I read a very interesting article today about a hypothetical insurance coverage mediation in a publication that you need to subscribe to in order to have access - so I cannot link to it here. But for those of you who have access, you can read the article in LexisNexis® Mealey's™ Litigation Report, Insurance Bad Faith Volume 23, Issue #16 · December 24, 2009. It is titled, "The Mediation", and was written by John J. Pappas of the law firm of Butler Pappas Weihmuller Katz Craig LLP.
My wife, Vickie Pynchon, is a full time mediator and arbitrator who writes a blog devoted to the practical and academic issues raised by commercial mediations and arbitrations called Commercial ADR. I passed the article along to her. She posted an interesting commentary on the mediation that John had described, with her thoughts about what the hypothetical parties might have done to better achieve their goals and how they perhaps in fact did.
As Vickie says, there is no right or wrong that you can point to with any certainty. My own take on these issues, based not on the academic training that Vickie has had, is that she is correct that the early offers and counter-offers in the stratosphere or the basement are a total waste of time and do nothing to define the ball-park that the players want to play ball in. I also agree with John's last comment in the endnote to his article: both fact and truth are difficult to pin-down in such a process, but are not necessary for resolution. That perhaps is the greatest lesson for those involved in mediations who want to resolve the conflict, as most any mediator will likely tell you at some point during the course of a long day.
Monday, December 28, 2009
Tuesday, December 22, 2009
Common Sense Sometimes Wins the Day
I thought that perhaps I ought to simply refer you all to an article that I found in one of my networking groups that has such clarity and wisdom that I thought I ought to just pass it on and give the author, John DeGroote, the credit he deserves. John's article is called "Insurance Coverage: 4 Rules and 10 Tips for Policyholders". It appears in his blog called, approrpriately enough, "Settlement Perspectives" (December 15). As long as I am giving him full credit, he acknowledges in his blog post that the concepts for the article came from a longer article that he co-authored called "Bet the Company Litigation from a Policyholder's Perspective" that appearred in the ACC Docket put out by the Association of Corporate Counsel.
Now that I have complied with all of my fair use copyright and attribution obligations, let me just say that the article sounds so much like common sense that you might ask yourself how could anyone think otherwise? But it happens all of the time. Just look at John's tip #3: I can't tell you how often it is that companies fail to give notice often enough: either of "circumstances" (as some policies require), let alone of an actual claim. His practical tips are truly worthy of deep consideration.
I think you will find John's post, and the article from which it comes, worthwhile reading.
Now that I have complied with all of my fair use copyright and attribution obligations, let me just say that the article sounds so much like common sense that you might ask yourself how could anyone think otherwise? But it happens all of the time. Just look at John's tip #3: I can't tell you how often it is that companies fail to give notice often enough: either of "circumstances" (as some policies require), let alone of an actual claim. His practical tips are truly worthy of deep consideration.
I think you will find John's post, and the article from which it comes, worthwhile reading.
Tuesday, December 15, 2009
Chinese Drywall - Another Comment
So I just finished my posting yesterday about Chinese Drywall insurance coverage issues and the presentation by United Policyholders to the National Association of Insurance Commissioners (see my post immediately below). As if by telepathy, I shortly thereafter received the presentation notes from an attorney, Charles Miller, who has been long involved with the insurance industry and now consults with policy holders. Charles spoke to the Commissioners as well on the same subject as did Amy Bach of United Policyholders (that I mentioned yesterday) and explained why coverage should and does exist in reality for homeowners facing Chinese Drywall losses.
I thought that his presentation notes might be helpful for anyone thinking through or dealing with these issues.
So pleasse treat this as a belated supplement to yesterday's post.
I thought that his presentation notes might be helpful for anyone thinking through or dealing with these issues.
So pleasse treat this as a belated supplement to yesterday's post.
Monday, December 14, 2009
Chinese Drywall Redux - United Policyholders Nudges the Insurance Regulators
I posted back in August about the insurance coverage issues raised by the use of Chinese Drywall. Those issues not only won't go away but the severity of the problem seems only to increase.
Fortunately for policyholders, a group exists that perhaps you may not know about called United Policyholders. United Policyholders was founded in 1991 as non-profit tax-exempt organization dedicated to educating the public on insurance issues and consumer rights.
The Executive Director of United Policyholders, Amy Bach, recently was invited to make a presentation on the consumer perspective concerning Chinese Drywall insurance problems to the National Association of Insurance Commissioners at its Winter Meeting in San Francisco on December 7. Amy was able to tell the Commissioners about the problems with drywall and, more importantly, about the problems with the insurance companies the Commissioners regulate who are trying to bluff their way out of covering their policyholders. You might want to review Amy's Powerpoint presentation that was shown and distributed to the Commissioners.
