Disclosure of Surveillance - 2

Aherne v. Chang, 2011 ONSC 3846

This is an appeal from Master Short’s recent decision on the issue of ‘when is privilege waived?’.

The defendants argued that if they provided surveillance material to an IME doctor, the privilege was not waived until the doctor released the report. The plaintiff argued that the privilege was waived as soon as the surveillance was given to the IME doctor. The defendant seems to want to avoid having the plaintiff’s lawyer review the surveillance before the plaintiff goes to the IME to make sure that the plaintiff doesn’t embellish during the IME.

It seems that the defendant in this case could have avoided this entire problem if they simply held onto the surveillance materials and let the IME doctor assess the plaintiff and prepare the report. Then, after the report is released, the defendant can provide the IME doctor with the surveillance, and ask the IME doctor if the surveillance changes his/her opinion.

Thanks to M. Edward Key for bringing this appeal to our attention and for the comments.

Is it a good idea to mix insurance with investment?

As the debate between choosing pure protection and endowment plans continue, we look at whether it makes sense to select an insurance plan with the objective of savings.

The insurance sector in India is growing at a fast clip. However, policyholders often get confused between the concepts of ‘insurance’ and ‘investment’ and cannot differentiate between pure protection or endowment life insurance. Some insights into the different facets of both these instruments should be helpful.

Term insurance or pure protection plans: A term insurance policy offers protection for a pre-determined premium. Generally, the premium is low and quite affordable, but does not have a built-in savings component. It provides coverage for a specific time period. However, the most important benefit of a term policy is that it offers a guaranteed death benefit at a considerable low cost.

Term plans are beneficial when protection needs are high at certain phases in life. For instance, when your family is growing and may be you do not have sufficient funds to pay a large premium.

However, term insurance policy has no cash value, or savings component, and the premiums tend to increase through the years.

The policy provides benefit only upon the death of the insured. In the absence of an eventuality, the premium is not refunded.

Endowment plans: Endowment life insurance plans offer both protection and savings opportunity. Generally, this is chosen to avail of fixed and market-linked variable returns. Hence, the important benefit of a endowment life insurance policy is the cash value benefit. The Indian consumer prefers bundled products to pure protection plans due to a preference for returns from all financial instruments. As per ‘Life 2010’, a study

done by AC Nielsen, 67 per cent respondents bought life insurance to get good returns from it.

Most endowment policies are also eligible for dividends, which are not guaranteed, if and when they are declared by the insurance company. Many companies offer the option to apply current and accumulated dividend values towards payment of all or part of the premiums. If dividend values are sufficient, out-of-pocket premium payments may end or be reduced after several years, yet coverage can continue for life.

So while premiums must be paid under both the term and endowment plans, long-term out-of-pocket cost of permanent life insurance may be lower compared to the total cost for a term policy.

Additionally endowment policies can also eliminate the problem of future insurability.

Cash value life insurance does not expire after a certain period of time. For example, whole life policies which allow for increasing protection through paid up additions thus matching the lifestyle needs of the policyholder.

Also, some policies contain guaranteed purchase options, which allow you to buy additional coverage at specified times and thus it builds cash value.

This amount, part of which is guaranteed under many policies, can be used in the future for any purpose you wish. If you like, you can borrow cash value for a down payment on a home, to help pay for your children’s education or to provide income for your retirement.

Most often, life insurance policy inculcates systematic and disciplined savings behaviour among the consumers to achieve their long term goals unlike any other financial instrument.

To conclude, be it a term or endowment insurance plan, choose a policy according to your objective and which accommodates the premiums and benefits to suit your budget.

Appeals Court holds that advance payments from insurer to insured must be returned if there is no coverage

In my last post I discussed French King Realty Inc. v. Interstate Fire & Cas. Co., 79 Mass. App. Ct. 653 (2011), in which the Massachusetts Appeals Court held that coverage for a fire loss was excluded because the insured knew that its fire suppression system was suspended or impaired and because the system was not maintained in complete working order.

Interstate, the insurer, had made an advance payment to the insured, French King. French King argued that it was not required to return the advance payment because Interstate did not reserve it rights and defenses in connection with the payment.

The court disagreed. It followed other jurisdictions that have reasoned that an insurer is entitled to reimbursement for an erroneous payment when coverage does not exist under the policy and the insured was unjustly enriched and did not change position to its detriment in reliance on the payment.

Appeals Court holds that word maintain in coverage means keep in place, not keep in working order

French King Restaurant, insured by Interstate, had in place had a dry chemical fire suppression system.

The insurance policy contained a "protective safeguards endorsement," or PSE, which required French King "to maintain" the fire suppression system. The policy excluded coverage for loss or damage caused by by or resulting from fire if French King "knew of any suspension or impairment" in the system or failed to maintain the system "in complete working order."

In 2002 Kidde, the manufacturer of the fire suppression system, issued a bulletin advising that it would no longer support dry chemical systems. Kidde had previously recommended that dry chemical systems be upgraded to wet chemical systems. As of 2002, the dry system could no longer be inspected, serviced, recharged, or repaired.

In 2003, the company French King hired to inspect its fire protection system warned it that the system was not in accordance with current requirements.

In 2004 the Executive Office for Public Safety announced that dry systems needed to be upgraded to wet systems.

After the subject insurance policy was issued in 2005, the private fire inspector again informed French King that to be in compliance with current standards a wet fire suppression system was required. That same month, the city's building inspector informed French King that he could not issue a certificate of inspection until the system had been fixed.

In October, 2005 there was a fire at the restaurant. The fire suppression system failed to function. Interstate declined to pay the loss on the grounds that French King had failed to "maintain" the fire suppression system and that exclusions relating to the fire suppression system applied.

In French King Realty Inc. v. Interstate Fire & Cas. Co., 79 Mass. App. Ct. 653 (2011), the Massachusetts Appeals Court held that the word "maintain" was ambiguous and must be interpreted in a manner favorable to French King as meaning merely having a fire suppression system in place.

