Insurance Company Delays

Fifth Circuit Court of Appeals Finds Missing Health Information Not a Bar to Life Insurance Recovery

Published on: March 19, 2012 | By Berniard Law Firm

When individuals apply for life insurance, several application forms must be submitted. Amongst these forms is a history of the applicant’s medical history. Based on this history, and a variety of other factors, insurance companies will either accept the application and set a premium that must be paid to obtain the insurance, or deny the application for pre-existing conditions. However, errors, omissions, and accidents occur during this application process and can cause several legal issues to arise when a life insurance policy needs to be paid out.

This situation arose in Foster v. United of Omaha. In that case, an individual sought to change her life insurer, but when the paperwork was arranged and sent to her, the medical history page was absent. The individual signed all of the paperwork and sent it back to the insurance company. Without any red flags regarding the individual’s medical history, United extended $1 million worth of life insurance to her. No physical health examination of the individual took place and the policy was extended based on the blank medical history paperwork.

The individual, after discovering that she was at high risk for cardiovascular disease, sought an addendum to the insurance policy to raise the payout to $2 million. To complete the policy change, the individual had to sign additional paperwork stating that her health condition had not changed since the issuance of the original policy. Because the individual never signed anything for the original policy claiming poor health, she signed the addendum stating that her health had not changed.

After some time, the individual passed away of lung cancer. United conducted an investigation and discovered that, prior to the issuance of the original coverage, the individual had been treated for heart disease, chest pain, and lung ailments. Based on these findings, coupled with the fact that the addendum stated that the individual’s health hadn’t changed, United refused to pay the policy out. The individual’s trustee brought suit against United, seeking payment of the policy.

Several insurance forms, including the one in Foster’s case, contain language that states “incorrect or misleading information may void this policy from its effective date.” Thus, courts have established that an insurance company, in order to rescind a policy on these grounds, must establish that statements made in the form were false, that those misrepresentations were made with an actual intent to deceive, and that the false statements materially affected the insurance company’s acceptance of risk. The most difficult of these elements to establish is the insured’s intent when making false statements. In these types of cases, courts often look to the attending circumstances to determine whether or not the insured had knowledge of the falsity.

In the Foster case, United failed to carry its burden of proof in establishing that the insured intended to deceive United. Though the individual did not claim her medical ailments in the policy application, the paperwork for the original policy was never made available to her. Thus, the insured could not be held responsible for claiming no change in her health when, in fact, it had not changed since the issuance of the original policy. The insured thought she was telling the truth, and therefore could not be held to have intended to deceive the insurer. This finding places responsibility on the insurer to ensure that all paperwork is provided and explained in a clear, reasonable manner. This avoids consumer confusion and creates an efficient market.

Many insurance companies claim that truthfulness is a condition precedent to policy coverage. This means that the policy will only extend its coverage upon the fulfillment of truthful statements required by the applicant. However, whether or not something is a condition precedent is a matter of contract interpretation. In the Foster case, for example, the court held that the language in the addendum that stated “incorrect or misleading information provided herein may void this policy from its effective date” was permissive. The use of “may” in this type of contract suggests that misleading information provided by the applicant might void the policy, but on the other hand, it might not. Such permissive language will never be held to be a condition precedent in insurance disputes.

With these rules at hand, the court in the Foster case found that United was not entitled to withhold the policy payment. Such a finding solidifies courts’ standing in placing responsibility on insurance companies to provide accurate assessment of insurance coverage and risk. Placing this burden on insurance applicants would carry market chilling potential. In addition, search costs could rise and those who were inexperienced with insurance applications would be prone to making mistakes that would stifle courts with insurance interpretation disputes.

