Happy New Year

Thank you for visiting my site throughout the year.

Willie Handler

Insurance News - Wednesday, December 30, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, December 30, 2015:

• City of Toronto won’t block Uber’s new $5 commuter service but it is doing a legal review.
• Another legal battle for Uber as the Seattle city council votes to treat Uber drivers as employees by giving them collective-bargaining rights.
• California sets rules for self-driving cars; must have steering wheel and licensed driver behind the wheel. Google is not happy.
• Google plans to make its self-driving cars unit, which will offer rides for hire to compete with Uber, a stand-alone business under the Alphabet Inc. corporate umbrella in 2016,
• The self-driving car, that cutting-edge creation that’s supposed to lead to a world without accidents, is achieving the exact opposite right now.  Because driverless cars obey the laws, humans don't so much.
• Google and Ford are about to announce they are forming a partnership to build self-driving cars.
• Wawanesa Insurance is asking policy holders if they are driving for Uber. And cancelling policies if the answer is yes.

Insurance News - Sunday, December 27, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Sunday, December 27, 2015:

• Studies suggest that insurance customers will walk away if purchasing insurance is slow, complicated and difficult.
• The $75,000 problem for self-driving cars is going away as the cost of LIDAR sensors drop.
• Self-driving cars can lure drivers into false sense of security and even lull them to sleep.
• If you want to know why Uber ignores regulators and not intimidated by law suits?  Because they are worth around $85 billion.
• Uber is testing out food delivery in Toronto.  
• Uber is also trying out commuter service to compete with the TTC.
• In Uber fight, taxi drivers on wrong side of history – and consumerism.

Settlement reached on class action claim against Progressive over PIP deductible

I wrote here about Estrada v. Progressive Direct Ins. Co., 53 F. Supp.3d 484 (D. Mass. 2014), in which 93A claims in a class action suit against Progressive Direct Insurance survived summary judgment.  The plaintiffs asserted that Progressive's website unfairly led consumers to purchase policies with an $8,000 PIP deductible.

Plaintiffs' attorney Ryan Alekman of Alekman DiTusa informs me that a settlement agreement has been reached.  According to the notice of class action settlement, Progressive has agreed to pay $1,875 on valid PIP claims under policies purchased online from it between May 1, 2008 and April 27, 2010 containing an $8,000 PIP deductible.  If you think you may have a claim you can click on this link to submit it. 

Attorney Alekman says this about the settlement:

We are happy to have achieved this result on behalf of all Massachusetts consumers.  Class actions enable a single consumer to make a difference that benefits other people in the same situation.  It is my belief that class actions also play an important part in leveling the playing field between individuals and large corporations, and act as a deterrent against similar behavior in the future. 

I reached out to counsel for Progressive but did not hear back before this article posted. 

Government Posts Proposed Changes to DRS Regulations

The Ministry of Finance has posted proposed changes to Insurance Act regulations to provide for the transition the Automobile Insurance Dispute Resolution System from the Financial Services Commission of Ontario (FSCO) to the Ministry of the Attorney General's Licence Appeal Tribunal (LAT), and the wind down of disputes filed at FSCO. 

Proposed amendments include:

 • The last date for submitting applications for mediation, neutral evaluation, or the appointment of an arbitrator to FSCO will be March 31, 2016. 

 • An application for an appeal to the FSCO Director of Arbitrations will only be accepted where the application for the appointment of an arbitrator was received by March 31, 2016. 

 • As well, an applications for a variation or revocation to the FSCO Director of Arbitrations will only be accepted where the application for the appointment of an arbitrator was received by March 31, 2016. 

 • The Office of the Director of Arbitrations will continue to function until all notices of appeal and all applications for variation or revocation have been finally determined. 

 • Statutory Accident Benefits Schedule (SABS) provisions that apply to the dispute resolution process at FSCO will continue to apply, as they read on March 31, 2016, to all applications that were received by FSCO before the transition date but are not finally determined before that date. The SABS will also be amended, where necessary, to apply to applications filed at the LAT on or after April 1, 2016.

Massachusetts Attorney General complains of homeowner's policy rate hikes by two insurers

According to The Boston Globe, Massachusetts Attorney General Maura Healey is complaining of excessive rate hikes to homeowner's policies by Mapfre (formerly known as Commerce Insurance) and Safety Insurance.  Both insurers raised rates by about $100 on the average state premium of $1,150.  According to Healey's analysis of trends that are traditionally used to calculate rates, Mapfre should have lowered rates, while Safety's increase should not have exceeded 3 percent. 

Competition Bureau Supports Ride-Sharing Services

The emergence of Uber and other ride-sharing services has created increased competition for the Canadian taxi industry.  This has created a source of friction for the industry because of what they see is an "uneven playing field."  Taxi operators are required to follow regulatory rules while ride-sharing services largely operate unregulated.  The Canadian Competition Bureau recently weighed in on the subject.

The Competition Bureau recently released a study, Modernizing Regulation in The Canadian Taxi Industry, which concluded that the competition in the sector has benefited consumers.  However, there needs to be a balance between increased competition and the need for regulation.

The taxi industry has operated largely unchanged for decades.  Regulators have created rules to govern price, vehicle safety and insurance requirements.  But the regulatory rules often restrict entry into the sector by limiting the number of taxi licences.  The number of plates usually does not keep up with demand for services which creates artificial scarcity, but also higher prices, poor service and long wait times.

Ride-sharing companies have changed the landscape by offering consumers lower prices, variable pricing (higher fares when demand is high), shorter wait times, and convenience.  The software application used by ride-sharing companies provides automatic payment and the ability to track the number of vehicles available in the local area.  The software also allows consumers to rate drivers which creates an incentive to provide better service.  Low rated drivers receive fewer ride requests.

