Insurance Cases To Watch In 2014

Larry Golub was recently quoted in an article by Law360, Insurance Cases to Watch in 2014 (subscription required), detailing what is expects will be the biggest insurance cases decided in 2014.

Golub's comments pertained to Fluor Corp. v. Superior Court of Orange County. The California Supreme Court agreed to take up the case this year, reconsidering its 2003 ruling in Henkel Corp. v. Hartford.

The Henkel ruling limits the circumstances under which policyholders can transfer insurance rights without an insurer's permission, allowing transfers “only if a loss has already been reduced to a sum of money due under the policy as a result of a settlement or judgment.”

The Fluor case argues that when it ruled in Henkel, the court ignored an 1872 statute which allows companies to freely assign their rights under insurance policies following a loss.

Golub told Law360 that the court's ruling in Fluor could be key given that there have been an increasing number of mergers and acquisitions and that it would provide certainty for both insurers and policyholders.

“The supreme court will reconsider the issue in light of this 1872 statute and hopefully draw a bright line, so parties know which way to go,” he said.

 

California Court Releases Insurers From Strict Duty To Settle

Larry Golub was quoted in an October 23, 2013, article published by Law360 about a California appeals court decision, Paul Reid v. Mercury Insurance Co., which held that insurers generally don’t have to launch settlement discussions with those injured by their policyholders in high stakes cases, freeing insurers from the greater bad faith liability.

This ruling put to bed confusion that was stirred up by the Ninth Circuit's ruling in Du v. Allstate Insurance Co. which said California insurers must proactively work toward a settlement when it's clear that the policyholder is liable, even if claimants have not made a settlement demand.

Golub told Law360 that it would have been helpful for the appeals court to rule that claimants must make a formal settlement demand before insurers have a duty to settle.

Insurance companies often hold off on responding to claimants' requests for policy limits because they need more information, especially in cases where there are multiple injured parties and there is little insurance available, Golub said.

He explained that an explicit rule requiring formal settlement demands would ensure that all parties act in good faith.

There should be a bright line rule because there are going to be disputes," Golub said. “It's easy for the insured or the insured's attorney to make a settlement demand formally, and there's no question."

For more information on the decision, see this blog's discussion No Settlement Offer, No Bad Faith Liability for Insurer.

Health Insurer Again Evades TCPA Suit Over Jobs Calls

Larry Golub was quoted in an Aug. 14, 2013, Law360 article, Health Insurer Again Evades TCPA Suit Over Jobs Calls, about the dismissal of a case against United American Insurance Co. alleging that the insurance company's prerecorded telephone calls advertising job openings violated the Telephone Consumer Protection Act.

Golub is one of the attorneys representing United American in Jordan Friedman v. Torchmark Corp. et al., a putative class action which claimed that the company was engaging in unsolicited advertising.

On Aug. 13, a judge tossed the suit ruling that the plaintiff had not stated an actionable claim. The plaintiff Jordan Friedman alleged that the recorded messages were actually an attempt by the company to encourage people to invest in its brokerage services, an argument that the court rejected. The court instead found that the messages were not intended to sell goods, but rather to inform recipients of an independent contractor position.

The court found this didn’t change the basic nature of what the alleged telephone call was,” Golub told the publication.

Barger & Wolen partners Kent Keller and Larry Golub represented United American Insurance Company in this action.

5 Tips for Attorneys Turned Claims Investigators

Larry Golub was quoted in a May 31, 2013, article, 5 Tips for Attorneys Turned Claims Investigators (subs. req.) published on Law360.com about the risks associated with lawyers stepping into the role of claims handler. The article also offered suggestions on what lawyers can do to make sure they protect themselves.

The article suggests that lawyers should know their boundaries, not assume that their communications are privileged and should educate staff that emails, letters and other communications may not be subject to attorney-client privilege.

Golub also told the publication that outside counsel should avoid making decisions about coverage and focus on providing advice.

The actual claims decisions should be made by the claims adjuster,” he said.

Golub added that outside counsel should avoid assuming any claims handling functions because their communications may become discoverable.

Most outside counsel, I would think would not want to be in that role,” he said. “The attorney-client privilege should not be waived unless there's an intentional determination to waive it.”

 

Winning Insurers Gain Clarity on Defense Duty During Appeals

Larry Golub was quoted in a Feb. 13, 2013, article by Law360, Winning Insurers Gain Clarity on Defense Duty During Appeals (subscription req.), about a recent federal court decision that found an insurer had not violated its contract when it ceased defending a policyholder after a trial court win on coverage, despite the fact that the victory was later overturned. The case is National Union Fire Insurance Co. of Pittsburgh, Pa., et al. v. Seagate Technology Inc.