Company’s Insurance Fails to Cover Truck Driver In Off-Hours Accident

Published on: March 15, 2012 | By Berniard Law Firm

Whether someone is working at the time of an accident can be difficult to tell, and it affects which insurance coverage applies. Harry T. Kemp was an independent contractor driving a Peterbilt tractor pulling a 50-foot flatbed trailer when the truck collided with an automobile driven by Lewis Jurey in East Baton Rouge Parish. Kemp had picked up his trailer from Baker Metal Works, which had completed repairs on the trailer. The Louisiana Court of Appeal decided 2-1 in Jurey v. Kemp (La. Ct. App. 1 Cir. 9/20/11) that Kemp was not working when the accident occurred. That affected which insurance policy covered the injuries received by Jurey and his two passengers.

Independent contractors with trucking companies may be covered by the company’s insurance when the driver is performing transportation services. When the independent contractor is not, non-trucking liability, or “bobtail,” insurance is needed to fill a gap in coverage. Liberty Mutual Fire Insurance Co. insured Dallas & Mavis Specialized Carrier Co., LLC (D&M), which had hired Kemp as an independent contractor. The Nineteenth Judicial District Court agreed with Liberty Mutual that the policy did not cover Kemp because he was “on his own time.” Instead, Kemp’s bobtail coverage from Great American Insurance Co. should cover the accident.

D&M’s policy would insure the accident only if the semi-tractor, leased to D&M, was being used for business purposes when the accident occurred. The reason for Kemp’s trip was decisive to determine coverage. Kemp’s lease with D&M required Kemp to “maintain the Equipment in proper operating condition and in full compliance with applicable government regulations.” On January 17, 2008, Kemp was picking up the trailer to make room at the Baker Metal Works. Kemp had requested the metal works replace some of the trailer’s decking boards and weld a door to make it easier to reach the wiring for lights and air lines for brakes. D&M did not request this work and did not know about it. Kemp did not ask for reimbursement, and D&M did not pay him for the trip. Nor was Kemp performing any transportation services for D&M or on standby.

Previous cases have established the outlines for when an independent truck driver is working. Driving home after a delivery is personal because it is after work has ended. When the company asks its independent contractor to remain in an area to pick up a load, the driver is working. Similarly, driving to a distant motel at night for rest to be ready to haul a load is work related.

Whether Kemp was on business depended on whether the lease with D&M required these repairs. Neither D&M nor Department of Transportation regulations required the repairs on the decking boards or creation of a door accessing the trailer’s wiring and air hoses. It would be different if regulations explicitly required these repairs. Instead, the repairs were for Kemp’s convenience. Because D&M did not require the repairs, it was not work related and D&M’s insurance policy did not cover him. Kemp’s bobtail policy was the appropriate insurer for the accident.

Judge Jewel E. “Duke” Welch disagreed. By his reasoning, the lease gave D&M “exclusive possession, control, and use of the leased motor vehicle for the duration of the lease agreement.” He interpreted “use ‘for’ D&M whenever that use furthered D&M’s business interests and was not a purely personal use of the covered vehicle by Kemp.” This may be a broader standard than previous cases allowed. The repairs may have made work easier for Kemp, but they also may have served D&M’s business interests. Kemp was maintaining the leased equipment for trucking-related purposes. Under the lease, he was obligated to maintain the trailer and make sure it passed periodic safety inspections. Kemp did not get reimbursed by D&M for any maintenance work because maintenance was his responsibility. Judge Welch would have reversed the district court.

Independent contractors are common in today’s flexible business world. In these business relationships, the line between work and free time is hazier than with traditional employment. More factors need to be taken into account. A lawyer skilled in determining potential liability will be able to distinguish the boundary between the individual’s and the company’s liability and which insurance policy should pay.

Longterm Treatment for Terminally Ill Patient Called into Question

Published on: January 3, 2012 | By Berniard Law Firm

Longterm treatment and care can oftentimes be difficult and emotionally taxing for all involved. What’s more, when an already arduous process is muddled by improper actions by the medical staff, legal resolutions do exist but are unlikely to remedy the problems caused.

