Agent pleads guilty, taken into custody

Former Washington insurance agent Jasmine Jamrus-Kassim pleaded guilty this morning to 10 counts of theft for stealing more than $1 million in retirement funds from elderly insurance clients.

Jamrus-Kassim, who had been free on bond, was immediately taken into custody.

From 2007 to late 2009, several of Jamrus-Kassim's clients cashed out large portions of their retirement accounts, apparently thinking they were re-investing the money. In reality, the money went to Jamrus-Kassim, who spent tens of thousands of dollars on a psychic hotline, clothes, jewelry and a trip to Mexico.

An investigation by the Washington insurance commissioner's Special Investigations Unit led to her arrest in March.

And Bankers Life and Casualty, one of the companies that Jamrus-Kassim worked for, agreed last month to repay the money that Jamrus-Kassim stole. 

Sentencing in King County Superior Court is slated for Nov. 18.

Children's open enrollment ends Monday, Oct. 31

If you need an individual health plan for your child or want to add them to your insurance, you have until Monday, Oct. 31. After that, unless you meet certain requirements, you'll have to wait until March 15-April 30, 2012.

There are some exceptions that allow children to be enrolled anytime during the year. Parents must apply for their child within 31 days of the following events if either they or their child:

• No longer qualify for a state program.
• Lose coverage due to a divorce.
• Lose employer-sponsored coverage (including COBRA).
• Move and their plan is not available where they live.
• Also, parents or guardians can apply year-round for individual coverage within 60 days of birth, adoption, or placement of a child for adoption.

PART II: Courts struggle with Whether Global Warming is “Natural and Probable”

Post by Ross Plyer

Last time, we discussed The AES Corporation v. Steadfast Insurance Company, a recent Virginia case where the growing trend of climate change nuisance cases intersected with the world of insurance coverage law. Critical to the coverage analysis was whether the Plaintiffs in the underlying action, the tiny island village of Kivalina, Alaska, alleged an accident or occurrence, which the Court defined as something that is not the natural or probable consequence of the insured’s actions.

This case centers on the "accident" definition, so let's compare how each state defines it.

• The Virginia definition says an "accident" is a result that is not natural and probable.
• South Carolina defines an "accident" as a result that is unexpected and occurs by chance.

Is it two ways of saying the same thing? How might this case have played out in an Palmetto State court?

In the Virginia case, the court decided the plaintiffs alleged that AES intentionally released greenhouse gas and had good knowledge that those emissions caused global warming.  Thus, global warming was the natural and probable result of their actions, and thus not an accident. A South Carolina court could look at the same actions and find that Kivalina accused AES of emitting greenhouse gas with the knowledge of its effects. Because the result was not unexpected and not occurring by chance, there is no accident. Using a slightly different standard, a South Carolina court could come to the same conclusion.

This back and forth may cause your head to spin, but these are the interesting questions that coverage attorneys like us enjoy wrestling with. The fact that this one centers around a hot-button issue such as global warming makes it that much more interesting.  (To us attorneys that is.)

- Ross

Simmonds Business Insurance Index™

The Simmonds Business Insurance Index™

November, 2011



Renewal Premiums - Slight Increases

Renewal Coverages - Negotiate - But Be Ready To Lose

Buyer's Outlook - Long-Term: Prices Increasing / Coverage Restrictions



The soft market is coming to an end.  Underwriters are asking questions.  Insurers are restricting writings in areas.  Coverages that were easy to get are requiring tough conversations and negotiations.



I had an underwriter refuse to offer crime limits over $25,000 to a wood products company the other day! Six months ago we could have probably negotiated for $100,000 at no additional premium.



Carriers are reluctant to offer renewal quotes early because they are afraid to miss an increase in the market premium.  There is breath-holding going on about the January reinsurance renewals.



This will not be pretty.

New Minor Injury Guideline

The new Statutory Accident Benefits Schedule (SABS) came into effect September 1, 2010. Among the key amendments, there has been a reduction of medical and rehabilitation benefits from $100,000.00 to $50,000.00. In some cases, this will be further reduced to $3,500.00 under the new Minor Injury Guideline (MIG).

The MIG applies to accidents that occurred on or after September 1, 2010, and replaces the Pre Authorized Framework for Grade I and II whiplash associated disorders. Section 268.3 of the Insurance Act requires that the MIG be considered in any determination involving the interpretation of the SABS.

An insured person’s impairment comes within this Guideline if the impairment is predominantly a minor injury. “Minor injury” is defined in the new SABS as a “sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and any clinically associate sequelae”. Each of these conditions are further defined to specify the severity of each to move it out of the “minor injury” category. For example, “whiplash associated disorder” is defined as “a whiplash injury that does not exhibit objective, demonstrative, definable and clinically relevant neurological signs, and does not exhibit a fracture in or dislocation of the spine”.

The objectives of the MIG are to speed access to rehabilitation for persons who sustain minor injuries in auto accidents, improve utilization of health care resources, provide certainty around cost and payment for insurers and regulated health professionals, and be more inclusive in providing immediate access to treatment without insurer approval for those persons with minor injuries.

Many accident victims may now find their benefits reduced to $3,500.00 and if they do not have a tort claim, they may have little alternative for additional medical coverage. The Financial Services Commission of Ontario expects the MIG to capture 30%-40% of accident claims.

Section 18(2) provides for an exclusion from MIG if the insured person’s health practitioner determines and provides compelling evidence that the insured person has a pre-existing medical condition that will prevent the insured person from achieving maximal recovery from the minor injury if subject to the $3,500.00 limit. This exception raises the question of what the courts will consider to be “compelling evidence”.

- Kristen Dearlove, Student-at-Law

Wedding Insurance?

This article at Canadian Finance Blog says it all.

Courts struggle with Whether Global Warming is “Natural and Probable” - Part 1

Post by Ross Plyler

Hello! My name is Ross Plyler, and I am based in the Collins & Lacy Greenville office. I'm excited to contribute to our Insurance Practice Group’s blog, and I wanted to take the opportunity to share an interesting case with you.