The innovations introduced by Uber and other similar service providers have benefited consumers.  There is a need for updated regulatory rules so that traditional taxi operators can respond to the competition.  But the one aspect not addressed by the Competition Bureau study is the insurance issue. 

In September 2015, Intact Financial announced plans to work with Uber to create products tailored for the ride-hailing service, after concerns emerged that person auto insurance policies may not cover drivers using their personal vehicles for commercial gain.   In the meantime, Uber claims it has adequateinsurance coverage and that every ride on the UberX platform is backed by $5 million of commercial auto insurance, which covers both bodily injuries and property damage stemming from a crash.  However, Alberta government said in July that it had determined the policies do not meet the requirements of the province’s Insurance Act.  It's all very confusing.  

Ride-sharing services are here to stay.  Consumers will benefit but only if the regulatory rules and updated and the insurance issues are addressed.

Limitation Periods in Actions Against Police

The Court of Appeal recently upheld a motions court judge's decision granting summary judgment in an action against police based on an expired limitation period .

In Cassidy v. Belleville, 2015 ONCA 794, the plaintiff alleged she was stopped by police in August 2009, who informed her she was driving a stolen vehicle and confiscated the car, forcing her to walk home.  She alleged she was pregnant at the time and the incident caused medical complications. She wrote to a lawyer six days after the incident asking whether she should commence a civil action but did not pursue a lawsuit at that time.  Approximately one month later (September 2009), she made a complaint to the Belleville Police and received a reply in June 2011. The complaint was partially upheld in November 2012.  The plaintiff waited until October 2013 before commencing her action, four years after the incident.  She argued she did not discover her claim until after the complaint was upheld as she was unaware of the standard of care until that time.

The motions judge disagreed, as did the Court of Appeal.  Section 5(2) of the Limitations Act provides a presumption that the limitation period begins to run the date of the incident unless the contrary is proven and there was nothing to rebut the presumption.  Expert evidence was not needed to discover the claim; the plaintiff was aware of the offending conduct, the identity of the offender and the nature of her injuries from the time of the incident.  The results of the complaint investigation may have provided additional information but were not necessary to trigger the limitation period.

Cassidy is of assistance in police actions, but may also extend to other circumstances where plaintiffs have attempted to extend limitation periods by waiting on administrative decisions.

Insurance News - Wednesday, December 2, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, December 2, 2015:

• There is a substantive risk associated with relying on insurer examination reports to deny serious claims which can be compounded by taking a matter to arbitration without having sufficient evidence to support a position.
• Why auto insurance rates are so high in the Greater Toronto Area.
• There is a down side to low gas prices - more vehicle traffic and more accidents.
• LAT releases update on transfer of auto insurance disputes from FSCO. LAT still planning on accepting disputes beginning April 1st.
• Consumers big winners in new law regulating towing operators.
• Ontario’s auto insurance overhaul needs to put consumers first according to a former New Jersey regulator.

First Circuit holds that parent corporation with risk management department responsible for subsidiaries is not an insurer

Mass. Gen. Laws ch. 176D requires insurers to act in good faith in adjusting claims.  When the insured is a consumer (rather than a business) a violation of ch. 176D is automatically a violation of ch. 93A §9.


In Bingham v. Supervalu, Inc., __ F.3d __ , 2015 WL 7076938 (1st Cir.), the United States Court of Appeals for the First Circuit held that a parent corporation that provides risk management services and pays claims against its subsidiaries is not an insurer.


Marion Bingham was injured when she was struck by a motorized cart while shopping at a Shaw's Supermarket.  She sued Shaw's.  After her death, her nephew, Warren Bingham, the administrator of the estate, was substituted as the plaintiff.


Shaw's was a subsidiary of Supervalu.  Pursuant to the manner in which Supervalu structured its relationship with its subsidiaries, it had authority to negotiate and settle claims on behalf of Shaw's. 


Supervalu owned 228 subsidiaries.  It maintained a centralized risk management system whereby it negotiated and resolved claims made against its subsidiaries that were not otherwise covered by insurance.  It employed claims adjusters to perform those functions and would pay claims from a central account. 


Apparently the claims adjusters weren't very good, because judgment entered in the Massachusetts Superior Court against Shaw's in Bingham's case under Massachusetts Rule of Civil Procedure 33(a).  That is a default judgment that enters after a party fails to answer interrogatories, and then ignores an application that requires it to answer the interrogatories.  A year later the court assessed damages against Shaw's.


Supervalu appealed, and the Massachusetts Appeals Court affirmed the damages award.  Supervalu threatened to seek further appellate reviews.  Bingham's estate accepted a settlement offer.


The Estate later sent a 93A demand letter to Shaw's and Supervalu, asserting that Supervalu had acted as Shaw's insurer and had violated chs. 176D and 93A by failing to promptly and fairly resolve the claim as required of insurers by ch. 176D.  It contended that Supervalu's decisions to appeal and then to threaten a further appeal were undertaken contrary to the advice of counsel that the appeals were unlikely to succeed.  It argued that Supervalu's sole motive was to protract litigation in order to receive a reduced settlement.  The 93A/176D case ended up in federal court. 


The Appeals Court held that Supervalu is a self-insurer not subject to ch. 176D,  not an insurer.  It also held that Supervalu is not a captive insurer because it does not come within the definition of "an insurance company owned by another organization whose exclusive purpose is to insure risks of the parent organization and affiliated companies." 


The court also held that Supervalu was not a risk manager subject to ch. 176D.  It was not "interposed between the insurer and the Estate;" it was self-insured.  Nor did it purport to act on behalf of an insurer that had a contractual obligation to pay claims.  It was under no duty to settle claims made against Shaw's or its other subsidiaries. 


Finally, the court held that ownership of a subsidiary that was an insurance agency did not make Supervalu itself subject to all laws that apply to insurers.

