Tag: insurance

May is National Bike Safety Month

man on motorcycleWith that warm and beautiful weather, comes an even greater responsibility for adults and children be aware of your surroundings as you head out to share and enjoy the roads on your bicycle.

According to the NHTSA, 630 pedalcyclists were killed and an additional 51,000 were injured in 2009 in motor vehicle traffic crashes. Pedalcyclist deaths accounted for 2 percent of all motor vehicle traffic fatalities, and made up 2 percent of all the people injured in traffic crashes during the year.

The best guideline is: Be Alert. Be Wary. Be Seen.

Be Alert: Scan ahead, center, left and right.

woman standing by motorcycleAlthough drivers of motor vehicles need to share the road with bicyclists, many times the cyclist is not seen. All drivers and riders should be courteous.

Drivers should:

>allow at least three feet clearance when passing a bicyclist on the road,

> look for cyclists before opening a car door or pulling out from a parking space,

> and yield to cyclists at intersections and as directed by signs and signals.

> Be especially watchful for cyclists when making turns, either left or right.

Cyclists need to

> keep your head up and look ahead, not at the ground. You need to see what is coming up so you have time  to react and maneuver.

> ride one person per bike. Riding with unsecured passengers puts you at risk for injury to yourself and others.

> ride in single file with space between bikes.

> ride on the right side of the road, never against traffic. Otherwise, you are at risk for an accident – or a ticket.

Be Wary: Pay attention to vehicles, pedestrians and others on the road.

woman who fell off bikeBicyclists are considered vehicle operators; they are required to obey the same rules of the road as other vehicle operators, including obeying traffic signs, signals, and lane markings. When cycling in the street, cyclists must ride in the same direction as traffic.

Be Seen: Use your horn, hand signals and light to be seen by others on the road.

Bicyclists should increase their visibility to drivers by wearing fluorescent or brightly colored clothing during the day, dawn,

and dusk. To be noticed when riding at night, use a front light and a red reflector or flashing rear light, and use retro-reflective tape or markings on equipment or clothing.

Important Safety Reminder:

All bicyclists should wear properly fitted bicycle helmets every time they ride. A helmet is the single most effective way

to prevent head injury resulting from a bicycle crash. California state law requires helmets for all bicyclists under age 18.

 

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.

Confusing Auto Insurance Policies Confound Drivers

woman confused
Confused about your policy? You’re not the only one.

According to an online Harris Interactive poll, reported by Insurance Networking News, confusing insurance policy wording makes auto insurance policies incomprehensible to 36% of American drivers.

The survey revealed that 87% of drivers who currently have auto insurance said they had read at least some of their auto insurance policies, but that 36% of those drivers complained that their auto insurance policies were somewhat or very difficult to understand.

Despite the fact that more than 30 states have enacted laws intended to simplify policy language, the online quote aggregator says that many consumers are confused by how their policies are written, and struggle to determine what’s covered and what’s not.

California Flag The irony with all this is, in California and many states, the law presumes that a consumer has read their insurance policy and understands its terms. I advise all my clients to read their policies as carefully as they can and then ask their broker/agent questions about the parts they don’t understand.

Not that this always helps. I have one case right now where the insured read their policy and thought they understood it, only to find out when their claim for a defense was denied that there was some case law the insurance company thought meant that the policy didn’t cover anything.

The truth is, right now the law favors insurance companies over consumers, so people need to watch their step and be very careful in buying and maintaining insurance.

And, yes, I read my own insurance policies and, no, I don’t understand everything I read, even though I litigate insurance disputes for a living.

What a world.

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.

 

Recreational use immunity extends to pathways used for recreational purposes

Plaintiff, who sustained injuries after falling over a protruding tree trunk while walking along a recreational pathway, appealed against a summary judgment in favor of the City of Bradbury.  The appellate court found that a government entity is absolutely immune from liability for injuries caused by a physical defect on a recreational trail.

The appellate court cited Government Code § 831.4(a) which stated that public entities are not liable for injuries caused by the condition of trails used for certain recreational purposes i.e., “hiking” and “riding, including animal and all types of vehicular ridings,” or for access to such recreation.

