Insurance when you're laid off: What to ask for on your way out the door

Nobody wants a layoff notice, but critical insurance moves on your way out the door can help extend your health insurance (and other coverage) and save you thousands of dollars at a critical time.

Insurance.com spelled this out today in an article titled "Insurance smarts during a layoff: 3 must-do moves."

Among the advice:

• Ask for an extension of health care benefits. Ask for the employer to keep you covered for 3-6 months.
• Negotiate with your employer to have them pay COBRA insurance premiums, which can be very expensive.
• Convert group life insurance or group disability coverage to an individual plan, particularly if you're older.

Report: Health costs' rapid rise

The Commonwealth Fund has published a new report looking at state trends in health insurance premiums and deductibles from 2003 to 2010.

The upshot: employees' annual share of premiums increased by 63 percent over those 7 years (and premiums themselves rose 50 percent as well). In Washington state, for example, family health insurance premiums rose from $9,212 to $14,188 during that period. That's a 54 percent increase.

Not surprisingly, given stagnant incomes in recent years, premiums as a percentage of median household income during that time increased dramatically. In 2003, only a single state (West Virginia) had average premiums above 20 percent of median household income. Today, about half the states are in that category.

For a look at premiums (single and family) by state, here's a good interactive map from the report.

The report continues:

 At the same time, per-person deductibles doubled in large, as well as small, firms.

If premium trends continued at that rate, the researchers predicted, "the average premium for family coverage will rise 72 percent by 2020, to nearly $24,000."

Federal health care reform, passed in early 2010 but taking effect largely in 2014, offers the hope of some savings, the report says:

Health reform offers the potential to reduce insurance cost growth while improving financial protections. If efforts succeed in slowing annual premium growth by 1 percentage point, by 2020 employers and families together would save $2,161 annually for family coverage, compared with projected premiums at historical rates of increase.

Colorado couple ordered to stop selling insurance in Washington state

A Colorado couple, Robert W. Ramlet and Patricia Ramlet, has been ordered to stop selling insurance in Washington state.

In 2006, the two sold two life insurance policies in Washington state without being licensed as insurance agents here.

Admissibility of Expert Reports in Small Claims Court

In Turner v. Kitchener (City) [2011] O.J. No. 4803, there was a mid-trial ruling on the admissibility of an expert report in Small Claims Court.

The facts of this case involve a plaintiff who was riding his bike along a recreational trail in Kitchener. It was his regular route and time of travel which put him on the trail at 5:15 am.

Earlier that morning vandals had set fire to a bridge along the trail and after investigating, the police and fire personnel had blocked off the bridge with a wooden barricade and yellow caution tape.

The plaintiff was biking at a relatively high speed for the time of morning, was wearing a helmet but did not have any light affixed to his bike. As the plaintiff approached the barricade, he was not able to see it, and when he did notice it is was too late to stop safely. The plaintiff applied his brakes so hard that he flipped over the bike and suffered injuries.

At trial, the plaintiff attempted to admit into evidence a report from a professional engineer. Defence counsel objected and intended to cross-examine the expert and challenge the admissibility of his report based on the evidence of qualifications.

The deputy trial judge held that the report was admissible. He cited section
27(1) of the Courts of Justice Act which provides the Small Claims Court (“SCC”) with the general authority to “accept and act on lower-quality evidence than would otherwise be permitted under the common law rules of evidence”.

He then examined the SCC Rule 18.02 subsections (1) to (7) and held that the position of defence counsel as he intended to cross-examine the expert is not contemplated by the Rules and that the report had already been admitted into evidence by way of Rule 18.02 (1) to (3). Admissibility of documents under Rule 18.02 is to be determined at the initial stage under Rule 18.02(1) when the document is tendered - “Once the document is admitted, the witness may be-cross-examined using the summons procedure under rule 18.02(4). But since that is cross-examination,the rule presupposes that the report or document is already admitted into evidence. The report or document serves as the examination-in-chief of that
witness.”

The deputy judge found no merit in the defendant’s objection to the expert’s qualifications. The expert was a professional engineer and his qualifications to provide the opinion evidence were of the highest quality generally seen in civil courts.

- Alison McBurney

Commissioner Kreidler on health care reform, the individual mandate, and rate transparency

Commissioner Kreidler was interviewed by host Austin Jenkins on TVW's Inside Olympia program this morning to discuss health care reform, health insurance costs, and his successful push to release confidential rate information from health insurers.

On the federal Affordable Care Act: "While this act is not perfect, it is the best thing that we have going right now to get our hands around a very serious problem for this country of ours...People are really being hurt...The current system is broken."

On the individual mandate to buy health coverage, starting in 2014: "If you have people opting in when they're sick and out when they're well, it just plain won't work."

On health care exchanges: "It's going to be a lot like online shopping that a lot of people are familiar with. And that's going to be a huge advantage over what we have now."