Federal District Court transfers hazardous waste coverage case to state of the contaminated site

XTRA Intermodal leased and eventually purchased property in Fairmont City, Illinois.  The site was later discovered to be contaminated with hazardous waste.  XTRA requested coverage for the contamination claims from Federal Insurance Company under policies Federal had issued it in the 1980's and 1990's.

Federal filed a declaratory judgment action in the United States District Court for the District of Massachusetts, seeking rulings on the applicability of pollution exclusions and on how damages and costs of defense should be allocated among all of XTRA's insurers. 

In Federal Ins. Co. v. XTRA Intermodal, Inc., 2015 WL 4275181 (D. Mass.) (unpublished), the United States District Court for the District of Massachusetts allowed XTRA's motion to transfer the case to the federal court in Illinois.

Federal asserted that venue was proper in Massachusetts because when it issued the policies to XTRA XTRA's corporate headquarters were located in Boston.  Additionally, some of the policies were brokered by insurance agencies in Massachusetts. 

The court noted that the insurance policies were issued more than twenty years ago and that there do not appear to be any modern-day connections linking the parties to Massachusetts.  XTRA moved its principal executive office out of Boston in 1999.   None of the insurers are headquartered in Massachusetts.


The court held that venue was more proper in Illinois because that state has a stronger, more immediate and more relevant connection to Illinois than to Massachusetts.  The underlying litigation is  there; additional insurance claims relevant to the site are likely to arise there; the site is located close to the federal courthouse there; and the interpretation and application of the policies will depend at least in part on the factual circumstances surrounding the contamination. 

The court  held that it was premature to conduct a choice of law analysis.  Even if Massachusetts law applied, that fact is given significantly less weight in a venue analysis when the law involves basic or well-established issues of law.


The court rejected Federal's argument that Illinois did not have a paramount interest in the resolution of the matter because the case would determine only who paid for the loss.  The court held that host states have a "paramount interest in the remediation of toxic waste sites, which extends to assuring that casualty companies fairly recognize the legal liabilities of their insureds." 

Instructing Letter Does Not Have to be Produced in Advance of Examination

One issue that arises periodically in personal injury cases is whether a party must produce counsel's letter of instruction to its expert.  In Nikolakakos v. Hoque, 2015 ONSC 4738 (S.C.J.), Master Graham considered whether the defendant was required to produce the letter of instruction to the plaintiff in advance of the plaintiff attending an independent medical examination.

Master Graham held that the instructing letter does not have to be produced until the party elects to call the expert at trial.  Even after the report is served, the instructing letter does not have to be produced pending the defendant's decision whether to call the expert at trial.  As a result, the defendant did not have to produce the letter of instruction in advance of the independent medical examination.

Insurance News - Friday, November 20, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, November 20, 2015:

• Uber operations in Toronto spark possibility of strike in taxi industry.
• Ontario highway incident management the "missing piece" of auto insurance fraud reform.
• A fascinating article on how Uber manages the marketplace and why taxis are doomed.
• Evolution of transportation may change the auto insurance industry.
• The Florida Insurance Commissioner thinks it may be time to eliminate no-fault.
• Toronto Star reports there is a lot of confusion regarding the snow tire discount that becomes mandatory beginning January 1.

Covenant to Insure Did Not Bar Crossclaim

A recent decision looked at whether a contractor could crossclaim against a subcontractor or whether the crossclaim was barred as a result of the covenant to insure between the parties.  In William Osler Health Centre v Compass Construction Resources Ltd., 2015 ONSC 3959 (S.C.J.), the contractor, Compass, was hired by the plaintiff to do kitchen renovations at the Hospital and subcontracted part of the project to Black Creek.  The contract between the Hospital and Compass contained a covenant to insure which required Compass to obtain all risks property insurance.  The covenant to insure contained reference to the terms and conditions of IBC 4042.  IBC 4042 contains language that defines the “Project Site” as the “property in the course of construction”.

 

Black Creek argued that under the principle of tort immunity, when one party to a contract covenants to obtain insurance for another party, this signifies an assumption of the risk and the party obtaining the insurance cannot sue the other party for the losses which are insured. Compass accepted that under the principle of tort immunity, it could not crossclaim for damages to the kitchen, but argued that it could maintain a crossclaim for damages to the rest of the hospital. 

 

The Court found that Compass’ covenant to insure did not extend to the entire Hospital and only covered the Project Site (namely, the kitchen). Thus, the Court held that Compass could crossclaim against Black Creek for damages to the Hospital outside of the kitchen, and was not barred by the covenant to insure.  If Compass’ insurance were intended to cover the entire hospital, the premiums and coverage limits would be much higher and closely resemble that of the Hospital’s; Justice Firestone held that it stood to reason that the covenant to insure only covered the Project Site and not damage done to the entire hospital.

 

Appellate Division holds that lienholder gets free insurance

Source One was a lienholder on a vehicle owned by Eric Santos.  On January 28, 2013, Progressive Insurance issued a "verification of insurance," or binder, that was provided to Source One. 


Santos's first premium payment bounced.  On February 8, 2013.  Source One received a notice of rescission from Progressive.  The notice was dated February 1, 2013 and was purportedly effective on January 28, 2013.


On March 3, 2013, the vehicle was towed as a result of a loss and Source One received possession of the vehicle.  Progressive refused to pay the claim filed by Source One on the ground that the policy had been rescinded. 


In Source One Financial Corp. v. Progressive Direct Ins. Co., 2015 WL 6739184 (Mass. App. Div.), the Massachusetts Appellate Division held that Progressive did not follow the cancellation procedure required by Mass. Gen. Laws ch. 175 § 113(A)(2).  Under the statute, "no cancellation of the policy . . . shall be valid unless written notice thereof is given by the party proposing cancellation . . . at least twenty days in each case prior to the effective date thereof."  The statute does not provide for rescission.


The court held that failure to comply with the requirements for cancellation means that the parties are in the same position as if no notice were ever sent.


