Court upholds Commissioner’s Contention: A Single Insurance Code Violation Can Constitute Bad Faith Without Evidence of a General Business Practice

Posted in: Bad Faith, Insurance Bad Faith, Insurance Commissioner, Insurance Litigation Blog, Policy Interpretation, Regulations, Unfair Business Practices/Unfair Competition October 02, 2018

Every insurance policy, including disability, life, health or accidental death policies, contains an implied covenant of good faith and fair dealing between the insurance company and the insured.  This covenant requires that insurance companies refrain from acting in a way that unreasonably jeopardizes, impairs or interferes with the rights of the insured to receive the benefit of the insurance contract.  The Unfair Insurance Practices Act (California Insurance Code Sections 790, et seq., “UIPA”) was enacted to regulate the business of insurance by defining and prohibiting practices which constitute unfair methods of competition or unfair or deceptive acts or practices.

California Insurance Code Section 790.03(h) (“Section 790.03(h)”) enumerates a list of sixteen specific unfair claims settlement practices that insurance companies are …

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Policyholder Wins Handed Down in Insurance Decisions. Daily Journal Publishes McKennon Law Group PC Article.

Posted in: Breach of Contract, Case Updates, Disability Insurance, Disability Insurance News, Duty to Defend, Duty to Settle, ERISA, Insurance Bad Faith, News, Unfair Business Practices/Unfair Competition February 12, 2014

The February 10, 2014 edition of the Los Angeles Daily Journal featured Robert McKennon’s article entitled:  “Policyholder Wins Handed Down in Insurance Decisions.”  In it, Mr. McKennon discusses six insurance decisions handed down in California and federal courts in 2013 that were favorable to policyholders.…

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Supreme Court Reaches Favorable Decision for Insureds in Zhang v. Superior Court of San Bernardino; Daily Journal Publishes McKennon Law Group PC Article on Zhang

Posted in: Case Updates, Insurance Bad Faith, Unfair Business Practices/Unfair Competition August 07, 2013

The Wednesday August 7, 2013 edition of the Los Angeles Daily Journal featured Robert McKennon’s article entitled:  “Clear win for insureds, though scope uncertain.”  In it, Mr. McKennon discusses how a highly anticipated decision by the California Supreme Court in Zhang v. Superior Court of San Bernardino (California Capital Insurance), 2012 DJDAR 10174, expands the availability of claims that can be brought under Bus. & Prof. Code 17200, a.k.a. California’s Unfair Competition Law, or UCL.  The article discusses how in Zhang, the Supreme Court addressed the split among courts in California regarding the scope of the court’s prior holding in Moradi-Shalal v. Fireman’s Fund Insurance Companies, 46 Cal. 3d 287 (1988) and adopted a narrow interpretation of Moradi-Shalal

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The Importance of Zhang v. California Capital Insurance Co

Posted in: Case Updates, Insurance Bad Faith, Unfair Business Practices/Unfair Competition May 14, 2013

After much anticipation, last week the Supreme Court of California heard oral arguments in the pivotal case of Yanting Zhang v. California Insurance Co., S178542 on May 8, 2013.  This case looks to have a substantial impact on insurance litigation in California and could open up another significant avenue for insureds to pursue claims against their insurance companies.  The key issue in Zhang is under what circumstances may an insured bring a cause of action against an insurer under the “Unfair Competition Law” (Bus. & Prof. Code, section 17200 or “UCL”).  Specifically, the issues on review by the Supreme Court are: (1) Can an insured bring a cause of action against its insurer under the unfair competition law (Bus. …

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Insurance Companies Must Show "Substantial Prejudice" to Deny Claims for a Failure to Comply With the Proof of Loss Requirement

Posted in: Breach of Contract, Case Updates, Fire Insurance, Homeowners Insurance, Insurance Bad Faith, Unfair Business Practices/Unfair Competition November 08, 2012

Following the August 2009 Station Fire, the lawsuits of over 1,440 policyholders filed against Fire Insurance Exchange (“FIE”) and related insurers were consolidated into one case – Henderson v. Farmers Group, Inc., __ Cal.App.4th __, 2012 Cal. App. LEXIS 1108 (October 24, 2012).  In this case, the California Court of Appeal, Second Appellate District, issued an interesting opinion addressing several important issues.