Here, the appellate court found that Government Code § 831.4(a) applies to any trail or path specifically put aside and developed for recreational uses, without regard to its unnatural condition or urban location.  Also, evidence established that members of the public regularly used the pathway for at least two of the recreational purposes listed in the statute – horseback riding and hiking.  The appellate court states that immunity for dangerous conditions on recreational trail of all kinds encourage public entities to open their property for public recreational use.  If public entities could not rely on the immunity of recreational trails, the public entities would be forced to close down existing trails and potentially entire parks where those trails could be found.

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.

Leading cause of death from sports-related injuries is traumatic brain injury

The American Association of Neurological Surgeons the leading cause of death from sports-related injuries is traumatic brain injury.  The AANS says a total of 446,788 Americans went to hospital emergency rooms in 2009 with sports-caused head injuries

They go on to report these numbers by the top 20 sports/recreational activities contributing to the highest number of estimated head injuries treated in U.S. hospital emergency rooms:

Cycling: 85,389

Football: 46,948

Baseball and Softball: 38,394

Basketball: 34,692

Water Sports (Diving, Scuba Diving, Surfing, Swimming, Water Polo, Water Skiing, Water Tubing): 28,716

Powered Recreational Vehicles (ATVs, Dune Buggies, Go-Carts, Mini bikes, Off-road): 26,606

Soccer: 24,184

Skateboards/Scooters: 23,114

Fitness/Exercise/Health Club: 18,012

Winter Sports (Skiing, Sledding, Snowboarding, Snowmobiling): 16,948

Horseback Riding: 14,466

Gymnastics/Dance/Cheerleading: 10,223

Golf: 10,035

Hockey: 8,145

Other Ball Sports and Balls, Unspecified: 6,883

Trampolines: 5,919

Rugby/Lacrosse: 5,794

Roller and Inline Skating: 3,320

Ice Skating: 4,608

The top 10 sports-related head-injury categories among children ages 14 and younger:

Cycling: 40,272

Football: 21,878

Baseball and Softball: 18,246

Basketball: 14,952

Skateboards/Scooters: 14,783

Water Sports: 12,843

Soccer: 8,392

Powered Recreational Vehicles: 6,818

Winter Sports: 6,750

Trampolines: 5,025

These numbers are frightening. Protect your brain. It’s the only one you have.

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.

Exposing Carriers Who Abuse Efficient Proximate Cause

 

  1. Introduction.

Whenever there are two or more causes of a loss, it is likely that the carrier’s investigation will focus on exaggerating an excluded cause and ignoring any fact that argues for coverage.

Carriers habitually push the envelope when trying to deny coverage in concurrent causation situations. The most recent evidence is found in Palub v. Hartford Underwriters Ins. Co.,92 Cal. App. 4th 645, 112 Cal. Rptr. 2d 270 (2001) (rev. den. Dec. 12, 2001), where the Court of Appeal reaffirmed the basic principal that when the proximate cause of a loss is a covered peril, it doesn’t matter if there is an excluded peril somewhere else in the causation chain.

To the extent that the “exclusion” would exclude loss proximately caused by [a covered peril], it violates Insurance Code section 530 and the long-standing principal that a property insurer is liable whenever a covered risk is the proximate cause of a loss, and is unenforceable.

92 Cal. App. 4th at 650, 112 Cal. Rptr. 2d at 274.

Since this is an area fraught with the potential for the carrier to manipulate its investigation and coverage analysis to the policy holder’s detriment, it is critical to understand how California law applies proximate cause to insurance claims.

  1. Proximate Cause, Efficient or Otherwise.

In California, it is settled that where a policy exclusion conflicts with state law the exclusion has no effect. Howell v. State Farm Fire & Cas. Co., 218 Cal. App. 3d 1446, 1464, n.4, 267 Cal. Rptr. 708 (1990). It is also settled that where there are two or more causes of loss “concurrent causes” and the efficient proximate cause is a covered peril, then there is coverage for the loss, even if one or more of the concurrent causes is excluded.. Garvey v. State Farm Fire & Cas. Ins. Co., 48 Cal. 3d 395, 257 Cal. Rptr. 292 (1989).

Just as Justice Stanley Mosk warned in his Garvey dissent, the insurance industry has devoted considerable energy to twisting and contorting efficient proximate cause to fit any claims denial situation. Plaintiff’s counsel’s job is to us to cut through the confusion.