The court rejected Progressive's argument that the insurance policy was a nullity due to failure of consideration.  "The promise to purchase the policy made by Santos at the time the binder was issued" satisfied the consideration requirement.  "The failure of consideration is not available to Progressive to avoid this policy.  The failure of performance, that is, Santos's failure to pay the promised premium, is different even under contract law than utter lack of consideration." 


The court held that the policy could not be rescinded because there was no fraud, accident, mistake, or gross inequity. 


I understand this case in principle.  By retroactively cancelling (or "rescinding") the insurance, Progressive failed to comply with the statutory requirement of giving twenty days notice.  Therefore, the insurance was never cancelled.


But what if Progressive had complied with the statutory requirements, and the accident had happened within the twenty day notice period?  A policy that was never paid for would nevertheless provide coverage. 

Insurance News - Tuesday, November 17, 2015:

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, November 17, 2015:

• Ontario Conservatives seek to regulate Uber, AirBnB and the sharing economy province-wide.
• Insurer cancelling policies of UberX drivers: “considered commercial use and is unacceptable for personal vehicles”.
• Uber says it needs self-driving cars to avoid ending up like the taxi industry.
• A decline in accident frequency due to safer vehicles and the adoption of autonomous vehicles could shrink the U.S. personal auto insurance sector by 60 percent within 25 years,
• Ready or not, Tesla Autopilot means self-driving cars are already on Canadian roads.
• Public consultation on Ontario tow truck regulations coming to a close.

Insurance News - Thursday, November 12, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, November 12, 2015:

• Ontarians pay more than double in car insurance than in some provinces.
• Trial lawyers have updated their report on profitability in the Ontario auto insurance market.
• Self-driving cars will be tested on Canadian roads in 2016.
• Car companies intend to accept full liability for self-driving car accidents.
• Tesla just beat Google to make the self-driving car.
• Could Google be auto-piloting itself into the insurance business?

Open Season - its time to review your health insurance plan

Even though you may be out of work receiving workers compensation from OWCP, you still need to stay on top of your health insurance enrollment. OWCP, and the federal government in general, no longer mail out brochures. You need to research any changes you might need to make and get your forms from the OPM website. A good place to start is here:

https://www.opm.gov/healthcare-insurance/open-season/

Please keep in mind that if you become eligible for Medicare, that is now considered your primary insurance and you need to change to a version of your health insurance plan that takes into account that you have Medicare as primary and health insurance as secondary. Otherwise you are paying too much for your health insurance. I have a client who reduced her health insurance premium from $800 per month to $200 per month by making this change. This is not a change that is limited only to Open Season. Becoming eligible for Medicare is an event that allows you to immediately change your health insurance enrollment without waiting for Open Season. The OPM website explains:

Can I Change My FEHB Enrollment When I Become Eligible for Medicare? 

Yes, you may change your FEHB enrollment to any available plan or option at any time beginning 30 days before you become eligible for Medicare. You may use this enrollment change opportunity only once. You may also change your enrollment during the annual Open Season, or because of another event that permits enrollment changes (such as a change in family status).

Another change is that beginning this coming year every plan must include an option for self plus one in addition to the previous choices of individual and family; this includes dental insurance.

Note that if your agency transferred your health insurance enrollment responsibility to OWCP,  you must send your completed SF2809 to the OWCP District Office handling your case. If you are not sure, send it to both your agency and OWCP.

Be sure to go to the OPM website to get started:

https://www.opm.gov/healthcare-insurance/open-season/

Loss Transfer and the Fault Determination Rules

The Court of Appeal recently considered the interplay of the Fault Determination Rules in a loss transfer context.

In State Farm Mutual Automobile Insurance Co. v. Old Republic Insurance Co. of Canada, 2015 ONCA 699 (C.A.), there was a multi-vehicle collision in which a Pepsi truck rear-ended a Dodge, which in turn rear-ended a Nissan.  Old Republic insured the Pepsi truck and State Farm insured the Nissan.  The driver of the Nissan collected accident benefits from State Farm, which in turn sought to be indemnified by Old Republic under the loss transfer provisions of the Insurance Act.  The issue on appeal was whether the Pepsi truck was only responsible for the initial collision with the Dodge or whether it was responsible for the entire chain reaction.

The Court of Appeal held that the Pepsi truck (and its insurer, Old Republic) was 100% responsible only for the collision between it and the Dodge, not the entire chain reaction.    As a result, Old Republic was not required to indemnify State Farm for accident benefits paid to its insured.

The Court's interpretation helps to clarify an area in which there was previously conflicting lines of case law.

FSCO Mandate Review Undecided on Auto Rate Regulation

The preliminary report by Panel reviewing the mandate of the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO) has been made public by the Ministry of Finance.  Panel members are George Cooke, Lawrence Ritchie and James Daw.

The report is virtually silent on how auto insurance rates should be regulated in the province.

The report recommends the creation of a regulatory body - the Financial Services Regulatory Authority (FSRA).  The FSRA would be self-funded and arm's-length from the government.  There would be three distinct functions - pension regulation, prudential regulation and market conduct regulation.  Under market conduct regulation, there would also be product regulation which might include auto insurance responsibility.

The FSRA would have a board of directors and reporting to the board would be a CEO.  Each regulatory function would be headed by a Superintendent.   The FSRA would have rule making authority.

FSRA would be given authority over any self-regulatory body operating within the financial services sector in Ontario not otherwise overseen by another statutory body. All relevant participants in the Ontario financial sector, such as payday lenders and loan brokers, consumer credit reporting agencies, debt and credit counsellors, and guarantee and warranty insurers would also fall under the FSRA. Regulatory oversight of the Cooperatives sector would be transferred to an agency or entity other than the FSRA. The administration and funding of the Motor Vehicle Accident Claims Fund should be transferred to the industry operated Facility Association.

