Insurance Company Delays

Intent of a Contract’s Language Explored in Insurance Dispute

Published on: August 21, 2013 | By Berniard Law Firm

The method by which a contract’s ambiguous language is interpreted can decide who wins the case. A slight difference in statutory interpretation can acquit or convict a person charged with a serious felony or a petty misdemeanor. There are two main theories of interpretation: textualism and purposivism. Proponents of the textualism theory, or textualists, look to the precise language of the code, statute, contract, etc., in order to apply it to the facts. Pure textualists look solely to the four corners of the
document to aid them in interpretation.

Proponents of the purposivism theory, or purposivists, look to understand the legislative history and intent of the parties who drafted the language, to decide how to apply the law. Purposivists believe that this method of interpretation is the most effective way to ensure that the law is applied the way the lawmakers (legislative branch) would have wanted it. Usually, however, interpretation of language comes about through utilizing a combination of texualist and purposivist approaches.

In this case, the proper application of an insurance contract hinges on the language of the contract drafted by Safeway Insurance Company. Safeway issued a policy of automobile liability insurance to Lawrence E. Metz effective November 16, 2008, through May 16, 2009, which only listed his 2003 Chevrolet Avalanche as an insured vehicle. Although Metz paid in full for his policy covering auto insurance for his Avalanche, he attempted to add another vehicle, his 2008 Chevrolet Uplander, on the
same day he made his final payment for the Avalanche.

In response, Safeway sent a bill to Metz for the additional premium owed for coverage on the additional vehicle, which Metz denies ever receiving. After issuing a notice of cancellation to Metz when Safeway did not receive the additional premium, Safeway canceled Metz’s entire policy ten days after.

Just two days after Safeway had canceled Metz’s policy, Metz got into an accident in Bossier City, Louisiana, while driving his Avalanche. The question in this case: is Safeway responsible for covering Metz’s payments from the accident? Safeway argues that since Metz did not pay the additional premium for the Uplander, the entire policy was canceled, which meant Safeway was no longer Metz’s automobile insurance company. Metz argues that he had paid in full to have his Avalanche (the vehicle involved in the accident) covered, so Safeway should therefore cover the damages.

The Court of Appeals states that ambiguous policy provisions are generally construed against the insurer in favor of coverage. The court looks to a paragraph under the “CONDITIONS” portion of the Safeway policy to conclude that the terms of the policy apply separately to each of Metz’s vehicles. The policy states “when two or more automobiles are insured hereunder, the terms of the policy shall apply separately to each.” Therefore, the Court of Appeals held that the trial court was not manifestly erroneous in finding there was coverage on Metz’s Avalanche at the time of the accident.

There is, however, a dissent, arguing that when it comes to the paying of premiums, the terms of the Safeway policy does not apply separately to each vehicle. The dissenter argues that parsing of the premium coverage is “logically untenable.” His argument is further explored in the rehearing given to reconsider the majority opinion in this case, which is detailed in the next entry.

Experts a Valuable Resource in Hurricane Damage Insurance Litigation

Published on: August 19, 2013 | By Berniard Law Firm

Years after Hurricane Rita, which hit in September 2005, those who have had their homes damaged are still dealing with cleaning up the wreckage and rebuilding. Litigation involving insurance companies is still particularly prominent. One couple from Lake Charles, Louisiana knows about this type of litigation all too well.

The couple had homeowners insurance through State Farm and made a claim for damage to their home as result of the storm. State Farm paid them for the damages and they began to rebuild. However, after the claims were settled, the couple found that significant damage to the home’s rafters in the attic. An adjuster came right over and paid the couple for damage to three windows. The rafters, on the other hand, were a different question. There was a separation between the center beam and the rafters that connected to the center beam to support the roof; the center beam was essential to the strength and integrity of the home’s overall structure. State Farm explained that the couple needed to have the opinion of an engineer to support their claim for damage to the rafters.