The court ruled that coverage was excluded by the exclusion for loss or damage if the insured knew of any suspension or impairment in the fire protection system. It held that the record showed clearly that French King knew that the fire suppression system was impaired. It ruled that coverage was also excluded because French King failed to maintain the system "in complete working order."

Your homeowners policy probably does NOT cover flooding

Many residents of Minot, North Dakota believed they were safe from flooding due to a revised flood map and either canceled their flood insurance or failed to purchase a policy. Today, only one in ten residents have flood insurance.

A New York Times article today chronicles how the number of people in Minot with flood insurance was cut in half in just a year.

Most people know this, but your standard homeowners policy doesn't cover flooding. If you want coverage, you must buy a policy from the National Flood Insurance Program.

Get a flood map or learn more about flood insurance.

Unidentified Motorist - Corroborating Evidence

In our post of July 27, 2010, we blogged about the case of Pepe v. State Farm Mutual Automobile Insurance Co., [2010] O.J. No. 2138 (S.C.J.) and whether a passenger in an insured’s motor vehicle was an “independent witness” who can corroborate the insured’s evidence concerning the involvement of an unidentified motorist for the purposes of the OPCF 44R Family Protection Endorsement. The motions judge held that the passenger could corroborate the insured’s claim for the purpose of OPCF 44R coverage, despite the fact that she was the insured's girlfriend and was also suing State Farm for damages caused by an unidentified driver.

The Court of Appeal has upheld the motions judge's decision.

Doherty J.A. reviewed the history of requiring corroboration and cited Chief Justice Dickson, in Vetrovec v. The Queen, [1982] 1 S.C.R. 811 at 826, for identifying the rationale for a corroboration requirement:

"The reason for requiring corroboration is that we believe the witness has good reason to lie. We therefore want some other piece of evidence which tends to convince us that he is telling the truth."

Doherty J.A. held that State Farm’s assertion that it is the witness who must be independent, in the sense of neutral to the outcome, was wrong. The independence requirement in the context of corroboration has always referred to the independence of the evidence and not to the neutrality of the witness. The witness’s neutrality or lack thereof is relevant to the ultimate credibility of the witness’s evidence, which is for the trial judge to assess.

Job opening: Chief market conduct examiner

Due to a retirement, we have a job opening for a chief market conduct examiner in our Seattle office.

The person will supervise the market conduct team of examiners, who work directly with insurance companies to determine compliance with consumer protection laws and regulations.

For more details, salary info, and more about the agency, travel requirements, etc., please see the full job listing.

If you want to stay up to date on any future openings at the Insurance Commissioner's Office, here's our job opportunities page.

Insurance companies and agents fined more than $750,000 this year in WA

Washington State Insurance Commissioner Mike Kreidler has fined insurance companies, agents and brokers more than $750,000 this year. Violations included charging unapproved rates and submitting false documents.
“These fines are the `teeth’ that help us protect insurance consumers,” said Kreidler. “It’s our job to see that the insurance industry’s playing by the rules.”

From January through mid-June, the insurance commissioner’s office has imposed $787,815 in fines. The largest, by far, was a $534,000 fine issued in January. More recent fines are listed below.

The money does not go to the agency. It is deposited in the state’s general fund to pay for other state services.

Any Washingtonian with a complaint against an insurer, agent or broker can contact the office at 1-800-562-6900 or file a complaint online at http://www.insurance.wa.gov/.

For a list of companies fined recently, read the press release here.

My Military

We have two sons in the service - 1 Army, 1 Navy.



Got a call today from Army Son that he is back on US soil from 11 months in the desert.  The sun is brighter today.  The air is crisper. My wife is smiling.



Now, back to our regular programing...

Life Line for New York SIGs Falling Short While National Attention on Funds Sharpens

It appears my recent story “A New Life Line for Group Workers’ Comp Funds in New York” was overly optimistic and the obituary for SIGs in that state may indeed be published in the not too distant future.

According to knowledgeable sources, preliminary discussions about finding a reasonable compromise to allow well run New York SIGs to continue to operate have not panned out. At issue has been the posting of security to satisfy regulator concerns about solvency going forward.

The state’s workers’ compensation board pushed back against formulas proposed by industry that would allow funds sufficient access to cash to pay claims and other operating expenses. As a result, a new law has been passed requiring funds to post security equal to 160% of expected claims. With such a high bar, it is likely that the baby will be thrown out with the bath water.

There is some uncertainty, however, as the regulations to implement the new law has yet to be written and industry continues to press its case to the Governor and the Legislature that this law will have significant negative ramifications for the state’s workers’ compensation system. So stay tuned as there may additional twists to this story in months ahead.

But while New York has been the epicenter of actual legislative/regulatory activity affecting SIGs, it’s worth noting that the New York experience has spurred discussions in national forums.

Just last month at the National Council of Self-Insurers (NCSI) Annual Meeting, representatives from the California Self-Insurers Security Fund presented a session on SIGs. Although some good objective data was provided, there was an obvious bias evidenced by the fact that they were quick to point out the isolated problems within the SIG industry without acknowledging that the overwhelming number of SIGs are well run and provide smaller employers an important risk financing option.

It should not be surprising that the presentation concluded with comments suggesting that national standards for SIG regulation should be considered.

This discussion promises to pick up again next month Southeastern Association of Workers’ Compensation Administrators (SAWCA) Annual Meeting as one of the featured sessions will discuss “warning signs for a SIG default.” This meeting typically attracts a large number of regulators so the meeting room is likely to be filled with those who may be inclined to make it more difficult for SIGs to operate.

While a serious regulatory push with national reach may not be right around the corner, those who have an interest in maintaining sensible SIG regulation should nonetheless pay attention to the discussions that are going on because developments can accelerate with little warning.

Not only do you have regulators encouraging each other to conform to group think about how to deal with SIGs, but the traditional insurance industry never misses an opportunity to stir the pot by trying to make funds look bad. The confluence of these dynamics should keep SIG industry stakeholders on their toes.

So we’ll watch to see how things continue to play out in New York while keeping an eye on other states who may not be able to resist on messing with a good thing.

