California Insurance Litigation Blog

California Insurance Litigation Blog

Can an Insurer Escape Bad Faith Liability When it Unreasonably Forces an Insured to Arbitrate an Uninsured Motorist Claim? No Way!

Posted in Auto Insurance, Bad Faith, Case Updates

In a very good ruling for policyholders, the California Court of Appeal ruled that an insurance company cannot escape insurance bad faith liability by forcing a claimant to arbitrate his claim without first fairly investigating, evaluating and attempting to resolve the claim.  In Maslo v Ameriprise Auto & Home Insurance, 2014 Cal. App. LEXIS 564, 2014 WL 2918866 (June 27, 2014), the court explained that “[t]here can be no serious dispute that an insurer is required to thoroughly and fairly investigate, process, and evaluate its insured’s claim,” and the failure to do so exposes the insurer to bad faith liability. Continue Reading

Echague v. Met Life: Equitable Surcharge is an Available Remedy Against Unresponsive Plan Administrators Under ERISA

Posted in Case Updates, Equitable Relief, ERISA, Life Insurance

The Employee Retirement Income Security Act of 1974 (“ERISA”) seeks to protect participants in employer-sponsored plans, but lack of adequate communication and transparency is an often an unfortunate byproduct of the insurance industry.  The California district court shed light on this issue in Echague v. Metro. Life Ins. Co., 2014 U.S. Dist. LEXIS 68642 (N.D. Cal. May 19, 2014) by holding an insurer breaches its fiduciary duty when providing insufficient responses and the insured may be entitled to equitable surcharge.  Echague is highly beneficial to insureds and beneficiaries, as it warns plan fiduciaries (such as insurers and plan administrators/employers) to think twice before ignoring requests for information, giving incorrect information, or neglecting to provide updates regarding the policies they administer, as their inactions or providing of incorrect information about the plan may open them up to equitable remedies such as equitable surcharge which would allow plan participants to recover the full value of the plan benefits in dispute.  Continue Reading

Insurers Have a Duty to Defend Where a Complaint Could Be Fairly Amended to State a Covered Liability; California Supreme Court Clarifies Duty to Defend Disparagement Claims Under Advertising Injury Coverage

Posted in Breach of Contract, Case Updates, Commercial General Liability Insurance, Insurance Bad Faith

An insurer has a duty to defend even if the causes of action in a lawsuit are not expressly covered by a liability policy if the factual allegations may support a potentially covered claim.  This was expansive interpretation of the duty to defend adopted by the United States District Court Southern District of California in Millennium Laboratories, Inc. v. Darwin Select Insurance Company, __ F. Supp. 2d ___ (S.D. Cal. May 13, 2014).  This highly significant decision further buttresses the now well-established position of courts in California that all of the facts and allegations in a lawsuit, not just the stated causes of action and facts stated in the complaint, must be considered in determining whether there exists a potentially covered claim triggering an insured’s duty to defend.  Continue Reading

Why Is It Important To Exhaust Your Administrative Remedies Under ERISA When Your Insurer Denies Your Disability Insurance Claim?

Posted in Disability Insurance, Legal Articles

The Employee Retirement Income Security Act of 1974 (“ERISA”) provides an exclusive remedial scheme for insureds who have been denied benefits.  29 USC section 1001 et seq.  Under ERISA, a plan participant may sue “to recover benefits due to him under the terms of their plan, to enforce their rights under the terms of the plan, or to clarify their rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B).  However, before plan participants can pursue a lawsuit against the plan/plan administrator for benefits, attorneys’ fees and costs, they must first pursue their ERISA appeal rights under the doctrine of exhaustion of administrative remedies.  29 USC section 1133.  If they do not do so, they may lose all of their rights to pursue an appeal or litigation of a disability, life or health insurance claim denial.  Continue Reading

Expert Testimony Can Help Policyholders Establish Property Damage and Survive Summary Judgment

Posted in Breach of Contract, Case Updates, Commercial General Liability Insurance, Expert Testimony, Insurance Bad Faith

Policyholders often face a formidable challenge proving causation on property damage claims, particularly when insurance companies insist on deferring to their own experts and adjustors.  Of course, insurance companies must conduct reasonable investigations and review and evaluate all of the evidence before making a claim decision.  The Ninth Circuit Court of Appeals held in an insurance action where the policyholder provides admissible evidence showing a genuine dispute as to coverage, the evidence should be evaluated by a trier of fact.  Pyramid Technologies Inc. v. Hartford Casualty Insurance Co., 2015 DJDAR 6205 (Cal. App. May 19, 2014).