Whenever there are two or more causes of a loss, and one or more of those causes is excluded, the analysis begins with Insurance Code section 530, which states:

An insurer is liable for a loss of which a peril insured against was the proximate cause; although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.

If the covered cause is closer in time to the loss than the excluded cause, this is generally where the analysis will stop. A prime example of how this works is found in Brooks v. Metropolitan Life Ins. Co., 27 Cal. 3d 305, 163 P.2d 689 (1945).

In Brooks, an insured with terminal cancer died in a fire. The carrier denied coverage under an accidental death policy, arguing essentially that since the insured would have not have died of his burns if he had not already been sick, the exclusion for “disease and mental infirmity” applied. Disease, argued the insurance company, was a concurrent cause and trumped the covered peril, i.e., death by fire.

The California Supreme Court rejected the argument:

The presence of preexisting disease or infirmity will not relieve the insurer from liability if the accident is the proximate cause of death; and [] recovery may be had even though a diseased or infirm condition appears to actually contribute to cause the death if the accident sets in progress the chain of events leading directly to death, or if it is the prime or moving cause.

Brooks, supra, 163 P. 2d at 691.

In other words, in a hypothetical claim situation such as where wind a covered peril requires replacing a roof that was previously functioning adequately and the carrier denies the claim by arguing (1) the roof was negligently installed, (2) third-party negligence is excluded, (3) the wind would not have blown off the roof but for the negligent installation, Brooks tells us that the carrier is not being reasonable.

The Brooks rule is critical in understanding proximate cause and efficient proximate cause because it was expressly followed when our Supreme Court examined an excluded cause of loss within the causal chain in Sabella v. Wisler, 59 Cal. 2d 21, 32, 27 Cal. Rptr. 689, 696 (1963) and Garvey v. State Farm Fire & Cas. Co., 48 Cal. 3d 395, 403, 257 Cal. Rptr. 292, 296 (1989).

Both Sabella and Garvey demonstrate how concurrent causation analysis becomes a shade more complex when an excluded cause occurs after a covered peril. The analysis then becomes a search for the “efficient proximate cause” of the loss, also known as the “predominate” cause.

When an excluded peril appears within the causal chain, carriers often look to Insurance Code section 532 as a basis for denying coverage. The statute provides:

If a peril is specially excepted in a contract of insurance and there is a loss which would not have occurred but for such peril, such loss is thereby excepted even though the immediate cause of loss was a peril which was not excepted.

In 1963, the California Supreme Court reconciled sections 350 and 352 in Sabella v. Wisler, 59 Cal. 2d 21, 27 Cal. Rptr. 689 (1963), which concerned a subsidence damage claim made under a homeowner policy. In Sabella, the policy specifically excluded “settling” and the carrier denied coverage, relying on section 352. The policy holder argued that the reason the house settled was that a negligently installed sewer line had ruptured, spilling water into loose fill and “setting in motion the forces tending towards settlement.” The Supreme Court held that the loss was covered because third party negligence was a covered peril under the policy and that negligence was the efficient cause of the damage.

“In determining whether a loss is within an exception in a policy, where there is a concurrence of different causes, the efficient cause the one that sets the others in motion is the cause to which the loss is attributed, though the other causes may follow it and operate more immediately in producing the disaster.”

Sabella, supra, 59 Cal. 2d at 31, 27 Cal. Rptr. at 695 (quoting, 6 Couch, Insurance (1930) § 1466). As the high court later explained in Garvey:

We reasoned [in Sabella] that sections 530 and 532 were not intended to deny coverage for losses whenever “an excepted peril operated to any extent in the chain of causation so that the resulting harm would not have occurred ‘but for’ the excepted peril’s operation.” Rather, we explained that when section 532 is read along with section 530, the “but for” clause of section 532 necessarily refers to a “proximate cause” of the loss, and the “immediate cause” refers to the cause most immediate in time to the damage.

Garvey, supra, 48 Cal. 3d at 402, 257 Cal. Rptr. at 295. Garvey reaffirmed the Sabella analysis in 1989 when the Supreme Court considered another claim for damage to a home damaged by earth movement. Again the carrier denied coverage under an earth movement exclusion and again the insureds argued that their policy covered losses caused by third party negligence. The Supreme Court looked to efficient proximate cause to solve the coverage question.