WATCH What U Post!!

Watch What You Post and Send

When I have a legal claim against someone I will often check to see if they are on Facebook or another social media site. It is amazing how often they will explain how the accident happened, and often admit that they had been drinking, or some other condemning information. While I only do injury law, I have read several cases where a criminal is arrested based on evidence found as a result of his own postings on Facebook! It seems technology has outpaced common sense in its use. But it is not just true in cases involving the legal system.

Public officials are proving that they too can be foolish with social networking tools. The latest public figure to fall from so-called sending lewd photos and suggestive statements via cell phone text messaging is Congressman Anthony Wiener. A recently married man, he was sending these to several other women. NFL star quarterback Brett Favre, a married Mississippi native, was alleged to have done much the same thing. Representative Christopher Lee, of New York texted a photo of him without his shirt on to a woman, not his wife, on Craigslist, and immediately resigned in disgrace.

So why do these people, who ought to know better, even do it?

"If you're looking for some kind of deep explanation, I simply don't have one," Weiner said at a press conference admitting the actions. "This was just me doing a dumb thing, doing it repeatedly and then lying about it."

The new term might be “Internet Infidelity.” Most experts say it is the instant gratification of this behavior that causes users to crave more.

This kind of behavior cannot be too far from more explicit behavior, however. As Christians, we understand how sin progresses. In the above texting cases, there is no allegation of actual physical intimacy. Compare this with recent allegations that Arnold Schwarzenegger, the current governor of the State of California, famous bodybuilder, actor and businessman, had a child with another woman while married to Maria Shriver.

If that sounds familiar, it is much like former presidential candidate and Senator John Edwards’ folly of having a child with another woman while his wife was fighting cancer and he was a viable candidate for the presidency. He added the audacious sin of allegedly forcing a staffer to lie and claim paternity for the baby, even though that man, Andrew Young, was also married.

Where does this all start? How can supposedly great--and certainly smart--men like this fall so far?

As with all other important questions in life, Scripture contains the answer:

But every man is tempted, when he is drawn away of his own lust, and enticed. Then when lust hath conceived, it bringeth forth sin: and sin, when it is finished, bringeth forth death. James 1:14,15.

You see in these cases, the “death” of marriages, trust and sometime careers. So how do the rest of us prevent ourselves from being “drawn away?” Here are some warning signs and deterrents that may be helpful on your online life:

– 1. Never tell a friend of the opposite sex something you would not tell your spouse. This can easily lead to a so-called “emotional affair.” Harmless at first, these begin as just friendship, but pick up speed as you eventually only feel “understood” by the person you are not married to.

– 2. Always have transparency in your online dealings. If you are on Facebook or Twitter, make sure your spouse can see all you send and receive.

3. 3. Always speak highly of your spouse in the presence of others of the opposite gender. If you express disappointment with him or her, the person you are talking to may see it as an opportunity.

4 .. Never post photos you don’t want your spouse to see, and that you don’t want to see again and again. You may see them in lawsuit or even a prosecution.

Remember, Jesus taught us in Matthew that our thought life is the birthplace of our actions. Centuries earlier, The ancient saying in Proverbs 23:7 summarized succinctly:

“For as a man thinks within himself, so he is.”

Mr. Peel is a local attorney who practices in the areas of Accident, Injuries, Malpractice and Nursing Home Neglect. Mr. Peel often addresses churches and clubs and can be contacted through www.PeelLawFirm.com, wherein other articles can also be found.

Dishonest Employees and Crime Insurance

I have posted about this in the past.

Most crime policies exclude acts by an employee who is known to have committed a past dishonest act. That exclusion removes coverage when a manager knows that an employee has stolen a pencil, and then six years later is found to have stolen $200,000.

Goofy!

Here is the wording from a Travelers' crime policy I am reviewing. Much better!

This Crime Policy terminates as to any Employee:

a. as soon as the Insured's partner, any of the Insured's Management Staff Members, or any Employee with managerial or supervisory responsibility not in collusion with the Employee becomes aware of any dishonest or fraudulent employment related act involving an amount in excess of $10,000; or

b. 60 days after the Insured's partner, any of the Insured's Management Staff Members or any Employee with managerial or supervisory responsibility not in collusion with the Employee becomes aware of any dishonest or fraudulent non-employment related act; either of which acts were committed by such Employee in the Insured's service, during the term of employment by the Insured or prior to employment by the Insured, provided such dishonest or fraudulent non-employment related act involved Money, Securities, or Other Property in an amount in excess of $10,000.

Crime Insurance - No Coverage For Owners

Here is an exclusion I see quite often in employee dishonesty and crime policies:

"This Crime Policy will not apply to loss resulting directly or indirectly from any fraudulent, dishonest, or criminal act committed by the Insured, the Insured's natural person partners, any LLC Member or Officer-Shareholder, whether acting alone or in collusion with others."

This means no coverage for theft by an owner.

Imagine there are five owners, and one steals. Most insureds would expect there to be coverage.

Nope!

Should a Christian Ever Sue??

Christians and Lawsuits--

Should a Christian Sue?

As a Christian, and a lawyer, I have been asked about this many times. As with any question, we should consult the Scriptures first.

The Biblical text that is most often cited is Paul’s letter in 1 Corinthians 6:1-8:

If any of you has a dispute with another, dare he take it before the ungodly for judgment instead of before the saints? Do you not know that the saints will judge the world? And if you are to judge the world, are you not competent to judge trivial cases? Do you not know that we will judge angels? How much more the things of this life! Therefore, if you have disputes about such matters, appoint as judges even men of little account in the church! I say this to shame you. Is it possible that there is nobody among you wise enough to judge a dispute between believers? But instead, one brother goes to law against another—and this in front of unbelievers! The very fact that you have lawsuits among you means you have been completely defeated already. Why not rather be wronged? Why not rather be cheated? Instead, you yourselves cheat and do wrong, and you do this to your brothers. (NIV)

Let’s look at the passage carefully. The kind of cases involved in the passage are described in the text:

A “dispute,” that is “trivial” in nature, “between believers,” involving being “cheated” and “wronged” and this dispute could well be judged by a “man of little account in the church.”