After what seemed like a never-ending nap, an individual who will not be named was transferred to Our Lady of Lourdes Regional Medical Center in Lafayette, Louisiana, where she spent the last nineteen days of her life. Her family, including her husband and three children, brought a medical malpractice case against her treating and diagnosing physicians as well as their insurance carrier. After a grant of summary judgment and a denied motion to continue, the decedent’s family followed with an appeal against the treating neurologist, Dr. Steven Snatic, and his medical malpractice insurance provider, Louisiana Medical Mutual Insurance Company (hereinafter “LAMMICO”), claiming the denial of appropriate care, misdiagnosis and resultant death. Upon further analysis of the underlying issues, the court reversed the grant of summary judgment and the matter was remanded to the trial court.

An expert witness testified to the medical review panel that the decedent was properly diagnosed and treated, despite the fact that she was treated for a condition she did not have. The basis for this argument was that the treatment for the misdiagnosis of cryptococcal meningitis was supportive for her true condition, cerebritis. Simply stated, this is a bit like saying if you have a headache and take an aspirin, which happens to also cure the pain in your back, then you’re covered. While this seems to be a difficult legal argument, the expert explained that because the decedent had lupus, it was difficult to make an accurate diagnosis.

The appellate court reviews appeals of summary judgments de novo, basically starting from scratch, with an eye toward determining three issues: (1) whether the decision of the lower court was appropriate; (2) whether there was a genuine issue of material fact; and (3) whether the appellant was entitled to judgment as a matter of law. Verbatim, the Louisiana Code of Civil Procedure Article 966(C)(2) states: “the movant’s burden on the motion [for summary judgment] does not require him to negate all essential elements of the adverse party’s claim, action or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense.” Additionally, in a medical malpractice case, a plaintiff is required under Louisiana Revised Statutes 9:2794(A) to prove the three following elements: “(1) the standard of care applicable to the defendant; (2) that the defendant breached the standard of care; and (3) that there was a causal connection between the breach and the resulting injury.”

The real questions that remained included if there a genuine issue as to material fact and is the family entitled to judgment as a matter of law? It is safe to speculate that a person without an advanced degree in medicine can see a problem with a patient being misdiagnosed and treated for an ailment she did not have. Under these details, it is probably safe to go one step further and conclude that summary judgment was not rightfully granted. Doubt and questions as to material fact are dripping all over this case.

So, why was the summary judgment motion granted? In this case the decedent’s family had the burden to prove that there was a breach in the standard of care administered by the physician. In order to accomplish this task, it was necessary to present an affidavit from an expert. It turns out the decedent’s family was not able to obtain an expert neurologist in time to draft an opinion. After two failed attempts with motions to continue, the decedents engaged a cardiologist, who was also a board certified internist, for a supporting affidavit. However, the court looked right through the substance of the documents, or lack thereof, and granted the summary judgment motion, which brings us to the present.

Basically, by the structure of law, the defendants had to show that factual evidence exists to adequately establish there is no genuine issue of material fact in order to be successful with the motion. Here, it is not readily apparent that the healthcare and insurance providers were able to complete such a weighty task. The defendants argued that the expert’s opinion failed to identity his training or experience, as required under the statute, since he did not specialize in the desired field of neurology. However, Hebert v. Podiatry Ins. Co. of America determined that the particular field of specialty is not the crucial point, but instead the knowledge of the subject matter, such that the individual possesses the capacity to testify as to the matter at hand in satisfying the plaintiff’s burdens. Due to the fact that the cardiologist was not a neurologist, the lower court determined that he was not credible. However, it was strictly stated in the doctor’s opinion that “the standards of care ‘are common to both the specialties and are equivalent and known’ to him.” The doctor also discussed how it was obvious that the misdiagnosis combined with the complications of lupus dramatically reduced the decedent’s chance of survival.

Accordingly, it was determined that the lower court got it wrong. The cardiologist was in fact capable of testifying as to the standard of care that should have been given to the decedent. This leads to the conclusion that an expert witness need not have the exact same training or specialty in order to testify as to the burdens a plaintiff must meet in a medical malpractice case, so long as they are equipped with the knowledge and experience to competently answer the questions. The grant of summary judgment in favor of Dr. Snatic and LAMMICO was reversed.

