Would You Believe that an Insurer’s Policy Violates the “Efficient Proximate Cause” Doctrine? Believe it!

Posted in: Case Updates, Homeowners Insurance, Insurance Litigation Blog, Property & Casualty Insurance February 11, 2016

A homeowners’ insurance policy does not always mean what it says.  That is, in effect, what the California Court of Appeal recently concluded in Vardanyan v. AMCO Ins. Co., 243 Cal. App. 4th 779 (2015), a case involving the well-established “efficient proximate cause” doctrine.  The insurer’s policy explicitly stated it did not cover property damage caused by collapse of a building unless the collapse was caused “only by” hidden decay, hidden insect damage or a couple other listed perils.  Although the collapse was caused in part by non-listed perils that were excluded by the policy, the Court of Appeal still concluded the loss should be covered if the jury on remand decides one of the listed perils is the most important cause of the loss.  It looked not just to the written contract language, though the claim would have been excluded if it did that, but to public policy as well.  The court held the insurer’s collapse provision “is an unenforceable attempt to contract around the efficient proximate cause doctrine.”

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Group Life Insurer’s Literal Policy Interpretation Penalizing Insured for not working on Paid Holiday Rejected

Posted in: Breach of Contract, Case Updates, Life Insurance, Policy Interpretation September 08, 2015

Group life insurance policies often have confusing language about when they become effective. A trial court recently interpreted one to mean that the policy had not become effective to a full-time employee, though he was already eligible for the coverage, because he was not physically present at work when the policy was issued to his employer. Instead he was at home for a paid holiday and then in the hospital on sick-leave because of a sudden and fatal illness. The insurer and trial court penalized the employee for taking his paid holiday and sick-leave. They docked him the life insurance proceeds for which he had paid. The dispute centered around the policy’s “effective date of coverage” provision: whether being a full-time employee was enough to make the policy commence even if out for a sick-day. Or whether the employee had to be actively working in the employer’s building.

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High Court Changes Cumis Landscape

Posted in: Attorneys Fees, Case Updates, Duty to Defend, General Liablity August 26, 2015

We all know the maxim that “bad facts make bad law.”  Two years after J.R. Marketing, LLC prevailed in the Court of Appeal concerning its dispute with its commercial general liability insurer, Hartford, it ran out of luck before the California Supreme Court in its fight over important Cumis counsel issues.  Hartford Cas. Ins. Co. v. J.R. Marketing, LLC, 190 Cal. Rptr. 3d 599, 2015 DJDAR 9111 (Cal. Aug. 10, 2015).  This is a must read for every lawyer in California that acts as Cumis counsel.

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ERISA Insurers’ Conclusory Medical Opinions Regarding Disability Status Will Not Carry the Day

Posted in: Case Updates, De Novo Review, Disability Insurance, Disability Insurance News, ERISA, Insurance Litigation Blog August 20, 2015

An individual suffering from a disabling condition undoubtedly has many concerns. In addition to dealing with physical pain and emotional distress, there is always the thought of how to pay for medical bills and living expenses if the disability prevents the person from continuing work.

It can be stressful and time consuming for a disabled claimant to fight for long-term disability benefits (“LTD”) provided under an ERISA-governed employee benefit plan. However, a recent District Court case, Carrier v. Aetna Life Insurance Company, 2015 WL 4511620 (C.D. Cal. July 24, 2015), may help insureds by making it more difficult for insurance companies/claim administrators to summarily deny an insured’s claim without proof of specific findings and details as to how and why they reached their conclusion to deny benefits.

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Ninth Circuit Severely Limits Known-Loss Doctrine in Insurance Cases

Posted in: Case Updates, Commercial General Liability Insurance, Duty to Settle, Insurance Litigation Blog, Policy Interpretation July 11, 2015

Have you ever wondered whether the liability policy you purchased covers losses you already knew about before you bought the policy?  How much do you have to know?  What if you knew about certain property damage at a construction project you caused but not about other related damage your policy would otherwise cover?  A recent case from the Ninth Circuit sheds light on these issues, and it is good news for policyholders.

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For ERISA Disability Insurance Appeals, A Claimant Who is a Day Late May Not Be a Dollar Short

Posted in: Case Updates, Disability Insurance, Disability Insurance News, ERISA, Insurance Litigation Blog, Insurance Questions and Concepts, Policy Interpretation June 10, 2015

Under most long-term disability insurance plans governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), a claimant must appeal the denial of any claim for benefits within 180 days of the denial letter. Unless the appeal is made within that strict 180-day period, the claimant may forfeit the right to any short-term disability benefits or long-term disability benefits available under the plan. At least, that was the law until a recent ruling by the United States Court of Appeals for the Ninth Circuit cracked open the window for a timely appeal.

