Insurance Law and Coverage Disputes Blog

High-Risk Insurance Pools Gain Steam Across U.S.

Michael Cessna — Mon, 12 Jul 2010 20:03:17 +0000

As of this week, Americans who have been denied health insurance coverage by an insurer because of a pre-existing health condition can apply for insurance through high-risk insurance pools. Officials with the U.S. Department of Health and Human Services have said they might shift funding among states if the new program to cover the uninsured runs out of money more quickly in some states than in others.

In Missouri, for instance, $81 million has been approved for the state’s high-risk insurance pool. The Missouri Health Insurance Pool will begin accepting applications for the pool in mid-July via its website or by phone. Costs will be supplemented by premiums paid by policy holders.

Kansas will also create a state-based high-risk insurance pool, and…

Insurance Implications of the Deepwater Horizon Disaster

Michael Cessna — Wed, 12 May 2010 19:08:09 +0000

The potential financial impact of the April 20, 2010 explosion and sinking of the Deepwater Horizon in the Gulf of Mexico may well eclipse the financial impact of the Exxon Valdez spill in 1989, which resulted in a $3.5 billion dollar settlement and $5 billion in legal and financial settlements. As efforts to contain the oil spill continue without success, the insurance ramifications of the disaster loom large.

The explosion led to the deaths of 11 crew workers and the loss of the $560 million dollar drilling rig. Reportedly, the well is gushing 5,000 barrels of oil a day, forming a 600-mile oil slick, which threatens to cause extensive environmental damage to the coastline of Louisiana, Mississippi, and Alabama. The claim…

Chickens are Animals and Fixed Overhead is Not an “Extra Expense” Under Business Interruption Insurance

Jennifer McAdam — Mon, 15 Mar 2010 19:36:16 +0000

In an insurance coverage action, the Eighth Circuit determined two policy exclusions unambiguously precluded coverage for a poultry processor under its property and business interruption insurance. George’s Inc. v. Allianz Global Risks US Ins. Co., 2010 U.S. App. LEXIS 5108, *1-2 (8th Cir. Ark. Mar. 9, 2010).

Following a power outage caused by ice storms, poultry processing company, George’s Inc. (“George’s”), brought an action against its insurer, Allianz Global Risks US Insurance Co. (“Allianz”), seeking indemnity for business expenses and personal property losses. Id. at *1, 2. The electrical outage disrupted production, resulting in a loss of business income and leading to the premature deaths of chickens stored in a holding shed. Id. at *2. Allianz conceded coverage of certain lost business income…

Self-insured companies now must report to Medicare before settling a liability claim brought by a Medicare recipient

William Jolley — Mon, 08 Mar 2010 22:18:58 +0000

Medicare Secondary Payer or “MSP” refers to circumstances where another entity, usually an insurer, is contractually obligated to pay for covered services before Medicare does, and must do so without regard to a patient’s Medicare entitlement. Since the early 1980s, Centers for Medicare & Medicaid Services (“CMS”) has been empowered to recover any overpayments from the entities which are primarily responsible for payments to Medicare beneficiaries. In order to facilitate these recoveries, Congress imposed reporting requirements beginning in 2009 for “Responsible Reporting Entities” or “RREs.” Notably, RREs include not only insurers, but also companies that self insure their liabilities or health care plans.

Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA Section 111), 42 U.S.C.…

Favorable Ruling from Mississippi Supreme Court for Contractors who Use Subs

Kim Winter — Wed, 03 Mar 2010 19:20:43 +0000

On February 11, 2010, the Mississippi Supreme Court overturned the lower court’s grant of summary judgment in favor of the insurer and held that a general contractor’s use of a subcontractor does not necessarily preclude coverage under the general contractor’s commercial general liability (”CGL”) policy for problems that arise once the project is complete due to work performed by the subcontractor. Architex Assoc. Inc. v. Scottsdale Ins. Co., ___ So.3d ___, 2010 WL 457236 (Miss. 2010). This was a major victory for the construction industry.