Golub told the publication that carriers will sometimes continue to defend their policyholders after winning at the trial court level if a coverage win doesn't appear to be strong enough to survive an appeal. The reason is that they could end up paying high interest on defense costs they might ultimately owe, he said.

Maybe they should play it safe and just keep defending under a reservation of rights and ensure that they don't have ultimate exposure,” Golub said.

Golub also noted that if other courts agree with the decision, insurers who have won temporary victories will not have to face bad faith claims or punitive damages.

 

Canon Ruling May Spur Unfair Competition Claims In Calif.

Law360 quoted Larry Golub in a Jan. 24, 2013, article, Canon Ruling May Spur Unfair Competition Claims in Calif (subscription req.), about the California Supreme Court's ruling in Jamshid Aryeh v. Canon Business Solutions Inc.

The ruling, which is expected to spark similar cases, held that equitable tolling doctrines apply to claims brought under California's Unfair Competition Law.

Golub told Law360 that the ruling could encourage more plaintiffs to bring Unfair Competition Law claims against California businesses.

The decision opens up a limited door to avoiding the statute of limitations for UCL claims that involve a continuing or recurring business practice,” Golub said. “Plaintiffs bringing UCL claims in the future will try to characterize claims as a continuous practice to try to fall within the Aryeh rule.”

Click here to read Mr. Golub’s full analysis of the case.

 

Insurance Cases to Watch in 2013

Larry Golub was quoted in a Jan. 1, 2013, article published on Law360, Insurance Cases to Watch in 2013 (subscription required) about key insurance cases lawyers, and those in the insurance industry, should keep an eye out for in 2013. Among other things, the article mentioned litigation filed over Hurricane Sandy losses, cyber liability claims and a much-anticipated California Supreme Court ruling on whether the state's unfair competition law can be used to accuse insurance companies of bad faith.

Golub's comments dealt with that case before the California Supreme Court, Zhang v. The Superior Court of San Bernardino County, which will decide whether policyholders can sue insurers for misrepresentation and false advertising for not promptly paying claims.

Golub told the publication that the state's courts have been split on the issue although insurers insist that Zhang is at odds with the California Supreme Court's decision in a 1988 case prohibiting private rights of action for violations of the Unfair Insurance Practices Act.

Prior to that ruling, insurance companies raised rates fearing they would be hit with private lawsuits brought under that law, a pattern that could repeat itself depending on what the Supreme Court decides, Golub said. The state's unfair competition law allows for restitution but not damages.

The remedies may be limited, but the breadth of the statute is very broad,” he said. “Since there are so many cases coming out on both sides of the issue, it's one that demands resolution.”

NCOIL Insurance Certificate Law May Aid Carriers In Court

Larry Golub was quoted in a Nov. 20, 2012, Law360 article (subscription required) about the National Conference of Insurance Legislators' (NCOIL) new model act to prevent the use of false and misleading certificates of insurance. The Certificate of Insurance Model Act allows state departments of insurance to fine and issue cease-and-desist orders to companies that ask insurance brokers and agents to provide false certificates.

Golub, who represents insurance companies and their agents, said the model act should help resolve problems that arise in litigation when insurance certificates contain information that conflicts with the associated policies.

In a lot of coverage cases I handle, certificates say things that are different from what the policy says, and people try to use the certificates to supplant the policy,” he said. “Having a statute on the books in various jurisdictions would be very helpful.”

Virginia has passed legislation to curb the use of erroneous insurance certificates. Whether other states will follow Virginia's lead depends on how big of a problem they are experiencing, Golub said.

Musicians Lawyer Up Over Insurance "Exclusion"

Larry Golub was quoted in a recent Daily Journal article about the fact that businesses are finding they need additional insurance to protect them against suits involving claims related to entertainment. According to the Oct. 24, 2012, article, Musicians Lawyer Up Over Insurance "Exclusion," (subscription req.) although it may seem counter-intuitive that musicians or artists would not be covered for entertainment-related activities, “such an industry exclusion is not uncommon.”

Entertainment businesses often must buy additional insurance to protect them against copyright infringement and defamation, because of the heightened risk associated with show business.

Often an exclusion is an invitation to purchase another policy,” Golub told the Daily Journal. “For example, people buy malpractice insurance to cover professional liability and those policies exclude bodily injury, which are covered under general liability.”