Additional flood warnings in WA

After overnight rain in parts of the state, the National Weather Service has issued another flood warning, including:

The Nooksack River at North Cedarville (Whatcom County)
The North Fork of the Stillaguamish near Arlington (Snohomish County)
The Deschutes near Rainier (Thurston County)
The Chehalis at Porter (Grays Harbor County)

Minor flooding is expected at some of those locations today or tonight. The Chehalis River at Porter was close to flood stage at 8:45 this morning.

See the link above for details.

Update: (11:41 a.m.) Another warning's been issued, including some other area rivers. The upper reaches of most rivers crested this morning or will crest this afternoon, with crests moving downstream through Thursday.

OPCF 44R - Family Protection Endorsement

The Court of Appeal recently affirmed a lower court decision on the OPCF44R.

In Van Bastelaar v. Bentley, [2011] O.J. No. 4666 (C.A.), the plaintiffs were concerned that the defendant's $1,000,000 policy would be apportioned between four injured parties and there would be a shortfall. As a result, they added their own insurer pursuant to the inadequately insured motorist provisions of their policy. Their policy had a Family Protection Endorsement with limits of $1,000,000. The key provision read as follows:

The insurer's maximum liability under this change form, regardless of the number of eligible claimants or insured persons injured or killed or the number of automobiles insured under the Policy, is the amount by which the limit of family protection coverage exceeds the total of all limits of motor vehicle liability insurance, or bonds, or cash deposits, or other financial guarantees as required by law in lieu of such insurance, of the inadequately insured motorist and of any person any person jointly liable with that motorist.

The motions judge held that "An underinsurer's obligation to pay does not arise until the total amount of insurance held by the tortfeasor at the moment of the accident is less than the family protection coverage liability limit." He concluded that since "the policies of the parties are unevenly matched, so therefore, the underinsurer had no exposure to liability".

The Court of Appeal affirmed the decision.

- Tara Pollitt

Flood warning issued for parts of Lewis, Thurston, Pierce counties

The National Weather Service has issued a flood warning for the:

• Newaukum River near Chehalis (reaching flood stage this evening, continuing through Weds night or Thursday)
• Chehalis River near Doty (this evening)
• Chehalis River at Centralia (late tonight)
• and the Chehalis River near Grand Mound. (late tonight)

"Minor to moderate flooding is expected along the Chehalis and Newaukum Rivers beginning this evening," the weather service says.

In addition, a flood watch remains in effect for the lower reach of the Chehalis River in Grays Harbor County, where the NWS says flooding is possible starting late Wednesday.

Up to 4 inches of rain has fallen in the Chehalis River Basin during the past 24 hours. Another 2-5 inches is expected from now through Wednesday night. For more details, including specific roads and areas likely to flood, click the link above.

Here's the critical part, from our perspective: Flood damage is not covered under a standard homeowners insurance policy. If you want coverage against flooding -- and your lender may require it if you live in a flood-prone area -- you'll need to buy extra coverage.

For most homeowners, that means going to the National Flood Insurance Program, a federally run insurance plan that's sold by local agents. But the coverage takes 30 days before it goes into effect. Flood season is long in the Pacific Northwest. If you think you're at risk -- and see the red "One-stop flood risk profile" box check your flood risk and get an estimate of premiums -- definitely consider flood insurance. And don't delay.

Update: (12:02 p.m.) A new alert has been issued for minor flooding along the Puyallup River near Orting and the Deschutes River near Rainier.

Two warranty companies ordered to stop selling in Washington

We issued a cease and desist against Charter Warranty Services of Detroit, MI and TracGuard Services of North Miami, FL, ordering both to stop selling protection products in our state without a license.

Both companies were selling motor vehicle service contracts and protection products guarantees but had not registered with us. In Washington state, all motor vehicle service contract and protection product providers must register with our office.

If they fail to do so, they're required to get a certificate of authority to act as an insurer and get an agent or producer license in order to sell their products.

Don't recognize these two companies, but still wondering if you should get a warranty on your next big purchase? We can help. See if the company is registered before you buy a policy.

And consider these helpful tips on negotiating a price and what to ask before you buy.

U.S. District Court holds that mortgagee can require flood insurance higher than the amount of the mortgage

In 1994 Susan Lass took out a mortgage on her house, which is an area that is designated under the National Flood Insurance Act as a special flood hazard area. (For older posts on flood insurance legislation, see here and then scroll down.)

As a named plaintiff in a class action lawsuit Lass alleged that Bank of America, the mortgagee, breached her mortgage contract by requiring her to have more flood insurance than was required under the terms of her mortgage and more than BOA's financial interest in the property.

In Lass v. Bank of America, N.A., 2011 WL 3567280 (D. Mass. 2011), the United States District Court for the District of Massachusetts noted that the NFIA prohibits federally-regulated lenders from giving loans secured by real estate in a special flood hazard area in which flood insurance is available unless the property is covered by flood insurance "in an amount at least equal to the outstanding principal balance of the loan or the maximum limit of coverage made available . . . , whichever is less."

Lass's original lender, RMC, required her to maintain insurance in the amount of her loan balance. In 2007 she chose to increase her coverage to $100,000.

