Court Rejects Third Party Administrator's Demurrer to Insurance Bad Faith Claim Based on Plaintiffs' Theory of Joint Venture Liability

Posted in: Bad Faith, Breach of Contract, Case Updates, Disability Insurance, Disability Insurance News, Insurance Bad Faith, Insurance Litigation Blog, Non-ERISA January 24, 2018

Implied in every insurance contract is a promise of “good faith and fair dealing,” which means that the insurer must not take unreasonable steps to prevent an insured’s right to receive benefits under the policy. To comply with its promise to act in good faith, the insurer must adhere to certain duties, such as the duty to adequately investigate a claim made by an insured. An insurer acts in bad faith when it fails to meet those duties unreasonably and without proper cause. Determining whether there has been bad faith conduct is important, in part, because it directly affects the insured’s potential recovery. If the insurer is found to have acted in bad faith, the insured may have access to …

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High Court Changes Cumis Landscape

Posted in: Attorneys Fees, Attorneys' Fees, Case Updates, Duty to Defend, General Liablity August 24, 2017

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.

The High Court held an insurance company can sue independent counsel (i.e., Cumis counsel) directly for reimbursement of unreasonable or unnecessary legal charges counsel billed it to defend its insured.  This …

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9th Circuit puts final nail in coffin for discretionary clauses in insurer-funded ERISA plans

Posted in: Abuse of Discretion, Case Updates, De Novo Review, Disability Insurance, Disability Insurance News, ERISA, Health Insurance, Insurance Litigation Blog, Life Insurance, Policy Interpretation, Preemption, Standard of Review May 24, 2017

Disability and life insurers frequently include clauses in their insurance policies affording them complete discretion to decide whether a claim has merit.  The clauses usually state the insurer has total discretion to decide whether the claimant is eligible for the policy’s benefits, to decide the amount, if any, of benefits to which they are entitled, to interpret the policy’s terms how they see fit, or something similar.  Employers regularly include these same types of “discretionary clauses” in their employee welfare benefit plan documents, and if a group insurance policy is the funding source of the plan’s benefits, they then delegate that discretion to decide the merits of claims to the insurer.

Employee benefit plans and the corresponding group insurance policies …

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Life Insurer on the Hook for Breaching Terminated Contract

Posted in: Breach of Contract, Case Updates, Class Actions, Insurance Litigation Blog, Life Insurance May 11, 2017

Life, health and disability insurers, whether governed by ERISA or state insurance bad faith laws, often do not have your best interests in mind, despite what the law requires of them.  Insurers, like other businesses, are motivated by profits.  Sometimes that drive leads to crossing legal, ethical or moral lines to improve the bottom-line.  That is what occurred in a recent pro-policyholder Ninth Circuit Court of Appeal case, Burnett v. Conseco Life Insurance Company, 2017 WL 1828145 (9th Cir. May 4, 2017) (reversing the district court decision found at 87 F. Supp. 3d 1238 (N.D. Cal. Apr. 9, 2015)).  In that case, applying California state insurance bad faith laws, the Ninth Circuit held a life insurer cannot completely absolve …

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Good News for Policyholders: The Insurance Commissioner has Broad Authority to Regulate Insurers

Posted in: Case Updates, Disability Insurance, Disability Insurance News, Insurance Litigation Blog January 27, 2017

We all know that insurance companies are good at trying to find any way possible to deny claims, whether they be long-term disability claims, life insurance claims, health insurance claims or homeowner’s claims.  To curtail their ability to do so, the Legislature enacted the Unfair Insurance Practices Act (“UIPA”) to regulate unfair or deceptive acts or practices in the insurance business.  UIPA defines such unfair methods of competition or unfair or deceptive practices as including untrue, deceptive, or misleading statements with respect to the business or conduct of insurance.  Under UIPA, the Legislature granted the Insurance Commissioner authority to promulgate rules and regulations, as well as to institute individual enforcement actions, against those who violate UIPA.  In Association of Insurance