Sabella defined “efficient proximate cause” alternatively as the “one that sets others in motion” and as “the predominating or moving efficient cause.” We use the term “efficient proximate cause” (meaning predominating cause) when referring to the Sabella analysis because we believe the phrase “moving cause” can be misconstrued to deny coverage erroneously, particularly when it is understood to mean the “triggering” cause.

Garvey, supra, 48 Cal. 3d at 403-404, 257 Cal. Rptr. at 296.

Garvey, teaches a number of lessons. First, in determining an efficient proximate cause, look for an active cause that sets a causal chain in motion. Following Brooks, a simple condition of person or property can never be an efficient proximate cause.

Second, an efficient proximate cause is a predominating cause and a term of art. In denying coverage, carriers will be creative and expansive in their own definitions of efficient proximate cause, but cannot be allowed to get away with loose definitions.

  1. Reading Exclusions Out of the Policy.

Even though Sabella, Garvey, Howell and their progeny have been the law in California for over a generation, carriers still attempt to push the efficient proximate cause doctrine beyond its limits to deny coverage.

For example, some carriers will argue that efficient proximate cause translates into the “most important” cause of a loss and then will fixate on an excluded event in the chain of causation in order to document a denial. This is a position that relies on a misstatement of the law. Garvey, after all, establishes that efficient proximate cause is equivalent to predominating cause, the meaning first offered in Sabella. Nowhere do the cases discuss “most important” cause as a standard.

The distinction is not mere linguistics. Going back to our roof loss hypothetical, a sloppy roofing job may well prove adequate against the elements for a decade or more before a windstorm tears it apart. The roofer’s negligence cannot by definition be an efficient proximate cause of the loss because it sets nothing in motion. It is simply a state of condition and the Brooks rule is that “recovery may had even though a diseased or infirm condition appears to actually contribute to cause the [loss] if the [covered peril] sets in progress the chain of events leading directly to [the loss], or if it is the prime or moving cause.” 163 P.2d 689, 691. Since it is the windstorm a covered peril that sets the damage chain in motion, following Brooks, Sabella and Garvey, windstorm is the efficient proximate cause and triggers coverage under the policy.

For its part, roofer negligence an excluded peril is an infirm condition that is a remote cause as a matter of law and cannot defeat coverage. The reasonable expectations of both insured and insurer that wind damage is covered are met. The carrier is free to pursue the roofer on its own in subrogation, but it must pay the claim benefits provided by the policy.

Palub v. Hartford Underwriters Ins. Co., 92 Cal. App. 4th 645, 112 Cal. Rptr. 2d 270 (2001), provides a good example of how carriers continue to try to abuse efficient proximate cause analysis. In Palub, the insureds made a claim under their all-risk homeowner policy for damage to their home after a slope behind the house failed. The insured argued that weather conditions caused the slope to fail and were the efficient proximate cause of the loss. The insurer argued that weather conditions were excluded under the policy by a provision stating, “We do not insure against loss to property . . . caused by any of the following . . . (a) Weather conditions. However, this exclusion only applies if weather conditions contribute in any way with a cause or event excluded in paragraph 1. above to produce the loss.”

The Court of Appeal observed that in light of this language, weather conditions were not an excluded cause of loss by themselves. The Court also held that to the extent that the policy provision attempted to exclude coverage for weather conditions that acted as the efficient proximate cause of a loss, the exclusion violated Insurance Code section 530 and was unenforceable.

Palub, in turn, relied on Howell v. State Farm Fire & Cas. Co., 218 Cal. App. 3d 1446, 267 Cal. Rptr. 708 (1990), which addressed much the same problem. Howell involved an all-risk homeowner’s policy and a claim for damage due to landslide. The insured argued that fire had destroyed the vegetation on a nearby slope and unusually heavy rains then drenched the bare unprotected ground, resulting in a landslide. An expert testified that the landslide probably would not have happened had the ground cover been intact. The Court held that the fire was the efficient proximate cause of the loss under this analysis and found coverage. 218 Cal. App. 3d at 456, 267 Cal. Rptr. at 714-715.