In the consolidated lawsuit, the policyholders alleged that FIE improperly denied their claims by asserting either that:  (1) the policyholders did not submit sworn proof of loss as required by the fire insurance policies, or (2) that the policyholders submitted delayed notice of loss.  The policyholders asserted causes of action for breach of contract, breach of the …

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Cause of Action Asserted Against Blue Cross for Violation of Montana's Unfair Trade Practices Act is Not Preempted by ERISA

Posted in: ERISA, Health Insurance, Preemption, Unfair Business Practices/Unfair Competition November 09, 2011

In a recent decision, the Ninth Circuit Court of Appeals ruled that ERISA does not preempt causes of action based on unfair insurance practice claims brought under Montana’s Unfair Trade Practices Act.  However, the Court did find that Montana’s so-called “little HIPAA” was preempted by federal HIPAA, which is part of ERISA.

In Fossen v. Blue Cross and Blue Shield, __ F.3d __ (9th Cir. October 18, 2011), the Court considered an appeal from a District Court ruling that entered summary judgment in favor of Blue Cross on two causes of action.  Plaintiffs – which consisted of three brothers, their corporations and a partnership of the three corporations – sued Blue Cross after the health insurer increased their premiums …

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Tumult in California UCL Class Action Cases: Will the Supreme Court Step in?

Posted in: Case Updates, Class Actions, News, Unfair Business Practices/Unfair Competition February 21, 2010

Late last year the Fourth Appellate District of the California Court of Appeal issued its decision in Zhang v. Superior Court, 178 Cal. App. 4th 1081 (2009).  In that case, the court identified the issue presented “as whether fraudulent conduct by an insurer, which is connected with conduct that would violate Insurance Code § 790.03 et seq., sometimes referred to as the ‘Unfair Insurance Practices Act’—can also give rise to a private civil cause of action under the Unfair Competition Law (UCL), Business and Professions Code § 17200 et seq.”  The court held that it did.  This case will thus address whether insurance companies enjoy any special exemption from UCL liability.  The statement of issues on review reads:

(1)

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Unfair Insurance Practices Act Can Give Rise To Private Cause Of Action Under UCL

Posted in: Case Updates, Insurance Bad Faith, News, Unfair Business Practices/Unfair Competition January 19, 2010

The California Court of Appeal recently addressed the question of whether a violation of the Unfair Insurance Practices Act can give rise to a civil cause of action under the Unfair Competition Law (“UCL”).  The court answered the question in the affirmative.  In Zhang v. Superior Court, 178 Cal. App. 4th 1081 (2009), Plaintiff Zhang sued California Capital Insurance Company (“California Capital”) for breach of contract and bad faith arising out of the handling of her claim for damages to her commercial premises due to fire.  In addition, Zhang alleged a cause of action under the UCL and for “unfair, deceptive, untrue, and/or misleading advertising.”  California Capital demurred to Zhang’s third cause of action by arguing that the plaintiff could …

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California Supreme Court Holds that Only the Class Representative Needs to Meet the Standing Requirements of Proposition 64 to Pursue a Representative Action

Posted in: Case Updates, Class Actions, News, Unfair Business Practices/Unfair Competition January 14, 2010

Following the passage of Proposition 64 on November 2, 2004, in order to bring a representative claim under the unfair competition law (“UCL”), a plaintiff must meet the following standing requirements: (1) establish that he or she “has suffered injury in fact and has lost money or property as a result of such unfair competition” and (2) comply with the class action requirements as set forth in California Code of Civil Procedure Section 382. Bus. & Prof. Code §§ 17203, 17204 and 17535. After the passage of Prop 64, litigants continued to debate whether only the named plaintiff or all class members had to meet the more stringent standing requirements of injury in fact and loss of money or property as …

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California Supreme Court Restricts the Use of Business & Professions Code Section 17200

Posted in: Case Updates, Class Actions, News, Unfair Business Practices/Unfair Competition January 14, 2010

In a pair of cases, the California Supreme Court restricted the use of California Business & Professions Code Section 17200 et seq.   One case affirmed what many expected, that Proposition 64, a 2004 voter initiative, requires plaintiffs to follow strict class-action procedures when seeking to recover under California’s unfair competition law (Bus. & Prof. Code § 17200 et seq.) which prohibits “any unlawful, unfair or fraudulent business act or practice . . . .”

Before 2004, any person could assert representative claims under the unfair competition law to obtain restitution or injunctive relief against unfair or unlawful business practices. Such claims were not required to be brought as a class action, and a plaintiff had standing to sue even without …

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