Insurance Dispute Lawyer Blog

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.

Vicarious Liability Explored in Jones Act Case

Published on: July 9, 2013 | By Berniard Law Firm

What is vicarious liability? Vicarious liability, simply put, is the common law principle that an employer may be liable for its employee’s negligence if that employee’s negligence occurred within the course or scope of his or her employment.

In the Beech v. Hercules Drilling Company, L.L.C., case coming out of the Eastern District of Louisiana, vicarious liability principles came into play. In this case, certain bizarre events led the United States Court of Appeals for the Fifth Circuit to make a ruling as to whether Hercules Drilling Company should be held vicariously liable for the actions of Michael Cosenza, its employee, who accidentally shot and killed his co-worker, Keith Beech, while both were aboard a Hercules owned vessel.

The facts of the case were not in dispute. Beech was a crane operator aboard a jack-up drilling rig that Hercules owned, while Cosenza was a driller aboard the vessel. On December 13, 2009, the fateful events that led to the aforementioned case, took place. Cosenza happened to own a firearm, which he accidentally took aboard the vessel; Hercules policy prohibited any firearms from being aboard their vessels. Not only did Cosenza bring a firearm aboard the vessel, violating the policy, but when he realized that he had inadvertently brought it aboard (he found it among his laundry) he did not inform anyone about it and placed it in his locker, further violating Hercules policy. Cosenza was aware of the policies regarding firearms.

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.”

Attorney Re-Enters Picture for Fees After Couple Successfully Settles Without Him

Published on: June 1, 2013 | By Berniard Law Firm

Choosing the right attorney for your lawsuit is crucial, not only for receiving the proper compensation for your damages but also to be protected by the legal representative themselves. The issue at hand for this post comes from a case heard in the Court of Appeal for the Fourth Circuit of Louisiana. The plaintiffs, Jill and Claud Brown, brought a case against their former attorney Mr. Lehman.

Mr. Lehman represented the Browns in a case to recover damages suffered from Hurricane Katrina. However, Lehman soon after withdrew from the case with the court’s permission on July 23, 2009. In the spring of the next year Mr. Lehman filed a “motion to set fees” requesting the Browns to pay him legal fees after the Browns had received a settlement in their case. Although the lower court granted Mr. Lehman a large percentage of the settlement received by the Browns, amounting to $12,300.00, the Court of Appeals reversed that decision because Mr. Lehman had withdrawn from the case and failed to first file a motion to intervene before he filed the motion to set fees. The motion to intervene in the action was deemed to be necessary by the appeals court and that was the reason for the reversal.

The case shows the unfortunate side of what can happen when individuals hire legal representation to handle their claims. The trial court’s determination of the rule about a former attorney intervening after withdrawing from a case created a tenuous situation for the Browns and anyone in the same situation, as they were forced to pay for and hire subsequent representation in order to protect themselves from their former lawyer. The Browns’ situation is one that anyone can easily finds themselves especially considering the difficulty for most people to navigate the language of the law in Louisiana.

Disability Benefits Center of Car Accident-Based Appeal

Published on: May 24, 2013 | By Berniard Law Firm

After a man was seriously injured in a one-car accident in Lafayette Parish, Louisiana, and rendered disabled to the point that he was no longer able to complete his job, he began to receive short term disability benefits from his employer. After those benefits expired, the man filed a claim for long term disability benefits. However, this claim was denied by the provider. The company’s policy with regard to long term disability benefits expressly prohibits the coverage of losses that are due to illegal acts. In this case, the man involved in the accident was reported to have had a blood alcohol level of 0.15, almost twice the legal limit in Louisiana, at the time of the accident.

Once his claim was denied, the man requested an appeal, claiming that the insurance company could not deny him coverage under the clause regarding illegal acts. The man provided several reasons why his act of driving under the influence should not be included in this clause: the policy did not include a specific “intoxication” provision; driving under the influence did not constitute an illegal act; even if it was an illegal act, the company could not prove that the accident happened because of his intoxication. At the time of the accident, two cars were racing towards him, and he had to swerve to miss them. The man claims that this was the real reason for the accident and that it had nothing to do with his intoxication.

In response to the man’s claims, the policy provider underwent an intensive investigation to determine whether or not it should grant the injured man’s long term disability claims. As part of the investigation, they found that the man’s blood alcohol level would have impaired his reflexes and reaction time at the time of the accident. Furthermore, by this time the man was indicted and given a DUI. Because of the DUI, medical records, and an export report that stated that the intoxication and resulting impairment contributed to the accident, the policy provider once again denied the man’s claims for coverage.

At this time, the man brought his claim against the policy provider to court. The trial court actually sided with the injured man, granting his motion for summary judgment with regard to coverage because it agreed that applying the “illegal acts” clause to the man’s case was unjust. Naturally, the policy provider appealed the case, claiming that the trial court had erred in reaching its decision. Specifically, the policy provider claimed that the trial court had abused its discretion in reaching its decision.

If the policy provider had the authority to interpret the terms of the policy and determine the individual’s eligibility for benefits, then the abuse of discretion standard would be the proper standard to employ. Under the “abuse of discretion” standard, the trial court or any other court reviewing the choices made by the policy provider should uphold the company’s decisions unless the person bringing claim against the company can prove that the company’s decisions were arbitrary. While the man argues that this is not the appropriate standard to use, the appellate court agrees that the policy expressly gave the policy provider the right to make all determinations with regard to eligibility for benefits.

So, now the court must simply decide whether or not this determination to deny the man’s claims was capricious or not. According to relevant case law, under the abuse of discretion standard, as long as the policy provider’s decision was supported by substantial evidence and was neither arbitrary nor capricious, then deference should be given to that decision. After reviewing the evidence, the court agreed that the policy provider interpreted the policy reasonably and that there was substantial evidence for the policy provider to deny the man’s claim. Because of this finding, the appellate court ultimately reversed the trial court’s judgment regarding the policy provider’s denial of coverage and remanded the case back to the trial court for further proceedings.