Yearly Archives: 2013

Nejat Ahmed Presents At The ACI 26th National Advanced Forum On Bad Faith Litigation in Miami, Florida

The American Conference Institute is holding the 26th National Advanced Forum on Bad Faith Litigation from November 21st to November 22nd in Miami, Florida. The forum shapes the future of bad faith litigation strategies for leading outside counsel, in-house counsel and claims professionals in the insurance industry. Nejat Ahmed, a member in Cozen O’Connor’s Houston office, will be present to speak on how to recognize the red flags to avoid bad faith set ups.  For more information regarding the 26th National Advanced Forum on Bad Faith Litigation, click here. About The Author

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Texas Hurricane Season: Statutory Requirements for Handling Claims

For Texans, the prime hurricane season from August to September is now over. Although there were no big storms this year, claims handlers still need to be attentive to timely adjusting their first party claims. The Texas Prompt Payment of Claims Act mandates prompt payment of claims. See Tex. Ins. Code Ann. §§ 542.051-.061.  After receiving notice of a claim, within 15 days, an insurer is required to: (1) acknowledge receipt of a claim; (2) begin an investigation; and (3) request documentation from the claimant that is needed for its investigation. Tex. Ins. Code Ann. § 542.055(a).  Further, the insurer is to notify the claimant in writing of the acceptance or rejection of the claim within 15 days after it receives the

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Except In Two Circumstances, There Can Be No Claim For Bad Faith Without A Breach of The Contract – The Houston Fourteenth Court of Appeal Reconfirms

In Lexington Insurance Company v. Jaw The Pointe, LLC, 2013 WL 3968445 (Houston [14th Dist.] August 1, 2013) the dispute arose from Hurricane Ike-related damage to an apartment complex in Galveston, Texas. The property sustained both wind and flood damage. The policy precluded coverage for loss or damage caused directly or  indirectly from flood “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” The insured submitted a claim for the cost to demolish and rebuild the apartment complex to comply with local flood damage reduction regulations.  The insurer paid the estimate to repair the wind damage only and denied the insured’s claim for cost to demolish and rebuild the complex. First, the

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Alicia Curran, Chair of Cozen O’Connor’s Bad Faith Practice, to Present at ACI 25th National Advance Forum on Bad Faith Litigation in San Francisco

The American Conference Institute (ACI), will be holding the 25th National Advanced Forum on Bad Faith Litigation from July 30th to July 31st at the Sheraton Fisherman’s Wharf Hotel in San Francisco, California. The forum shapes the future of bad faith litigation strategies for leading outside counsel, in-house counsel and claims professionals in the insurance industry.  Alicia Curran, chair of Cozen O’Connor’s Bad Faith practice, will be present to speak about best practices for claims investigations and litigation decisions. With more than 50 speakers present during the two-day affair, attendees will have the pleasure to meet attorneys and insurance professionals from a vast spectrum of background areas. For more information regarding the 25th National Advanced Forum on Bad Faith Litigation,

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In Alabama, Bad Faith Claim Defeated As A Matter Of Law Though Basis For Coverage Denial Was Debatable

A policyholder’s tort claim for the bad faith refusal to pay a claim was dismissed as a matter of law where a legitimate dispute existed as to coverage liability at the time of the coverage decision by the U.S. District Court for the Northern District of Alabama, Southern Division.  See Alabama Gas Corporation v. Travelers Casualty and Surety Company, et al., Case No. 2:10-CV-01840-IPJ, Document No. 214, June 25, 2013.  Although forty-four (44) states previously decided that a Potentially Responsible Party Notice from the EPA constitutes a “suit” that triggers an insurer’s obligations under a liability policy, the insurer here denied the claim contesting that a PRP notice was not a “suit.”   At the time of the denial, Alabama courts

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A Claim for Bad Faith is Not Eliminated By A Late Payment of the Insured’s Economic Damages

The United States District Court for the Southern District of California recently considered whether the carrier’s late payment of the insureds’ economic damages eliminated a claim for bad faith and held that it does not. Polcyn v. Liberty Mut’l Ins. Co., 2013 U.S. Dist. LEXIS 76193 (S.D. Cal. May 30, 2013). In that case, the insurer at first rejected and later accepted the insureds’ tender of the underlying lawsuit.  After accepting the tender, the insurer agreed to pay all of the insured’s economic damages incurred in defending the underlying lawsuit and enforcing their claim under the policy.  The insurer, however, refused to pay for emotional distress damages claimed.  The insureds filed suit and the carrier moved to dismiss the complaint

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Think You Cannot Be Sued For Bad Faith Because You Haven’t Issued A Policy to A Plan Participant? Think Again . . .

Just because there is no insurance policy may not mean there is no cause of action for bad faith according to a recent Hawaii Supreme Court decision analyzing the Joint Underwriting Program (“JUP”) statute.  Willis v. Swain case. — P.3d — 2013 WL 2459880 (Hawaii).  In what appears to be a change in position, the Court explained that “[t]he special relationship between the insurer and the insured and the conduct of the insurer toward the insured is what gives rise to the tort of bad faith, not solely the existence of a contract.”  The Court concluded “the underlying covenant of good faith and fair dealing applies, even in the absence of an actual contract.” Based on this expanded view of

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Bad Faith Claims Permitted Against Self-Insured Employers In Iowa – “Fairly Debatable” Defense Precludes Finding This Time

A federal trial court in Iowa confirmed that first-party bad faith claims may be cognizable against both insurers and self-insured employers.  In Spencer v. Annett Holdings, Inc., 905 F.Supp.2d 953 (S.D. Iowa, Nov. 27, 2012), an over-the-road truck driver who was allegedly injured when he slipped and fell off  the back of his flatbed trailer sued his employer, a self-insured trucking company, alleging, among other things, that it acted in bad faith by refusing to pay outstanding medical bills, by denying and delaying necessary medical care and treatment, and by breaching a settlement agreement approved by the Iowa Workers’ Compensation Commissioner.   The trial court stated “[f]irst-party bad faith is an intentional tort that arises in the insurance context due to

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New York Court of Appeals to Insurers: If You Breach Your Duty to Defend, You May Lose Your Defenses to Indemnification

The New York Court of Appeals, the state’s highest court, recently held that an insurer that breached its duty to defend could not later rely on otherwise applicable exclusions to deny coverage for indemnification. Under this apparently new rule, an insurer’s wrongful failure to defend may result in the insurer’s liability for an amount up to its policy limits, even if a policy exclusion would otherwise preclude coverage for indemnification. This unanimous ruling potentially expands the indemnity obligation beyond the coverage afforded by the policy, although the court specifically affirmed the dismissal of the bad faith claims.  As the Court suggests, the filing of a pre-denial declaratory judgment action may now be an important strategic consideration.  It remains to be

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Connecticut Court Confronts Duty to Investigate

In Capstone Building Corp. v. American Motorists Ins. Co., 2013 Conn. LEXIS 187 (Conn. June 11, 2013), the Supreme Court of Connecticut declined to recognize a cause of action for an insurer’s alleged bad faith conduct in investigating a general liability insurance claim, relying on the policy terms which expressly granted the insurer discretion to conduct an investigation.  The Capstone court also addressed other certified questions including whether faulty construction work could be an “occurrence,” the meaning of “property damage” and application of the business risk exclusions.  As to the bad faith issue, the court held that a bad faith action “must allege denial of the receipt of an express benefit under the policy.”  Id. at *64.  The court reasoned

Posted in Bad Faith
Avoiding Insurance Bad Faith
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action. More
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