In Louisiana, like many other states, lay people are generally not allowed to offer their opinions at trial. Instead, they are supposed to supply facts and the jury or judge is supposed to provide their opinion, resulting in the outcome of the trial. The witness should not substitute their opinion for that of the factfinder. However, if the witness is certified as an expert in a particular area, then they can give their opinion to the court.

Testimony of expert witnesses is particularly useful in highly technical trials. For example, if an individual is suing for a personal injury, it may be helpful to have a doctor come in to explain the injury and state how he or she thinks the plaintiff acquired the injury. If you can only acquire the injury a certain way, then the fact finder should know that information so they can provide an accurate final verdict.

In this case, the couple had their contractor come in to testify. Their contractor built the home and testified as to his opinion of how the damage occurred. He was a valuable witness because he could tell the judge that when he built the home, the center beam and rafters were not separated as they are now. He explained that if they were separated like that, then the house would not have been up to code and the couple could not have lived there.

The couple also employed an engineer to testify at the trial regarding the cause of the split in the rafters. The engineer looked at the house after the storm and, using his experience, explained that only extremely high winds could have created that kind of damage in the time between when the house was built and shortly after Hurricane Rita hit. He also stated that the home’s structure would have continued to get worse if the attic frame was not properly restored.

State Farm argued that the contractor was not an appropriate expert because he was not trained to be an expert regarding causation of the movement in the rafters. Because he was not an engineer, he could not compute the effect of the wind speed on the house nearly as well as an engineer could. However, State Farm did not like the engineer that the couple used either. In fact, they argued, the contractor did not even use the correct wind speed when he calculated the effect of the wind, so his testimony should be entirely discredited.

The court determined that both the contractor’s and the engineer’s testimony would remain in evidence. First, it concluded that the contractor was not retained as an expert for the trial, so he did not need to be qualified as an expert. Instead, he spoke about the before and after affects regarding the rafters. Louisiana law allows witnesses who are not experts to testify about their inferences and opinions if they are “rationally based upon the perception of the witness and helpful to a clear understanding of [the] testimony or determination of the fact at issue.” In addition, the court kept the engineer’s testimony because they determined that even though he had used the incorrect wind speed in his calculations, the correct wind speed would not have changed the outcome of his opinion.

Witnesses can make or break a case, and expert witnesses are particularly important to explain technical concepts that the average person may not understand. Those technical concepts are usually essential to the case.

Permission Involving Use of Government Vehicle Crucial to Lawsuit

Published on: July 22, 2013 | By Berniard Law Firm

In this auto-related blog post, plaintiff Fartima Hawkins seeks to recover damages resulting from a February 5, 2008, automobile accident in Baton Rouge Louisiana. The accident occurred when Ms. Hawkins’ vehicle was broadsided by a government vehicle being driven by Sergeant Sean Fowler, a recruiter for the United States Army. Ms. Hawkins filed suit naming, among others, Sergeant Fowler and his personal liability insurer, Allstate, as defendants

After Hawkins filed suit against them, Allstate filed a motion for summary judgment, alleging that the policy issued to Fowler excluded coverage for the accident. Allstate claimed Fowler lacked permission to use the government vehicle for commuting purposes or, alternatively, because Fowler used the vehicle for his regular use insofar as he drove it back and forth from his home in Baton Rouge to his office in Covington each day. Allstate further asserted that its policy did not afford coverage under either circumstance and summary judgment was therefore appropriate.

The trial granted Allstate summary judgment reasoning that whether Mr. Fowler had implied permission or not, it either falls within the regular use exclusion because back and forth to work every day is regular use or alternatively falls within the lack of permission exclusion. Plaintiff subsequently filed a Motion for New Trial and/or Reconsideration which was denied by the trial court.