The primary issue decided by Howell is that an insurer cannot contractually exclude coverage when an insured peril is the efficient proximate cause of the loss, no matter how the policy is written. Any exclusion purporting to defeat coverage where the efficient proximate cause is a covered peril is simply read out of the policy.

  1. Conclusion.

Just as Justice Mosk warned in Garvey, the efficient proximate cause analysis has tempted many a carrier to engage in studied mischief. But Sabella and Garvey provide the bedrock definitions for efficient proximate cause. Brooks confirms that a pre-existing, latent infirmity can never be an efficient proximate cause since is a condition rather than a moving cause. And Palub and Howell render inapplicable exclusions that seek to limit coverage where a covered peril is the efficient proximate cause of loss.

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.

Medicare indemnity language for non-US personal injury victims

Medicare indemnity language for non-US personal injury victims

As you probably know, Medicare has a super-lien on personal injury recoveries where Medicare paid all or part of the related medical expenses.

Carriers will generally not cut a check to a settling attorney and their client without Medicare signing off on their lien amount, since the carrier might otherwise face possible penalties and interest if Medicare doesn’t get its cut.

The problem is, if the injured party is not a US citizen and didn’t contribute to social security or pay any Medicare tax, they won’t qualify for Medicare benefits and the government will not (at this writing at least) provide any document that states there is no lien.

If the conditions are right, then the solution (short of having Medicare on the check and sending it off for endorsement, which takes months) is an indemnity clause in the settlement agreement.

Make sure this will not blow back on you or your client, but if you decide to go this route, here is some language that has worked for us with State Farm and Farmers:

FURTHER, as a condition of the settlement and release, Claimants represent and warrant that as of the date of this signing, Claimants have provided the released party’s(ies’) Insurer ______________________ (“Insurer”) all information Claimants know about any and all Medicare rights to recovery as of this date. Claimants agree to reimburse, indemnify and hold harmless each of the persons, firms or corporations released hereunder and their Insurers, including their agents and assigns, with respect to all known and unknown Medicare rights to recovery related to the Subject Accident for which the federal government may seek repayment, as well as any fine or penalty the federal government may seek resulting from the sufficiency and accuracy of the information Claimants have provided to Insurers regarding Medicare rights to recovery known as of this date.

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.

Searching for a Higher Duty When an Insurer Refuses to Admit its own Mistakes

Searching for a Higher Duty When an Insurer Refuses to Admit its own Mistakes  

  1. Why won’t they just “do the right thing?”

People make mistakes. It’s part of being human.

Even so, over and over we see cases where an insurance carrier or its designated agent makes an error and then stubbornly denies responsibility. The carriers/agents just won’t “do the right thing” in industry parlance.

The result is always the same. Innocent insureds are left to fend for themselves. The carrier and agents defend based on the notion that they owe “no duty” to have prevented or to right the particular wrong. A struggle ensues.

Bad faith law may be insufficient to address the situation, especially if the mistake has to do with a faulty insurance application or a failure to provide adequate limits or coverages. Breach of the implied covenant of good faith and fair dealing generally requires a breach of the insurance contract and the policy declarations or coverages are often exactly what the agents/carrier mistakenly put into place.

Catch 22, anyone?

The solution is to think outside of the box just a little bit and examine what is really going on in the insured/agent/insurer relationship, because the nature and extent of the relationship will ultimately define where the duty truly lies. Fortunately, this area is one of the few in insurance law that has grown more sympathetic to insureds during the past decade.

  1. Defining Different Levels of Duty.

The typical agent/carrier mistake problem requires analyzing duty at multiple levels. The duties can involve a fiduciary duty under certain circumstances, a duty to perform reasonably or a duty created by an oral or written contract.

The duties themselves will define the remedies available to the insured in the event of a breach so the level of duty involved becomes critical in prosecuting a claim.

Breach of fiduciary duty is the most interesting, both because it has recently been affirmed as available under certain circumstances (Tran v. Farmers Group, Inc. (2002) 104 Cal.App.4th 1202, 128 Cal.Rptr.2d 728) and because it presents a potential for obtaining punitive damages.