A Happy Holidays to All Friends of the Berniard Law Firm

Published on: December 25, 2011 | By Berniard Law Firm

The Berniard Law Firm would like to wish everyone a Happy Holiday.

Regular posting will resume in 2012! Have a happy, and SAFE, holiday season!

Exploring the Standard for Recovering Penalties From an “Arbitrary and Capricious” Insurer

Published on: December 19, 2011 | By Berniard Law Firm

Uninsured/Underinsured Motorist (UM) coverage is designed to protect a policyholder against injury or loss inflicted by another driver who has inadequate insurance or no insurance coverage at all. Louisiana statute provides that “an insurer owes to his insured a duty of good faith and fair dealing,” which includes fairly and promptly settling claims with the insured. La. R.S. 22:1220. An insurer who breaches this duty is liable for damages that result from the breach. In order to establish a cause of action for penalties and or attorney fees, a plaintiff must show that (1) the insurer received sufficient proof the of loss; (2) the insurer failed to tender payment within 30 days; and (3) the insurer’s failure to pay is “arbitrary, capricious, or without probable cause.” La. R.S. 22:658. Louisiana courts have held that “arbitrary, capricious, or without probable cause” is “synonymous with ‘vexatious,’” and that a “vexatious refusal to pay” means it is “unjustified, without reasonable or probable cause or excuse.” The courts impose penalties on an insurer when the facts of the situation “negate probable cause for nonpayment,” but tend to avoid them when an insurer can point to “a reasonable basis to defend the claim and acts in good-faith reliance on that defense.” Pointedly, it is well settled that “bad faith should not be inferred from an insurer’s failure to pay within the statutory time limits when … reasonable doubt exists.” Instead, penalties are appropriate when the insurer refuses to tender a reasonable payment in an amount over which “reasonable minds could not differ.”

Louisiana’s Third Circuit Court of Appeal recently applied this jurisprudence in the case of Mitte v. Progressive Security Insurance Co.. On April 20, 2004, Dyna Mitte was severely injured when her vehicle was hit by an underinsured driver in Lafayette Parish. Mitte had UM coverage through Progressive and filed a claim after receiving only $32,000 from the other driver’s insurance company. Progressive made pre-trial tenders to Mitte that amounted to $393,624. Mitte then filed suit seeking penalties and attorney fees on the basis of those tenders that she alleged were “inadequate and untimely.” A jury found that the tenders made by Progressive were not adequate and awarded Mitte $1.6 million. However, the jury declined to award her penalties and attorney fees. Mitte appealed, arguing that the jury erred in failing to find that Progressive was arbitrary or capricious.

Mitte’s assignment of error was based in part on her argument that because the jury awarded a large sum compared to the tenders made by Progressive, Progressive was necessarily arbitrary or capricious. The court rejected this argument, stating that Progressive was not required to “meet some percentage of the total claim awarded [Mitte] to avoid penalties and attorney fees.” Rather, Progressive “needed to tender only a figure over which reasonable minds could not differ.” Further, the record included several factual disputes described by Progressive’s adjuster at trial. For instance, there was uncertainty over whether Mitte made a claim for lost earning capacity and also as to whether a gastric bypass surgery was related to the auto accident. Thus, although the jury ultimately concluded that Progressive undervalued Mitte’s general damages “by a fairly large extent,” there was a reasonable factual basis for the jury’s finding that Progressive was neither arbitrary nor capricious. Because the court could not find that the jury’s determination was manifestly erroneous, it affirmed the trial court’s judgment.

Calcasieu Parish May Be Liable For Damages Resulting from Failure to Ensure Drainage After Hurricane

Published on: November 17, 2011 | By Berniard Law Firm

Governments traditionally were immune from lawsuit. That has changed. In certain circumstances, governments may be held liable for the damage they cause. A coulee flooded homes in Lake Charles after Hurricane Rita, although the area is protected by a drainage district that operates pumps and pipes to ensure drainage. The Louisiana Court of Appeal affirmed a jury award against the drainage district in Bordelon v. Gravity Drainage District No. 4 of Ward 3 of Calcasieu Parish, No. 10-1318 (La. Ct. App. 3 Cir. 10/5/11).