RMC transferred the loan to BOA, which required her to increase her flood insurance to $145,086, the replacement value of the improvements to her property. When she did not purchase the additional insurance, BOA purchased it for her and paid for it out of her escrow account.

The court held that BOA did not breach the mortgage contract, because the contract requires Lass to maintain flood insurance "in the amounts and for the periods that Lender requires."

The real question is: Why would a homeowner with property in a flood zone not insure the property to replacement value? Weather patterns are getting more extreme. Insurance protects your investment. We quibble over exclusions and exceptions, but overall: Insurance is good. Make sure you have enough of it.

Suit Against Insurer Must be Served through S.C. Department of Insurance

Post by Pete Dworjanyn

The South Carolina Court of Appeals has issued an opinion that lawsuits against insurance companies in South Carolina must be served through the South Carolina Department of Insurance. The opinion was premised on two code sections. S.C. Code § 38-5-70 Appointment of Director as Attorney for Service of Process provides that every insurer shall appoint in writing the director [of the Department of Insurance] to be its lawful attorney upon whom all legal process and action or proceeding against it must be served.  S.C. Code Section § 15-9-270 Service on Insurance Companies provides that the summons and any other legal process in any action against it must be served on an insurance company as defined in Section § 38-1-20 by delivering two copies of the summons or other legal process to the Director of the Department of Insurance.

In White Oak Manor v. Lexington Ins. Co., 394 S.C. 375, 715 S.E.2d 383 (August 10, 2011) the South Carolina Court of Appeals reversed the circuit court’s entry of default against Lexington Insurance Company where the plaintiff had failed to serve the insurer through the Department of Insurance. The court also held that inclusion of a service clause in the policy did not constitute a waiver of the insurance company’s right to insist on statutory service of process. Lexington had disputed that process was effective even under the service of suit clause in the policy. Lexington also argued the circuit court erred in failing to set aside the entry of default.  As the Court of Appeals concluded that the code sections referenced above are mandatory in their requirement of service of process on the Department of Insurance, the court did not address Lexington’s other challenges to the circuit court’s rulings.  White Oak Manor has filed a petition for writ of certiorari in the South Carolina Supreme Court, which is currently pending.  We will update this entry when the Supreme Court rules on that petition.     

- Pete  

Wind warning for tonight

The National Weather Service is predicting gusts of up to 60 miles per hour in parts of Washington state tonight, including San Juan County, western Whatcom County, western Skagit County and the Admiralty Inlet area.

The day after windstorms, we often get a wave of calls from people with toppled trees, debris-damaged cars, etc.

To help, we put together this list of typical questions, including:

Am I covered if my car was damaged by falling tree limbs?
My yard is covered with branches and debris. Will my insurer pay the cleanup costs?
My boat sank from strong winds. Am I covered?
My business' awning was damaged by the wind. Can I file a claim?

Be careful out there.

Sentencing this afternoon for insurance agent who stole $1 million from elderly clients

Former insurance agent Jasmine Jamrus-Kassim is scheduled to be sentenced later today for stealing more than $1 million in retirement savings from several elderly clients. Jamrus-Kassim pleaded guilty last month to 10 counts of first-degree theft.

The King County Prosecutors Office is seeking an exceptional prison sentence of 68 months. The case is State v. Jamrus-Kassim, with sentencing slated at 3:30 p.m. before Judge Sharon Armstrong in courtroom E-847.

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. 

Update: As it turned out, sentencing was continued until Dec. 9 after Jamrus-Kassim demanded a new attorney.

Thankful for America

Something to be Thankful For

We woke up this morning in a country that enjoys rare blessings and protections.

Think of how improbable it is that a few colonies could stand up to the most formidable navy in the world during the Revolutionary War and survive. We really should have lost, even with France’s help. It looked like we would never stay united following the War Between the States and the explosive issues of slavery and states’ rights that drive that tragic conflict. When Japan had the drop on us at Pearl Harbor, and virtually destroyed the Pacific Fleet, we could have easily folded. When Nazi Germany’s superior war machine rolled roughshod across Europe, it was more likely we’d never stop them. On D-Day, our gliders and airdrops were mostly miles off course, many of our troops were scattered across the countryside of France. U.S. defeat was in sight. The U.S. invasion of Normandy beach was a killing field for our troops. The bad weather conspired to drown many heavily loaded men before they ever even faced the German pills boxes laying down incessant machine gun fire. The Germans had the high ground. And, they were ahead of the U.S. in both jet engine technology and the atomic bomb. Using only what we can see, America should never have survived.

But we did.

And we thrived.

The United States is the world’s remaining Superpower. We are sailing eleven (11) Aircraft carriers through the world’s troubled waters, while no other country has more than two. Although North America has only 6% of the world adult population, it accounts for 34% of household wealth.

All this success causes some interesting points. We call the Super Bowl winners the “World” Champions even though the football series is only played by American teams. In fact, the rest of the world thinks “football” is what we call “soccer.” Similarly, the “World Series” in baseball is limited to North American teams.