The type of actual dispute is not revealed, but from the description above it is clear that it involves a matter that is between two believers, where one feels cheated or wronged and appears--to others at least--as “trivial” in nature. The Bible expressly states that legal action in that situation is shameful.

An example of that might include a Christian church member suing another member for slander for unknowingly sharing partially false information in a prayer request about her, and hurting her reputation. Or, it could involve a dispute between two members of a church suing one another over the giving of a poor reference for a job. (Yes, both of these are unfortunately based on real cases).

There is little doubt that these bring the reproach of men upon the church, and are horrible examples. However, Paul himself resorted to law twice when he was wrongfully arrested as a Roman citizen. He also used the threat of law in Acts 16:37. When one examines the Biblical admonition carefully, there is a clear distinction depending upon the type or nature of the dispute.

For instance, cases that I handle generally involve serious injuries or death. Any case involving grievous injury or death, by definition, is not at all “trivial.” I hasten to add that 98% of cases settle without trial, so even the most serious cases rarely see a courtroom. Mediation, which is based on Matthew 18, is often used with great success.

Further, these types of serious disputes are rarely actually “between believers” in any real sense. For instance, if I represent you because you were paralyzed when a truck rear-ended your car, I have to name the negligent driver of the truck (who may be a Christian) in order to obtain the compensation due from his auto insurance. Recall as well, that insurance is purchased to assist us all in paying for accidental acts that may harm someone, and to help protect our assets in that event. It is exceedingly rare for any case to cost an insured driver one penny personally. Many cases are against large corporations that, of course, do not have souls, and therefore cannot be believers.

I may represent a Christian, against a nursing home chain for neglect in allowing terrible bedsores. This is usually a large corporation that often put profits over people. These cases are clearly not what is banned in the Corinthians passage.

Finally, cases that I handle, against negligent drivers, doctors, hospitals and nursing homes are not at all the type of cases that can be resolved by “men of little account in the church.”

While there are many other types of law, the type that I deal with is mentioned frequently in Scripture. Much of our civil injury law (called “tort law”) is actually based on the Bible’s passages.

For instance, the law governing dog bites in Tennessee states that if my dog is not known to bite I have no liability for it doing so. However, if my dog has a vicious nature and is known to bite then I am liable in tort law for all damages. Compare, Exodus 21:28:

If a bull gores a man or a woman to death, the bull must be stoned to death, and its meat must not be eaten. But the owner of the bull will not be held responsible. If, however, the bull has had the habit of goring and the owner has been warned but has not kept it penned up and it kills a man or woman, the bull must be stoned and the owner also must be put to death. However, if payment is demanded of him, he may redeem his life by paying whatever is demanded.

Or, look at the law regarding a slip and fall on a premises owned by another. If I create a condition that I know is dangerous and leave it as a virtual trap for another, I am liable in civil damages. Compare Exodus 21: 33:

If a man uncovers a pit or digs one and fails to cover it and an ox or a donkey falls into it, the owner of the pit must pay for the loss;

Other interesting accidents in Scripture include the negligent attaching of an axe head to an axe handle such that it flies off and kills someone while chopping wood (Deut. 19:5); and the dropping of a stone on an unseen man (Num. 35:22).

Also, the negligent person has a responsibility as well. Sometimes people talk of lawsuits being a way of making another person responsible for one’s own misfortune. But, if not for lawsuits generally, we may still have Ford Pintos with exploding gas tanks on the road, burning people alive after very minor car accidents. The medicines we take would not be so thoroughly tested. Nursing homes would not be under any incentive to give better care.

As you can see, the Bible does not forbid lawsuits, but it gives us much direction. Here is a Biblical checklist that may be helpful in evaluating a potential claim:

1. Is this matter “trivial?” (If so, overlook it.) (1 Cor 6:2 & Col 3:13).

2. Is this matter solvable by involvement of others at church? (1 Cor 6:4 & Matt 18:15).

3. Are my motives selfish or vengeful? (If so, stop). (Phil 2:3)

4. Have I tried to resolve my claim before suit or court? (Proverbs 25:8).

In the end, some will say, my cases are about money. I understand the criticism.

However, as I may tell a jury, “Don’t give her money---give her back time…give her back years of pain…give her back a life without this suffering…give her back her quality of life. But if you cannot give these things, then compensation is all we can ask for. It gives her freedom and it gives her choices. That is all we have to offer her.”

First the birth certificate thing and now this . . .

Tred Eyerly discusses a new statute in Hawaii on his blog Insurance Law Hawaii.

According to Eyerley, the statute provides that an "occurrence" in a liability policy "shall be construed in accordance with the law as it existed at the time that the insurance policy was issued."

The statute was apparently passed in response to a court decision holding that construction defects are not occurrences.

I don't have any additional information on the new statute, but if it's as broad as Eyerly describes there could be some insurance coverage attorneys in Hawaii who will make a great (if unexciting) living off of it. Let's say there's an environmental coverage case in which a pollutant seeped into the ground from 1935 to 1975. When the insurance coverage aspect comes up, as it inevitably will, the parties will be arguing the definition of occurrence in each policy year. Maybe -- and I have no idea -- there was a decision by the highest state court in Hawaii in 1934 giving a clear definition of occurrence. (It's not very likely, but it could be.) If one of the policies was issued outside of Hawaii, assuming that Hawaii follows the usual choice of law rules, the history of occurrence litigation in that state will come into play.

And let's not forget that the definitions of occurrence given in standard policy forms have evolved over the years.

And finally, as a philosophical matter, what does it mean to "construe" a concept "in accordance with the law as it existed at the time that the insurance policy was issued." For example, if a court of a particular state makes a ruling on triggers of coverage for the first time in 1972, and holds that the manifestation trigger applies, does that mean that the manifestation trigger does not apply to policies issued before 1972? Or would the manifestation trigger apply all the way back because if the word occurrence was construed that way in 1972 then logically it always had to be construed that way?