The Financial Services Tribunal would operate separately from FSRA, with its own budget, subject to normal government process. 

The Panel made no recommendation with respect to the prior approval of auto insurance rates. It appears a preference would be to move away from the rate setting approach currently used in Ontario.  The Panel has reservations about continuing this approach within FSRA as it might unnecessarily dominate the agenda of FSRA to the detriment of other sectors.

At least three options were presented to the Panel during the consultations: continue rate approval within FSRA as practiced today; remove this function from FSRA and transfer it to a formal rate-setting board, or; give FSRA authority/responsibility for rate regulation, the approach to which to be determined through its rule-making authority.

Feedback on the preliminary report is being solicited by the government.  The deadline is December 14, 2015.  A final report will submitted to the government in the winter

Supreme Court Dismisses Westerhof Appeal

We previously blogged on Westerhof v. Gee, where the Court of Appeal held that non-party experts such as treating health practitioners may give opinion evidence formed in the course of treatment or based on observations formed outside of the litigation (such as accident benefits assessments).

The case was appealed to the Supreme Court of Canada.  On October 29, 2015, the Supreme Court dismissed the application for leave to appeal.  As a result, non-party experts will continue to be permitted to give opinion evidence without complying with r. 53.03, subject to the court's gatekeeper function.

The companion appeal in Baker v. McCallum was also dismissed.

Litigation Insurance Does Not Prevent an Order for Security for Costs

The fact that a plaintiff obtains litigation insurance does not prevent a court from making an order for security for costs.

In Shah v. Loblaw Companies Ltd., 2015 ONSC 5987 (S.C.J.), the plaintiff claimed he slipped and fell on a mat at a grocery store in 2012.  At the time of the incident he was a permanent resident of Canada, but his permanent resident card expired in 2013.  He returned to India and did not returned to Canada.  The defendants brought a motion for security for costs.  In response, the plaintiff secured a Legal Protection Certificate and Indemnity Agreement.  He opposed the motion for security and argued that the insurance plan was sufficient security for the defendants.

The Court rejected the plaintiff's argument.  The policy contained a number of exclusions where the insurance proceeds would not be paid, such as where the plaintiff does not accept his counsel's recommendation to accept an offer to settle, decides to represent himself, fails to attend a defence medical examination, provides materially misleading information and so on.  The defendants had no control over the circumstances and if the policy were cancelled, the defendants would have no security in the event of an adverse costs award against the plaintiff. 

Justice Lemon comments that other judges have considered the existence of insurance as a factor in determining whether security for costs should be awarded, but that the circumstances of the case and terms of the policy should be considered.  It would seem important to obtain production of such a policy in the event that the plaintiff raises such an issue in response to a motion for security for costs.

Another view

Randy Maniloff's  article on Bridge of Spies in Coverage Opinions is way better than mine.  Of course, Maniloff is addressing the actual facts -- James Donovan, the person on whom the Tom Hanks character was based in the movie, argued in court that a multi-vehicle accident is one occurrence.  Tom Hanks argued in a bar that plaintiffs' counsel should accept a low settlement offer because of that then-undetermined question of law. 

(Maniloff doesn't mention it, but Donovan also argued in court that the Russian spy he defended should not be executed because the spy might be useful in a trade if the USSR ever captured an American spy.  In the movie Tom Hanks argued it as an ex parte communication in the judge's living room.)

Incompetent insurance defense lawyers make good spies, apparently

I just saw Bridge of Spies, the much-praised Steven Spielberg movie in which Tom Hanks plays an insurance defense lawyer who ends up negotiating a spy-swap with the Soviet Union. 

In Hanks' first scene in the movie, he demonstrates an incompetence that should get a real lawyer fired.

Hanks is negotiating settlement of a claim.  Apparently the sticking point is how many occurrences there are in a multi-vehicle crash for the purposes of a per occurrence limit.  Typically the starting point for this type of discussion would be the policy definition, followed by legal research on both sides.  If the issue is still open for debate, there might be some analogizing.  Hanks' character, perhaps anticipating his future role as a bit player in the cold war, decided to do the equivalent of Khrushchev banging a shoe on the table at the United Nations. 

Sure, that'll work.  (Not.)

In the same scene, Hanks says repeatedly that he does not represent the tortfeasor, but the insurance company.  Huh?  Any second year insurance defense associate should have a thorough understanding of the tripartite relationship--a cornerstone of an insurer's duty to defend that  says that an insurance defense lawyer fully represents the insured in all cases assigned to that attorney.  It's true that the attorney also fully represents the insurer -- that's the third "partite" in tripartite -- but generally that only comes into play as a reason that insurance defense counsel can't advise on coverage issues, or when there is a possibility of an excess judgment.

The response of any competent personal injury attorney to Hanks' negotiation strategy:  See you at trial.

Which brings us to the courtroom scenes in the movie.  During them I kept forgetting I was watching Tom Hanks in a Serious Movie About Serious Matters and thought I was watching James Spader in Boston Legal.  Same apparently senile crazy old coot judge who made rulings he admitted from the bench were wrong but he made them because he felt like it.  Same utterly inappropriate over-the-top goading of opposing counsel.  Same ex parte communications with the judge that could get both attorney and judge disbarred.  

Spoiler alert:  Hanks succeeds in negotiating the hostage exchange.  He uses the same tactics he uses in his insurance defense negotiations:  No research whatsoever and a lot of bluster.  The fact that he does succeed is a testament not so much to his skill as to the fact that when both parties really want a settlement , and what they are each willing to give is within the other side's settlement parameters,  a settlement will generally be reached.  That doesn't take heroics; it takes a telephone call. 

Plaintiffs Who Settle for Less than Tortfeasor's Limits May Not Pursue Underinsured Claims

A claim against an insurer pursuant to the underinsured provisions of the policy has been rejected since the plaintiffs settled against the tortfeasor for less than his limits.