An environmental case that started in an Alaskan fishing village of less than two square miles and less than 400 residents landed in the Supreme Court of Virginia. That court issued an opinion that could impact the growing trend of climate change litigation.

Here is some background information:



Aerial view of Kivalina, Alaska, USA. View is to the southeast.



Kivalina, an Alaskan barrier island 70 miles north of the Arctic Circle, filed suit in the U.S. District Court for the Northern District of California against numerous defendants, including AES Corporation (a Virginia energy company) alleging their emissions of greenhouse gases caused global warming and warmer winters, which in turn affected levels sea ice leaving their island exposed to erosion. AES tendered the suit to its insurer, Steadfast Insurance Company, and Steadfast filed a declaratory judgment action, The AES Corporation v. Steadfast Insurance Company. Steadfast argued there was no “occurrence” under the policy and thus no coverage or duty to defend the climate change complaint.

In the appeal, the court defines "occurrence" the same as an accident, which is an event that creates an effect that is not the natural or probable consequence of the insured’s actions, and is not intended, designed or reasonably anticipated. The court said the inquiry is whether the Kivalina plaintiffs allege the resulting harm (global warming) is a natural and probable consequence of an intentional act (emitting greenhouse gas).  If so, there is no accident here and thus, no coverage. However, if global warming is an unforeseen or unexpected consequence, then it is an accident or occurrence, and there is coverage.  The court said that because Kivalina alleged that there is “clear scientific consensus” that global warming is a natural and probable consequence of greenhouse gas emissions, then global warming is no accident, and thus not an occurrence, meaning no coverage.

In South Carolina, we don't worry too much about sea ice, but if climate change litigation is a trend, it is interesting to guess how our courts may deal with the issue of whether global warming is a "covered occurrence."  You will have to wait until next time for the exciting conclusion!

Does insurance cover space junk crashing to earth?

If pieces of a satellite crash on your home or car -- or on you -- does insurance cover that?

Yes, according to the Insurance Information Institute:

"Damages caused by falling objects are generally covered under standard auto, business, homeowners, and life insurance policies..."

the industry group says. It also noted, however, that the odds of being struck by space debris are extremely low.

Appeals Court finds duty to defend where loss may have arisen out of use of excluded boat and use of a different boat that was excepted from exclusion

Jeffrey and Nicole Crispo (the Crispos) were aboard their power boat, the MSJC69, and were towing a lobster boat, the Laina Lou, owned by Steven Crispo. Steven and Dana Gagne were aboard the lobster boat. The MSJC69's propeller shaft became entangled on a mooring line. After cutting loose the Crispos were unable to restart the boat because the battery was dead. The Laina Lou dropped anchor and the two boats remained attached by the tow line. The Crispos were unable to use the running lights because of the dead battery.

Approximately ten minutes later a ferry operated by BHC collided with the two vessels.

Steven, Jeffrey, Nicole, and Gagne sued BHC for personal injuries and property damage. BHC asserted claims for indemnification and contribution against the Crispos, alleging that their negligence caused the accident.

The Crispos sought coverage for the counterclaims from Quincy Mutual, their homeowner's insurer, which filed a declaratory judgment action. The policy excluded coverage for losses arising out of use of boats, but the lobster boat fell into an exception to that exclusion.

In Quincy Mut. Fire ins. Co. v. Crispo, 80 Mass. App. Ct 484 (2011), the Massachusetts Appeals Court held that a duty to defend is triggered when a loss "arises out of" both a a use that is excluded from coverage and a use that is excepted from the exclusion.

The court noted that the underlying complaints did not distinguish between the use of the two vessels with respect to which caused the accident. Therefore, the allegations of the underlying complaints "raise the possibility that the claims against the Crispos arose from their use of the Laina Lou."

The court also noted that no anti-concurrent causation clause applies to the exclusion, although such a clause does apply to other parts of the policy. Under Massachusetts law, where an anti-concurrent cause provision is included with reference to exclusions in one part of the policy and omitted with reference to other parts of the policy, the absence of such a provision means that a loss caused by a risk excluded in the section without the provision will be covered if a covered risk also contributed to the loss.

Quincy Mutual argued that the phrase "arising out of" in the exclusion conveyed the same limitation on coverage as an anti-concurrent causation provision. While noting that "arising out of" denotes an intermediate level of causation, the court held that its use in an exclusion, without more, could not reasonably be understood as denying coverage for damages connected to the insured's simultaneous undertaking of an excluded risk and a risk specifically excepted from the exclusion, where both caused the injury.

Coverage for construction defects

When a construction contractor brings a claim under its general liability policy for coverage of construction defects -- construction that was faulty and needs to be redone, but did not cause injuries to people or damage to other property -- Massachusetts courts generally analyze (and deny) the claim under up to six exclusions, often referred to as the "your work" or, more accurately, "builder's risk," exclusions. In many policies the exclusions have some holes in them, however, depending on when and where the damage occurred and whether the work was done by the insured contractor or by a subcontractor. When I work on such a case I often make a chart which I stare at until I am bleary-eyed.

This article in Insurance Journal notes a wide variation from state to state in how construction defects are analyzed:

On whether faulty workmanship is itself an occurrence, some states say yes, some states say no, some states are undecided, and some states say faulty workmanship is not an occurrence but the resulting damage is. “You also see differences in states in other issues as well."

It should be noted that there are Builder's Risk policies available that will cover contractors for construction defects. I have yet to come across a contractor that actually has such a policy, but that may be because those claims get resolved without the help of counsel.

Municipality attempts to exert rights to shoreline road after discovering a 150 year old By-law

Meaford (Municipality) v. Grist [2011] O.J. No. 4188

This is an interesting case regarding an 1854 By-law that had been found in 2004, which purported to create a municipal/public road along the shore of Georgian Bay.

