Insurance Litigation Law Blog | Regulatory Law | Bad Faith | California | Lawyer | Attorney | Barger & Wolen

The California Department of Insurance issued a notice on October 24, 2011, which advises that most of the amendments to regulatory section 2632.13 apply to accidents that occur prior to the amendments’ December 11, 2011, effective date. 

However, provisions in the amendments relating to the threshold for principally at-fault determinations and to presumptions about principally at-fault accidents do not apply to accidents that occur prior to December 11, 2011.

Background

The question of whether a driver was principally at-fault for an accident has significant implications for the driver. A principally at-fault accident affects the driving record that is used to determine the driver’s auto insurance premium and also affects the driver’s eligibility for the statutory good driver discount.

Regulatory section 2632.13 sets forth the requirements that a private passenger auto insurer must follow when the insurer determines whether a driver was principally at-fault for an accident. The section was first adopted in 1994.

Two years ago, the Department of Insurance started the process of amending section 2632.13. The process resulted in amendments to section 2632.13 which were adopted on March 16, 2011. The amendments will go into effect on December 11, 2011. 

The amendments address a number of issues including insurers’ reliance on loss underwriting exchange data, notices that insurers must send to drivers, the injury or property damage accident threshold that must be met in order for a driver to be considered principally at-fault for the accident and certain presumptions that insurers must follow when they make principally at-fault determinations.

October 24, 2011, Notice

The amended version of subsection (b) of section 2632.13 changes the accident threshold that must be met in order for an insurer to determine that a driver was principally at-fault for an accident. The amended version of subsection (c) of section 2632.13 changes the presumptions that an insurer must follow when the insurer makes a principally at-fault determination.

The question of whether the amended threshold and presumptions in subsections (b) and (c) apply to accidents that occur prior to the amendments’ December 11, 2011, effective date needed resolution.  

The department’s October 24 notice advises that the amended version of subsections (b) and (c) do not apply to accidents that occur prior to December 11, 2011, because the subsections change the legal consequences of past behavior and there is no evidence that those two subsections are intended to be applied retroactively.  

The October 24 notice concludes that the remaining amendments to section 2632.13 are procedural and do apply to accidents that occur prior to the amendments’ December 11, 2011, effective date.

The department’s October 24 notice advises that the amended version of subsections (b) and (c) do not apply to accidents that occur prior to December 11, 2011, because the subsections change the legal consequences of past behavior and there is no evidence that those two subsections are intended to be applied retroactively.

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by Evan L. Smoak and Kyle M. Medley

In a Barger & Wolen victory, the U.S. District Court in Manhattan has confirmed an arbitration panel’s interim order, which required a policyholder to post pre-hearing security in the amount sought by an insurer. On Time Staffing, LLC v. National Union Fire Ins. Co. of Pittsburgh, PA, No. 10 Civ. 9583 (JSR), 2011 U.S. Dist. LEXIS 50683 (S.D.N.Y. May 11, 2011).   

In On Time, the arbitration panel issued an interim order of pre-hearing security in favor of National Union against one of its policyholders, On Time. National Union had argued that the policyholder was financially unable or simply unwilling to pay on the amount National Union sought in the arbitration for premiums, fees, and expenses. 

The policyholder asked the court to vacate the order of pre-hearing security on two grounds. First, the policyholder argued that the panel had exceeded its authority by awarding pre-hearing security (under Section 10(a)(4) of the Federal Arbitration Act “FAA”). Second, the policyholder argued that the Panel’s order of pre-hearing security before a full evidentiary hearing constituted “misconduct” by the Panel (under Section 10(a)(3) of the FAA). Judge Jed S. Rakoff rejected both of the policyholder’s arguments.

First, the court found that the arbitration panel had not exceeded its authority, noting that the language of the arbitration clause gave the Panel broad authority to resolve “any” dispute and to make its award “final and binding”. The court stated:

Prior to the rendering of its final decision, the Panel, in the absence of language expressly to the contrary, possesses the inherent authority to preserve the integrity of the arbitration process to which the parties have agreed by, if warranted, requiring the posting of security. Otherwise, an arbitration panel with a well-founded concern that a party was financially unable to satisfy an eventual award would have no recourse to protect itself against the risk that its significant expenditures of time and effort would be for naught. 

On Time, 2011 U.S. Dist. LEXIS 50683 at *12 (underline added). 