Good going Amy! Policyholders are lucky to have you and United Policyholders on their side. For those of you who are reading this post and do not know of this organization, you might enjoy perusing its website.
Fortunately for policyholders, a group exists that perhaps you may not know about called United Policyholders. United Policyholders was founded in 1991 as non-profit tax-exempt organization dedicated to educating the public on insurance issues and consumer rights.
The Executive Director of United Policyholders, Amy Bach, recently was invited to make a presentation on the consumer perspective concerning Chinese Drywall insurance problems to the National Association of Insurance Commissioners at its Winter Meeting in San Francisco on December 7. Amy was able to tell the Commissioners about the problems with drywall and, more importantly, about the problems with the insurance companies the Commissioners regulate who are trying to bluff their way out of covering their policyholders. You might want to review Amy's Powerpoint presentation that was shown and distributed to the Commissioners.
Good going Amy! Policyholders are lucky to have you and United Policyholders on their side. For those of you who are reading this post and do not know of this organization, you might enjoy perusing its website.
Friday, December 4, 2009
If You Thought E-Discovery Was Bad, Hang on For Cloud Computing
All litigators who handle disputes for business entities and any business that has already gone through a major piece of litigation understand how expensive, time consuming, to be honest, down-right awful, is the experience of trying to ascertain where all potentially relevant information resides within a company's many computer systems, networks, and individual PCs.
But the world of technology is slowly moving towards data storage somewhere outside the physical locations of many companies and out into the "cloud" (i.e., onto servers maintained by internet service providers or other large companies). Having to search for data, however difficult within your own company (or that of a client), raises yet further difficulties when you need to coordinate with outside vendors and raises all types of questions about control and access to information that your company (or client) may not have thought about.
The articles on e-discovery are legion and many companies have developed consulting services regarding e-discovery. Many lawfirms, including my own, have developed this expertise as well in conjunction with the cases that we litigate for our clients. But the issues with cloud computing are just developing and virtually no law yet exists on the obligations and duties of a litigant to get documents and e-data from sources outside its company that stores the data that you (or your client) only has access to. That may raise all kind of questions, starting with the pre-existing contractual obligations of the cloud provider or the lack thereof.
I have found an excellent series of articles on cloud computing. Rather, than trying to summarize them, let me direct you to the 4th article on the subject of the intersection of e-discovery and cloud-computing. The article is titled Legal Implications of Cloud Computing -- Part Four (E-Discovery and Digital Evidence) by Tanya Forsheit of Informationlawgroup. Also, if you are a lawyer or have an interest in one judge's views on e-discovery in general, you might also want to read the decision Tanya discusses, Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534 (D. Md. 2007)
The bottom line is that as a company moves to cloud computing and data storage, yet more thinking is required in advance of litigation and once litigation commences or is likely to commence. These are not easy issues nor ones that can be inexpensively dealt with.
But the world of technology is slowly moving towards data storage somewhere outside the physical locations of many companies and out into the "cloud" (i.e., onto servers maintained by internet service providers or other large companies). Having to search for data, however difficult within your own company (or that of a client), raises yet further difficulties when you need to coordinate with outside vendors and raises all types of questions about control and access to information that your company (or client) may not have thought about.
The articles on e-discovery are legion and many companies have developed consulting services regarding e-discovery. Many lawfirms, including my own, have developed this expertise as well in conjunction with the cases that we litigate for our clients. But the issues with cloud computing are just developing and virtually no law yet exists on the obligations and duties of a litigant to get documents and e-data from sources outside its company that stores the data that you (or your client) only has access to. That may raise all kind of questions, starting with the pre-existing contractual obligations of the cloud provider or the lack thereof.
I have found an excellent series of articles on cloud computing. Rather, than trying to summarize them, let me direct you to the 4th article on the subject of the intersection of e-discovery and cloud-computing. The article is titled Legal Implications of Cloud Computing -- Part Four (E-Discovery and Digital Evidence) by Tanya Forsheit of Informationlawgroup. Also, if you are a lawyer or have an interest in one judge's views on e-discovery in general, you might also want to read the decision Tanya discusses, Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534 (D. Md. 2007)
The bottom line is that as a company moves to cloud computing and data storage, yet more thinking is required in advance of litigation and once litigation commences or is likely to commence. These are not easy issues nor ones that can be inexpensively dealt with.
