Seven Signs a Claim is About to Go Wrong

Louie Castoria | Claims Magazine

VETERAN CLAIMS EXECUTIVES know that sometimes lawsuits go off the rails. Juries can “run away,” key witnesses can crater on cross-examination, and judges can, occasionally, be injudicious. However, there are warning signs:

  • It’s quiet, too quiet. Most insurers have reporting intervals stated in their litigation guidelines, but these represent minimum standards, not the ideal. Ignoring reporting deadlines is bad enough, but it’s a danger sign when an attorney who has been a more frequent correspondent than the guidelines recommend goes radio silent.

It could be an illness or “nothing much doing.” Is it a high-end stakes case? Are there trial or pre-trial deadlines coming up? Those usually aren’t good times for the silent treatment; rather, times to over-communicate. Maybe counsel doesn’t want to broadcast what’s happening, hoping things will turn out fine, but forgetting Murphy’s Law. Clients hate surprises, especially ones that begin, “We regret to advise …”

  • The sudden, unexplained substitution of an expert witness. There must be 100 good reasons why counsel might need to drop an expert witness from the trial list. Even experts get sick, but substituting a new expert for the one who has worked the case up, has been disclosed as a trial witness, and has already billed a substantial amount of money can be a danger sign. The departing expert’s work, if used at all, may seem less forceful, and if the new expert relies solely on that work, his or her credibility may be questioned.

The keyword in this danger sign is often “unexplained.” Be skeptical if the explanation is so brief that it sounds more like an excuse: “She has a calendar conflict.” Really? When did it arise? Why is that case deemed more important than this one? Has the expert already written a report or expressed opinions in our case? Has the expert issued contrary opinions in other cases? If it is an illness, when will the expert again be available?

  • Unexpected motions seeking reconsideration. Sometimes a law firm’s invoice tells more than its reports. If you first learn about a motion for reconsideration on an invoice, that’s a danger sign. The outcome of the motion being reconsidered must be important to the case, and unfavorable.

Judges, like the rest of the species, can make mistakes, some of which need to be corrected. When that happens, that is the time to notify the client of the adverse ruling, provide a copy of the order, if there is one, and advise the client that motions for reconsideration have a low-percentage shot. In most jurisdictions, it must be based on a change in the law occurring after the motion was briefed and argued, newly discovered facts that could not have been known earlier, or counsel’s excusable neglect, will not support reconsideration.

  • A string of unfavorable outcomes on pretrial motions by the trial judge. Most judges decide pretrial motions on the merits, and not for settlement leverage. When the trial judge issues a string of unfavorable decisions, seemingly one-sidedly, it’s time to reassess. Are we right on the law and facts? Is our method of presentation turning the judge off — too wordy, too many issues in a single motion? This might be a time to consult with someone who has tried many before the judge and can provide a reality check.
  • Overly-optimistic reports from defense counsel. A very seasoned trial lawyer had a case before a jury and phoned in daily reports to the client and managing partner. They were too good to be true: “They didn’t lay a glove on us!” Day after day. At the end of the case, Ka-POW! It was more like an anvil than a glove. In some large-exposure trials, it may be worth the effort to bring in a neutral observer who has seen other trials, acting as the canary in the coal mine by sensing when things start to go wrong.
  • Unexplained changes in lead counsel. “Unexplained” is again the keyword. Many clients say, “We hire lawyers, not hire law firms.” Of course, they expect that lawyer to be supported by the resources of the law firm, but it is him or her they want at the helm of the case. Attorneys are vulnerable to disease, irreconcilable conflicts, or simply running out of gas. When a change in lead counsel must be made, it must be done gracefully, giving the client options of others to take the reins, and an opportunity to speak with each of them.
  • A ringer is brought in to try the case for the plaintiff. A well-known, high-stakes attorney — a “ringer”— suddenly joins as counsel for the other side. This can sometimes be a ploy, especially if the ringer does not formally associate in the case but lends his or her name to a mediation or settlement conference statement.

You could bring in your own “ringer,” though that could telegraph lack of confidence in current counsel. Another downside: some “ringers“ thrive on the battle, and may not be attuned to settlement opportunities that arise during trial. Having a ringer consult behind the scenes may provide the advantage of his or her expertise, thus empowering current counsel. Watching for the telltale signs that a case may be taking a wrong turn can be the proverbial “stitch in time that saves nine” or $9,000,000.

Claim Handling Requirements by State – Idaho

Julitza Perez | Property Insurance Coverage Law Blog | August 17, 2018

Idaho is a state with a diverse weather, and property owners have risks all year long. Adequate insurance coverage should be considered by all property owners. Some of the natural disaster risks in Idaho are wildfires, snowstorms, flooding, and earthquakes.