Drainage district employees typically stayed in pump houses during hurricanes, but in July 2005, Louisiana state officials determined that no evacuation site in Calcasieu Parish could withstand a category 4 or 5 hurricane. The drainage district has automated pumps run by electricity, but if the power went out, the diesel-fueled backup pumps required human operation. Hurricane Rita was expected to hit land as a category 4 or 5 hurricane. The district decided to allow its employees to evacuate with their families to Opelousas, Ville Platte, and Lafayette. The whole area south of Interstate 10 in Lake Charles was a part of the evacuation.

Rita unexpectedly weakened to category 3 when it made landfall on Friday, September 24, 2005. Electrical power was wiped out across a wide area. The drainage district’s electric pumps at Pithon Coulee stopped at 9 p.m. No one was in the pump house to start the diesel pumps. When residents returned the next morning, their homes were fine, but the coulee waters were rising. Drainage district employees had yet to be recalled. The houses began flooding from the rising coulee waters after 3 p.m. Saturday. Early on Sunday, the district workers returned. They turned on the pumps at 8:30 a.m. By noon, the coulee was below flood stage.

Twenty-four homeowners sought damages from the district because it failed to plan a way to automate the diesel pumps and because its decisions during Hurricane Rita resulted in flooding. The district argued it was protected by governmental immunity under Louisiana Revised Statutes. A jury awarded the homeowners $1,570,219.60, although it recognized that the liability of the district’s insurer, American Alternative Insurance Corporation, was limited to $1 million. The drainage district and its insurer appealed.

Courts strictly interpret immunity statutes to limit their reach. Two statutes may protect the district. The Louisiana Homeland Security and Emergency Assistance and Disaster Act provides immunity when a government is “engaged in any homeland security and emergency preparedness activities” as a part of complying with the Act. An unpublished court of appeal decision persuasively limits immunity to actions taken during an emergency, but not before. Based on that decision, the jury decided against the drainage district because it failed to have a plan in place before the hurricane’s forecasted arrival. The court of appeal agreed. “A failure to plan for an emergency is not an emergency preparedness activity under the statutes conferring immunity for such activities.” The district was not immune for not having a plan to keep pumps running when the pump houses were not staffed and power was out.

Louisiana state and local governments also are not liable “based upon the exercise or performance or the failure to exercise or perform their policymaking or discretionary acts when such acts are within the course and scope of their lawful powers and duties.” Immunity exists for policymaking or acts for which a choice is acceptable within the government’s delegated powers. If the act is “not reasonably related to the legitimate governmental objective for which the policymaking or discretionary power exists,” or was done criminally or in some way intentionally, immunity does not apply.

The Louisiana statute is patterned after the Federal Tort Claims Act. A two-part test determines if immunity applies. Did the government employee have discretion, a choice, or did law require the employee to follow a certain course of conduct? If a specific action is mandatory, no immunity applies. If the employee has a choice, was that discretion “grounded in social, economic or political policy”? If not, the government may be liable. Louisiana has adopted the federal test for the state governmental immunity statute.

The court of appeal recognized that planning is an act of discretion, and ensuring employee safety above concerns to protect property “is clearly within the discretion of the district.” But, automating the diesel pumps had never been considered, although it would cost only $40,000 and the money was available. By statute, “the drainage district shall make adequate provision for the drainage of all lands and property affected thereby.” The district was required to provide adequate drainage of all property. The failure to consider a feasible alternative to ensure compliance with a statutory mandate prevented immunity for the effects of not automating the pumps. The court of appeal affirmed the district court jury verdict.

If you believe you have been harmed by a government, it is hard to know what to do. Government duties come from statutes and regulations, and governments may be protected from lawsuits. But not always. A lawyer will be able to review your claim and determine the government’s authority and potential liability.