In Kovacevic v. ING Insurance, 2015 ONSC 3415 (S.C.J.), the plaintiffs were injured in 2004 in a motor vehicle accident in Florida.  At the time, the plaintiffs were insured by ING; the policy had a $2 million limit and included the OPCF 44R - Family Protection Endorsement.  The Florida defendant had a policy of insurance with a $1 million limit.  The insurer, Lincoln General, elected to go into a "voluntary solvent run-off" in 2009 which resulted it in ceasing to write new policies but it continued to pay its existing obligations and liabilities.  There was no evidence that Lincoln had become insolvent at the date of the settlement or thereafter.

In 2010 the plaintiffs settled their Florida action for $300,000 without ING's knowledge or consent and then sought to recover under their own policy's underinsured driver provisions.  ING brought a motion for summary judgment.  The plaintiffs argued that settling at less than the policy limits did not disentitle them to recovery under the OPCF 44R.  They also argued that the case was unique as the possibility of Lincoln becoming insolvent meant the limits of the policy were unavailable and a settlement for less than the limits was provident.

Justice MacKenzie granted summary judgment and dismissed the claim.  The plaintiffs were not entitled to settle the Florida action for less than the limits then pursue an underinsured claim.  The claim that Lincoln was not solvent or that the policy limits were not available was not accepted.

Appellate Division holds that release of uninsured motorist benefits did not release PIP claim

Chiropractic Care Centers, Inc. provided medical treatment to Rafael Jimenez after he was injured in a motor vehicle accident. 


Chiropractic sought payment of medical bills from Allstate Insurance, the patient's PIP insurer.  Allstate asserted that Chiropractic's claims were extinguished when the patient signed a release of his uninsured motorist coverage arising from the same accident. 


In Chiropractic Care Centers, Inc. v. Allstate Ins. Co., 2015 WL 5783605 (Mass. App. Div.), the Massachusetts Appellate Division held that Jimenez did not have authority to release the PIP claim because he had previously assigned the claim to Chiropractic and Allstate had notice of the assignment. 


Allstate asserted that Jimenez falsely claimed in the release that there were no outstanding medical bills and that any such bills would be paid from the proceeds of the uninsured motorist benefit settlement.  The court held that any recourse Allstate has for such statements is against Jimenez and does not affect the rights of Chiropractic. 


The court also held that the release did not encompass PIP benefits because the release was  specific to uninsured motorist benefits. 

Ontario Rate Approvals Fall in the Third Quarter

FSCO approved 45 private passenger automobile insurance rate filings during the third quarter of 2015.  A total of 40 insurers submitted the filings.  These 40 insurers represent 77.45 percent of the market based on premium volume.  Approved rates decreased on average by 0.50 percent when applied across the total market.  For the first three quarters of 2015, approved rates have decreased by 0.85 percent.

Rate approval decreases since 2013 now total 6.95 percent.  The government rate reduction strategy calls for a 15 percent reduction by August of this year.

Finance Minister Charles Sousa reminded drivers this week that auto insurance discounts will be introduced on January 1, 2016 for consumers who drive with winter snow tires.  The discount amount is still unknown.  Additional reforms are being implemented on June 1, 2016 which is also expected to further reduce premiums.

Strong Position at Mediation Does Not Result in Increased Costs After Trial

Sections 258.6 and 258.6 of the Insurance Act impose an obligation on insurers to settle claims as expeditiously as possible and to participate in mediation.  Failure to do so shall be taken into consideration when a court is awarding costs.

In Ross v. Bacchus, 2015 ONCA 347 (C.A.), the jury awarded the plaintiff $248,000.  The trial judge awarded the plaintiff $217,000 plus HST in costs, including an award of $60,000 on the basis that the insurer failed to comply with ss. 258.5 and 258.6. 

The action was commenced in 2010 and the defendant offered to settle the claim for $40,000 in 2011, although the offer was revoked in 2012.  Three weeks before the trial was scheduled to commence, the plaintiff offered to settle the action for $94,065 plus interest and costs, and requested mediation for the first time.  Defence counsel responded the next day with an offer of $30,001 plus interest and costs, and agreed to attend mediation, but advised that his clients were "not interested in settling this case".  The mediation took place four days before trial.  The trial judge described the insurer's participation in mediation as a "sham" based on counsel's statement.

The Court of Appeal allowed the costs appeal and held that the $60,000 award was not appropriate.  Justice Doherty held that a clear statement of the insurer's intent does not mean it has failed to settle expeditiously or participate in a mediation:

[46]      The costs sanctions in ss. 258.5 and 258.6 can only serve their intended purposes if the facts justify the imposition of those sanctions. An insurer’s statement on the eve of trial that it is not prepared to settle a claim cannot be equated with an insurer’s failure to “attempt to settle the claim as expeditiously as possible.” Nor can an insurer who actually participates in a mediation be declared to have failed to participate simply because the insurer indicated prior to the mediation that it was not prepared to settle the claim. A clear statement of the insurer’s position going into the mediation, even a strong statement, does not preclude meaningful participation in a mediation.

 Although ss. 258.5 and 258.6 make mediation mandatory, it is important to remember that the insurer is still entitled to take strong positions without being subjected to an additional costs penalty.

Insurance News - Wednesday, October 14, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, October 14, 2015:

• Finance Minister Charles Sousa appoints David Marshall as auto insurance, pension advisor.  Are more reforms coming?
• Can a self-driving car maneuver through a moral maze?
• State Farm has plans to use biometrics to price auto insurance.
• Volvo says it will take the full liability if one of its self-driving cars crashes.
• Hands-free technology not keeping drivers hands-free.

At least Jezebel commenters understand insurance

Jezebel, like several other online magazines and newspapers, is running an article today shaming a woman for suing her young nephew who accidently broke her wrist by hugging her too hard.

