLY.  "INELIGIBLE RISKS" ON THE RISE.

NOT EXCLUSIONS EXACTLY. "INELIGIBLE RISKS" ON THE RISE.

When an insurance carrier declines to issue an insurance policy because the risks are too rich for its blood, the insurance company is not declining coverage under a policy because of an exclusion.  Instead, it is declining to issue a policy in the first place because of "ineligible risks."  Ineligible risks are on the rise because rather than denying already-issued coverage on the basis of exclusion, carriers are declining to cover certain risks at all.  See Ron Hurtibise, "Insurers Widening Lists of Things They Won't Cover" (Sun-Sentinel Online [Ft. Lauderdale, Florida], posted April 24, 2016).

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with Supplements).  You are invited to visit the author's website here.  All rights reserved.

 

CARRYING WATER TO A DISTANT HOME. "WATER" EXCLUSION IN MISSISSIPPI.

A casino in Mississippi owned a barge. The barge cut loose during Hurricane Katrina and crashed into a home, destroying it. The homeowner made an insurance claim under her all-risk homeowner's policy.

When the homeowner's case reached the Mississippi Supreme Court, the Court held that the homeowner's policy exclusion for damage caused by "water" included the damage caused by the casino's barge. Without water the barge could not have floated all the way to the home and so without water there could have been no damage and so without water there was no claim, which is how the Court said as it looked at the situation with dry eyes.

The case is Porter v. Grand Casino of Mississippi, Inc., 181 So. 3d 980 (Miss. 2016).

Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of "Insurance Claims and Issues" (forthcoming Thomson Reuters 2016). All rights reserved.

"INSURANCE CLAIMS AND ISSUES," THE BOOK: COMING IN 2016!

 

 Storm Clouds lined up over the Gulf of Mexico.  Photograph and text copyright 2015-2016 by Dennis J. Wall.

I am hard at work on an anthology of the best blogs from "Insurance Claims and Issues."  The anthology I submit to my publisher will keep all hyperlinks intact, including links to the Insurance Claims and Bad Faith Law blog.  When articles posted on Insurance Claims and Bad Faith Law blog are important to the anthology of "Insurance Claims and Issues," I am including them in the anthology too.

As each previously posted article is updated, the posted articles will remain just as available here as they always have been.  New articles will benefit from me being better informed and better equipped to discuss future insurance claims and issues.

I have contracted with Thomson Reuters (West Publishing Company to those fortunate to have the experience) to publish "Insurance Claims and Issues," the Book, in the late Spring or early Summer of 2016.  Best wishes to everyone for a joyous and Happy New Year!

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of "Insurance Claims and Issues" (forthcoming Thomson Reuters 2016).  All rights reserved.

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CYBERINSURANCE:  MANY DATA-LESS RISKS TO UNDERWRITE & PREMIUMS TO CHARGE.

THE ALI RESTATEMENT PROJECT OF THE LAW OF LIABILITY INSURANCE.

Majority Holds No Negligence Cause of Action by Insured Against I.A.

LEAKING SINK IN UTAH IS EXCLUDED, BUT NOT "MORAL HAZARD."

Streaks on Mars possibly caused by water.  Image by NASA.

In a recent decision, coverage was excluded for damage caused to a cabin in Utah by a sink that leaked for a long time.  The homeowner's policy at issue contained a standard exclusion for damage caused by "seepage or leakage over a period of weeks, months or years … from within, or around any plumbing fixtures."  There was an exemption or exception to the exclusion for "sudden and accidental" escape of water.  The U.S. Magistrate Judge considering the situation held on competing motions for summary judgment that the exclusion applied, that the exception to the exclusion did not apply, that since there was no claim to coverage available there could be no bad faith claim either, and that the insurance company's motion for summary judgment should accordingly be granted.  Wheeler v. Allstate Ins. Co., No. 2:12-cv-193-BCW, 2015 WL 5714392 (D. Utah. September 29, 2015)(Wells, USMJ).

Allstate's denominated "expert" wrote in her report that the policy exclusion of damage which results from seepage or leakage of water "'is considered a morale [sic] hazard" and so is not covered. 

Balderdash.

Far from inventing an imagined 'drafting history' of the exclusion, the Court applied the plain language of the policy and controlling case law from Utah to reach its conclusion that the exclusion applied to the undisputed material facts in the record.  The Court in Utah also cited and consulted case law decided on similar facts in Michigan and Oregon.

However, the Court never returned to the so-called expert "morale [sic] hazard" testimony of Allstate's expert. 

Anyone that thinks this decision was based on "moral hazard," like the kind of moral hazard perpetrated by investment banks and hedge funds that helped to cause the Great Recession, is not experienced either with insurance coverage or with insurance policies.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, Co-Author of "Catastrophe Claims / Insurance Coverage for Natural and Man-Made Disasters" (Thomson Reuters May, 2015).  All Rights Reserved.