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A Pro-Insurer Decision Provides Guidance for Insureds on the Application of Estoppel and Waiver to Statute of Limitations Defenses in Disability Insurance ERISA Cases

Posted in Case Updates, Disability Insurance, ERISA, Statute of Limitations

At times, decisions that appear favorable to insurers can also have unexpectedly positive take-aways for policy holders.  Gordon v. Deloitte & Touche, __ F.3d ___, 2014 U.S. App. LEXIS 6688 (9th Cir. April 11, 2014) is just such a case.  Although, the Ninth Circuit in Gordon ruled in favor of the insurer in finding that the insured’s ERISA action was barred by the California four-year statute of limitations, the Court also reaffirmed and clarified the standards for evoking waiver and estoppel arguments to prevent insurance companies from raising a statute of limitations or contractual limitations defense.

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New liability for claims adjusters the right move. Daily Journal Publishes McKennon Law Group PC Article.

Posted in Case Updates, Negligence, Property & Casualty Insurance

The April 21, 2014 edition of the Los Angeles Daily Journal featured Robert McKennon’s article entitled:  “New Liability for claim adjusters the right move.”  In it, Mr. McKennon discusses a new case which exposes insurance adjustors to negligent misrepresentation and intentional infliction of emotional distress claims by policyholders.  The article is posted below with the permission of the Daily Journal.

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ERISA Administrator Must Show That a Theoretical Job Actually Exists in Order to Serve as Justification for Claim Denial

Posted in Case Updates, Disability Insurance, ERISA

A common justification for denying a claim for long-term disability insurance benefits or short-term disability insurance benefits is that the claimant is capable of returning to work in another job.  However, insurers / ERISA administrators are not allowed to deny a claim just because an insured might be capable of returning to any job, rather the identified job must be based on the insured’s education, training and experience.  Further, the occupation must be “gainful,” which usually means that it pays the insured at least 50%-60% of his or her pre-disability income.  In Kennard v. Means Industries, Inc., 2014 U.S. App. LEXIS 2846 (6th Cir. Feb. 13, 2014), the Sixth Circuit imposed another important requirement — the insurer must prove that the theoretical job actually exists.

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Helpful Tips to Policyholders: Pay Close Attention to Plan’s Limitations Provisions

Posted in Case Updates, Disability Insurance, ERISA, Insurance Questions and Concepts, Policy Interpretation, Statute of Limitations

Do you have a disability insurance policy, health insurance policy or life insurance policy through your work?  If you do, you should read this article as you may miss some important deadlines if you do not.

The Supreme Court’s recent  holding that the limitations periods in employer-sponsored plans are enforceable, even where such limitations periods began to run before a cause of action accrued, had a rippling effect through federal courts, the insurance bar and participants alike.  Under the Employee Retirement Income Security Act of 1974 (“ERISA”), participants must exhaust the plans’ administrative process before bringing suit.  Previously, the Ninth Circuit and majority of circuit court of appeals had held that the statute of limitations for filing suit under ERISA commenced after an insured exhausted all administrative remedies.  However, the high court explained that a plan may impose a particular limitations period, which begins from the date proof of claim is due, rather than after the conclusion of the administrative process.  Heimeshoff v. Hartford Life & Accident Insurance Co. et. al., 134 S. Ct. 604 (2013).  Below, we examine the implications Heimeshoff has for insureds and provide helpful tips.

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California District Court Rules That a Treating Physician’s Observations are “More Persuasive” Than a Paper Reviewer’s Contrary Opinions

Posted in Case Updates, Disability Insurance, ERISA, Standard of Review

When reviewing a claim for disability insurance, insurers and other claim administrators often rely on the opinions of paid physicians to support their improper denial decisions.  For example, a disability insurance company will hire a doctor to conduct a “paper review” – that is, reviewing an insured’s medical records, without actually examining the insured – and then offer an opinion on the insured’s ability to return to work.  If the “paper reviewer” opines that the insured is capable of returning to work, the insurance company will then rely on that opinion to deny the claim for benefits; even if the insured’s own treating physicians repeatedly state that the insured is disabled.  However, in Oldoerp v. Wells Fargo & Co. Long Term Disability Plan, 2014 U.S. Dist. LEXIS 9847, 2014 WL 294641 (N.D. Cal. Jan. 27, 2014), the court held that with a psychological disability, a treating mental health professional’s observations are “more persuasive” than a paper reviewer’s opinion.  This opinon is beneficial for policyholder/insureds, espeically in ERISA cases, because insurers will have a harder time using the opinions of paid, so-called “experts” who do not examine the insured to support their improper claim decisions.

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