I was pleased to see that many commenters chimed in to point out that, contrary to the article's assertion, this does not appear to be a situation where a crazy, hateful, greedy aunt is suing a kid and breaking a family apart; it is more likely a case of someone trying to achieve a fair settlement with a homeowner's insurer where she was injured due to the negligence of an insured under the policy.  Negligence does not mean bad intentions, and a broken wrist is not less injurious because it was caused by a hug. 

Or, who knows?  Maybe she is a crazy, hateful, greedy aunt who is breaking a family apart -- that's why we have jury trials. 

Pre-Judgment Interest in Auto Claims

We previously blogged on Cirillo v. Rizzo, where the Court held that s. 258.3(8.1) of the Insurance Act should be applied retroactively (the section provides that pre-judgment interest should be calculated in accordance with s. 127 of the Courts of Justice Act). 

Perhaps unsurprisingly, another judge has come to the opposite conclusion.  In El-Khodr v. Lackie, 2015 ONSC 4766 (S.C.J), Justice Toscano Roccomo held that s. 258.3(8.1) is substantive law, therefore it cannot be applied retroactively.

Until there is appellate authority on this issue, it may be that the calculation of PJI in motor vehicle actions is a matter for negotiation in settlement discussions.

First Circuit holds that pro rata allocation does not apply to attorney's fees in long tail loss

In a case with odd facts, the United States Court of Appeals for the First Circuit has held that under Massachusetts law, in long tail losses attorney's fees are not subject to pro rata allocation. 


I'm not going to go into great detail of the facts of the case.  Suffice it to say that the First Circuit's recitation of those facts and the procedural history fairly drip with disdain for the insurer's actions and litigation strategy.  Rather than stating a straightforward prediction that the SJC would not apply pro rata allocation to defense costs (a subject of debate among insurance coverage attorneys), it chided the insurer for removing the case to federal court where new state law cannot be made. 


The reasoning of the First Circuit that the duty to defend is a broad duty that should not be subject to pro rata allocation is sound.  But in the context of the case the court has left room for insurers to argue that bad facts make bad law and that Massachusetts state courts should ignore the decision for that reason.




A substantial oil spill occurred on property owned by the Peabody-Essex Museum, and eventually migrated off-property to land owned by Heritage Plaza.  Heritage Plaza discovered the oil in 2003 and made a claim against the Museum.  The Massachusetts of Department of Environmental Protection issued a Notice of Responsibility to the museum.

The museum sought coverage from U.S. Fire Insurance Company, its insurer from December, 1983 to December, 1985.  U.S. Fire denied a duty to defend the private demand from Heritage Plaza, but accepted defense of the DEP claim with a reservation of rights.

The museum retained legal counsel and an environmental consultant and tendered the bills to U.S. Fire.  It received no payment for the defense of the public claim even though U.S. Fire had agreed to defend that claim.  It finally sent a payment totaling $611.41, which it calculated by unilaterally reducing the hourly rate of counsel to $200 per hour and unilaterally reducing the bills to what it considered to be the percent spent on the public claim.  It made no payment for the environmental consultant,

The museum sued U.S. Fire and, in 2013, was awarded judgment of over $1.5 million in the United States District Court for the District of Massachusetts. 

In Peabody Essex Museum,Inc. v. U.S. Fire Ins. Co., __ F.3d__, 2015 WL 5172841 (1st Cir. 2015), the United States Court of Appeals for the First Circuit held that US Fire's persistent failure to make any payment towards defense costs "despite having nominally accepted that duty may be treated as a wrongful refusal to defend upon receipt of notice of a claim." 

The court then turned to the issue of how the costs and fees should be divided between the insurer and insured. 

The court first held that the US District Court did not abuse its discretion in finding that the beginning of the 1983-1985 policy period was the start date for the allocation period even though that date "has a make believe quality." 

The District Court had applied a fact-based allocation rather than the default time on the risk method set forth in Boston Gas Co. v. Century Indem. Co., 454 Mass. 337 (2009).  In a fact based allocation, costs are attributed to a policy period based on the percentage of damage that occurred during that period.  Courts generally agree that a fact-based allocation is best, but it is often impossible to produce facts indicating how much damage occurred in one 12-month period versus another of a 30 year long undiscovered contamination.  Some courts have applied it in sexual abuse cases, where an institution allowed sexual abuse of many minors over a period of time, because in that instance it is possible to determine how many allegations of abuse occurred in one year over another.

The time on the risk method, as set forth in Boston Gas, allocates damages based on the percentage of time a particular insurer provided coverage out of the entire period of the loss.

The District Court apparently allocated loss based on a finding that 9,000 square feet of oil damage occurred during the two year policy period.  (The total square feet damaged is not clear from the opinion.)

The First Circuit affirmed the holding of the District Court that time on the risk proration of Boston Gas Co. v. Century Indem. Co., 454 Mass. 337 (2009) does not apply to defense costs.  It held that the arguments of U.S. Fire "appear diminutive next to the long-standing state precedent on the broad and formidable contractual duty to defend that heavily favors insureds and hat stands apart from indemnity obligations."    It tempered its holding by adding, "we have warned, time and again, that litigants who reject a state forum in favor of federal court under diversity jurisdiction cannot expect that new state-law trails will be blazed" by the federal court.


Thanks to Mike Tracy for bringing this case to my attention. 

Robert Von Dohlen's answer to How Do I Submit a Fire Insurance Claim? - Quora

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Houston Insurance Lawyer’s insight:

Quick Q&A on Quora regarding the top factors to consider when your home or property is damaged by fire.

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Fire Insurance Claims - Attorney Robert Von Dohlen (avec tweet) · InsuranceLawyer

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Houston Insurance Lawyer describes important fire insurance claim considerations

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Fire Insurance Claims - by Attorney Robert Von Dohlen

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Important factors to consider if your home or property has been damaged in a fire and you must submit a fire insurance claim. Houston Attorney Robert Von Dohlen

Houston Insurance Lawyer’s insight:

Excellent article regarding fire insurance claims in Houston, TX.