FLORIDA COURT CONFUSES ALL RISKS POLICY WITH NAMED PERIL POLICY …

Cites "efficient proximate cause doctrine."

In a recent and as-yet officially unpublished opinion, a panel of Florida's Second District Court of Appeal apparently reached a correct result for the wrong reasons.  The panel said that "[b]ecause the [policyholders] failed to establish below that their loss was covered by a peril caused by their [all-risk] insurance policy, we affirm."  Peek v. American Integrity Insurance Co. of Florida, No. 2D14-780, 2015 WL 5616294, *1 (Fla. 2d DCA September 25, 2015)(stated not released for publication in permanent law reports and subject to revision or withdrawal).  Actually, the record quoted by the panel establishes both that the policyholders in this case met their all-risks burden of proof and that the insurance carrier also met its burden to prove that an exclusion applied to bar coverage for claimed loss resulting from Chinese Drywall.

"At trial, the [policyholders] established through their own testimony and that of a representative of [the insurance carrier] that they suffered a loss to their property within the insurance policy period."  Peek v. American Integrity Insurance Co. of Florida, 2D14-780, 2015 WL 5616294, *1 (Fla. 2d DCA September 25, 2015).  A policyholder claiming coverage under an all-risks policy has the burden of proof on the initial issues of coverage that the policyholder's property suffered a loss during the policy period, as the panel recognized.  Peek v. American Integrity Insurance Co. of Florida, 2D14-780, 2015 WL 5616294, *3 (Fla. 2d DCA September 25, 2015).  Therefore, as the panel opinion confirms, in this case the record establishes that the policyholders met their initial burden of proving coverage.  Simply put, an all-risk insurance policy basically covers all risks unless specifically excluded.

In this case the record also clearly establishes that the insurance carrier also met its own burden, which was to prove the applicability of one or more exclusions.  The carrier denied coverage on the bases of "policy exclusions for latent defects, corrosion, pollutants, and faulty, inadequate, or defective construction materials and contended that the Chinese drywall fit the definitions of all of these exclusions."  It introduced the testimony of an expert botanist that the Chinese Drywall used in the construction of the policyholders' home, and damages resulting from it for which the policyholders claimed coverage here, "that it was a faulty, inadequate, or defective construction material."  He further testified that the Chinese Drywall emitted gases which caused the corrosion damage complained of by the policyholders here, and "that the Chinese drywall itself was a pollutant due to its emission of noxious and destructive gases."  The policyholders did not put on any evidence to rebut this testimony.  Peek v. American Integrity Insurance Co. of Florida, 2D14-780, 2015 WL 5616294, *1-*2 (Fla. 2d DCA September 25, 2015).

On this record, the trial court granted the carrier's motion for directed verdict and entered judgment that the carrier did not breach the all-risks insurance contract.  The Second District panel affirmed.  Despite some regrettably loose language, the panel clearly affirmed on the basis that the carrier had proven that the exclusions on which it relied to deny coverage, applied to the policyholders' claimed loss in this particular case as a matter of applying the all-risks contract language to the record evidence -- and regardless of any confusion about the "efficient proximate cause doctrine" here.  In reaching its contract conclusion, the Florida appellate court panel joined the majority of U.S. Courts which have addressed the question.

Please Read The Disclaimer.  ©2015 by Dennis J. Wall, co-author of Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters including § 7:12, Faulty Workmanship/Materials (Thomson Reuters West May 2015).  All rights reserved.  

Insurance Issues For the Ride-Selling, Room-Renting Economy.

There are an increasing number of reports raising questions about the extent of sellers' liability in the new ride-selling, room-renting economy.

Share these concerns?  In this climate, insurance issues are well worth a close examination given so many questions of liability in so many situations. A large top-tier law school is considering a symposium on the insurance issues shared by the potential liabilities of our new ride-selling, room-renting economy.  Let's leave it up to them to make their own announcement of who, when, and where.

Please Read The Disclaimer.  Copyright 2015 by Dennis J. Wall.  All rights reserved.

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What's in a Claim? A Defense, Possibly.

"FORTUITY?" "DOCTRINE"? HOW FORTUITOUS! "DOCTRINES FOR EVERY OCCASION" COMING SOON.

    Every so often, you will read an assertion that a claim is barred by something called "the fortuity doctrine".  The idea that there is something called "fortuity" that acts like an exclusion except that the burden of proof is on the policyholder rather than on the carrier, is baseless.  "Fortuity" is not a "doctrine".  It is inherent in the concept of insurance, and there are many things inherent in the concept of insurance which are not written in insurance policies.  Policyholders do not have to put on proof about those things, either.