Disclosure of Surveillance

If surveillance is provided to an independent medical assessor, does it have to be produced to the plaintiff, even if the assessor does not rely on it in forming his or her opinion?

In Aherne v. Chang, [2011] O.J. No. 1880 (S.C.J.), the plaintiff sued for injuries alleged to have been caused as a result of medical treatment provided by the defendant. On the defendant's examination for discovery, his counsel confirmed that there had been no surveillance undertaken but refused to answer questions pertaining to disclosure of any future surveillance that might be undertaken after the discoveries. Counsel for the defendant took the position that privilege over documents released to a medical examiner, is waived only if the document is relied upon by the medical examiner, and not at the time that the document is released to the medical examiner. The plaintiff sought to obtain copies of any surveillance that was released by the defendant to a physician or healthcare practitioner retained for purposes of a defence medical assessment.

Master Short held that from the moment of his retainer to conduct a Rule 33 examination, a defence medical examiner owes his or her primary duty to the court. It is inappropriate and unseemly for the court to prevent any party before it from having contemporary access to the information provided to that expert.

Master Short summarized the following principles emerging from the rules and previous jurisprudence:

(a) if information is sent to an expert, then the same information should be sent to the opposing party to allow that party to test the expert’s opinion;
(b) an opposing party is entitled to the facts on which the expert’s opinion is based;
(c) so long as an expert read a document sent to him or her, then that document was considered, such that it is a “finding” that must be produced;
(d) the privilege claimed over a document sent to an expert is waived at the time that it was decided to rely on that expert’s opinion or in circumstances where privilege is waived over the report, even if the waiver was inadvertent;
(e) by sending a defence medical assessor portions of surveillance, privilege over the full surveillance video or all photographs is waived.

Master Short held that privilege is lost at the point the material is sent to an expert retained for the purpose of a Rule 33 examination. It was therefore held that the defendant is obliged to provide a copy of any surveillance of the plaintiff concurrently with its release to any defence medical examiner.

Pierce County man charged in insurance fraud case

A Tacoma man faces multiple charges after allegedly filing forged documents in an auto theft claim.

Cash B. Knott, 45, has been charged in Pierce County Superior Court with three counts of forgery, one count of insurance fraud, and one count of attempted 2nd degree theft.

On Nov. 6th, less than a month after getting coverage from Progressive Direct Insurance Co. for his 1992 Ford Ranger pickup, Knott filed a $5,674 insurance claim with Progressive. He said someone had scratched the paint, stolen his chrome wheels and tires, and stolen his navigation and entertainment system, 1,000 watt amplifier and other electronic components.

He provided Progressive with a Sept. 2 stereo shop invoice for $4,547.84 worth of stereo equipment, a copy of his check, and a bank statement showing the withdrawal from his checking account.

The problem: When contacted by an insurance adjuster, the stereo shop said it had no record of such a purchase. All they could find was that Knott had bought an amplifier -- for $109 -- on Sept. 2.

Insurance Commissioner Mike Kreidler's Special Investigations Unit obtained a search warrant for Knott's bank records. The bank found no checks written to the stereo shop, and none whatsoever for $4,547.84.

The upshot: The investigators believe that Knott altered the invoice, forged a check, and created a phony bank statement.

He's scheduled for arraignment on June 27th.

Everything you ever wanted to know about IDL coverage but were afraid to ask

Here's an article on a type of coverage I had never heard of: independent director liability, or IDL coverage.

This supplements directors and officers (D&O) coverage. My first thought was why such supplemental coverage would be necessary; why not just purchase higher policy limits on D&O coverage. The reason is given at the end of the article: IDL coverage provides peace of mind for outside directors. If a D&O policy is depleted by an Enron-type meltdown, the directors will still have coverage.

If I were an insurance agent or a risk manager I would need to take a hard look at both the D&O coverages and the proposed IDL coverage before I would make a recommendation about whether a corporation should buy the IDL coverage. But, as the article points out, if I were an outside director (who wasn't paying for the policy from my own funds), of course I'd want it because, hey, why not.

Job openings: Analyst and .NET developer

We have two job openings:

Functional Program Analyst 3 - The application period ends June 22.

.NET Application Developer - Open until filled. This is a limited-duration project, funded by a federal health care reform grant.

Note: The link to this post has been fixed. Sorry about that.

New free iPhone app guides you through steps after a car accident

AAA has released a new iPhone app that will walk you through the steps to take after an auto accident, including a list of information to gather for police and your insurers, photos to take, and a diagram of vehicle damage.

You don't have to be a AAA member. The app is free, and AAA says it's working on a version for other smartphones.

No smartphone? Here's a comprehensive auto accident checklist, put together by the National Association of Insurance Commissioners, that you should print out and keep in your car.

Here are the steps we recommend:

• Stay safe, but try to warn oncoming traffic of the danger at the scene. Turn on your hazard lights.
• If someone's hurt, give reasonable aid and call 911 immediately. Don't move them unless absolutely necessary.
• Notify the police.
• Give and get info for the accident report, including insurance information, license plates, names and contact information of those involved, including police and witnesses. Diagram the scene.
• If you can do it safely, take photos with a camera or phone.
• Call your agent or insurance company.
• Many experts advise not admitting fault or assigning blame, and only discussing the details of the accident with police or your insurer.

Obsessed With Adverse Selection

In case you haven’t heard, self-insurance is the gateway to adverse selection in the health insurance marketplace. Federal and state regulators have been sending up warning flares on this subject, but not surprisingly, their aim misses the mark.

This discussion has heated up as policy-makers look ahead to 2014 when state insurance exchanges are slated to come on-line and they try to predict market conditions and that time. For PPACA supporters, there’s a lot riding on making sure the exchanges work as promised so they are taking aim at any real or perceived obstacles. Adverse selection drivers are at the top of the list.