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Insureds May Still Have a Claim for Insurance Bad Faith Even If Their Insurer Offered to Pay the Policy Limits

Posted in: Bad Faith, Case Updates, Commercial General Liability Insurance, Duty to Settle, Insurance Bad Faith, Insurance Litigation Blog December 13, 2016

Under California law, an insurer has an obligation to, among other things, make reasonable efforts to settle a third party’s lawsuit against an insured.  As a recent decision rendered by the California Court of Appeals illustrates, “reasonable efforts” entail more than timely offering the policy limit to settle a claim from a third party.  The insurer’s conduct must be reasonable given the circumstances and they must do everything reasonably within their power to effect a settlement.  An insurer’s responsibilities are not necessarily complete when they offer to pay their policy limits or other amounts agreed-upon by the parties. …

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Have “Quack” Medical Reviewers Caused Denial of Your Long-Term Disability Claim? California Court of Appeal Berates Insurance Company for Controlling Medical Peer Reviews

Posted in: Bad Faith, Case Updates, Disability Insurance News, Expert Testimony, Health Insurance, Insurance Litigation Blog, Punitive Damages December 13, 2016

During their Presidential election campaigns, Donald Trump and Hillary Clinton spotlighted for America flaws in our criminal justice system.  They raised questions about whether the criminal probe into Ms. Clinton’s private email server was handled honestly or politically.  Conservatives bitterly complained that FBI director Jim Comey’s recommendation not to prosecute Ms. Clinton was inconsistent with the FBI’s fact findings (that she carelessly mishandled classified emails) and influenced by the left-leaning Justice Department rather than justice.  On the flip side, Liberals vehemently complained that on the eve of the election Director Comey made an unprecedented announcement that the FBI had reopened its criminal investigation into Ms. Clinton’s private emails, attempting to influence the election.…

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Federal Court Criticizes Long-Term Disability Insurer for “Paper Reviews” and Dismissing SSA Award

Posted in: Case Updates, Disability Insurance, Disability Insurance News, ERISA, Insurance Litigation Blog October 07, 2016

Were you denied benefits by your group long-term disability insurer without the insurance company’s doctor examining you in-person?  Did your insurer deny your claim even though the Social Security Administration concluded you are disabled?  If so, the McKennon Law Group may be able to help get your disability benefits by appealing the insurer’s decision or by filing a lawsuit against it in federal court.  As experienced ERISA disability insurance lawyers who have handled hundreds of individual and group long-term disability claims, we see all too often insurance companies unjustly deny claims based purely upon a “paper review” of the employee’s medical records by a biased medical consultant and, worse yet, often by just an unqualified nurse employed by the insurer.  …

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Ninth Circuit Affirms Rule that Ambiguous Policy Terms Must Be Construed Against Insurer in ERISA Disability Insurance Cases

Posted in: Case Updates, Disability Insurance, ERISA, Insurance Litigation Blog, Policy Interpretation July 06, 2016

The “reasonable expectations of the insured” doctrine has been around for decades in California.  The state Supreme Court started toying with rules that became its foundation after the turn of the century.  See Pac. Heating & Ventilating Co. v. Williamsburgh City Fire Ins. Co., 158 Cal. 367, 370 (1910) (“any ambiguity … must be resolved in favor of the insured”).…

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Ruling Limits Insurance Company’s Ability to Collect SSDI Overpayments

Posted in: Case Updates, ERISA June 16, 2016

When and under what circumstances an insurer paying long-term disability benefits may collect retroactive benefits paid to an ERISA plan participant under the Social Security Act has been the source of conflicting opinions over the years.   The most recent pronouncement:  a long-term disability plan administrators must “specifically identify a particular fund” from which it will be reimbursed in order to seek to recover of alleged overpayment of disability benefits.  So held the Southern District of California in its recent plaintiff-friendly decision in Wong v. Aetna Life Insurance Company, 2014 U.S. Dist. LEXIS 135661 (S.D. Cal. 2014).  Through its decision in Wong, the district court reaffirmed that simply because an ERISA governed long-term disability plan’s language provides for recovery …

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