    The idea of "fortuitousness" or "fortuity" first appeared in the case law in dicta in a North Carolina Supreme Court opinion in 1973, so far as it has been traced to date.  The North Carolina Supreme Court cited an A.L.R. article and an Am. Jur. article as its authorities that the claimed "loss" or the "event" in question (two different things, of course) must be "fortuitous".  Avis v. Hartord Fire Ins. Co., 283 N.C. 142, 148, 195 S.E.2d 545, 548 (1973).

    In 1984, one Federal Judge in one case in Connecticut imposed "fortuitousness" or "fortuity" as a requirement that the policyholder put on proof and show that the claimed loss was "fortuitous".  In pertinent part, the Connecticut Federal Judge's legal authorities were the 1973 North Carolina Supreme Court's dicta, and again an A.L.R.  See Standard Structural Steel Co. v. Bethlehem Steel Corp., 597 F. Supp. 164, 191 (D. Conn. 1984).

    Substituting  a maxim or a phrase for thought is not a good substitute for lawyers and judges, to rephrase a saying of Justice Oliver Wendell Holmes.  Or, to put it another way, off-hand judicial comments sometimes make bad law.

Please Read The Disclaimer.  Copyright 2014 by Dennis J. Wall.  All rights reserved.  No claim to Original U.S. Government Works.

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FLIGHT 17: BUT IS IT AN EXCLUDED WAR?

   The standard war exclusion in Homeowner's Policies excludes coverage ...

 

to bodily injury or property damage caused by war, including any undeclared war, civil war, insurrection, rebellion, warlike act by a military force or military personnel, destruction or seizure or use for a military purpose, and including any consequence of any of these.

 

[Boldface in original; italics added for emphasis.]  If this exclusion or one substantially like it was applied to the wreckage of Flight 17, including the deaths, injuries and damages to the passengers and crew and all their families, there may be a question whether it would exclude coverage.

   It clearly matters who "done it" in the case of the destruction of Flight 17.

   What happened and is still happening in Eastern Ukraine qualifies as an undeclared war, civil war, insurrection, rebellion, warlike act, destruction or seizure, all words used in this exclusion.

   One coverage question that would arise with respect to this exclusion is whether who done it was a military force, military personnel, or acting for a military purpose.

   It seems hard to argue that killing a civilian airliner and all of its passengers and crew was an act of war.

 

See also Keith Bradsher, "Air Insurers Worry After Malaysia Airlines' Latest Crash," p. B1, col. 2 (New York Times Nat'l ed., "Business Day" Section, Tuesday, July 22, 2014).

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

Please Read The Disclaimer.

 

PRIVATIZING PRISONS FOR PROFIT? REPORTS ....

Who has the Coverage?

 

          Reports of despicable conditions in for-profit prisons contain opinions.  These reports also contain evidence of facts.  Photographs and eyewitnesses have recorded these conditions in a private prison in Mississippi recently:

• "Dirt, feces and, occasionally, blood are caked on the walls of cells."
• Prisoners with treatable medical conditions, like glaucoma, do  not receive medical treatment.  When these individuals are released, their condition has deteriorated to the point where the condition is untreatable.
• Guards, who are paid a small hourly wage, spend little time in the solitary-confinement block.  Prisoners in solitary confinement sometimes set fires to their bedding in order to get the guards' attention and, even then, the guards sometimes do not respond.

These eyewitness accounts and photographic evidence and more are reported for example by Erica Goode, "Seeing Squalor and Unconcern in Southern Jail," p. 1, col. 1 (New York Times Nat'l ed., Sunday, June 8, 2014).  The Mississippi prison in question is run by Management and Training Corporation from Utah.

           Management and Training Corporation made one comment for publication.  They blamed these problems on the corporation they replaced in 2012, one GEO Group.  Otherwise, they declined to comment, saying they would not comment because they have been sued.  This is unusual.  Even aside from the fact that due diligence probably revealed these conditions before Management and Training Corporation took over the running of this Mississippi prison, this is 2014.  It has now been two years since CEO Group was in charge, and this is still unusual.  Many large corporations stage large press campaigns to "push back" against lawsuits.

           Management and Training Corporation is entitled to a defense.  Questions abound about how they will defend themselves.  Which of their carriers will fund their defense?  What sort of insurance coverage will provide them indemnity if their defense fails?  Who will cover these people against such reports?  And what sort of exclusions could apply, intentional damages exclusions for example?  So much depends on what Management and Training Corporation has to say about its prison-keeping.  When they start talking we will know more.  Until then, questions continue to pile up.

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

Please Read The Disclaimer.

Related articles

Allocation, Indemnity, Defense Insurance Coverage Issues: Part Two.

Seeing Squalor and Unconcern in Southern Jail