We tend to think America is somehow superior to other nations. I am one of the those, too.

But I think that we can trace our blessings back to the beginning. This Thanksgiving, read some true Mayflower history to your family. Here is the modern version of the text of the Mayflower Compact, signed as they ventured upon the “new world” in 1620:

“In the name of God, Amen. We, whose names are underwritten, the loyal subjects of our dread Sovereign Lord King James, by the Grace of God, of Great Britain, France, and Ireland, King, defender of the Faith, etc.

Having undertaken, for the Glory of God, and advancements of the Christian faith and honor of our King and Country, a voyage to plant the first colony in the Northern parts of Virginia, do by these presents, solemnly and mutually, in the presence of God, and one another, covenant and combine ourselves together into a civil body politic; for our better ordering, and preservation and furtherance of the ends aforesaid; and by virtue hereof to enact, constitute, and frame, such just and equal laws, ordinances, acts, constitutions, and offices, from time to time, as shall be thought most meet and convenient for the general good of the colony; unto which we promise all due submission and obedience.

In witness whereof we have hereunto subscribed our names at Cape Cod the 11th of November, in the year of the reign of our Sovereign Lord King James, of England, France, and Ireland, the eighteenth, and of Scotland the fifty-fourth, 1620.”

I believe it is that same God, Who has blessed us with the bravery of our Veterans, the sharpness of our intellects, the wealth of our resources and the protection of His Mighty Hand.

Happy Thanksgiving from my family, and from the Staff of Peel Law Firm.

___________________________

See more of Mr. Peel’s articles on insurance-coveragelaw.blogspot.com. Mr. Peel may be available to speak to your church or club. Contact PeelLawFirm.com.

Elena Mabry

emabry@bigriver.net

www.PeelLawFirm.com

McQueen v. Echelon General Insurance Co. [2011] O.J. No. 4563 (Ont CA)

Appeal by the insurer from an award of accident benefits and damages for mental distress.

At trial, the plaintiff sought housekeeping, transportation, costs of medical assessments and damages for bad faith and mental distress.

The insurer made three major arguments on the issue of damages for mental distress:

1. That there was procedural unfairness based on the trial judge’s
consideration of conduct unrelated to rejected claims for statutory
accident benefits;

2. That merely denying benefits does mean that there was bad faith; and

3. That the trial judge lacked jurisdiction to make an award for mental
distress.

The trial judge quickly dismissed the initial two arguments by concluding that the plaintiff was seeking to recover damages for more than the SABS benefits and that this was not a case where the insured simply denied benefits.

In regards to the allegation that there was merely a denial of benefits the appeal judge agreed with the trial judge on the following points:

• The insurer had a duty to act in good faith in all its dealings with the
insured and had an additional duty not to inflict unnecessary mental
distress. Fidler v. Sun Life Assurance Co. Ltd. 2006 2 SCR 3 (Fidler);

• That the insurer repeatedly refused to provide benefits noting that they
were not “reasonable and necessary”, but never provided and reasons why
they were not reasonable and necessary;

• That damages were warranted because benefits were denied contrary to
medical recommendations;

• That the insurer took an adversarial approach to the plaintiff in the
beginning;

• That the one object of the insurance contract was to secure the plaintiff’s
peace of mind and that it was within the reasonable contemplation of the
parties that breach of peace of mind promise would bring about mental
distress; and

• That the plaintiff’s mental distress was palpable and accepted her evidence
that the change in her emotional and psychological conduct was the result
of her relationship with the insurer.

In regards to the jurisdiction argument, the insurer argued that the plaintiff was not a party to the insurance contract since it was her husband’s policy, and therefore, she was not entitled to claim for damages for mental distress.

It was further argued that Fider was distinguishable because Fidler dealt with LTD benefits not SABS benefits and that consequently, peace of mind cannot have been a contemplated term.

The appeal judge held that the reasoning in Fidler applies to an insured person under an automobile policy, whether the person is the named party or not.

“Mental distress to anyone insured under the policy upon breach would
have been within the reasonable contemplation of the insurer and the
insured and, thus, damages are recoverable pursuant to the basic
principle of compensatory damages.”

….

“People purchase motor vehicle policies to protect themselves from
financial and emotional stress and insecurity. An object of such
contracts is to secure a psychological benefit that brought the prospect
of mental distress upon breach within the reasonable contemplation of
the parties at the time the contract was made.”

In the end, the appeal judge affirmed all aspects of the trial judge’s decision only modifying the total awarded under the transportation head of damages as the trial judge provided inadequate reasons for the amount.

- Alison McBurney

Fourth Circuit Holds Prior Knowledge Provision Is Condition Precedent to Coverage

Post by Logan Wells

On September 6, 2011, the United States Court of Appeals for the Fourth Circuit amended its March 24, 2011 opinion in Bryan Brothers, Inc. v. Continental Casualty Co., which held that the prior knowledge provision in a policy is a condition precedent, not an exclusion, and changed the status of the opinion from unpublished to published.