Some of the named defendants brought two summary judgment motions claiming that there are no genuine issues requiring a trial. The action is disputed by the defendants because the road would take away approximately 66 feet of their shorelines lands.

The road had not been registered on title until 2007 after the Municipality discovered the By-law.

The Municipality’s argument, among other things included the doctrine of dedication and acceptance.

Justice Daley set out the test for the common law doctrine of dedication and acceptance/ long user:

Dedication depends on the intention of the donor and also acceptance of
the road by public authority.

There are three conditions:

1. An owner of the land on which the road is situated had formed the
intention to dedicate the land to the public road or highway;

2. The intention was carried out by the road being thrown open to the
public; and

3. The road was accepted by the public.

Dedication can occur by usurpation and long enjoyment.

Where members of the public continually use the road over a long period
of time, dedication may be inferred.

Justice Daley stated that the plaintiff bears the onus “upon a preponderance of probability to demonstrate that the conditions necessary for the establishment of dedication and acceptance were all present”. He then refers to the Reed v. Town of Lincoln [1973] decision where the “cogency of the evidence required to satisfy the burden … may vary … according to the nature of the issue with respect to which the burden must be met.”

Using this ruling, he bolsters the onus requiring the municipality to “satisfy the onus by a clear and substantial preponderance of evidence that the property owners have lost the title to a portion of their property which now constitutes a public road”.

Meaford argued that the public highway existed prior to the by-law. It was held that there was no genuine issue for trial; the plaintiff had not offered any physical/documentary evidence. Even if there had been a road, the time from the initial Crown grant in 1840 to the date of the by-law in 1854, is not enough time to find a “long user”.

It was further held that there was no dedication and acceptance in modern day, for many reasons, including:

1. The municipality graded the road approximately twice a year –
otherwise had no involvement in the upkeep.

2. The municipality entered into a maintenance agreement with the
cottage owners association.

3. In 1986, part of the road had washed away and the municipality had
not restored the road. In fact, the owner of the property had a
different portion of his property, severed, re-zoned and built a
private driveway (no dispute that this “inland” driveway was a
private road).

4. The “inland” driveway was maintained pursuant to the maintenance
agreement.

5. The defendants were bona fide purchasers for value and the cottages
built on the lots comply with zoning by-laws in regards to set back
from the water’s edge and not from the disputed road.

6. There was no evidence of municipal funds or labour to build, maintain
or restore the road.

7. The municipality, in this action, was only trying to lay claim to a
very small potion of the road that the By-law purported to create.

Justice Daley held that there was no evidence of actual or implied dedication or acceptance and was held not to give rise to any issues requiring a trial.

He went further to state that the municipality had slept on their rights for over 150years and applied the doctrine of laches and acquiescence and that “quite apart from all of the other reasons expressed (in the 192 paragraphs), it would be unjust to grant Meaford’s claim”.

This post was prepared by our Associate Alison McBurney.

Is the weather really getting worse? Insurer's data suggests yes

Munich Re, a major reinsurance company, this summer released a very interesting report on natural disasters, and the data suggests that, as one newspaper columnist put it, it's not your imagination. The weather really is getting worse. Click on that link, and take a look at the chart you'll see.

Munich Re's full report is online and entitled the 2011 Half-Year Natural Catastrophe Review. There's also a 47-minute webinar on the topic posted online.

Methamphetamines vs. Narcotics - What do they mean anyway?

 

Post by Lee Floyd

Hello all!

I'm Lee Floyd, a self-admitted sports junkie who practices law at the Collins & Lacy Columbia office. When I'm not wake boarding or playing golf in my spare time, I'm enjoying the company of my wife, Kelli, and our two dogs, Fenway and Dustin.  I've been with the firm about four years practicing primarily insurance coverage, professional negligence and products liability law. I love what I do, and now I get to share it with you through this blog. So here's my first post. I hope you like it, and I look forward to your suggestions for more. - Lee.

Methamphetamines vs. Narcotics - What do they mean anyway? The ordinary and usual meaning rule cuts in favor of the insurer in Hutchinson v. Liberty Life Insurance Co.


The South Carolina Court of Appeals recently reversed an order granting summary judgment to an insured under an accidental-death insurance policy, holding methamphetamine fell within the ordinary and usual meaning of the undefined term “narcotic.” Hutchinson v. Liberty Life Insurance Co., 393 S.C. 19, 709 S.E.2d 130 (Ct. App. 2011).

Here's what happened.

The accidental death insurance policy excluded coverage for injury resulting from an insured being “under the influence of any narcotic.” The policy did not define “narcotic.” The insured died two days after the policy became effective when he drove a tractor-trailer off an interstate highway. The death certificate cited the cause of death as blunt force trauma but also listed methamphetamine use as another significant condition contributing to the insured’s death. Liberty Life denied the claim under the policy citing the illegal drug use exclusion. The insured’s beneficiary brought a declaratory judgment action seeking coverage and for bad faith and violation of the South Carolina Unfair Trade Practices Act.

In the original ruling, the Circuit Court held the term narcotic did not include methamphetamine because the drug is a stimulant rather than a depressant and did not fall within the insured’s expert testimony that the scientific definition of narcotic drugs only includes drugs that “induce pain relief, drowsiness, sleep and similar states of stupor.”

The Court of Appeals reversed, holding the Circuit Court erred in applying the scientific definition of the term narcotic rather than a definition using the usual understanding of the term narcotic to the ordinary person. The Court then cited cases using the terms narcotic and methamphetamine interchangeably and quoted the reasoning that the term narcotic ‘“has come to have a generic meaning for drugs considered to be illegal.’” Id. at 25, 709 S.E.2d at 134 (quoting Doe v. Gen. Am. Life Ins. Co., 815 F. Supp. 1281, 1285 (E.D. Mo.1993)).

Main Takeaway: In applying this generic definition, the Court held a layperson would commonly understand methamphetamine to be a narcotic drug based on its widespread illegal use.