Wednesday, December 2, 2009
California Supreme Court Speaks Yet Again on Punitive Damage Limitations
The California Supreme Court has just spoken again on the issue of punitive damages. On Monday, November 30, 2009, the California high court handed down in its decision in Roby vs. McKesson Corporation. (The preceding link is to the official web site of the California Supreme Court and will only be current for 120 days.)
In Roby, the Supreme Court ruled that the maximum punitive damages award allowed under the federal constitution in the context of the facts of this case were no higher than a 1 to 1 ratio of punitive damages to compensatory damages. Purporting to apply the tests of State Farm Mut. Auto Ins. Co. v. Campbell (2003) 538 U.S. 408, 416-418 (State Farm) and BMW of North America v. Gore (1996) 517 U.S. 559, 568 (BMW), the Court ruled that the facts of this case fell within what it characterized as a low level of reprensibility and was coupled with what it characterized as a substantial award for non-economic damages (i.e., emotional distress). The conclusion that the wrongdoing was only "sort-of" reprehensible seemed to be driven by the stated and unstated evaluation of the fact that only a mid-level manager of a large and wealthy corporation was involved in the wrong-doing, even though his acts were repeated (frequency being the supposed test for evaluating wrongdoing). The opinion reads as if the Court were almost siding with the company because it was being stuck with liability by one of its supposedly rogue mid-level managers.
The concurring and dissenting opinion, however, felt that the maximum cap for a punitive award could be larger than a 1 to 1 ratio. However, even that opinion would allow no more than a 2 to 1 ratio.
If you work for or are the risk manager of a company, you might be very pleased with this decision as it shows a court's hostility towards charachterizing conduct as "really" bad (read the concurring/dissenting opinion to see why those justices would call the conduct "moderately" reprehensible). The decision also demonstrates the importance of the litigation strategy of characterizing the conduct.
If, however, you or your company are involved in litigation with an insurance company over their bad faith treatment of your company, you might find this decision certainly troubling. At no point does the Court deal in any meaningful way with the wealth of the corporation, although it does pay lip service to the fact that wealth has survived as an evaluative criterion even after the hostile U.S. Supreme Court decisions in State Farm and BMW. Yet, without assessing that impact, the California Supreme Court lets stand a reduced award that may (as far as one can tell from reading this decision) be a mere pin-prick in the operations and revenues of the defendant.
Applied to insurance bad faith litigation, this decision shows the need for the policyholder to perservere in demonstrating that the conduct complained of was sanctioned on high within the insurance company, was part of or a component of (if true) a general course of dealing or set of practices, and was more than the conduct of a mere rogue actor. Proving these fact, however, ought often to be fairly easy, given that many insurance company decisions -- at least with respect to sizeable claims -- are made by several people at varying levels of authority and reviewed by lawyers who are often involved to try to cloak the decision making process with privilege protection.
This decision makes highly relevant the practices of the defendant even when the acts complained were undertaken by a single individual so the plaintiff (policyholder in an insurance suit or plaintiff in the liability suit) can demonstrate facts pertaining to "who knew" and "how common". I believe that we will see this decision cited in numerous discovery battles over the scope of potentially relevant discovery.
In Roby, the Supreme Court ruled that the maximum punitive damages award allowed under the federal constitution in the context of the facts of this case were no higher than a 1 to 1 ratio of punitive damages to compensatory damages. Purporting to apply the tests of State Farm Mut. Auto Ins. Co. v. Campbell (2003) 538 U.S. 408, 416-418 (State Farm) and BMW of North America v. Gore (1996) 517 U.S. 559, 568 (BMW), the Court ruled that the facts of this case fell within what it characterized as a low level of reprensibility and was coupled with what it characterized as a substantial award for non-economic damages (i.e., emotional distress). The conclusion that the wrongdoing was only "sort-of" reprehensible seemed to be driven by the stated and unstated evaluation of the fact that only a mid-level manager of a large and wealthy corporation was involved in the wrong-doing, even though his acts were repeated (frequency being the supposed test for evaluating wrongdoing). The opinion reads as if the Court were almost siding with the company because it was being stuck with liability by one of its supposedly rogue mid-level managers.
The concurring and dissenting opinion, however, felt that the maximum cap for a punitive award could be larger than a 1 to 1 ratio. However, even that opinion would allow no more than a 2 to 1 ratio.