We saw this first in the HHS Report on the Large Group Market, which was published in March. In the report HHS commented that if low attachment point policies in the reinsurance (read stop-loss) market become more widely available by 2014, a significant number of fully-insured employers with “low risk” employees will switch to self-insurance, therefore creating adverse selection in the marketplace.

This section of the report concludes that “these results highlight the importance of closely monitoring the availability and pricing of reinsurance (stop-loss insurance) and closely monitoring decisions made by small employers to self-insure.”

A working draft of a recent NAIC white paper on the subject of adverse selection also points the finger at self-insurance as contributing to adverse selection. The NAIC writes: “Employers with favorable risk demographics have an incentive to self-fund while those with less desirable risks would tend to opt for fully-insured plans either through the exchange or in the outside market.”

Neither HHS nor the NAIC acknowledges one very important fact as part of their analysis, which is that most companies with fewer than 100 employees simply do not know if their group is a good risk because claims data is generally not available to them. In this regard, their “premeditation” argument is compromised.

Now it’s true that employers that switch to self-insurance can often improve the aggregate risk profile of their groups over time, regardless of the baseline at the time of transition, through wellness programs and other innovative plan design strategies, but shouldn’t that be the objective of all group health plans?

Let’s also recognize the importance of the HHS comment about “closely monitoring” the stop-loss market as way to guard against adverse selection. As described in my previous blog posting, Treasury Department Gets Schooled on stop-Loss Insurance, federal regulators now have a keen interest in stop-loss insurance for a variety of reasons.

This new federal attention combined with the ongoing desire by state legislators to expand their authority over self-insured health plans creates a very uncertain environment for future legislative/regulatory activity that could affect the ability of small and even mid-sized companies to self-insure.

There’s one last development on this subject worth mentioning. Some key House Republican staffers have indicated a renewed interest in introducing association health plan (AHP) legislation, but are holding back because of anticipated criticism that self-insured AHPs would contribute to adverse selection. So the education process continues on multiple fronts.

California Federal District Court sharply curtails Cumis doctrine

The widely-accepted doctrine that an insured has a right to independent counsel of its choosing if an insurer is defending it under a reservation of rights is frequently called the Cumis counsel doctrine, after a case from California, San Diego Fed. Credit Union v. Cumis Ins. Society, Inc., 162 Cal. App. 3rd 358 (1984).

A federal district court in California has now sharply curtailed the application of that doctrine under California law, essentially holding that because insurance defense counsel has an obligation to the insured, any potential conflict of interest between the insurer and the insured cannot affect the defense.

Centex Home is a general contractor against whom several homeowners filed lawsuits alleging construction defects. Centex sought coverage for some of the claims as an additional insured on policies Travelers Property had issued to Centex's subcontractors. Travelers agreed to defend subject to a full reservation of rights. It agreed that the attorneys already retained by Centex could continue to represent it.

Nine months later Travelers informed Centex that it would hire new counsel of its own choosing, and retained two law firms to defend Centex. Centex refused to accept those firms unless Travelers showed that they could provide a conflict-free defense. It also claimed a right to independent counsel due to Travelers' reservation of rights.

Travelers stopped paying defense costs and filed a suit for declaratory judgment on the grounds that Centex breached its duty to cooperate.

In Travelers Property v. Centex Homes, The United States District Court for the Northern District of California noted that under California statute and case law:

[a] conflict exists "when an insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by counsel . . . retained by the insurer for the defense of the claim." . . . However, if the coverage issue is "independent of, or extrinsic to, the issues in the underlying case," then independent counsel is not required. . . . Where the interest of the insured and insurer are aligned in defending against the underlying action, a conflict does not exist."

The court held that Travelers' reservation of rights did not give rise to a conflict of interest. One of the rights that Travelers reserved was the right to deny coverage if the damages alleged occurred outside the policy periods. Centex had asserted a statue of limitations defense in the underlying cases. It argued that Travelers would attempt to focus liability outside the policy periods, which would harm the statute of limitations defense.

The court rejected that argument because the conflict is a "merely potential" one.

[Centex] provides no evidence that [Travelers'] appointed counsel could shift the focus of liability outside of [Travelers'] policy periods. More importantly, whether damages occurred before, during, or after the policy period is a factual issue outside of counsel's control. . . . [Centex] and [Travelers] have the same interest in minimizing liability by establishing that any damages occurred at a time early enough for the statute of limitations defense to apply.

Furthermore, any counsel [Travelers] appoints also has legal and ethical obligations and a fiduciary duty to [Centex]. . . . Although [Travelers] might have an interest in continuing an investigation into its potential for coverage, this is irrelevant to the ability of [Travelers'] appointed counsel to control the issue of when any covered liability occurs.

Things that can affect your auto insurance rates

A new survey says that more than half of Americans have recently made an economic-driven change that may affect how much they pay for car insurance.

The National Association of Insurance Commissioners survey found that:

• nearly 40 percent of respondents were driving less or taking public transportation more
• nearly 20 percent traded in a vehicle for a lower-priced model or got rid of a second vehicle entirely
• and almost 20 percent of drivers reduced or canceled their car insurance to save money -- something we do not recommend. You'll almost certainly pay more to get coverage later, and if you continue to drive without coverage, you expose yourself to potentially devastating financial liability.

(Bonus round: Here's a long list of NAIC tips for lowering your auto insurance premiums.)

Here are some of the changes that can affect how much you pay for insurance:

• You moved: A change in zip code may affect your premium, depending on crime statistics in the area.
• You changed cars: A lower-value car, not surprisingly, is usually cheaper to insure. If you're car's paid off and not worth much, you might consider saving money by raising your deductible or canceling your collision coverage. But keep your liability coverage.
• A new job, or no job: These can affect whether you commute, and how far.
• Driving less: Almost 40 percent of consumers said they're driving less. Many are walking or taking public transportation more often. If this sounds like you, you should talk to your insurer and see if you qualify for a low-mileage discount.
• Bad credit score: The weak economy, layoffs and the collapse of the housing market have left many people with battered credit. Most states, including Washington, allow insurers to use your credit information to decide how much to charge you. (Here in Washington, we have successfully fought to limit this practice, but have not yet been able to convince lawmakers to ban it entirely.)