The Statute of Limitations on Insurance Claims

Published on: July 14, 2013 | By Berniard Law Firm

A recent case in which the Civil District Court declined to hear the insurance claims of a New Orleans homeowner demonstrates some of the pitfalls associated with a failure to carefully inspect one’s insurance policy. In Halmekangas v. ANPAC, a homeowner claimed that his insurance agent failed to properly inspect his house prior to issuing the policy. As a result, his agent listed his three-story house as a two-story, resulting in inadequate coverage. He claimed to have been unaware of this deficiency until June of 2006; ten months after Hurricane Katrina had destroyed his home.

Louisiana law provides two different statutes of limitation with respect to insurance claims. Claims against the insurer must be brought within one year of injury or damage to the property. Claims against the agent, by contrast, must be brought within one year after the insured either knows or should have known of the agent’s negligence. Louisiana courts regard a suit against the insurer as a suit against the agent, for purposes of the statute of limitations, whenever the suit pertains to actions of the agent. Because Halmekangas predicated his suit upon the agent’s mistake, the court, accordingly, regarded the suit as having been filed against the agent.

In such a case, determining the date upon which the statute of limitations begins to run—the “peremptive period”—is not so easy. In recognition of the fact that evidence of when someone knew something—much less when he should have known something—is often difficult to come by, courts have developed a series of presumptions based upon more easily determinable factual guideposts. First, courts presume notice of the negligence upon delivery of the policy. This represents a long-standing rule of contract law—the “duty to read.” Because an insurance policy is a contract much like any other, the insured is presumed to have read and understand its terms when he receives the policy.

Second, courts presume that delivery follows mailing. Louisiana law specifies four means by which insurers may deliver the policy to the insured: hand delivery in person, by private courier, by certain forms of electronic transmission, and by US Postal Service. By specifying these four methods of delivery, the legislature deemed them reliable. Thus, once the insurer proves that he sent the policy in accordance with one of these methods, the statute of limitations begins to run unless the insured can specifically prove that delivery did not occur—a difficult task in most cases.

It is for this precise purpose that insurance companies keep meticulous records. In this case, Halmekangas’ insurer, ANPAC, proved that it had mailed the policy on January 3, 2005. Halmekangas admitted receiving the policy on January 5, but claimed that he did not receive the page containing coverage limits. In response to this claim, the court noted that the insurer mailed policy declarations and revisions six times between January 5 and June 6, 2005, all over a year before Halmekangas filed suit on June 21, 2006. In light of this overwhelming evidence, Halmekangas failed to prove that he lacked the opportunity to know about the agent’s mistake.

Statutes of limitation provide economic actors with “repose.” They enhance economic efficiency by reducing transaction costs. They do so by eliminating the need for parties to retain records in perpetuity and by providing certainty. Despite this laudable purpose, however, statutes of limitation have their drawbacks. They impose an arbitrary date upon contracting parties, and often seem unjust when one discovers he has rights just soon enough to find out that he cannot pursue them. The benefits of statutes of limitation can only be achieved, however, by establishing a bright line. Courts, therefore, are unable or unwilling to bend the rules for a sympathetic plaintiff.

These considerations underscore the importance of reading and understanding your insurance policy as soon as you receive it. Do not sit on your rights. If your insurer has made a mistake on your policy and is denying you coverage, get legal representation immediately.

Plain Language of the Insurance Policy Trumps Follow Form Rules

Published on: June 30, 2013 | By Berniard Law Firm

“An insurance policy is a contract between the parties and should be construed using the general rules of interpretation of contracts set forth in Civil Code.” As such, the courts generally try to confine their analysis of an insurance agreement to the language within the contract. They try to determine the common intent of the parties when they entered the contract, and do not want to make the contract any more inclusive than it was intended to be. That is exactly what happened with a New Orleans School Board sued under an insurance contract regarding flood insurance.

The School Board argued that two of their insurance carriers had flood coverage because they were “follow form” policies. That is, they “followed” the form of another insurance carrier, the primary insurance company, which the school also used. Follow form policies are designed to be very similar to the primary insurance company, but cover large loss amounts that the primary insurance company may not cover. For example, if the first insurance company covers only $100 of loss, then the secondary, or excess, insurance company may cover the an additional $50 of the same type of loss. Generally, they cover the same things, but the amounts may be larger or specifically state that they will cover above a certain amount that the primary insurance company covers.