Negligent breach of a duty to perform resulting in damages is also important, but will generally only become available where the agent or insurer have acted in such a fashion where they can be seen to have adopted a special duty towards the insured. See e.g., Paper Savers, Inc. v. Nacsa (1996) 51 Cal.App.4th 1090, 59 Cal.Rptr.2d 547; Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110, 55 Cal.Rptr.2d 276; Free v. Republic Ins. Co. (1992) 8 Cal.App.4th 1726, 11 Cal.Rptr.2d 296. Under this theory, both agent and insurer may be liable for the agent’s negligence in misrepresenting policy terms or the extent of coverage provided. In addition, the measure of available damages may, in the right case, include attorneys fees and costs. Saunders v. Cariss (1990) 224 Cal.App.3d 905, 274 Cal.Rptr. 186.

Finally, where there is an oral or written agreement to provide a certain level of insurance protection, there is the potential for a breach of contract to provide insurance. The damages available would be the same as for any contractual breach.

Read more on this topic on my website, including:

  1. The Fiduciary Duty as applied to a Carrier. A significant duty in the proper case.
  2. Finding a Duty of Care.
  3. Finding a Contractual Duty.

Insureds sometimes need to rely on the expertise of agents and carriers to obtain the correct coverages and limits that will best protect them. When agents and carriers act as insurance experts but drop the ball, they should do the right thing. When they won’t, it’s up to the consumer lawyer to set things right.

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.

Discovery and Depositions in the Bad Faith Case: What You Need to Know

Discovery and Depositions in the Bad Faith Case: What You Need to Know  

     Introduction

Insurance bad-faith cases are usually hard fought and can be bitter.

Generally speaking, when we take on a carrier for acting contrary to its insured’s interests and allege those actions are malicious justifying punitive damages, the folks on the defense side tend to take it personally.

So, the first rule of discovery in the bad faith case is, assume you are in for a tough fight. Which, in turn, leads to the second and third rules: know your adversary and be prepared.

The bad news that the general practitioner faces in prosecuting a bad faith case is that the defense team will usually be much better schooled in the fine points of insurance than an attorney who does not work with insurance matters on a daily basis.

The good news that the general practitioner can take heart from is B the purpose of bad faith law is to act as an equalizer between the powerful carriers who adjust claims for a living and the ordinary insured who probably never wanted to have a claim and, with luck, will never have another. Insurance regulations require that insurance companies keep a record of all material claims decisions. So, where there is wrongdoing, there is almost always a record of the bad acts waiting to be uncovered.

The key discovery strategy in defending bad faith cases is to deny the plaintiff information. However, if you know where and how to dig, it’s not that difficult to get the evidence you need to put on your successful case.

   Know your adversary

People spend their lives learning about the insurance business, which itself represents a huge, multifaceted, globally diverse industry devoted to making money by spreading risk. Generally, you do not have a lifetime to learn each and every nuance of the insurance world. So, don’t try. But do make sure you know everything you can about the facts and circumstances of the insurance business as it applies to your case.

Understand that the defendant or defendants in your prospective case may not be obvious from the face of the insurance materials your clients hand you. For example, it is not unusual to have a client provide letters on letterhead from the “Farmers Insurance Group of Companies.” Some practitioners will put this name in their complaint. Only, there is no such creature that can be sued. “Farmers Insurance Group of Companies” is simply the trade name for a collective of entities organized as inter-insurance exchanges. Usually, the proper defendants in a Farmers claims case are Farmers Group, Inc. (the management company), Farmers Insurance Exchange (the claims handling entity) and the insuring exchange (ie., Fire Insurance Exchange, Truck Insurance Exchange, etc.). See, Tran v. Farmers Group, Inc. (2002) 104 Cal.App.4th 1202 (rev. den. Mar. 26, 2003).

So, when laying out your case, always make sure you closely review the original insurance policy and declarations pages prior to determining who to name in your complaint. When in doubt, consult with experienced practitioners about who the proper parties are and why. Getting the defendants right at the beginning can save tremendous amounts of time during the case.

Also, make sure you understand who has standing to sue under the insurance policy. A business owner may not be able to sue for bad faith if the named insured is a corporation or limited liability company. On the other hand, the owner may have standing as an additional insured. The question is important where there is a potential for emotional distress and other general damage to the owner. Again, look to the policy and declarations pages for the answer.

 Getting to the Heart of Your Case in 60 days or less.

Once you have the parties clear in your mind and have filed suit, you can prepare your initial round of discovery for service once the defendants answer or, as is more typical, demur.