Also, if you're struggling to find coverage here in Washington, we maintain an online list of companies offering policies for hard-to-insure drivers.

Insurance investigators shot and killed in Louisiana

Our hearts go out to our colleagues in Louisiana, where yesterday two Louisiana Department of Insurance fraud investigators were shot and killed while trying to gather information from an insurance agent.

Here's the statement from Louisiana Insurance Commissioner Jim Donelon.

According to the New York Times, the agent was found dead by SWAT team members after barricading himself in his business, where the shootings happened.

Thanks to Barb Legate for this comment on our post on McNeill v. Filthaut, regarding the current debate over the testimony of accident benefits assessors:

"A point that seems to be missed in some of these analyses is that notwithstanding the provisions of Rules 4 and 53, those rules are merely a codification of the law that stated with Amertek. Rules 4 and 53 are part of the Mohan criteria, and fall under the "any exclusionary rule" branch. So, although there are exclusionary rules for experts a party retains, that does not end the analysis. If a witness is to give opinion evidence, the witness has to be qualified as an expert. Part of the qualification exercise is to enquire into bias. Bias also enters into the relevance assessment. See CA decision in Abbey.

IMHO, those cases that strain to differentiate treating opinions from AB opinions from DAC opinions and retained expert opinions have missed the basic law: you want to call a witness to give an opinion, then follow Mohan. No fancy differentiations needed."

Massachusetts Attorney General alleges nearly $1 billion overcharge on commercial auto insurance

Massachusetts Attorney General Martha Coakley has issued a press release alleging that businesses in the state have been overcharged by nearly $1 billion on commercial auto insurance in the past seven years.

Coakley cited data showing that insurers' underwriting profits were significantly higher in Massachusetts than the national average. She has requested that the Commissioner of Insurance reduce insurance rates so that they comply with a statute forbidding rates that are "excessive" or "unreasonably high."

Summer, and the rantin' is easy

A while back I posted about my annoyance with a day camp that required parents to sign a release acknowledging that the camp did not carry liability insurance.

New summer, new camp, new rant.

This camp requires parents to sign a release of the camp and every affiliated person or entity from all negligence claims. (In oversimplified terms, negligence means you made a mistake that caused someone else to get hurt.)

First, I want to acknowledge that this particular camp is priced and has additional financial aid to allow participation by kids from families of all income levels. It is possible the release lowers the price of its liability insurance, or that the camp administration believes (wrongly) that the release eliminates the need for such insurance. I do not in any way intend to minimize the effect of the cost of insurance, and the effect it might have on the camp's ability to serve all populations.

But . . . I am sending my elementary-school aged child to you. As I have written many times before, accidents happen. If an accident happened because you made a mistake -- and I'm not going to list all of the possible mistakes you can make while caring for a bunch of little kids -- and as a result a kid is permanently disabled, unable to work, unable to care for himself -- you have a moral obligation to defray the expenses for care that will follow the kid for the rest of his life. The good news is, you don't have to pay it yourself, you can get insurance. That's what it's there for.

Having adequate insurance is simply the responsible thing to do.

Special Circumstances Doctrine

This is a case which comments on the Special Circumstances doctrine which we have been reviewing recently in our last two blog entries. This case was brought to our attention by Dana Paladino, legal counsel at the City of Windsor. Thanks Dana!

Wood Waste Solutions Canada Inc. v. Associated Paving Company, 2010 ONSC 6280 (CanLII). The court indicates that the special circumstances doctrine is potentially available where an old limitation period applies.

It is surprising that this wouldn’t have been mentioned in Chadowski.

One accident, two claims: Seattle man charged with insurance fraud

A Seattle man has been charged with insurance fraud and second-degree theft for allegedly filing multiple auto insurance claims for a single accident.

Thanh Thai "Derrick" Dang, 31, was charged Wednesday in King County Superior Court. Both charges are class C felonies, carrying a maximum penalty of 5 years in prison and a $10,000 fine.

An investigation by the state insurance commmissioner's Special Investigations Unit found that in May 2010, Dang contacted insurer Ameriprise to say that his Toyota RAV4 had been hit by a hit-and-run driver while parked outside a home in Seattle. Ameriprise issued a check for $3,887.

Eight days after the accident, Dang obtained coverage over the internet from Allstate. Almost immediately, he filed a claim with Allstate for damage to the RAV4, saying that the car had been rear-ended while he was driving on Interstate 5. He also claimed that he'd been injured. Allstate issued a check for $3,502 for repairs to the vehicle.

A subsequent investigation by Allstate's anti-fraud unit showed that the RAV4 damage was identical in both claims.

A hearing in Dang's case is scheduled for June 13th.

Update (9/20/2011): King County Superior Court Judge Susan Craighead ordered Dang to pay restitution to both Allstate and Ameriprise, plus $600 to the court. He was also sentenced to 200 hours of community service.

Policy Form Number Decoding

It dawned on me that the un-initiated in insurance traditions don't know the rhyme or reason to insurance policy form numbers.



A policy form listed as "CG0001 1001" means that it is a commercial general liability form - CG - the form number is 0001 and the edit date is 10/2001.



Here are some of the prefix codes most commonly used by insurers in the ISO (Insurance Service Office) system of policy forms.



HO Homeowners

BOP Business Owners

PP Private Passenger Auto

CP Commercial Property

CA Commercial Auto

DP Dwelling Property

CG Commercial General Liability

IM Inland Marine

DP Dwelling Property

CU Commercial Umbrella

CR Crime

This is further to our May 25th blog of last week on the Special Circumstances Doctrine.

Thanks to Edward Key of O'Donnell, Roberston & Sanfilippo, Toronto, for this comment:

My understanding is that “special circumstances” is still alive for causes of action that pre-date January 1, 2004.