It is not uncommon for large structures to have several insurance companies. The School Board in this case actually had five insurance policies that built upon one another and covered various hazards. The school had already settled their complaints with their other three insurance companies. The major concern in this case, however, was flood damage relating to Hurricane Katrina. Even in mid-2012, individuals and insurance companies were still dealing with the complications that Katrina created.

In this case, the policy that the excess insurance companies followed had some flood coverage, specifically for electronic media, so the school argued that these other carriers also offered flood coverage. In addition, the policy also had a coverage for “fungus, wet rot, dry rot, and bacteria” that may imply partial coverage for flood insurance.

However, the two other insurance carriers’ polices specifically stated that they did not offer any flood coverage. Therefore, although some of the language in the contract may have appeared to offer some coverage, the contract negated that appearance by specifically stating that no flood insurance was provided. An excess carrier is allowed to include extra exclusions that do not completely follow from the primary insurer.

The court concluded that where the insurance company specifically stated that it did not cover flood, the court would not create that inclusion: “We decline to create flood coverage out of an exclusion to an exception.” The court notes that although the “fungus” provision may look like it covers flood slightly, it also specifically states that the fungus, wet rot, dry rot, and bacteria can only be a result of hazards that are covered in the insurance policy, namely, not flood.

The plain language of the contract won in this case, which gave the school less coverage than they may have anticipated. It is important to read through your insurance contracts so that you are aware what they do and do not cover.

Summary Judgment Granted in Uninsured Motorist Dispute

Published on: June 26, 2013 | By Berniard Law Firm

Vehicle collisions are difficult in of themselves but when they involve an insurance dispute, they can be considerably daunting. One recent case involving an accident in dispute helps illustrate this further. In this case, Broussard and Brandy Oppenheimer live together with a child, but are unmarried. Broussard was driving Oppenheimer’s vehicle when he was rear-ended by an uninsured driver. While the pair maintained unisured motorist coverage through their insurance policies, which is suppose to cover them in these types of situations. However, the insurance company saw otherwise.

Farm Bureau denied Broussard’s request, stating that “the policy did not cover the accident in that Broussard was operating a vehicle that was not listed in the policy.” The insurer filed a motion of summary judgment on the issue of coverage, while Broussard filed a cross motion summary judgment to recover under his policy. The Appellate court cited Schroeder v. Board of Supervisors of Louisiana State University to define summary judgment, which states that a motion for summary judgment should be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law.”

The trial court reasoned that by allowing Farm Bureau “to exclude coverage would allow…a policy in derogation of La.R.S. 22:1295.” The statute explains that the policy should provide coverage to “an injured party while occupying and automobile not owned by said injured party.” Farm Bureau appealed the trial court’s decision to grant Michael Broussard’s motion for summary judgment. The granted motion for summary judgment declared Broussard was entitled to coverage under his uninsured motorist clause in his insurance policy.

To counter, Farm Bureau cited policy language claiming the insuring policy does not apply:

This insuring policy does not apply: (1) to any automobile owned by or furnished for the regular use to either the named insured or a member of the same household.

And;

This policy does not apply: (g) Under division 1 of coverage to bodily injury to the insured, his spouse or members of household sustained while in or entering into or alighting from an automobile owned by the insured, his spouse, or members of the household except the one described in the declarations.

The trial court and the Appellate court both agreed and affirmed that “policy language cannot change the requirements of the statute.” The law would allow the exclusion of coverage if involving a spouse or relative’s policies, but is not the situation here as Broussard and Oppenheimer are not married or related. Farm Bureau’s attempt to push the limits of its restrictions were unsuccessful, however, resulting in the judgment in favor of Broussard.