An insured may not be required to obtain fire or hazard insurance in an amount that exceeds the replacement value of the improvements.1 The Idaho Supreme Court has held that it will not be considered a breach of contract for an insurance company to choose between paying the insured the policy amount or defending an insured in a lawsuit involving title to the property. Neither will it create a liability for emotional distress.

The “Gem State” regulates insurance claims under the “Unfair Claim Settlement Practices”2section of the Idaho Code. Like many other states, Idaho keeps track of practices in the business of insurance to avoid unfair methods or acts by insurance companies against insureds.

Idaho will consider as unfair practices those acts, omissions, or methods that consist of:

  • Misrepresenting facts in insurance policy related to coverages.
  • Failing to act reasonably and promptly upon communication with respect to insurance claims.
  • Failing to conduct a reasonable investigation.
  • Refusing to pay claims without reasonable investigation based upon all available information.
  • Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.
  • Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.
  • Compelling insureds to recover less amounts than due under their coverage.
  • Attempting to settle claims for less than a reasonable amount or on the basis of application altered without notice to, knowledge or consent of the insured.
  • Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made.
  • Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
  • Delaying the investigation or payment of claims by requiring the insured duplicate information such as submitting a preliminary claim report and then a formal proof of loss.
  • Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the policy coverage.
  • Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.

The Idaho Code also provides insureds a limited action to recover punitive damages. The insured must prove, by clear and convincing evidence, oppressive, fraudulent, malicious or outrageous conduct by the insurer.3 In all civil actions a claim for punitive damages shall be pursuant to a pretrial motion and after hearing before the court, amend the pleadings to include a prayer for relief seeking punitive damages. A court’s conclusion on the motion shall not be barred by lapse of time under any applicable limitation on the time in which an action may be brought or claim asserted, if the time prescribed or limited had not expired when the original pleading was filed.4 Judgments on punitive damages shall not exceed the greater of two hundred fifty thousand dollars ($250,000) or an amount which is three (3) times the compensatory damages contained in a judgment.5

The State of Idaho has a legitimate interest in preventing the mistreatment of its citizens by punishing insurance companies that exploit the vulnerability of their insureds.6 It is important for Idaho’s insureds to understand their policy coverage and how a claim should be adequately handled by its insurance company.
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1 IDAPA Section 12.01.10.060.
2 ID ST Section 41-1329. Unfair Claim Settlement Practices.
3 I.C. Section 6-1604 (1). Limitation on Punitive Damages.
4 I.C. Section 6-1604 (2). Limitation on Punitive Damages.
5 I.C. Section 6-1604 (3). Limitation on Punitive Damages.
6 Hall v. Farmers Alliance Mut. Ins. Co., 2008, 179 P. 3d 276, 145 Idaho 313.

Claims Handling Requirements by State – Oregon

Robert Trautmann | Property Insurance Coverage Law Blog | April 30, 2017

Next up in our state-by-state anthology of claims handling guidelines is the Beaver State – Oregon. Claims handling in Oregon is governed by the Oregon Administrative Rules.

Oregon gives insurance carriers a long time to acknowledge claims as compared to many other states; in Oregon carriers must acknowledge a claim not later than 30 days after receipt of the claim.1 Within those first 30 days they must also provide all necessary claims forms such as a proof of loss.2 They must also reply to all pertinent communications with regards to the claim within 30 days of reciept.3 Thereafter the carrier carrier must complete its investigation of the claim within 45 days.4 If they cannot complete their investigation within 45 days, they must notify the insured of the need for the extra time along with the reasons therefore and continue to so advise every 45 days thereafter.5 They also must advise as to the acceptance or rejection of the claim no later than 45 days after receipt of a proof of loss.6

Additionally, an insurance carrier must not refuse to settle a claim on the grounds that another party may be financially responsible for the loss.7 Finally, if a first-party insured is not represented by an attorney, the insurance carrier must advise them that their claim may be affected by a statute of limitations at least 30 days before it would expire.8

As always, please let me know if you have any questions or requests to move a state up on the list in our 50-state tour.

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1 Or. Admin. R. 836-080-0225(1).
2 Or. Admin. R. 836-080-0225(4).
3 Or. Admin. R. 836-080-0225(3).
4 Or. Admin. R. 836-080-230.
5 Or. Admin. R. 836-080-0235(4).
6 Or. Admin. R. 836-080-0235(4).
7 Or. Admin. R. 836-080-0235(5).
8 Or. Admin. R. 836-080-0235(6).