If you work for or are the risk manager of a company, you might be very pleased with this decision as it shows a court's hostility towards charachterizing conduct as "really" bad (read the concurring/dissenting opinion to see why those justices would call the conduct "moderately" reprehensible). The decision also demonstrates the importance of the litigation strategy of characterizing the conduct.
If, however, you or your company are involved in litigation with an insurance company over their bad faith treatment of your company, you might find this decision certainly troubling. At no point does the Court deal in any meaningful way with the wealth of the corporation, although it does pay lip service to the fact that wealth has survived as an evaluative criterion even after the hostile U.S. Supreme Court decisions in State Farm and BMW. Yet, without assessing that impact, the California Supreme Court lets stand a reduced award that may (as far as one can tell from reading this decision) be a mere pin-prick in the operations and revenues of the defendant.
Applied to insurance bad faith litigation, this decision shows the need for the policyholder to perservere in demonstrating that the conduct complained of was sanctioned on high within the insurance company, was part of or a component of (if true) a general course of dealing or set of practices, and was more than the conduct of a mere rogue actor. Proving these fact, however, ought often to be fairly easy, given that many insurance company decisions -- at least with respect to sizeable claims -- are made by several people at varying levels of authority and reviewed by lawyers who are often involved to try to cloak the decision making process with privilege protection.
This decision makes highly relevant the practices of the defendant even when the acts complained were undertaken by a single individual so the plaintiff (policyholder in an insurance suit or plaintiff in the liability suit) can demonstrate facts pertaining to "who knew" and "how common". I believe that we will see this decision cited in numerous discovery battles over the scope of potentially relevant discovery.
Wednesday, November 25, 2009
Collateral Source Rule Protects Tort Plaintiff's Recovery for Health Insurance Discounts
Here is an interesting case. The plaintiff in an auto accident sued for her full damages resulting from the accident. The defendant was found liable but sought to reduce the award by the amount of the difference between what her medical insurance actually paid and the total for which she was liable to the providers. Thus, the case focused upon whether the collateral source rule protected not only the amounts paid by the medical insurer, but also the huge discounts which often reach into the stratosphere that the insurers squeeze out of the providers.
In Howell v. Hamilton Means and Provisions, 2009 DJDAR 16748 (11/23/2009), the California Fourth District Court of Appeal ruled that the plaintiff was indeed entitled to her full medical expenses and the defendant was not entitled to any reduction reflecting the negotiated price reduction obtained by the insurer. The insurance company lobby filed an amicus brief in support of the defendant. The court disagreed with the analysis of other appellate court decisions and concluded that any abrogation of the collateral source rule should be undertaken by the Legislature, not by the courts.
This case is an unusual example of a conservative leaning court (we do not legislate) ultimately filing a decision that clearly supports the plaintiff's bar.
The decision has been published. Given the conflict amoungst several appellate courts in Califonria on this subject, it will be interesting to see whether or not the California Supreme Court takes this decision for review (which effectively removes it from the books) or depublishes it. For those of you not from California, seeking depublication is a tactic that insurance companies often seek to use to remove the precedential value of adverse decisions because a depublished decision cannot be cited by others as precedent, even though it remains the law of the case. The Supreme Court could also let the decision stand. I suspect that the insurance company lobby (openly or through the defendant) will move the appellate court to de-publish the decision and, if that maneuver fails, have the defendant seek review by the state Supreme Court.
Stay tuned.
In Howell v. Hamilton Means and Provisions, 2009 DJDAR 16748 (11/23/2009), the California Fourth District Court of Appeal ruled that the plaintiff was indeed entitled to her full medical expenses and the defendant was not entitled to any reduction reflecting the negotiated price reduction obtained by the insurer. The insurance company lobby filed an amicus brief in support of the defendant. The court disagreed with the analysis of other appellate court decisions and concluded that any abrogation of the collateral source rule should be undertaken by the Legislature, not by the courts.
This case is an unusual example of a conservative leaning court (we do not legislate) ultimately filing a decision that clearly supports the plaintiff's bar.
The decision has been published. Given the conflict amoungst several appellate courts in Califonria on this subject, it will be interesting to see whether or not the California Supreme Court takes this decision for review (which effectively removes it from the books) or depublishes it. For those of you not from California, seeking depublication is a tactic that insurance companies often seek to use to remove the precedential value of adverse decisions because a depublished decision cannot be cited by others as precedent, even though it remains the law of the case. The Supreme Court could also let the decision stand. I suspect that the insurance company lobby (openly or through the defendant) will move the appellate court to de-publish the decision and, if that maneuver fails, have the defendant seek review by the state Supreme Court.
Stay tuned.
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