Second, the court rejected the policyholder’s argument that the Panel had committed misconduct when it ordered security without a full evidentiary hearing. The court found that the arbitrators “need not follow all of the niceties observed by the federal courts”, but instead had to “merely grant a fundamentally fair hearing”. Id. at *13. In any event, the court found the policyholder had “an ample opportunity to oppose the motion for pre-hearing security, and did, in fact, vigorously oppose it”. Id. at *14.

This significant victory confirms a pre-hearing security order against a policyholder and in favor of an insurer.

For additional information about this decision, or the arguments considered by the court, please contact Evan Smoak (esmoak@bargerwolen.com) or Kyle Medley (kmedley@bargerwolen.com) in Barger & Wolen’s New York office (212-557-2800).

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On October 3, 2011, the California Supreme Court heard argument in Francis Harris et al v. Superior Court, Case No. S156555. The issue here is whether insurance adjusters should be eligible for overtime pay under California’s wage and hour laws. 

In 2007, the California Court of Appeal, Second District, Division One, ruled that insurance adjusters who sued Golden Eagle and Liberty Mutual were nonexempt from California’s overtime laws. The insurers had argued that the adjustors were subject to the “administrative exemption” to California’s overtime rules, which provides that persons employed in “administrative, executive, or professional capacities” are exempt from overtime.

In a 2-1 ruling, the Court of Appeal disagreed. 

Justice Rothschild wrote the opinion of the Court, pursuing a lengthy and complicated analysis of California and federal law to reach the conclusion that adjustors were not exempt. 

Noting that California law requires that exempt administrative employees be “primarily engaged in office or non-manual work” that is “directly related to management policies or general business operations,” the Court concluded that this requirement was only satisfied if such work relates to the administrative operations of a business as distinguished from production or, in retail services, sales work. 

Applying this “administrative/production worker dichotomy,” the Court held, adjustors were not subject to the administrative exemption, since their work involved the daily carrying out of the insurance business’ affairs, and had no effect on the policies adopted by the Company or general business operations.

Justice Vogel dissented, wryly noting that “[t]he majority’s analysis is complex. Mine is not.” 

Noting that federal regulations, which are incorporated into California’s regulations by reference, specifically note that claims adjustors constitute administrative employees, Justice Vogel would have rejected the “administrative/production” dichotomy as a test. Instead, she pointed to applicable federal regulations, which specifically provide that work performed by employees who advise, plan, negotiate, and represent management are administrative employees. 

Watch this space. We’ll keep you posted on developments as they occur.

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When introducing technology into the courtroom, the trial lawyer needs to be master of that domain. This is not the time to experiment. Trial lawyers not comfortable with technology should seriously consider utilizing litigation-technology support services, who -- for a price -- can provide everything needed to make the presentation look and feel professional, freeing the lawyer up to concentrate on the case.

For those who doubt, Robyn Weisman's recent article in ALM’s Law Technology Review, Wrong Way: Preventing (and Recovering From) Courtroom Snafus, (free subscription) outlines what could happen when technology and people crash during trials, and how to recover from (and prevent) those disasters.

Ms. Weisman’s article provides sound advice for all lawyers utilizing technology in the courtroom. The inability to incorporate technology into your case, or the misuse (or abuse) of PowerPoint, can do more damage than good.

Fredric Lederer, chancellor professor of law and director of the Center for Legal and Court Technology and Legal Skills at William & Mary Law School, says there are three types of trial technology snafus: 1) real or perceived hardware failure, 2) real or perceived software failure, and 3) attorney ineptitude.

Hardware and software failures can be minimized, somewhat, by ensuring that your equipment is up-to-date, with the latest software installed. Back up your software on CD-rom or DVDs. Keep an extra laptop computer handy, preferably one that has a mirror image of your main computer, just in case. Make sure you have the proper cables, extension cords and adapters available. I would never venture into a trial without first paying a visit to the courtroom and getting to know the clerk and scouting out their equipment first, as they often insist that you use their equipment. 

Even for those who master technology, or who use professional services, Ms. Weisman wisely points out some of the pitfalls of using technology that have nothing to do with hardware or software failures. Technology can too easily run roughshod over the rules of evidence. An inadvertent keystroke or move of the mouse can display documents not yet admitted into evidence, or your PowerPoint presentation may obstruct, rather than elucidate your point.

But, for those lawyers who take technology as seriously as their arguments, it can make a world of difference in creating winning presentations. 

Originally posted on Barger & Wolen's Life, Health & Disability Insurance blog.

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