The policies in question provided coverage for an “occurrence” which was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The policies excluded any property damage or bodily injury that…

Eleventh Circuit Adopts Davila, the Supreme Court’s ERISA Preemption Test

Jennifer McAdam — Mon, 15 Feb 2010 17:15:29 +0000

More that five years after the U.S. Supreme Court decided Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), the Eleventh Circuit officially adopted the Court’s ERISA complete preemption test. Conn. State Dental Ass’n v. Anthem Health Plans, Inc., 2009 U.S. App. LEXIS 28773 (11th Cir. Fla. Dec. 30, 2009). The court determined that some of the plaintiff’s state law claims were properly removed pursuant to § 502(a)(1)(B), ERISA’s civil enforcement provision, 29 USCS § 1132(a)(1)(B). Id. at *2.

Dentists Rutt and Egan and Connecticut State Dental Association brought state law claims against Anthem for improper “‘downcoding’ and ‘improper bundling,’ as a means of underpaying participating dentists for services they performed.” Id. at *3. Anthem removed the case to federal court on the basis that the claims…

Paint Fumes Are Not Subject to “Pollution Exclusion” According to U.S. District Court

Sarah Millin — Tue, 26 Jan 2010 16:05:21 +0000

In what appears to be a case of first impression, the United States District Court for the District of South Carolina has held in NGM Insurance Co. v. Carolina’s Power Wash & Painting LLC, 2010 WL 146482 (D.S.C. Jan. 12, 2010) that the “absolute pollution exclusion” does not apply to injuries which are alleged to result from paint fumes at a work site, and should be limited in its application to traditional environmental pollution.

The NGM court acknowledged what it deemed to be a “clear” split of authority throughout the nation “regarding: (1) whether ‘absolute pollution exclusions’ bar coverage for incidents outside of traditional environmental pollution (e.g., contamination of groundwater over a long period of time), and (2) whether ‘absolute pollution…

Reinsurance Rates Down First of 2010

Kim Winter — Fri, 22 Jan 2010 16:17:52 +0000

According to a study by Guy Carpenter & Company, LLC, released earlier this month, reinsurance rates for most lines of property insurance decreased at the Jan. 1, 2010 renewal, compared with rates for similar coverage in 2009. Guy Carpenter’s “Rates Retreat as Capital Rebounds: Global Reinsurance Renewals at Jan. 1, 2010″ can be found here. Guy Carpenter attributes the rate decrease to a variety of factors, including relatively low catastrophe losses during 2009, the lingering effects of the recession on demand, and a rally in global financial markets, all of which lead to an excess in supply and increased competition. It remains to be seen whether this declining trend will continue through 2010. Guy Carpenter notes some “longer-term clouds on the…

Seventh Circuit Court of Appeals Still “Pondering” Conflict Analysis

Robyn Anderson — Mon, 04 Jan 2010 15:36:22 +0000

In Majeski v. Metropolitan Life Ins. Co., the Seventh Circuit Court of Appeals admitted that it “is still pondering . . . just how to consider a plan administrator’s conflict of interest.” 2009 WL 5088720 (7th Cir. Dec. 29, 2009) (emphasis in original). The court continued to reject a blanket rule that would force a reviewing court to weigh conflict in every case, instead opting for a case-by-case inquiry that weighs conflict only if it is relevant based on its gravity. “Gravity” of conflict might be discerned from the reasonableness of the claim procedures, the safeguards implemented to minimize the conflict and the “terms of employment” of the decision-maker’s staff, the court suggested. The court rejected that the conflict inquiry…

Third Circuit Holds that Drunkenness Does Not Render an Intentional Act Accident

Michael Cessna — Mon, 21 Dec 2009 21:27:49 +0000

A recent decision from the Third Circuit addresses a rather timely issue during this holiday season, that is, does inebriation render an intentional act accidental? State Farm Fire & Casualty Co. v. The Estate of Thomas W. Mehlman, 2009 WL 4827027 (3rd Cir. Dec. 16, 2009), holds that for purposes of a liability insurance policy, a person’s intentional act is not rendered accidental simply because one commits the act while inebriated.

State Farm issued two liability insurance policies to Mehlman, a Homeowner’s Policy and an Umbrella Policy. The insuring agreement of the Homeowner’s Policy provided coverage “if a claim is made or a suit is brought against an insured for damages because of bodily injury . . . cost by an…