In Bryan Brothers, Inc. v. Continental Casualty Co., an accounting firm sought coverage under a claims made and reported professional liability insurance policy issued by Continental Casualty Co. for liability arising from illegal acts of a former Bryan Brother’s employee. Continental denied coverage under the policy’s prior knowledge provision, which provided as follows:

In accordance with all the terms and conditions of this policy, we will pay on your behalf all sums in excess of the deductible, up to our limits of liability, that you become legally obligated to pay as damages and claim expenses because of a claim that is both first made against you and reported in writing to us during the policy period by reason of an act or omission in the performance of professional services by you or by any person for whom you are legally liable provided that:

. . .

2. prior to the effective date of this policy, none of you had a basis to believe that any such act or omission, or interrelated act or omission, might reasonably be expected to be the basis of a claim

In other words, Continental denied coverage because the former employee had reason to believe, before the effective date of the policy, that her thefts might become the basis for claims.

Bryan Brothers brought suit for coverage under the policy and the parties filed cross-motions for summary judgment. Bryan Brothers argued the prior knowledge provision was an exclusion from, as opposed to a condition precedent to, coverage. Therefore, by Bryan Brothers’ reasoning, because the former employee was the only insured with prior knowledge of her thefts, coverage was saved for insureds other than the former employee by the innocent insureds provision:  

If coverage under this Policy would be excluded as a result of any criminal, dishonest, illegal, fraudulent, or malicious acts of any of you, we agree that the insurance coverage that would otherwise be afforded under this Policy will continue to apply to any of you who did not personally commit, have knowledge of, or participate in such criminal, dishonest, illegal, fraudulent or malicious acts or in the concealment thereof from us.

Continental, on the other hand, argued the prior knowledge provision was a condition precedent that precluded coverage if unfulfilled. Further, Continental argued coverage was not denied because the former employee’s acts were “illegal” under the bad acts exclusion; consequently, the innocent insureds provision was not triggered to save coverage otherwise precluded by the prior knowledge provision.

Applying Virginia law, the court sided with Continental and found Bryan Brothers had failed to fulfill a condition upon which Continental’s obligation was dependent:

The plain language and structure of the policy convince us that the prior knowledge provision is a condition precedent to coverage. In the first coverage agreement clause, Continental Casualty Company agrees to cover Bryan Brothers’ liability on claims made during the policy period "provided that . . .prior to the effective date of this policy, none of you had a basis to believe that any such act or omission, or interrelated act or omission, might reasonably be expected to be the basis of a claim" (emphasis added). This language may be rephrased to say that if any defined "you" knew prior to the effective date of the policy that an act or omission might become the basis for a claim, any claims arising from such acts or omissions are not covered. Here, Bryan Brothers’ lack of prior knowledge is a condition of Continental Casualty Company’s agreement to cover Bryan Brothers’ liability from acts predating the policy. Because Whitworth had prior knowledge, "[t]here has been a failure to fulfill a condition upon which [Continental Casualty Company’s] obligation is dependent."

This interpretation melds with the concept of fortuity, a fundamental premise of insurance law. Insurers do not usually contract to cover preexisting risks and liabilities known by the insured. Thus, it is generally the insured’s duty to provide truthful and complete information so the insurer can fairly evaluate the risk it is contracting to cover. If the insured fails to comply with a clear condition required by the insurer, it is typically not liable on the policy.

Here, the prior knowledge provision essentially makes fortuity a condition of coverage. The prior knowledge provision indicates in clear and unambiguous language Continental Casualty Company’s unwillingness to cover liability arising from prior acts or omissions that any insured might reasonably expect to result in a claim.

(internal citations omitted).

In addition, the court found that Continental’s denial of coverage was based on Bryan Brothers’ failure to comply with a condition precedent; thus, the innocent insureds provision, which appeared to be an exception to the bad acts exclusion, was not implicated. The court also noted that even if the innocent insureds provision could be considered an exception to the prior knowledge provision, “it is elemental that exclusions and exceptions in an insurance policy cannot expand the scope of agreed coverage.” Accordingly, the court found that the innocent insureds provision could not provide coverage that was precluded by the plain language of the prior knowledge provision.

Are insurers looking at your Facebook page?

There's an interesting article in Insurance & Technology, detailing the ways in which insurers could use -- and in some cases, are starting to use -- the information you post on your social media sites.

"When placed in public areas of users' profiles, these photos -- not to mention location information and personal statements in status updates -- represent data insurers can potentially use for claims and underwriting purposes,"

writes I&T's Nathan Golia, citing an October report from consulting firm Celent.

In a summary of the report, ABA Banking Journal called social media "a huge marketing and engagement potential for insurers," adding that:

"Most insurers are currently involved in only defensive actions. Celent expects that over the next three years, companies familiar with social media will being to apply social data to their buisinesses," and looking for vendors to help them capture, store and analyze social media data.