Appeals Court holds motor vehicle exclusion excludes coverage for social host liability

Patrick Bernier and Julien Caron were insured under a homeowner's policy issued by MPIUA. They negligently served, supplied or permitted David DiFrancesco, a nonresident minor, to consume alcohol at the insured premises. While under the influence of that alochol, DiFrancesco negligently operated a motor vehicle, getting into an accident that injured Malcolm Berry.

Berry sued Bernier and Caron. MPIUA filed a declaratory judgment action, seeking a declaration that it had no duty to indemnify.

In Massachusetts Property Ins. Underwriting Ass'n v. Berry, 80 Mass. App. Ct. 598 (2011), MPIUA argued that the motor vehicle exclusion applied. The court agreed, on the ground that the motor vehicle exclusion categorically excluded coverage for personal injury arising out of the use of any motor vehicle.

The decision was based on changes in language in homeowner's policies. Under previous editions, coverage was excluded for losses arising only out of a vehicle owned by an insured. The change was apparently made in response to social host liability cases such as this one.

I don't like this change. In this situation -- a homeowner provides alcohol to a minor who drives away in his own car -- the homeowner's insurance is likely to have significantly higher coverage than the minor's vehicle. The homeowners were culpable in giving alcohol to a minor and letting him drive away. If their insurance isn't going to cover the loss, it should at least be because of a social host exclusion, not an automobile exclusion. That would be more straightforward and allow people to negotiate for the coverage they want.

Red cars, insurance and speeding tickets

There's an urban myth out there that holds that the color of a car affects your insurance rate. The rumor is so pervasive that some insurers mention it on their corporate websites.

It's not true. In our experience, the color of a car has nothing to do with how much you pay for auto coverage. We review auto insurance rates (among many others) here in Washington state, and we can't recall ever seeing an auto insurance rate schedule that takes color into account. Insurers do often raise rates for high performance vehicles, which may be more likely to come in red, but color itself is meaningless in determining rates.

(Here are the sorts of factors insurers take into account, including things that might surprise you -- like your credit score.)

While we're on the topic, how about the widespread belief that red cars get more speeding tickets? Snopes.com, the rumor-busting website, says that doesn't seem to be true, either:

"...It does not appear that red cars get cited for speeding more often than they statistically should."

Don't get fooled by official-looking health insurance website

The federal Centers for Medicare and Medicaid Services (CMS) is warning consumers about a site that "has the appearance of being an official government website" but isn't. The website is http://preexistingconditioninsuranceplan.com/. Here's a partial screenshot:

From CMS:

This new website...is not maintained by any government programs and consumers are strongly urged not to submit any personal information requested by this website under the assumption that it is a government website.

The site includes a small disclaimer acknowledging that it's not a government-run site, but is:

"rather (a) solicitation by a licensed insurance entity/agent/broker seeking to assist and enroll individuals in the PCIP program or other insurance products."

Pre-existing Condition Insurance Plans -- PCIPs for short -- were created under federal health care reform. They're a good option for people who have a problem getting insurance due to a pre-existing medical condition. Here's our official, real website that explains more about Washington's PCIP program.

Not in Washington? Here's the official federal PCIP site.

Premera refiles rate request

Premera Blue Cross has refiled a rate change for its individual health plans - this time seeking a 4.7 percent increase. We disapproved it's earlier request for a 3.1 percent increase in September. We have 60 days to review the request and make a decision.

The new rate, if approved would take effect on Jan. 1, 2012 and would impact approximately 3,874 people.

You can view the entire rate filing, a summary of key date supplied by Premera and why we turned down their last request at www.insurance.wa.gov/health-rates.shtml

Insurance for data security breaches

WGA InsureBlog has an interesting article on insurance for data breaches. Although some of the statistics in the article strike me as overblown, the basic point seems about right:

Insurance protection for privacy-related breaches by employees and vendors can be addressed in various types of insurance policies, but not all will protect an insured from all acts of insiders. The variability of insurance coverage for “insider” breaches reflects the polyglot state of affairs in the cyberliability world. Coverage problems can arise from the nature of the particular insurance policy at issue (for example, an E&O policy versus a privacy policy) and from insurers’ inherent aversion to paying for intentional wrongdoing — an aversion that can miss important distinctions among the guilty and the innocent. Companies and their advisors need to be alert to the nuances in policy terms to make sure that insurance insult is not added to injury after a breach caused by an insider.

The Importance of Causation

In Lancaster (Litigation Guardian of) v. Santos, [2011] O.J. No. 3706, the County of Dufferin was added as a third party in an action arising out of a MVA on November 21, 2001 involving a fully-loaded pickup truck being driven by Mr. Santos and the plaintiff’s vehicle.

The transport had tipped over when coming around a curve and slid into oncoming traffic. It was alleged that but for the County’s failure to properly sign the portion of the road in issue, Mr. Santos would have been aware of the hazardous road condition and would have reduced his speed such that he could have managed the curve.

Lemon J., found the cause of the accident, on a balance of probabilities, to be the shifting of the truck’s load as a result of it not being properly secured. Mr. Santos had testified that the signs which existed provided some warning and he reacted to it by slowing down. As a result of this testimony, the road conditions and signage were not found to be the cause.

Lemon J., went on to determine whether the County could have been liable had there been causation. The plaintiff argued that when the County breached the Manual of Uniform Traffic Control Devices (MUTCD) by not properly signing the road, it breached its duty of care.

Lemon J., stated: “while I agree that this sign did not meet the standard set by the MUTCD, and that other drivers in other circumstances might have been mislead, that was not the case for Mr. Santos…The sign as posted was doing its job”.

This case is significant in that that court confirms an obvious yet often overlooked principle – If there is a breach of the duty of care, it must have contributed to or caused the MVA. Municipalities should keep in mind that although they perhaps made a mistake at some point in time, it must be considered whether this mistake caused or contributed to the MVA.

Thanks to our articling student, Kristen Dearlove, for this post.

