In a recent case from the Supreme Court of California, the court held than an insurer can recover allegedly excessive and unnecessary defense fees directly from the insureds’ independent Cumis counsel. Although the court limited its holding in a number of respects, the case could have major implications for those serving as independent Cumis counsel in California and other jurisdictions. Continue Reading
In the coming months, the United States Supreme Court will hear oral argument on a critical subrogation issue under the Employee Retirement and Income Security Act of 1974 (“ERISA”). The case is Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, Case No. 14-723, and is set for argument before the Court on November 9. Proponents on both sides argue that a ruling for either party will have serious implications for insurance plan participants.
In granting certiorari, the Supreme Court noted “[e]ight of the thirteen circuits have squarely and openly disagreed over the question presented[,]” which has resulted in “a widely acknowledged 6-2 circuit split.” The issue to be decided is whether the Petitioner, Robert Montanile, must reimburse his insurance company for medical expenses it paid before he received a settlement from the drunk driver who injured him. Continue Reading
Given the important role that commercial insurance plays in protecting, and sometimes saving, businesses of every size, smart companies pay attention to their insurance applications, insurance policies and other communications from their insurer. The cost of having a competent law firm conduct an audit of a company’s risks and insurance coverage pales in comparison to an expensive lawsuit against an insurance company when a claim is rejected.
An recent case in Alabama provides a good example of the harm that can be caused when policyholders are not careful to make sure they get their insurance coverage right. Late last month, the Alabama Supreme Court issued a verdict that made one thing clear: those who don’t read their insurance-policy applications – and instead rely solely on verbal advice from their insurance agents — run the risk of having their claims denied and their insurance policies cancelled. Continue Reading
Today’s Wall Street Journal front page features an article titled, “Travelers Doesn’t Want to Share its Umbrella,” about Travelers Insurance threatening suit against virtually every company that uses an umbrella as part of its logo – including Totes Isotoner Corp., the maker of…umbrellas.
According to the article, written by Wall Street Journal reporter Leslie Scism, Travelers — the $27 billion insurance giant — “has challenged at least 30 trademark applications across a range of industries, according to U.S. Patent and Trademark Office records.”
In a recent decision issued by the Supreme Court of New Hampshire, losses caused by a persistent odor can be considered a “physical loss” and thus covered under a homeowner’s insurance policy if the smell distinctly and demonstrably changes the condition of the property. While some jurisdictions may disagree, the decision serves as an important guide for courts dealing with policy interpretation issues. Continue Reading
A recent decision by the Supreme Court of Georgia is an important reminder to businesses and individuals whose policy contains a “consent-to-settle” clause – make sure you have the insurer’s approval before proceeding with a settlement; otherwise the insurer can deny coverage and refuse to pay the settlement amount on your behalf.
The case is Piedmont Office Realty Trust, Inc. v. XL Specialty Insurance Company, 2015 WL 1773620 (2015), in which Piedmont Office Realty Trust filed suit against its insurer alleging breach of an excess insurance policy and bad faith for refusing to pay the full amount of a settlement Piedmont had agreed to in a separate matter. Piedmont had an excess policy that provided an additional $10 million in coverage beyond its primary policy’s limits.
The excess policy was issued to Piedmont by XL Specialty Insurance Company, and included a “consent to settle” provision that required Piedmont to obtain XL’s consent for the settlement of any securities claim that Piedmont became “legally obligated” to pay. According to the clause, XL’s consent could “not be unreasonably withheld.” The policy also contained a “no action” provision, which precluded Piedmont from suing XL unless it was in “full compliance with all of the terms” of the policy.
As reported by The Daily Record, The Equal Employment Opportunity Commission filed a class-action suit last week against the Maryland Insurance Administration, claiming the agency is “willfully” paying its female insurance investigators and enforcement officers less than their male counterparts.
In a press release dated April 20, the EEOC says it attempted to reach a pre-litigation settlement with the agency before filing the suit. The case, filed April 15 in the U.S. District Court for the District of Maryland, Northern Division, is captioned EEOC v. Maryland Insurance Administration, Civil Action No. 1:15-cv-01091-JFM).
According to the press release, a spokesman for the Maryland Insurance Administration said the MIA strongly disputes the allegations and assured that “the case will be vigorously defended.”
Could it be that Maryland courts have finally started empowering policyholders in lawsuits against insurers, alleging bad faith and fraud? Successfully prosecuting such cases against insurers has historically been difficult in Maryland, which makes District Judge Deborah Chasanow’s recent ruling in Charter Oak Fire Insurance Company, et al. v. American Capital, Ltd., et al., all the more worthy of attention.
In Charter Oak, Charter Oak’s parent company, Travelers Insurance of America, is accused of acting in bad faith in its dealing with a policyholder. The case has been kept largely out of public view for the past six years, with many of the records sealed and much of the discovery deemed “protected.” But that is about to change.
Last month, highly respected U.S. District Judge Deborah Chasanow ordered that the case against Travelers can proceed and she also ordered unsealed several filings that have been kept out of public domain since 2009. She rejected what she called “boilerplate issues” being used by the parties to frustrate the proceedings going forward. Continue Reading
What would happen if Maryland’s rule of construction for insurance policies was turned on its head and Maryland courts construed policy language against insurers, rather than granting insurers deference? We may never know. When faced with the question recently, Maryland’s highest court, in an unusual move, dismissed People’s Insurance Counsel Division v. State Farm Fire and Casualty Co. as “improvidently granted.” Despite the case’s potential to impact thousands of Marylanders, the Court’s majority declined to decide the case on its merits without explanation, generating a strong and heated dissent.
The case arose from the collapse of Gregory and Moira Taylor’s carport from the weight of snow during the blizzard of 2010. The Taylors’ State Farm insurance policy contained a clause covering “the sudden collapse of a building,” so the Taylors thought they were covered. State Farm denied the claim, arguing that the term “building,” which was not defined in the policy, only applies to structures with walls. The Taylors’ carport, of course, did not have walls, and was thus deemed by State Farm not to be a “building,” and thus, not covered by the policy. Continue Reading
One recent appellate decision puts manufacturers on notice that they must take care in purchasing commercial insurance policies to ensure that their general liability policies provide the coverage they expect. A California appeals court has just handed down a verdict siding with insurer Lloyds of London in the insurance company’s denial of a claim involving $3 million in recalled beef used in frozen tacos and burritos. In Windsor Food Quality v. Underwriters of Lloyds, et al., the appellate court found that the policy underwritten by Lloyds covered the products made with the beef, but not the beef itself. The recalled beef was used in frozen tacos and burritos manufactured by Windsor Food Quality Company and marketed under the brand name, “Jose Ole.”
Windsor Food, which had a $4 million “Products Contamination Insurance” policy with Lloyds that covered “Accidental Product Contamination” and “Malicious Product Tampering,” had filed the claim shortly after the beef was recalled in 2008, as part of the largest beef recall in US history. Lloyds rejected Windsor’s claim on the grounds that it did not insure the beef, just the products in which the beef was used, and that there had been no accidental product contamination or malicious-product tampering of the product itself.