For example, in Parent v. Janandee Management Inc. (2009) 82 C.P.C. (6th) 321 (Ont. Master), Master Short wrote:

[29] For cases dealing with events occurring after January 1, 2004, the Ontario

Court of Appeal has held in Joseph v. Paramount Canada's Wonderland (2008),

90 O.R. (3d) 401 (Ont. C.A.) (at paragraphs 27 and 28) that the equitable concept

of special circumstances permitting an extension of time for suit, no longer

applies in Ontario. As this case is based upon an occurrence that took place prior

to January 1, 2004, the Court of Appeal's decision in Meady v. Greyhound

Canada Transportation Corp., 2008 ONCA 468 (Ont. C.A.) does hold that the

doctrine of special circumstances may be available to the plaintiffs in this in

seeking the addition of a party to litigation after the expiry of the limitation

period.

Chiropractor pleads guilty to making false statements under oath

A chiropractor with several clinics in Pierce and King counties has pleaded guilty to making false statements under oath during insurance-related depositions.

Alnoor Haider Bhanji, 43, of Issaquah, pleaded guilty to three counts of false swearing in King County Superior Court on Tuesday.

In depositions in three different lawsuits (in 2007, 2008 and 2010) involving insurers, Bhanji lied under oath. The false statements included:

• claiming that he didn’t know who owned his Federal Way clinic building,

• claiming that his brother was not associated with the chiropractic business in any way,

• and repeatedly denying knowing an individual who had a long history of bringing patients to Dr. Bhanji.

Each count is a gross misdemeanor with a maximum penalty of one year in jail and a fine of $5,000.

Sentencing is set for June 17.

How does a ticket affect my insurance rate?

A new study shows just how damaging speeding tickets or other moving violation citations can be to your insurance rates.

Insurance.com did an analysis of more than 32,000 insurance policies sold last year, and concluded that a single violation on a driver's record drove up rates by an average of 18 percent. Drivers with two violations paid an average of 34 percent more, and those with three paid 53 percent more.

Some of the violations that affect your auto insurance rates are no surprise: a DUI, for example, or fleeing from police, or wrong-way driving. But an improper passing citation also counts, as does failure to use a proper child restraint.

What typically doesn't count? Parking tickets.

Your driving record, of course, isn't the only thing that auto insurers consider. Here are some of the other factors that affect the cost of your auto insurance.

Take a look at the new Cavalcade of Risk

You can find it here.

For newbies, the Cavalcade of Risk rotates among insurance and other risk blogs, and provides links to blog posts on those topics.

80/20 rule applies to you

The 80-20 Rule

You might never have heard of the "Pareto Principle," but it is the name for what many call the "80/20 rule."

Vilfredo Pareto, an Italian economist, once famously observed that 80 percent of the land was owned by 20 percent of the population.

In your business, the rule implies that approximately 20 percent of your clients/contracts/crops produce 80 percent of your income. In your life, 80 percent of the love and support you receive come from just 20% of the contacts on your cell phone.

If you can focus on the 20% that brings you 80% of your income, satisfaction and success, you can change the ratio. Think about how little of your 40 hours of work accounts for the majority of your results.

Here are some signs that will help you to recognize whether you're spending your time as you should:

The 80% of your life will be marked with these marks:

You're busy on tasks other people want you to do, but you see no future in them. You're always doing something that just popped up and is “urgent.”

You're spending time on tasks you are not usually good at doing that others could do. Activities are taking a lot longer than you expected. You find yourself complaining all the time. Your spouse or friends do not see why you are doing this task.

The 20 percent will involve these points:

You see this as a step or part of your dream--your overall purpose in life. You're doing things you have always wanted to do

You feel good about yourself upon doing this task. You're hiring people to do the tasks you are not good at or don't like doing. You're smiling. You're spouse sees the wisdom of your task and is supportive

As the old saying goes: "The main thing is to keep the main thing the main thing."

David B. Peel

Attorney at Law

Mr. Peel is a local attorney who practices in the areas of Accident, Injuries, Malpractice and Nursing Home Neglect. Mr. Peel often addresses churches and clubs and can be contacted through www.PeelLawFirm.com, wherein other articles can also be found.

Medicare phone scam reported

The state attorney general's office is warning about a phone scam that attempts to get people to reveal their banking information, supposedly as a way to get a special Medicare card.

From the post:

"Remember, government programs will never make unsolicited calls seeking financial or health information. Anyone who does so is a crook."

Click on the link above for more information about the scam -- as well as a similar one that the Nevada AG is warning about.

Filing a Holocaust-related life insurance claim

This morning's New York Times had a story about the ongoing struggle for Holocaust survivors to collect on life insurance policies.

The International Commission on Holocaust-Era Claims, which helped collect more than $1 million for Washington state claimants, stopped accepting claims in March of 2007. But you may still be able to file a claim. The following companies have agreed to accept post-deadline Holocaust-era claims directly from individuals:

• Generali
• Allianz
• AXA
• Winterthur
• Zurich
• as well as their affiliates and other German companies.

Also: After the closure of the international commission's claims period, Washington state's Holocaust Survivors Assistance Program has continued to help some claimants recover money from the Austrian General Settlement Fund.

For help or questions -- if you're a Washington state resident -- contact our office at 1-800-562-6900. (If you live in another state, here's a list of contact information for other state insurance departments.)

Our 2010 annual report

We've just posted our annual report for calendar year 2010.

It can tell you things like:

• Washington premiums for earthquake insurance last year ($118 million). Claims were almost nonexistent.
• Medical malpractice insurance premiums totaled ($157 million).
• Who the top 40 companies are, for each line of insurance business.
• Accident and health coverage is a $14 billion business in Washington.
• Health insurers pay out an average of nearly 86 cents for every dollar in premiums they collect.
• Mortgage guaranty insurance, due to the housing market turmoil, has seen a big surge in payouts over the past few years, and continues to lose money. Last year, these policies paid out nearly $1.76 for every dollar in premiums they collected.

And if you want to compare data year-to-year, we've posted all our annual reports online since 1998. (Here's an interesting one: Take a look at mortgage insurance claims in 2005, for example, compared to the last couple of years.)