No Attorney’s Fees for Derry Man After Insurance Dispute

Published on: November 11, 2011 | By Berniard Law Firm

When one is successful on a claim against an insurance company the payment of the claim is expected to be prompt. Any delay in payment could result in the court imposing a penalty against the insurance company. In most, if not all, cases this penalty takes the form of court costs and attorney’s fees. But if an insurance company challenges a policy claim in court, and then loses, does that time when payment was refused constitute delay? The answer to this question is ‘it depends.’

In Louisiana Bag Co. v. Audubon Indemnity Co., the court held that if an insurer errs in interpreting its own insurance contract, then the insurance company will be held liable for the delay in payment resulting from the trial. This delay justifies the incurrence of penalties for attorney’s fees. If, however, the policy dispute revolves around facts rather than contract interpretation, then the “timely payment” provision is stayed during the trial. This was the situation of Maxley v. Universal Casualty Co. where Maxley’s car insurance policy through Casualty covered loss from both theft and fire. When Maxley’s car was stolen and set on fire, he filed for his claim. However, Maxley had left his car unlocked with the key in it. The policy through Casualty had an exception that nullified any claim if there was no evidence of forcible entry. The issue went to court with Casualty claiming it owed nothing under the policy because the theft was not through a forcible entry, and Maxley contesting payment was due under the fire provision of the policy rather than the theft. Maxley, in essence, argued that the exclusion provision for no evidence of forced entry was irrelevant because his car would have been recovered if it had not been for the fire.

The court found for Maxley, who then sought attorney’s fees for Casualty’s failure to make timely payment. The Third Court of Appeal upheld the denial of Maxley’s claim, stating that Maxley’s reliance on Louisiana Bag was misplaced. While Louisiana Bag relied on policy interpretation, Maxley’s case relied on a true disputation of the facts. It would be senseless to require the insurance company to pay the claim only to the have the claim payment rescinded if the facts were found in favor of the insurance company. This finding upholds efficiency in the industry as it is easier to withhold payment until truly due than it is to always make payment, then try to recoup it if made erroneously.

Insurance Company Taken to Task for Poor Handling Claims

Published on: November 3, 2011 | By Berniard Law Firm

It is well settled under Louisiana law that insurers owe a duty of “good faith and fair dealing” to their customers. Each insurance company is required to adjust claims in a fair and prompt manner and to make reasonable efforts to settle claims when possible. La. R.S. 22:1973 establishes that damages may be awarded against an insurance company that fails to meet this duty. One category of wrongdoing includes:

“Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.”

The statute also permits a wronged insured to collect penalties from the insurer “in an amount not to exceed two times the damages sustained or five thousand dollars, whichever is greater.” The purpose of this law is to discourage insurers from failing to live up to the promises they make to their customers in their insurance policies and for which the customers pay premiums.

On October 27, 2004, Carl Guidry and his granddaughter were driving in Guidry’s pickup truck. They were rear-ended by Amber Guidry (no relation) and Guidry’s truck was knocked forward. Guidry suffered from neck and back pain following the accident. Two weeks later, on November 11, 2004, Guidry and his granddaughter were again rear-ended while driving in Guidry’s truck, this time by an SUV driven by Evelyn Smith. Guidry experienced further neck and back pain, as well as shoulder pain, after the second collision. Guidry sued both Amber Guidry and Evelyn Smith, and also sued his own uninsured/underinsured motorist (UM) carrier, Progressive. Guidry settled with Amber Guidry’s insurance carrier in the first accident for the policy limits of $10,000. At trial, the jury found that Guidry did not suffer damages in the first accident, but found that he did suffer damages in the second accident; they jury awarded Guidry medical expenses in the amount of $19,860 and general damages of $10,000. The jury also found that Progressive had been “arbitrary and capricious” in handling Guidry’s claims for general damages and medical expenses from both accidents; specifically, Progressive never tendered any money to Guidry for either claim. Accordingly, it awarded Guidry $50,000 for Progressive’s breach of duty and $10,000 in attorney fees. Then the trial judge awarded Guidry $100,000 in statutory penalties against Progressive.