Insurance Networking News also reports that:

Celent predicts that social data will be incorporated into core underwriting and claims processes over the next three years and become standard inputs into risk evaluation and settlement activities."

In other words, your insurer may not be reading your Facebook profile or Tweets yet. But it may be soon.

Fraud on pet insurance increasing in England

Read all about it here.  But only if you want to be outraged and saddened.

Veterans tribute

Tribute to Veterans

I have felt blessed to live in the United States all my life. Part of what makes our country great is the ample freedom we enjoy.

But, as the saying goes, “freedom is not free.”

The security, power and military superiority of the United States was earned by the blood, sweat, tears and backs of our veterans.

This “blanket of security” is indeed, stitched with bloody gauze of our servicemen and women. While I have enjoyed its protection, I have never contributed a square of cloth to it.

I am convicted by the courage of the veterans who charged the beaches of Normandy in World War II. This “greatest generation” quite literally saved the world from the Nazi’s plan to take over the world.

I admire the men who faced the Battle of Inchon in the Korean Conflict. I am confronted by the bravery of the men who faced the incessant attacks of the Vietcong. In both these conflicts, our servicemen who received tragically little support from back home.

More recently, our service personnel freed tiny Kuwait from attacks by Saddam Hussein of Iraq during Desert Storm; only to return later and liberate Iraq and Afghanistan from Islamic extremists. Make no mistake: the U.S. won both those wars handily!Defeating insurgencies is quite another matter, and is a police matter that we are asking our troops to do.

I am glad to see how much more support our returning troops now receive. At the college football games I attend, some of the loudest cheers are often for a service man or woman being reunited with his or her family.

We can all simply acknowledge the contribution they have made, and continue to make, to do their duty on our behalf.

___________________________

See more of Mr. Peel’s articles oninsurance-coveragelaw.blogspot.com. Mr. Peel may be available to speak to your church or club. Contact PeelLawFirm.com.

Tacoma landlords charged with insurance fraud

A Pierce County couple and an acquaintance of theirs have each been charged with one felony count of insurance fraud.

William Harold Dummitt and Carole A Dummitt-Dombrowski rent out a cottage behind their home in Tacoma. On Nov. 25, 2010, the cottage had a water leak. The Dummitts submitted a claim to their insurer, USAA.

But they allegedly inflated their loss by claiming they’d been getting more rent from the cottage than they did – and to try to prove that by forging a renter’s signature on a false rental agreement.

Their acquaintance, Philip R. Burgess, told an investigator that he’d moved into the cottage on Dec. 1, 2010 and had to move out because of the sudden leak. But when the leak actually happened – Nov. 25, 2010 – Burgess was actually living in Portland, Ore.

Arraignment is scheduled for Nov. 18.

Update: (Feb. 1, 2012): William and Carole Dummitt each pleaded guilty to one count of false claims or proof in an insurance claim. Both were ordered to pay $1,200 in costs and assessments, and were each sentenced to 3 days in jail, which was converted to 24 hours of community service.

Okay -- an insurer should be bound by a mutual mistake over the terms of the policy . . . sometimes

Last week I wrote a somewhat snide post about a Superior Court decision in Caron v. Horace Mann Ins. Co., a decision that was reported in Massachusetts Lawyers Weekly but that I have not seen. The judge apparently held that an insurance company is bound by a mutual mistake between an insured and an agent over the terms of the policy.

My knee-jerk reaction was that the terms of the policy always trump, and that an insured is presumed to have read and understood the policy. But I can certainly see how a case could be made that if an insured believes that he or she is purchasing certain coverage, and the insurance agent, acting on behalf of the insurer, believes that he or she is selling that coverage, such coverage should be read into the policy.

Such a result could only apply in specific circumstances. Take, for example, Welch Foods, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, __ F.3d __, 2011WL 5027445 (1st Cir.), the other case I discussed in last week's post.

If the insured had said to the agent prior to purchasing the policy, "I want to make sure that there is coverage for claims of deceptive trade practices," and the agent, speaking on behalf of the insurer, had looked at the policy and said, "Yep, there's no exclusion for that," but there actually was such an exclusion hidden under a label "AntiTrust Exclusion," then it would be fair that the insurer be bound by the mutual mistake. And maybe as the insurer is suing the agent for negligence, it could send a memo to its underwriting department to label the policy provisions more accurately.

Sheikh v. Pinheiro 2011 ONSC 6143

We thank M. Edward Key of O’Donnell, Robertson & Sanfilippo for this contribution to our blog.

The plaintiff was going westbound in her vehicle and the defendant taxi driver was travelling northbound in his taxi. They collided at an intersection. The defendant taxi then went on to collide with a southbound vehicle. That southbound vehicle did not collide with the plaintiff’s vehicle.

None of the drivers appeared to be hurt. They all went to the same Collision Reporting Center and filled out very detailed collision reports. There was no question who was driving what vehicle.