I seldom use interrogatories during my initial bad faith discovery. I find it is much more productive to immediately demand the claim file(s) and, if warranted, the underwriting file(s), since these are the basic documents necessary for preparing any bad faith case for trial.

Because these files are key evidence in the case, and in order to discourage potential mischief in discovery, I ask for the documents in multiple requests, simultaneously, using a formal request for production of documents, along with a custodian of records deposition notice and notice of deposition of the person most qualified. By utilizing this process, I find I am able to exert maximum pressure on the defense to produce the entire record all at once. This process also insures that I will be able to either establish foundation for the insurance files either by direct testimony or stipulation, so that they are admissible later in the case. Do not assume that a claim file or any other document will be admitted at trial under the business records exception to the hearsay rule. Nail down the foundation as you go, it will save much grief later on.

It is also important to make sure that the original files are available during any depositions. Copies of files don’t do the originals justice B often information about file handling can be gleaned from handwriting on the file folders themselves or how the files are organized. It is much easier for insurance adjusters and other key witnesses to evade answering key questions if the original files are not in front of them. Copies of file materials are okay as part of a document production and, in fact, are easier to handle as you organize your case. But make sure you request to see the originals and insist they be produced.

Person most qualified depositions under Code of Civil Procedure section 2025.220 are the fastest way to gain general information about the basic handling of the claim or other insurance matter that lies at the heart of your case. I typically notice the person most qualified to testify regarding the identities of each and every individual who performed work or made a decision in the matter. Generally, the witness will be the primary claims adjuster, which is fine. However, the PMQ deposition helps avoid wasting time meeting and conferring over boilerplate objections and incomplete responses typical when interrogatories are served.

Also, try to determine whether or not the defense will be allowing on advice of counsel as a defense by serving a simple Request for Admission that is on point. Carriers generally do not like using the defense since it opens up areas that would otherwise be privileged. But don’t assume it won’t be used. Ask up front.

I have number of sample deposition notices, discovery requests and requests for admissions that are regularly requested from me. If you’re interested, click here for the set. Please note, the forms I provide use the old Code of Civil Procedure sections, so you should update them before using them in your case

 Focusing Depositions

Once I know who was involved with the claim or other insurance matter I am concerned with, I typically depose everyone who touched the file in any way. Even if the deposition lasts only fifteen minutes, absent a stipulation, getting the testimony is the only way to insure that all the potential holes in your cases are filled.

I prefer to video all key depositions, particularly the adjusters and claims personnel. The best insurance bad faith cases are generally morality plays where the attitude and demeanor of the witnesses are just as important as their precise testimony. A picture, as the saying goes, is often worth a thousand words.

When deposing insurance professionals, I almost always begin by getting them to agree with me as to basic principles such as an insurance carrier must give its insured’s interests equal weight with its own,” an insurer is obligated to conduct a thorough, fair and objective investigation into the facts of a claim,” etc. Once I establish the common framework of duty, I use those basic principles to tie down the witness while going through the claim.

Lists of duties and obligations can be gleaned from the case law, jury instructions and your experts. Make one up that works for your case and use it from day one.

In deposing witnesses, utilize the insurance files you obtained at the beginning of the case as both a guide to questioning and evidentiary support for your case. Adjusters will have diary notes, these should be analyzed and authenticated by the witness. If it is unclear just what notes or materials were created by the witness, don’t be afraid to ask. Unraveling how a claim was handled is often like piecing together an intricate puzzle. Be thorough with each witness and you will not need to fear missing pieces when your discovery is concluded.

Also, just as in any case, don’t be afraid to lead adverse witnesses as allowed by Evidence Code section 776. Leading questions are the best way to focus an adverse witness, especially one that might be inclined to waste your time with irrelevant insurance technicalities and side issues.

   Conclusion

There’s no magic to conducting bad faith discovery. Just preparation, study and hard work.

While the basics outlined in this article should help you get going, don’t forget that there is a strong community of insurance bad faith practitioners available who can help answer particular questions or give guidance on technical issues.

In my mind, there is no nobler endeavor than fighting for deserving individuals who have been legitimately wronged by powerful institutions. Hopefully, you are of the same mind. So, go get ’em!

 

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.