Progressive appealed the penalty award to the Third Circuit. The court upheld the award after a review of Progressive’s handling of Guidry’s claims. Progressive admitted receiving proper notice of Guidry’s accidents in September, 2006 but disputed that Guidry could establish the amount of his damages. The general rule for UM carriers is that if the insured can show that “he was not at fault, that the other driver was uninsured or underinsured, and that he was in fact damaged,” the UM insurer cannot avoid liability just because the insured is unable to prove the exact extent of his general damages. Instead, the insurer “must tender the reasonable amount due as a sign of its good faith and its willingness to comply with the duties imposed upon it under the insurance policy.” See McDill v. Utica Mut. Ins. Co. The tendered amount would not be to settle the case, but to show good faith. Once the good-faith tender is made, the insurer must take “substantive and affirmative steps” evaluate the claim. In this case, Progressive opened its claim file in September, 2006 but did not depose Guidry’s treating physician and orthopedist until June, 2008–nearly two years later. It failed to pay Guidy any money towards the $3,500 in costs to repair his truck. Also, Progressive failed to tender any of the medical payment coverage ($5,000 per accident) included in Guidry’s policy, even though it ample evidence that injuries had resulted from the second accident. Guidry finally had shoulder surgery some four years after the second accident to relieve his debilitating pain, which was paid for by Medicare. Thus, the court concluded that “the jury was not unreasonable in finding that Progressive breached its duty to Mr. Guidry by failing to pay the amount of any claim within sixty days and by failing in its duty to timely investigate the accidents.”

What should have been a simple resolution for Mr. Guidry turned into a four-year-long nightmare of shoulder pain because his insurance carrier mishandled and delayed the payment he was entitled to receive under his policy. This case shows the value of an experienced accident attorney who can advocate on behalf of an injured victim.

Appeal Violates Louisiana Statute, Policy for Judicial Effectiveness

Published on: October 17, 2011 | By Berniard Law Firm

“Judgment” may sound very final but not every judgment has such gravitas. Only final judgments are appealable under Louisiana law. When Doug Selman Builders, LLC. appealed the judgment against it in Webster v. Doug Selman Builders, LLC., it violated the legislature’s restriction on appeals.

The defendant was accused of defectively constructing the home that the plaintiffs purchased. At the trial level, the defendant sought and obtained an exception as to consequential damages. The defendant was less successful in responding to the plaintiffs’ claim for mental anguish and mental distress. The parties could not agree whether or not to make the judgment immediately appealable. If they had, the trial court could have certified it as such, though apparently not without incident. In the instant case, defense counsel submitted two versions of the proposed judgment: one with the certification and one without. The judge signed the one with the certification. It would seem that the judgment would have become appealable at this time. This was not the case.

The appellate court ordered the defendant to show why this appeal was not taken from an interlocutory appeal. The defendant’s argument that he was only appealing the ruling on the denial of his exception for mental anguish and non-pecuniary damages. However, the law in this area is clear: a denial of an exception is interlocutory by nature and cannot be designated as immediately appealable. When confronted with this seemingly bizarre result, it behooves us to ask why the incentive structure is set up to obtain it.

Though it may not always be readily apparent, judicial efficiency is an important goal in Louisiana and the United States. The court system does not enjoy hearing repetitive litigation if it can be avoided. The Louisiana statute that barred the defendant’s action in this case serves to make sure that a defendant has actually lost his or her case before taking it before the higher court. The denial of an exception simply causes the defendant to actually have to defend himself on the merits of his case.

Under the scheme set up under this statute the litigation would progress in a logical manner. The plaintiff will file a suit, the defendant will file his answer with his proposed exceptions, he will either win or lose on these, the case will proceed through discovery and to trial, the defendant will either win or lose. Then the defendant will decide whether or not to appeal the final judgment. If the defendant’s argument were to be adopted as the law, litigation would have needlessly circuitous steps. The plaintiff files a complaint, the defendant answers asserting several exceptions, the defendant appeals any denied exceptions, the defendant wins his appeal and the case is remanded for a judgment reflecting this or the defendant loses his appeal and appeals again or lets the case be remanded to the trial court so he can defend himself, win or lose and maybe appeal again. This system is untenable to say the least. If denials of exceptions are appealable, then why not make any lost motion or evidentiary objection appealable? This would make litigation more complicated than it has to be and waste a significant amount of time.