On the second anniversary of the collision, the plaintiff brought an action against the driver of the southbound vehicle, believing that he was the taxi driver. Essentially, the plaintiff got the other two drivers confused.
Two years after that (i.e. four years after the collision), the plaintiff commenced a separate action against the real taxi driver after realizing the mistake.

The taxi driver brought a motion for summary judgment on the basis that the action was limitation barred.

The plaintiff argued that there was a genuine issue regarding when the plaintiff knew or ought to have known the true identity of the driver that hit her vehicle. The motion judge made short work of that argument. In particular, for strategic reasons, the plaintiff did not swear an affidavit regarding the state of her personal knowledge of the issues, and the motion materials only included affidavits from their lawyers. The judge determined that the information was readily available in the form of the Self Collision Reports.

Alternatively, the plaintiff argued that there was a genuine issue for trial on the basis that she could not "discover" that her injuries were likely to satisfy the Insurance Act threshold until 2 years before she started the second action.
The motions judge rejected the plaintiff's argument. The trial judge considered that the medical evidence was clear that it was "reasonably discoverable" that the plaintiff's injuries met the threshold more than two years before the second action was commenced.

The motion judge looked not only at medical reports, but also relied on the fact that the first Statement of Claim (issued exactly 2 years after the accident) alleged that she sustained "serious and permanent injuries." The motion judge stated at paragraph 47 of his reasons that, "While this action was mistakenly directed against the wrong defendant, this assertion by the plaintiff in the Statement of Claim is akin to an admission that, by at least that time, if not earlier, the plaintiff viewed her injuries from the accident as serious and permanent, and that they had thereby discovered their potential cause of action."

The Transference Phenomenon: Sexual Misconduct & Healthcare Professional Liability Coverage

Post by Lee Floyd

At first blush, it might not seem that a healthcare professional liability insurance policy would cover injuries due to alleged sexual misconduct by a healthcare professional. Instead, one might assume such conduct would not be considered “professional services” or would be an excluded criminal act.

For medical doctors and most other healthcare professionals, this assumption would likely be correct.[1] However, when the sexual misconduct is by a psychiatrist and during the course of a therapeutic relationship, there is a potential for coverage due to what is known as the “transference phenomenon.”

The transference phenomenon is:

[t]he emotional reaction which the patient in therapy has toward the therapist. The patient in therapy ‘“unconsciously attributes to the psychiatrist or analyst those feelings which he may have repressed towards his own parents.... [I]t is through the creation, experiencing and resolution of these feelings that [the patient] becomes well.’” ‘“Inappropriate emotions, both hostile and loving, directed toward the physician are recognized by the psychiatrist as constituting ... the transference. The psychiatrist looks for manifestations of the transference, and is prepared to handle it as it develops.’”[2]

This issue is unique to the field of psychiatry and psychiatrists are educated about how to handle this phenomenon. On that basis, some courts have reasoned that allegations of sexual assault during the therapeutic relationship are sufficient to allege “damages arising out of the performance services rendered or which should have been rendered.”[3] 

While some courts have reached a different conclusion,[4] generally one must keep in mind that allegations of sexual misconduct against a psychiatrist may be sufficient to create the possibility of coverage under a healthcare professional liability insurance policy. 

---

[1] E.g., Snyder v. Major, 789 F. Supp. 646, 649 (S.D.N.Y. 1992) (“[T]he prevailing view is that sexual conduct is not a medical incident for insurance purposes unless the physician is a psychiatrist and the sexual incident arises out of a therapeutic relationship.”); Christopher Vaeth, Coverage of Professional-Liability or Indemnity Policy for Sexual Contact with Patients by Physicians, Surgeons, and Other Healers, 60 A.L.R.5th 239 (1998 & Supp. 2011) (“A mental-health therapist's sexual conduct has oftentimes been found covered since the development of an intense emotional relationship is an expected part of the therapeutic relationship. The courts have held in many cases, however, that a physician's sexual acts are not covered since such conduct does not constitute the rendering of professional services.”).

[2] L.L. v. The Med. Protective Co., 362 N.W.2d 174, 177 (Wisc. Ct. App. 1984) (quoting D. Dawidoff, The Malpractice of Psychiatrists 6 (1973) & Heller, Some Comments to Lawyers on the Practice of Psychiatry, 30 Temp.L.Q. 401, 401-02 (1957)).

[3] St. Paul Fire & Marine Ins. Co. v. Mitchell, 296 S.E.2d 126, 127-28 (Ga. Ct. App. 1982).

[4] Dodge v. Legion Ins. Co., 102 F. Supp. 2d 144 (S.D.N.Y. 2000) (holding a patient's allegation of “kissing, embracing, sodomizing and engaging in intercourse” with her psychiatrist during her therapy sessions was not a covered “occurrence,” which was defined in professional liability policies as act or omission that was neither expected nor intended by psychiatrist; the factual basis of patient's claim consisted solely of acts that were intrinsically intentional.”).

New Federal Insurance Office to compile financial data on insurers

Here's a detailed article that explains upcoming changes in the public availability of financial data on insurers.