Appellate Division discusses burdens of proof on PIP claim that was paid late

Francisco and Gloria Delasnueces were in an accident while in a car insured by Plymouth Rock. They received treatment from Kantorosinski Chiropractic. Plymouth Rock initially paid some of the bills and denied some. It later made a "business decision" to pay all the bills.

In Kantorosinski Chiropractic, Inc. v. Plymouth Rock Assurance Corp., 2011 WL 4529392 (Mass. App. Div.), the Massachusetts Appellate Division held that summary judgment cannot be granted to a PIP insurer on a claim that it delayed payment merely because the insurer asserts that the reason for eventual payment was a business decision. (The remaining issue, once the PIP claim has been paid, is the award of attorney's fees.)

The court then took note of evidence offered by Plymouth Rock that the damage to the insured vehicle was minor and that after an independent medical examination the doctor concluded that there was no objective findings to support the need for further treatment. That evidence was sufficient to shift the burden to Kantorosinski to show that there is a genuine issue for trial.

Kantorosinski met that burden with evidence that at the time the IME doctor opined that there was no further need for treatment, the insureds were still experiencing pain, which improved with additional treatment. The court held that the evidence was sufficient to overcome Plymouth Rock's motion for summary judgment.

COURAGEOUS Movie is Must-See

The new movie "Courageous" from the producers of FireProof and Facing the Giants, is a must-see.

As you might know, movies with a distinctively positive message are often given short shrift at the cinemas. It is irritating that movies that feature Satanic serial killers like "Friday the 13th" will run for months, while positive films fight to run just two weeks.

Thus, I implore you to see and support this film as soon as possible. Not only do I think you will find it moving, funny and meaningful, but it needs your family's support to run as long as possible.

The story is at once, a guy movie with masculine theme and an emotional tear-jerker. There is something for everyone.

While the plot, involving law enforcement officers, may remind you of the movie Grace Card, it is not at all a do-over of that story. Men, especially Dads, will be challenged by the message. I have likely read a thousand movie reviews myself, and some have said "you will laugh, you will cry." In this matter, I can assure you that I saw big burly men crying like little girls, and then a minute later, the whole theater was laughing loudly.

Don't be surprised if the audience claps at the end.

When was the last time you even felt like doing that?

Please do not put it off. My kids (as young as nine) loved it, regardless of the PG-13 rating for a couple violent scenes. Please go see Courageous the movie. Tonight. This weekend.

You will not regret it.

Insurance company not paying a life insurance claim? Here's what you can do...

Generally, insurance companies can only deny life insurance proceeds within the first two policy years for two reasons. This is called the "contestability period." After the two years, the insurer generally cannot contest the benefits.

The two reasons are if the death of the insured:

1. Is due to suicide (this does not apply to group life policies).
2. Didn't tell the truth on the application for coverage. This is called the “contestability period.” After the two years, the insurance company cannot contest the benefits.

(Bonus round: Here's a link to our ever-popular post on "How to find old life insurance policies.")

If you’re the beneficiary of a life insurance policy and you think the insurer is wrongly denying your claim for benefits, file a complaint with our office, if you live in Washington state. (If you don't, here's a handy map showing how to contact your own state insurance regulator.) We'll look into the matter and see if we can help you resolve the problem. File a complaint online or give us a call at 1-800-562-6900.

Where you can find a flu shot

Here's a new site, developed by the feds, where you can type in your zip code and immediately get a list of local pharmacies, etc. that have the flu vaccine. (Your doctor or clinic's probably got the shots, too.)

We thought it was pretty clever and useful.

Production of Adjuster Personnel Files in Insurance Litigation

Post by Logan Wells

It is well known that discovery can be one of the most expensive and time-consuming parts of the litigation process. Often, an insurer is faced with requests for sensitive material that seem to test the limits of the Federal Rules’ liberal discovery provisions. Adjuster personnel files are commonly the subject of such requests. Accordingly, today’s blog post discusses the relevance and discovery of adjuster personnel files in insurance litigation.   

Strong Public Policy Against Disclosure of Adjuster Personnel Files

“There is a strong public policy against the disclosure of personnel files...” 10 John Kimpflen et al., Federal Procedure § 26:130 (L.Ed. West 2011). See Blount v. Wake Elec. Membership Corp., 162 F.R.D. 102, 105 (E.D. N.C. 1993) (Discovery of personnel files “would discourage future candid evaluations of employees, making it difficult for the firm to maintain its standards and improve its performance.”); Alterra Healthcare Corp. v. Estate of Shelly, 827 So.2d 936, 944-45 (Fla. 2002) (“In recognizing the danger of permitting the disclosure of personnel records of any witness or litigant, one court has said: ‘It has been widely noted that such records often contain raw data, uncorroborated complaints, and other information which may or may not be true but may be embarrassing, although entirely irrelevant to any issue in the case, even as to credibility.’”) (internal quotations and citations omitted); see also Regan-Touhy v. Walgreen Co., 526 F.3d 641, 648 (10th Cir. 2008) (“[P]ersonnel files often contain sensitive personal information, ... and it is not unreasonable to be cautious about ordering their entire contents disclosed...”).

Heightened Standard of Relevance for the Production of Adjuster Personnel Files

Under Federal Rule of Civil Procedure 26, a plaintiff may only obtain discovery regarding a nonprivileged matter that is relevant to a party’s claim or defense. Fed. R. Civ. P. 26(b)(1). “Relevant evidence” means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence. Fed. R. Evid. 401.