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Insurers Do No Have Discretionary Authority, Absent Clear Language in Official Plan Documents

Posted in: Abuse of Discretion, Administrative Record, Case Updates, De Novo Review, Disability Insurance, Disability Insurance News, ERISA, Insurance Litigation Blog, Insurance Questions and Concepts, Policy Interpretation, Standard of Review April 30, 2015

In actions brought under the Employee Retirement Income Security Act of 1974 (“ERISA”), two roads diverge in federal court—and the court’s choice regarding the applicable standard of review can make all the difference in the scope of permissible evidence.  If the court applies the abuse of discretion standard of review, the court more typically (but not always) only considers evidence received by the insurer in time for its decision and limits its review to the “administrative record” to determine whether the insurer’s denial was an abuse of discretion.  Alternatively, the court may review a case “de novo,” and may consider documents not previously provided to the insurer to determine whether the insured is entitled to benefits. 

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Ninth Circuit Affirms MLG’s Six-Figure Judgment in a Disability Suit Filed Against Sun Life

Posted in: Abuse of Discretion, Administrative Record, Case Updates, Conflict of Interest, Disability Insurance, Disability Insurance News, ERISA, Insurance Litigation Blog April 29, 2015

On April 22, 2015, the United States Court of Appeals for the Ninth Circuit issued a decision affirming the district court’s decision to award McKennon Law Group PC’s client, an attorney (“insured”), his past-due ERISA plan benefits, as well as attorneys’ fees, costs and interest against Sun Life & Health Insurance Company in connection with his short-term and long-term disability insurance claim. 

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California Court of Appeal Emphasizes Just How Broad the Duty to Defend Is, which Includes Suits Alleging Even Rape

Posted in: Case Updates, Disability Insurance, Disability Insurance News, Duty to Defend, Excess Insurance, Homeowners Insurance, Insurance Litigation Blog April 01, 2015

A liability insurer’s duty to defend its insured against lawsuits is extremely broad, much broader than its duty to indemnify its insured for a judgment entered against it.  That has been the law in California for decades.  But just how broad is the duty to defend?  Does it extend to civil lawsuits alleging the insured raped and sexually assaulted the plaintiff?  Does it extend to lawsuits alleging intentional acts by the insured?  You bet it does if the policy contains the right language.

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Multi-Million Dollar Disgorgement Award Struck Down in Rochow - But the Disgorgement Remedy May Still Be Alive

Posted in: Case Updates, Disability Insurance, Disability Insurance News, Equitable Relief, ERISA, Fiduciary Duty, Insurance Litigation Blog March 31, 2015

In December 2013, we published an article highlighting the Sixth Circuit Court of Appeals’ bold decision to award the plaintiff disability benefits plus $2.8 million in disgorged earnings, as a potential “game-changer” in Employee Retirement Income Security Act of 1974 (“ERISA”) litigation—that is, if it survived review.  Rochow v. Life Ins. Co. of N. Am., 737 F.3d 415 (6th Cir. 2013) (“Rochow I”).  Alas, the Sixth Circuit Court of Appeals vacated the decision in February 2014 and stayed the case.  Rochow v. Life Ins. Co., 2014 U.S. App. LEXIS 3158 (6th Cir. Feb. 19, 2014) (“Rochow II”).  Finally, in March 2015, the Court of Appeals issued an en banc decision vacating the disgorgement award and remanding the case for a review of prejudgment interest.  Rochow v. Life Ins. Co. of N. Am., 2015 U.S. App. LEXIS 3532 (6th Cir. 2015) (“Rochow III”).  The Court held that because the plaintiff was adequately compensated by an award of the insurance benefits, attorneys’ fees and possible prejudgment interest, that in this case, disgorgement was not necessary to make the plaintiff whole.  Although this decision is disheartening to claimant’s attorneys eager to test the limits of ERISA remedies, a careful reading of Rochow III reveals that the Sixth Circuit does not entirely foreclose disgorgement as an appropriate remedy under ERISA.  Moreover, the concurring and dissenting opinions provide additional guidance for future ERISA claimants who suffer injuries and seek equitable remedies beyond their policy benefits.

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