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Coverage Opinions Remain Privileged in Bad Faith Action Even Where Gist of Recommendation is Set Forth in Letter to Insured

As a matter of first impression, the Supreme Court of West Virginia recently held that coverage opinion letters were protected by the attorney-client privilege even though the insurer subsequently sent correspondence to its insured that included the recommendation of coverage counsel.  State of West Virginia ex Rel Montpelier U.S. Ins. Co., No. 13-1172, 2014 WL 1408487 (W. Va. Apr. 10, 2014).  The Court conducted an in camera examination of the documents the insurer claimed were privileged. The insured argued that because the insurer disclosed the recommendation of the coverage opinion letters to the insureds, the attorney-client privileged was waived.  The insureds relied on the third-party disclosure exception to the attorney-client privilege.  The Court surveyed cases nationwide and found no authority

Posted in Attorney-Client, Bad Faith, West Virginia Insurance

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

Posted in Bad Faith

Estée Lauder v. OneBeacon Insurance Group – Expanding the Scope of Discovery in Bad Faith Cases

On April 15, 2013, a New York trial court granted the insured’s request for the production of certain claims file material and previously sealed discovery in Estée Lauder Inc. v. OneBeacon Insurance Group LLC et al., index number 602379/2005, leaving insurers with yet another troubling instance of a broadened scope of discovery in bad faith cases. The trial court denied categorical protection for documents created by the insurer during the course of litigation, even if licensed attorneys were involved in the creation of such post-filing documents. Instead, the court was clear – post-litigation documents that relate to the alleged post-filing bad faith conduct are discoverable, unless the insurer demonstrates that the specific document for which it is seeking protection is

Posted in Bad Faith

Good Faith Denial of Benefits When Insurer Relies on Rulings of Workers’ Compensation Court

Last week, the Montana Supreme Court held that the insurer acted reasonably when it stopped payments based upon its reliance on a prior order from the Workers’ Compensation Court (“WCC”).  Steward v. Liberty Northwest Ins. Corp., 2013 WK 1739577, *7 (Mont. Apr. 23, 2013).  The insurer terminated payments to the claimant without notice, but only after the insurer reviewed an order from the WCC.  The WCC denied the claimant’s request for an increased impairment rating because it did not see any causal relationship between the complained pain issues and the claimant’s on-the-job injury.  In addition, after a short break in payments, the insurer resumed paying for the pain patches under a reservation of rights. The Court held that since the

Posted in Worker's Compensation

No Bad Faith Recovery Unless Insured Demonstrates Acts Were A Producing Cause Of Damages

A jury found that Mid-Continent committed five separate violations of the Texas Insurance Code and awarded $2 million to the insured as compensation for the amount it paid to settle third-party claims.  The trial court, however, granted Mid-Continent’s motion for judgment to overturn the jury verdict.  Mid-Continent Cas. Co. v. Eland Energy, Inc., 795 F. Supp.2d 493 (N.D. Tex. 2011).  The insured appealed, and the United States Court of Appeals for the Fifth Circuit affirmed the award in favor of Mid-Continent.  Mid-Continent Cas. Co. v. Eland Energy, Inc., 2013 WL 656631 (5th Cir. Feb. 22, 2013). About The Author

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Posted in Texas Insurance Code
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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