Although the Fourth Circuit has not directly addressed this issue, courts in other jurisdictions apply a “heightened standard of relevance” to the production of personnel files.  For example:

• The court in Compuware Corp. v. Moody's Investors Services, Inc., 222 F.R.D. 124, 134 (E.D. Mich. 2004), held that personnel files were not discoverable where the plaintiff failed to show that they were clearly relevant and that a compelling need existed.
• In Carlucci v. Maryland Casualty Co., No. Civ. A. 98-3294, 2000 WL 298925 (E.D. Pa. March 14, 2000), the court applied the heightened relevance standard to production of claims adjusters’ personnel files.
• The court in Miller v. Federal Express Corp., 186 F.R.D. 376, 384 (W.D. Tenn. 1999), stated, “Personnel records, because of the privacy interests involved, should not be ordered produced except upon a compelling showing of relevance.”
• In Stablilus v. Haynsworth, Baldwin, Johnson & Greaves, P.A., 144 F.R.D. 258, 266 (E.D. Pa. 1992), the court required a heightened standard of relevance for discovery of confidential information contained in personnel files.  
• The court in Raddatz v. Standard Register Co., 177 F.R.D. 446, 447-48 (D. Minn. 1977), noted that because personnel files contain an employee's sensitive and personal data, ordering their disclosure is a highly intrusive act that should not be undertaken lightly.

Under the heightened standard of relevance, discovery of personnel files is permissible only if:

(1)     the material sought is clearly relevant; and

(2)     the need for discovery is compelling because the information sought is not otherwise readily obtainable.

10 John Kimpflen et al., Federal Procedure § 26:130 (L. Ed. West 2011) (emphasis added). “[G]eneral allegations of negligence or wrongdoing do not suffice to render personnel records discoverable.” Id.

What is "Clearly Relevant"?

In determining whether the adjuster personnel files are “clearly relevant,” courts have generally focused on whether the requests are relevant to the primary issues in the case. See Royal Bahamian Ass’n, Inc. v. QBE Ins. Co., 268 F.R.D. 692, 693-94 (S.D. Fla. 2010); see also Gehring v. Case Corp., 43 F.3d 340, 342 (7th Cir. 1994) (no abuse of discretion where “privacy interests, coupled with [the district court's] determination to keep the trial focused ..., justified limiting [plaintiff's discovery of] personnel files”).

For example, courts have found that adjuster personnel files were not clearly relevant where:

·        The case did not concern the individual negligence of an adjuster, but rather, was based on the alleged negligence of the insurer as a company.

o      See Allstate Ins. Cos. v. Herron, 393 F. Supp. 2d 948 (D. Alaska 2005), in which the court denied the plaintiff’s motion to compel production of personnel files of individual adjusters and found files were not relevant in declaratory judgment action concerning bad faith breach of insurance contract. In so finding, the Court stated, “With respect to requests for personnel files, Herron's theory is murky. It is unclear to the Court how the files of individual adjusters will be relevant to the issue in this case, i.e., the negligence of Allstate as a company. Clearly, the files would be relevant in the state trial since claims were filed against individual adjusters. However, such claims are not at issue in this case. The request is denied.”

·        The plaintiff could identify no specific purpose necessitating the production of the personnel file which would override privacy concerns regarding the production of confidential material.

o      See Tolz v. Geico Gen. Ins. Co., No. 08-80663-CIV, 2010 WL 298397 (S.D. Fla. Jan.19, 2010), a bad faith action wherein the court found production of a personnel file improper where the plaintiff claimed the files were relevant to establish “whether the very employee hired by Geico to handle [the insured’s] claim acted in bad faith while doing so” and “argued the files most likely memorialize relevant circumstances surrounding Jones' conduct both in handling similar claims prior to that of [the insured],” but there was no evidence the files were necessary for a specific purpose, such as to impeach sworn testimony.

What is "Not Otherwise Readily Obtainable"?

In addition, requests for adjuster personnel files do not meet the heightened standard of relevance where the information sought is readily obtainable through less invasive means. See Fed. R. Civ. P. 26(b)(2); Cecena v. Allstate Ins. Co., No. C05-03178, 2006 WL 3302837 (N.D. Cal. Nov. 9, 2006) (“Generally, even if personnel records are relevant, discovery of such files is permitted only upon a showing of ‘compelling need.’”).

For example, in Carlucci v. Maryland Casualty Co., No. Civ. A. 98-3294, 2000 WL 298925 (E.D. Pa. March 14, 2000), the plaintiff in a bad faith insurance suit moved to compel production of the personnel file of one of the claims adjusters to whom her insurance claim had been assigned.  In support of the request for disclosure, the plaintiff cited the adjuster’s termination for poor performance and the adjuster’s deposition testimony that she had complained that she had too many files to handle, and argued that the adjuster’s poor performance was likely to be central to the issues at trial. Id. at *1. The court concluded that the plaintiff could obtain the information sought regarding the claims philosophy of the company and the specifics of the adjusters assigned to the plaintiff’s claims by other less invasive means. Id. Accordingly, the court denied the plaintiff’s motion to compel and found the plaintiff “failed to establish she cannot obtain the necessary information through supervisors or other adjusters assigned to the case.” Id. at *2.

Courts in other jurisdictions have ruled similarly. For example:

• In Sanchez v. City of Santa Ana, 936 F.2d 1027, 1034 (9th Cir. 1990), the Ninth Circuit Court of Appeals concluded that the district court did not abuse its discretion by denying the appellants' request for all of the defendant's confidential personnel files, because “focused discovery could have been employed” in order to discover the relevant information.
• The court in Adams v. Allstate Insurance Co., 189 F.R.D. 331, 333 (E.D. Pa. 1999), found that “Plaintiff seeks the personnel files of every Allstate employee who worked on plaintiff's claims. This request is overbroad, and seeks information that is unnecessarily invasive. Plaintiff should seek the information that it needs by a less invasive means, such as by deposition or interrogatory. Thus, defendant need not comply with Plaintiff's Request for Production No. 22.”
• In Kaufman v. Nationwide Mutual Insurance Co., No. Civ. A. 97-1114, 1997 WL 703175 (E.D. Pa. Nov. 12, 1997), the court denied the motion to compel where the plaintiff in a bad faith action sought production of personnel files of employees involved in handling of the plaintiff’s claim on grounds that information could be learned from a less confidential source.

Practice Point

In determining whether an adjuster personnel file should be disclosed, an insurer should consider whether the plaintiff’s request meets the heightened standard of relevance.