Appeals are only able to be taken from final judgments because final judgments incorporate the compilation of all pre-trial motions and filings as well as the record at trial. This allows appellate courts to have a better picture of the controversy before passing judgment. It also allows the parties to complain about everything they think the trial court did wrong all at once. This system may not be perfect but it is certainly better than the one that the defendant proposes with his argument in the instant case.

U.S. 5th Circuit Court of Appeals Clarifies Retroactive Renewal of Flood Insurance

Published on: October 3, 2011 | By Berniard Law Firm

Those living in low-lying areas and near rivers often seek, and often obtain, flood insurance. Many of the policies granted come from insurance providers that have opted into the National Flood Insurance Program (NFIP). Under this program, property owners are issued flood insurance through the Federal Emergency Management Agency (FEMA). The federal government, in an effort to expand the NFIP, created the Write Your Own program. These policies provide identical coverage as regular NFIP insurance, except they are administered through local insurance companies. These insurance companies increase community awareness of the NFIP in return for expenses related to claims written and processed. FEMA retains all responsibility for claim losses.

These policies, like any other insurance policy, are only active for the policy period. However, once the policy period has expired, FEMA and Write Your Own insurers typically extend a grace period of thirty days. This means that if the policy holder pays a renewal premium within thirty days of the policy’s expiration, the renewal will be retroactive, essentially covering the gap between the policy expiration and the payment of the premium. If the policy holder fails to pay the renewal premium before the grace period ends, then the policy terminates at its original expiration date and no grace period claims can be processed under it.

This retroactive policy renewal was the issue in Campo v. Allstate Insurance Company. Here, Campo’s flood insurance expired and Allstate sent him notice of the expiration along with the option of retroactive renewal. During this grace period Campo’s property was damaged by Hurricane Katrina. Due to the excessive number of claims arising from Katrina, FEMA increased NFIP grace periods from thirty days to ninety. Campo contacted Allstate and procured an insurance check to cover his living expenses. No further discussion of policy renewal took place. Campo’s ninety day grace period expired without any renewal premium payment. Therefore, when Campo filed his insurance claim it was denied as the policy was not retroactively renewed to cover the damage caused during the grace period. Campo sued Allstate claiming that Allstate had negligently misrepresented the status of his policy.

The only way to succeed on a claim of negligent misrepresentation by an insurance company is to show that the insurance company had a legal duty to supply correct information, that that duty was breached, and that damages resulted from justifiable reliance on that misrepresentation. In most cases, as in Campo’s, the third prong of this test is the most difficult to satisfy. The reasoning behind this is simple: policy holders have access to correct information through the policy contract that they possess. Thus, courts may find damages flowed from an unjustified reliance on the misstatement because the policy itself is clear.

Yet, under this test, Campo succeeded on his damages claim in district court. The U.S. Court of Appeals for the 5th Circuit, on the other hand, reversed in favor of Allstate. The reasoning behind this decision is that Campo was fully aware that he was required to pay a premium in order to obtain the retroactive renewal of his policy. In conversations with Allstate, Campo failed to discuss the renewal, and, in addition, the check provided by Allstate during the grace period was not a promise that it would pay Campo’s claim. In short, the court viewed Campo as being responsible for knowing the terms of the insurance policy he held. Insurance policy holders have access to the terms of their policy and are therefore in a position to familiarize themselves with relevant provisions.

Since much of Louisiana is prone to flooding, it is important to protect yourself by obtaining flood insurance. However, once a policy is issued, be sure to read through the terms and know the conditions of renewal. When a policy expires, it is the policy holder’s responsibility to take action for renewal.

Insurance disputes such as these are complex and best left to an experienced practicing attorney.