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Best,

Scott

Keep your policies forever

I can't say it too often: Keep copies of your insurance policies, forever, in a place you can find them. If at the beginning of your policy year your insurer or agent sends you only the coverage selection (or "declarations") page -- the page that summarizes your coverages -- ask for a copy of the entire policy. Do it immediately or you may never get it. And when you get it, make sure that the policy forms and endorsements provided match the forms and endorsements listed on the coverage selection page.

In almost every insurance coverage dispute I have ever been involved with, whether on the side of the insurer or the insured, the first challenge is obtaining a copy, preferably certified, of the policy. Whichever side I'm representing, it generally takes months.

Don't just keep your most recent policy. Keep all of them. For decades. Forever. If you have an occurrence-based policy and get hit with a Superfund suit -- say a property you owned for five years in the early 1990's has been discovered to be a site of toxic waste -- there might or might not be coverage under policies issued for each year that you owned the property. If the policies differed from one year to another, even if issued by the same insurer, there may be coverage under one year but not others.

Chances are that if the policies were issued not too long ago the insurer can, eventually, provide or recreate a copy. But at some point old documentation, especially but not exclusively from before the advent of computers, is lost. Insureds have the burden of proving coverage under a policy. The easiest way to do that is to provide the court with a copy of the policy, not to guess, "When my grandfather owned the company he was friends with an adjuster at Acme Insurance, so . . ."

Statutory Duty of Care

Morsi v. Femer Paving Ltd. [2011] O.J. No. 3960

This is an appeal from a trial decision that held York Region and Femer Paving Ltd each 25 % liable for a single car motor vehicle accident. The deceased was driving in excess of the speed limit, ignoring speed and construction signs and lost control of his vehicle when the road surface changed from fresh pavement to gravel.

The trial judge held that the plaintiff was 50% to blame for the accident, leaving the defendants with the other 50%.

York Region and Femer Paving appealed the decision.

York Region’s main submission was that after the trial Judge correctly stated the main issue and the test for resolving the issue …

“Whether at the material time Major Mackenzie drive was in a state of repair that was reasonable in the circumstances such that users of the road, exercising ordinary care, could travel upon it safely.”

… that he did not apply the test to the facts of the case.

“The evidence of Detective Stock and the Varicom tests as well as the evidence of Constable Herbert and the various engineering experts establishes that if Mark Morsi had operated his vehicle at the posted speed or even a speed modestly above it, he would have been able to successfully negotiate the transition area.”

The Ontario Court of Appeal found the driver to be reckless having accelerated to 117 km/h through a long curve and straightaway and ignoring two 60km/h speed signs, a reverse curve sign, a 40 km/h advisory sign and two construction signs. This was not a driver exercising ordinary care.

The appeal was allowed and the action by the driver’s family was dismissed.

- Alison McBurney

Disagreement between First Circuit and Superior Court on whether terms of insurance policy control coverage

Welch Foods was sued by a competitor and by consumers for placing a label on a three juice blend bottle that pictured mainly pomegranates, even though the juice blend consisted primarily of apple and grape juice. A jury in California found that the label had a tendency to deceive a substantial number of customers. (Really? You really think that a three juice blend will consist primarily of pomegranate juice?)

Welch requested insurance coverage from National Union Fire Insurance Co. of Pittsburgh, PA. National Union denied the claim on the basis of an exclusion labeled "Antitrust Exclusion," which, in addition to excluding antitrust claims, also excluded coverage for unfair competition and deceptive trade practices.

In Welch Foods, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, __ F.3d __, 2011WL 5027445 (1st Cir.), the United States Court of Appeals for the First Circuit found that although the exclusions for unfair competition and deceptive trade practices were listed under the antitrust exclusion, the claims were effectively excluded. The court noted that the policy provided, "the description in the headings of this policy are solely for convenience, and form no part of the terms and conditions of coverage."

The court quoted the familiar language, "an insurance contract is to be interpreted according to the fair and reasonable meaning of the words in which the agreement of the parties is expressed. . . . Every word in an insurance contract must be presumed to have been employed with a purpose and must be given meaning and effect whenever practical."

By contrast, this week's Massachusetts Lawyers Weekly has a cover story on a Superior Court decision drafted by Judge Cornetta, Caron v. Horace Mann Ins. Co., which apparently held that an insurance company is bound by a mutual mistake between an insured and an agent over the terms of the policy, even if -- quoting Eric Parker, who represented the plaintiffs -- "some 50- or 75- page boilerplate policy they've been printing for years says [that different terms apply]. It's going to be changed to reflect the understanding of the parties."

Tired of being suprised by health rate changes?

Now you can sign up to get notified by e-mail whenever your health plan wants to make a rate change - and when we've made our decision.

A newly enhanced website, built with grant funds from Affordable Care Act, allows you to search rate requests for individual and small employer health plans, sign up to get an e-mail when your health plan wants a change, and make a public comment about requests still under review.

Eight requests are pending and eight decisions have been made - see the full details for yourself.