However, in the event that some of the personnel file may meet the heightened standard of relevance, the insurer may request an in camera review of the file to limit the production of material to that which is relevant to the primary issues in the case. See, e.g., Porter v. Farmers Ins. Co., Inc., No. 10-CV-116-GKF-PJC, 2011 WL 1566018 (ND. Okla. April 25, 2011) (recognizing confidential nature of personnel files in bad faith insurance suit and ordering same to be produced for in camera review); DeKnikker v. Gen. Cas. Co. of Wis., No. Civ. 07-4117, 2008 WL 1848144 (D.S.D. April 23, 2008) (same); Cecena, 2006 WL 3302837 (“[C]ourt should first examine the [personnel] file in camera and order disclosure of only that information which might be relevant to the lawsuit.”).

If you have any questions about determining whether an adjuster personnel file should be disclosed, I'd be happy to talk with you. Just email me at lwells@collinsandlacy.com or call (864) 282-9100.  - Logan

Insurance agent who sold fake policies sentenced to more than two years in prison

An insurance agent who sold hundreds of thousands of dollars in fake business-insurance policies has been sentenced to more than two years in prison.

Brenda MacLaren-Beattie, 68, of Des Moines, Wash., was sentenced Thursday in King County Superior Court to 26 months in prison. She was immediately taken into custody. She was also ordered to pay back $532,659 in restitution.

“I’m very pleased that the court took this as seriously as we did,” said Insurance Commissioner Mike Kreidler. “This agent sold fictitious coverage to dozens of medical offices in Washington and Oregon, often for years. People thought they had coverage and they didn’t.”

An investigation by Kreidler’s office found that from late 2001 through 2009, MacLaren-Beattie issued fake insurance to 25 oral surgeons in Washington and 16 in Oregon. During that time, she is believed to have collected more than $532,000 in premiums for fictitious insurance policies, often issuing counterfeit certificates of insurance to doctors and clinics. Her insurance license expired in 2009. (And here's the cease-and-desist order issued at the time.)

In a few cases – a lost camera, some water damage – she paid out small insurance claims herself. One of her clients became suspicious after a claim check was issued by MacLaren-Beattie, rather than from an insurance company.

The fictitious policies were for business owners’ general liability insurance, which typically covers things like slip-and-fall accidents, employee theft, and damage to rented property.

MacLaren-Beattie pleaded guilty in August to eight counts of first-degree theft, a felony. On Thursday, she received eight 26-month sentences, which will run concurrently.

How to avoid buying a flood-damaged car

With hurricane and storm season winding down, an insurance industry organization is warning about the likelihood that flood-damaged vehicles will be sold to salvage dealers, their flood-damage history illegally hidden, and sold as normal cars in the used-car market.

An anti-fraud group, the National Insurance Crime Bureau, has created an online tool where you can look up -- for free -- a car's vehicle identification number and see if it's been declared a salvage vehicle by an insurer. (The VIN number is typically visible through the front windshield, where the windshield meets the car's hood. It's usually a long combination of numbers and letters.)

Also, the Insurance Information Institute suggests being on the lookout for several warning signs that a car may have been flooded:

 Mildew, debris and silt in places where it wouldn't normally be found, such as under the carpeting in the trunk, or around the engine compartment


 Rust on screws and other metal parts

 Waterstains or faded upholstery; discoloration of seatbelts and door panels

 Dampness in the floor and carpeting; moisture on the inside of the instrument panel

 A moldy odor or an intense smell of Lysol or deodorizer; this is a tactic frequently used by dealers to cover up an odor problem

If you suspect that your local car dealer is committing fraud by knowingly selling flooded cars as regular used cars, the III suggests contacting your insurance company, local law enforcement agency or the NICB at 800-TEL-NICB.

How to lower your homeowner's insurance rates

This article has tips.

Court of Appeal Comments on s. 132 of the Insurance Act

The Court of Appeal recently commented on s. 132 of the Insurance Act. Section 132 provides that a person who obtains a judgment against an insured person which has not been satisfied may recover that amount from the insured’s insurer.

In Walker v. Sovereign General Insurance Co., [2011] O.J. No. 4106 (C.A.), the Walkers obtained a judgment against Sun Shelters Industries Inc. for damages sustained in a parking lot slip and fall. Sun Shelters went bankrupt and could not pay the judgment, so the Walkers brought an action under s. 132 against Sun Shelters’ insurance company, Sovereign. Sovereign’s position was that it did not receive proper notice as required under the CGL policy and as a result was not required to defend the action or indemnify Sun Shelters or the Walkers.

The Court of Appeal held that notice of a claim can be given either by the insured or by a person on behalf of the insured. In this case, notice was given to Sovereign by a co-defendant. The Court noted that if notice is given by someone other than the insured, the person should have sufficient proximity to give adequate details of the claim:

36 Given its purpose and importance, if the notice is to be given for an insured instead of by the insured itself, the person giving it should have sufficient proximity to the claim to have knowledge of the information required by s. 3(a). Emshih was just such a person. It owned the property where the accident occurred; it was a defendant in the original action; and it cross-claimed against Sovereign's insured. In giving notice to Sovereign, Emshih was giving notice for Sun Shelters as contemplated by s. 3(a) of the policy.

Sovereign had actual notice of the claim and made a conscious decision not to defend. If the insurer had no knowledge of the claim, no opportunity to investigate or negotiate a settlement, it may be that the decision would be different.

- Tara

Scammed seniors will be repaid more than $1 million

Retirees who lost more than $1 million to an unscrupulous insurance agent will be repaid, under an agreement reached between the insurance company and state Insurance Commissioner Mike Kreidler.


Bankers Life and Casualty, one of the companies that the independent agent worked for, has agreed to replace the money allegedly stolen by the agent.

An investigation by Kreidler’s office found that several of Jasmine Jamrus-Kassim’s clients repeatedly cashed out large portions of their annuities with Banker’s Life and Casualty from late 2007 to late 2009. The money was then pocketed by Kassim.