“Other Insurance” Provisions and the Delays Associated with Conflicting Policies

Published on: June 17, 2013 | By Berniard Law Firm

In a recent case, a federal appeals court ruled on a longshoreman’s right to recover for injuries sustained when a pile-driving hammer unexpectedly released from a crane and fell on him. His employer had leased the crane from another company in order to perform restoration work on the docks and bulkheads at the Turtle Cove Research Center near Manchac. Luckily, both companies carried insurance. Unfortunately, both insurers quickly pointed the finger at each other.

Such situations occur frequently when contracting parties in large projects require multiple insurance policies to cover the myriad situations which could give rise to liability. The most important question from the victim’s perspective, however, is simply how and when he or she will be compensated.

When such finger-pointing occurs, the task devolves upon the courts to “rank” the policies. The longshoreman’s case, Deville v. Conmaco/Rector L.P., involved competing claims of three insurance companies. The crane owner carried general liability insurance and the employer carried an “excess” insurance policy — a policy which kicks in only after coverage limits have been reached on other applicable policies. In addition to these policies, however, the crane lease itself required the employer to obtain a third policy to cover its use of the crane.

Injuries Realized After Settlement Fail to Receive Compensation

Published on: June 12, 2013 | By Berniard Law Firm

Settlement agreements are compromises between two people or companies that face a lawsuit. Their purpose is to avoid the high costs and extensive time involved in taking a case to trial. These settlements, however, include terms that require careful consideration before signing.

In the case of Montgomery v. Montgomery, Chad was trimming a tree on his brother Richard’s land, using a frontloader to lift him high enough to reach the limbs. His father, R.L., was operating the frontloader. R.L. accidently hit the quick release, dropping Chad and injuring him. R.L. was covered by homeowners insurance and farm insurance from Farm Bureau. Richard’s land was covered by insurance from American Reliable Insurance Company. Chad sought a recovery from both Farm Bureau and American Reliable. Chad was able to receive money from both companies through settlements. In the American Reliable settlement agreement, Chad received a $100,000 settlement in turn for agreeing to release both insurance companies and his father from any further claims. The Farm Bureau only agreed to give $1,000, but also included a statement that it was released from all claims.

This release from all claims is a common feature of settlements. The insurance company agrees to pay some amount of money in return for no further liability, or obligation to pay any more. However, this is a major concession on the part of the injured person. In the words of the Farm Bureau agreement, Chad agreed to “release, acquit and forever discharge” the insurance company for any injury sustained, even if it is “not yet evident, recognized or known.” The American Reliable agreement stated that he gave up “any and all…claims” from “any and all known and unknown personal injuries.”

This agreement can only be questioned by a court if there is “substantiating evidence” of mistaken intent. This means that there is evidence showing that the person signing “was mistaken as to what he or she was signing” or that the person “did not intend to release certain aspects of his or her claim.” Otherwise, any challenge to such a settlement will be thrown out of court through summary judgment. The insurer also has a duty to “adjust claims fairly and promptly and to make a reasonable effort to settle claims with the injured [person].” If the insurer misrepresents “pertinent facts or insurance policy provisions relating to any” injury coverage that is at issue, then it violates this duty.

Some time after signing the agreements, Chad began to feel that his injuries were worse than he had originally thought. He then filed a lawsuit against Farm Bureau. He claimed that the agreement with Farm Bureau had been misrepresented to him. The court, however, granted summary judgment to Farm Bureau. It stated that Chad had presented no evidence that he had misunderstood what he was signing. In addition, the American Reliable agreement released Farm Bureau from any claims. Chad argued that there was misrepresentation regarding Farm Bureau, but not regarding the American Reliable agreement.

Settlement agreements involve signing away significant rights to future damages. Such an agreement should be made only with the advice of an experienced attorney.