Top 3 Insurance Rules After Disaster Hits Your Home

Avoiding Insurance Disaster.

It seems like whenever catastrophe strikes, insurance problems rear their ugly head. It might be your home isn’t sufficiently covered to pay for repairing the damage. Or, you might be the victim of unfair adjusting practices, such as a carrier that would rather fight than pay its fair share.

In a disaster such fire, flood or earthquake, you might not even know who your insurance company is, since your policies and other important documents may well be cold ash or soggy trash.

If you suffer a disaster and have to make a claim on your insurance, keep these three principles in mind:

  1.     Get a Copy of Your Policy and read It.

Insurance always begins with a written contract. So, the first thing that needs to be done when getting ready to make a claim is to get a copy of every policy that might possibly provide coverage for your damaged property and read them all from front to back.

If you don’t have the policy forms because they were lost, destroyed or are otherwise unavailable, you’ll have to get policy reconstructions from the insurance company. Requests can be made to your agent or directly to the insurance company’s policy services department. If you don’t remember who your insurance company is, you’ll need to do a little detective work. Start with your checking account. A review of your banking records may well lead you to every insurer that might provide coverage for the damaged property.

  1. Check your coverages.

Your insurance policy provides coverage for certain types of loss, and excludes coverage for others. That’s why it’s important to get a copy of the contract right at the beginning.

One issue that frequently arises following a catastrophic loss is the damaged property was not adequately insured in the first place. Where an agent or broker provided you with professional advice on the appropriate coverage or bound coverage based upon their own professional expertise, there may be a claim for professional negligence where the property isn’t properly protected.

  1. Watch out for Time Limits

Property insurance contracts generally have their own time limits, called “statute of limitations,” built in, and the period in which to file suit to enforce the contract is generally less than the period that applies to a plain vanilla written contract.

When in doubt, consult a legal professional about what time limits will apply to your claim. Be proactive. Once you have loss, there is a clock ticking somewhere that might limit your ability to recover policy benefits.

 

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.

Understanding the Affordable Care Act (ACA aka Obamacare): DSM-5

A big change for the better in health insurance is the Obamacare mandate that insurance carriers provide parity for mental health/substance abuse benefits with medical/surgical benefits.

What’s that mean? Well, most people know that health insurance has regularly scrimped on mental health care benefits in the past. Sessions with psychologists would be limited. Other types of mental health care would be severely rationed or even just plain excluded.

Obamacare mandates “parity between mental health benefits with respect to financial requirements and treatment limitations under group health plans and health insurance coverage offered in connection with a group health plan,” according to the finals rule on mental health parity published by the federal government.

So, what kinds of mental health problems fall within the mandate?

Well, the final rules say that: “Any condition defined by the plan or coverage as being or as not being a mental health condition must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the Diagnostic and Statistical Manual of Mental Disorders (DSM), the most current version of the ICD, or State guidelines).”

The thick purple book called the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (“DSM-5”) is probably your first resource in identifying whether the illness that needs treatment is considered a mental illness.

Think of DSM-5 as the big book of brain disease.

Most folks won’t call DSM-5 easy reading. Even so, DSM-5 is the best collection so far of mankind’s mental maladies, all spelled out and organized just so.

Doctors reference DSM-5 disorders in their clinical charts while diagnosing and treating. Insurance companies use the codes attached to DSM-5 disorders while deciding what care is covered and how much they will pay. Courts and attorneys use DSM-5 as a reference while assessing the forensic consequences of mental disorders.

If you are looking for insurance coverage for what you believe is a mental illness, start with the DSM-5. If your insurance company starts claiming your illness is not covered, knowing your rights under the law is a huge first step in getting the benefits you deserve.

 

Bill Daniels is a trial lawyer and shareholder with the law firm of DANIELS LAW in Sherman Oaks, CA.  A graduate of Loyola Law School of Los Angeles, he is a former member of the Consumer Attorneys Association of Los Angeles Board of Governors, a founding member of Loyola’s Civil Justice Program and a past president of the Encino Lawyers Association.  Since 2007, he has been named a Southern California “Super Lawyer” by Los Angeles Magazine.  Mr. Daniels focuses his practice on serious personal injury, insurance and employment. For information, visit our website at www.daniels.legal or contact us through e-mail: Info@danielslaw.com.