Jamrus-Kassim, of Kent, was arrested in March 2011 and charged with 21 counts of first-degree theft. Her trial is pending in King County Superior Court.

“I commend Bankers Life for stepping up and making these victims whole, to the extent possible,” said Kreidler. “I’m deeply saddened that one victim, stripped of his life’s savings, has already passed away. In his case, restitution will go to his estate.”

The victims, who ranged from age 74 to 90, typically made out their checks to “S.A. Saad” and gave them to Kassim. Several said they believed that S.A. Saad was an insurance company official. They thought their money was being reinvested.

In reality, Kassim has two daughters, both with the initials and surname “S.A. Saad.” Most of the money was deposited briefly in the girls’ accounts, then moved to Kassim’s personal credit union account. Kassim’s financial records show thousands of dollars spent on clothes, jewelry, and a trip to Mexico. They also show large payments to online psychic advisors, including $20,000 in charges from one psychic website in one month.

The victims live in Bellevue, Renton and Seattle. The payment amounts are:

• $512,112

• $488,071

• $116,070

• $65,321

• And $929

Bankers has also agreed to pay interest.

Class-action settlement covers hundreds of thousands of insurance customers

Hundreds of thousands of people who were led to expect more interest than they got from annuities are eligible for a multi-million dollar class-action settlement – if they sign up on time.

“Consumers across the country were misled, and I’m very glad to see this case finally resolved with restitution,” said Insurance Commissioner Mike Kreidler. “I urge anyone who qualifies to sign up for their share of the settlement.”

The settlement involves Northern Life Insurance Company’s marketing of tax-sheltered fixed annuities, primarily to teachers, starting in 1995. (The company, which was based in Seattle, merged with Minnesota-based Reliastar Life Insurance Co. in 2002.)

The annuity documents, Kreidler said, misrepresented to consumers the way that interest would be calculated over the life of the annuities. Instead, Northern Life paid a high interest rate only in the first year of the contract, reducing the rate during all the remaining years.

Under the settlement, Northern Life has agreed to pay $29 to $40 for each $10,000 in value of a person’s annuity. The settlement provides up to $31 million for the payments. A King County Superior Court judge recently approved the mediated settlement, in which Northern Life did not admit wrongdoing.

Northern Life has notified 406,000 account holders that they are potentially affected by the settlement. An estimated 20,000 of those people are in Washington state.

“People are naturally skeptical of mailings,” said Kreidler, “but don’t just toss this one in the trash.”
The one-page claim form, also available at http://www.curtissettlement.com/, must be mailed back on or before Oct. 17, 2011. (It can also be scanned and emailed by that date.) Under penalty of perjury, signers must certify that they owned a fixed annuity issued by Northern Life sometime between Jan. 1, 1995 and the present time.

Typical payments are likely to range from $60 to $80, although some will be significantly larger.
The claimants were represented by private attorneys in the 10-year court case, which involved more than 1 million pages of documents.

Kreidler’s office investigated the issue and filed an amicus brief in the case, saying that consumers had been substantially harmed by misleading marketing.

U.S. District Court interprets earth movement exclusion

Habit OPCO leased a building that was damaged by construction at an adjacent site owned by the Greater Boston Food Bank.

The building rested on concreted piles and on fill. On December 7, 2007 GBFB began construction of a new building on the adjacent property. It drove concrete piles to a depth of almost 190 feet. Within a couple of weeks Habit employees noticed damage to its building such as cracked door frames. By mid-February the building had floor heaves, its ceiling tiles were shifting, and walls were cracking.

Habit's insurer, Philadelphia Indemnity, hired an expert who opined that the damage was caused by vibrations from the pile driving on the GBFB property.

Philadelphia Indemnity denied the claim for structural damage, citing the policy's earth movement exclusion. Habit argued that the earth movement exclusion bars coverage only for damage from naturally occurring earth movements and not from man-made events.

In Mulhern v. Philadelphia Indem. Co., __ F. Supp. 2d __, 2011 WL 3563126 (D. Mass.), the United States District Court for the First Circuit noted that the exclusion includes loss from "improperly compacted soil," which is a man-made condition. The court held that Philadelphia Indemnity was entitled to judgment to the extent that Habit is precluded from arguing that the policy covers damages caused by defects in the fill.

Philadelphia Indemnity argued that the anti-concurrent causation clause in the earth movement exclusion precluded coverage under Habit's theory that shock waves generated by the pile driving caused the structural damage to the building. The court denied summary judgment on that issue because there was a disputed issue of fact as to whether improperly compacted soil was a cause of damage or whether vibrations emanating from the pile driving were the exclusive cause.

Finally, the court held there was no coverage under the collapse clause of the policy because the damage to the building was not "an abrupt falling down or caving in of a building or any part of a building with a result that the building cannot be occupied for its intended purpose, because the claim was the the roof split, leaving a gap of .75 inches, and then cracked.

Turned down for life insurance? Here's what you can do...

If you apply for life insurance and get rejected, it's usually due to a specific health condition. Here’s what you can do to appeal their decision:


1. Ask the insurer to tell you, in writing, what specific condition disqualified you for coverage and where they obtained that information.

2. Review their information for accuracy. If you find any discrepancies, contact the doctor and ask him or her to correct the information. If the information is accurate, discuss the condition with your doctor. If the doctor thinks the condition is not a major health risk, ask him or her if they’d be willing to write a letter on your behalf to the insurer.

Other options:

• Asking the company if they would consider issuing coverage at what's called a "rated premium."

• Applying to other companies. Just because one company doesn’t want to take on your risk doesn’t mean another one won’t. Each company determines which risk they are willing to take. (Brokers can help with this.)

• If ultimately, you don’t qualify for coverage through a standard life insurance company, consider applying for coverage through a company that offers covereage specifically for high-risk people. You’d pay more, but at least you'd have coverage.