Insurance Company Lawsuit Involving Healthcare Providers Illustrates Class Certification Rules

Published on: June 8, 2013 | By Berniard Law Firm

A group of healthcare providers sued a number of insurance companies alleging that their worker’s compensation bills were discounted under a preferred provider agreement without notice as required by Louisiana state law. When the judge was deciding whether or not to certify the group of healthcare providers as a class, allowing them to bring one lawsuit all together instead of each having to pursue a suit individually, the insurance companies claimed the providers had no right to bring the case at all. The judge did not address the issue and certified the class. The insurers appealed the decision.

The insurers argued that healthcare providers are barred by Louisiana law from directly suing insurance companies because the law does not allow contract claims and the claim the healthcare providers brought was a contract case. The healthcare providers argued that their claim was not contractual but of a breach of a statutory duty, which is a duty created by a specific law. A party has standing, which means they are allowed to bring a case, when they have a legally protectable stake in a litigated matter. This case stems from a case against a party insured by the insurance companies. The healthcare providers settled with the insured party but retained the right to sue the insurance companies.

Louisiana law does not allow the providers to sue the insurance companies independently but they do have a right to sue the insurance companies if they have a substantive case against the insured party. The fact that the healthcare providers settled with the insured party does not automatically mean they can no longer sue the insurance companies. The appeals court decided that the healthcare providers could sue the insurance companies because their claim was a violation of a statutory duty, not a contract dispute, and because they had specifically retained their right to sue the insurance companies in their settlement agreement with the insured party.

The appeals court then went on to review whether the class certification was proper. An appeals court is always deferential to a trial court’s decision to certify a class and will only overturn the decision if there was manifest error, or the decision was obviously wrong. In order to be certified as a class the group of plaintiffs must meet these requirements: 1) The group must be so large that treating each plaintiff as an individual would be too complicated 2) The questions of law and fact in the case must be the same for all the plaintiffs 3) the plaintiffs who take the lead in the case must have claims typical of all the class members 4) the plaintiffs who take the lead, and their lawyers, must adequately and fairly represent the interests of everyone in the class. If these requirements are met the case can go forward as a class action.

The trial court found that the class representative was adequate to represent the class and the appeals court agreed. The trial and appeals court also agreed that common issues predominated over individual issues. The defendant insurance companies insured the same insured party on which the claims were based, the claim for all the providers was the same, that their bills were illegally discounted, this is definitely enough commonality and typicality for a class certification. The appeals court upheld the trial courts decision and sent the case back to the trial court to continue the case.

Even preliminary legal issues, such as standing to sue, are highly complicated and very important aspects of a case.

Certification and Settlement in Katrina/Rita Class Action Claims

Published on: June 7, 2013 | By Berniard Law Firm

The settlement in Orrill v. Louisiana Citizens Fair Plan demonstrates some of the hurdles faced by class action litigants and the benefits of having experienced class counsel. In that case, Katrina and Rita victims sought statutory penalties for their insurers’ failure to pay claims within the 30 days required by statute. The long history of the case dates to 2005, immediately after the storms first hit. The Berniard Law Firm vigorously pursued their claims past procedural roadblocks along the way to a final settlement this past January.

While class actions provide an obviously efficient way of adjudicating large controversies, the drawbacks associated with this device are equally apparent. Class actions allow courts to resolve all claims related to an occurrence in a single proceeding. This means, however, that even claims of those who do not participate must be decided. Otherwise, class members could “free ride” off the efforts of others, waiting to see whether a legal strategy or theory will succeed or fail without expending any efforts or resources. Courts have long resolved this dilemma by requiring class action plaintiffs to provide adequate notice to those who might have claims and by requiring that participants meet a series of requirements.

First, the class must consist of a sufficiently large number of claimants. Courts have not defined this “numerosity” requirement precisely; rather, a plaintiff satisfies this requirement by establishing that traditional methods of joining parties would be unreasonably difficult or expensive. Second, the claims of the class members must involve common issues. To meet this “commonality” requirement, it is not enough simply to have claims resulting from the same injury. Instead those claims must be capable of resolution in the same way. As the United States Supreme Court has stated, what is important is not the raising of common questions, but “capacity of a classwide proceeding to generate common answers.”