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Fire Insurance Claim Facts - Insurance Lawyer Robert Von Dohlen - YouTube

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http://www.vondohlenlaw.com/about/ What should you know about fire insurance claims? The Von Dohlen Law Firm helps insuranance policy holders in Houston, TX….

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Contracting out of the Insurance Act

Section 263 of the Insurance Act provides that in cases of property damages involving two insured automobiles, the insured is entitled to recover from his or her own insurer.

A recent appeal decision held that although s. 263 precludes tort claims, it permits claims based in contract.

In Hafeez v. Sunaric, 2015 ONSC 4065 (S.C.J.), after a collision in a parking lot, the defendant agreed to pay the plaintiff $15,000 "minus insurance payment".  The vehicle was appraised at $13,500.  The plaintiff was paid $6,500 by his insurer and sought to recover the rest from the defendant pursuant to their contract.  The Small Claims Court judge held the agreement was unenforceable due to s. 263.  The plaintiff appealed.

Justice Perrell allowed the appeal.  The property loss compensation scheme introduced by s. 263 precludes tort claims but does not preclude claims based in contract.

Insurance News - Wednesday, September 23, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, September 23, 2015:

• B.C. auto insurance rates are going up due to higher bodily injury claims and fraud.
• Allstate insurance files patent for “Traffic-based Driving Analysis”tool to spy on car owners/drivers.
• Should police have the capability to take control of driverless cars?
• Intact working with Uber on new products for ridesharing but will the regulator approve them?
• Competition from Uber motivates Beck Taxi to start a petition to lower taxi fares in Toronto.
• Toronto’s most expensive car insurance is found in areas of Downsview in North York.

Insurer Must Pay for Repairs Associated With Building Code Upgrades

The importance of the wording of exclusion clauses can be seen in Choukair v. Allstate, 2015 ONSC 4989 (S.C.J.).

The Applicant, Choukair, had a Homeowner’s Policy with the respondent, Allstate. On January 20, 2014 there was a total loss fire at Choukair’s residence. As a result, the house had to be rebuilt. Choukair stated that his replacement cost was $450,700.00, plus taxes. Allstate paid Choukair $369,000.00 but refused to pay the balance.

The difference between what Choukair claimed and what Allstate paid related to the increased cost of the rebuild associated with upgrades required as a result of the Building Code, which Allstate stated were excluded by the Insurance Policy.

There was an exclusion clause in the Policy which stated the following:

We do not insure: (5) losses or increased costs of repair or cost of improving or upgrading dwellings or structures due to the operation of any by-law regulating the zoning, demolition, repair or construction of buildings and their related services;

Justice Quigley held that the loss did not result from the operation of a by-law. The increased costs were related to the application of the Building Code, which is categorized as a law and not a by-law.

Allstate therefore had to pay the balance related to increased costs associated with the Building Code upgrades.

Insurers may want to consider the wording of their exclusion clauses as a result.

When to Call a Bad Faith Insurance Claim Lawyer

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When your property has been damaged, it can be difficult to know when you should get an insurance attorney involved. Robert Von Dohlen, Insurance Lawyer, explains the best practice.

Houston Insurance Lawyer’s insight:

Many people have asked when the right time is to get your insurance lawyer involved in the insurance claim process. It’s usually a good practice to let the insurance company attempt to handle the claim first. If your common sense begins to set off certain alarms, like feeling as if they are treating you unfairly, then it may be time to call a lawyer. This post on Storify explains the process I use to determine how best to handle this situation.

https://www.google.com/maps/d/edit?mid=zC3B_Q4aRMRw.kS_6D3toetgo

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Robert Von Dohlen's answer to How do you know when it's time to get an insurance attorney involved in your insurance claim? - Quora

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Houston Insurance Lawyer’s insight:

Clients who have had their property damaged in a flood, hurricane, or fire, are often confused as the whether or not they need to contact an insurance lawyer before submitting their claim. http://www.avvo.com/attorneys/77007-tx-robert-vondohlen-4132071.html

 

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Senator Tom Carper is no friend of working people

Senator Tom Carper (D-DE) has once again introduced legislation to "reform" the Post Office by blowing it up. While this is presented as fixing problems, what it really does is radically destroy the working wages that USPS employees depend upon to support their families. In addition, this legislation once again contains stealth provisions that will radically change FECA benefits for ALL federal employees not just Postal Employees. It must be very difficult to keep your billionaire friends happy without showing them that you will make life harder for working people.

FSCO Prepared to Introduce New Minor Injury Protocols

Why is FSCO releasing new treatment protocols?

In the Superintendent’s report on the Five Year Review released in 2009, a recommendation was made to develop a treatment protocol for minor injuries that reflects current scientific and medical literature.  This recommendation was accepted by the government and confirmed in the 2012 Ontario Budget, which acknowledged that newer scientific and evidence-based approaches can be applied to the treatment of minor injuries resulting from automobile accidents.

How were the new treatment protocols developed?

In 2012, Dr. Pierre Côté, Associate Professor, Faculty of Health Sciences, University of Ontario Institute of Technology, was awarded a consulting contract to develop the Minor Injury Treatment Protocol (MITP) after an open competitive Request For Proposal process.

The Ontario Protocolfor Traffic Injury Management Collaboration includes a multidisciplinary team of expert clinicians (from medical, dental, physiotherapy, chiropractic, psychological, occupational therapy and nursing disciplines), academics and scientists (epidemiologists, clinical epidemiologists and health economists), a patient liaison, a consumer advocate, a retired judge and automobile insurance industry experts.  I played a small role on the project team.

Over the 2-year course of the project, the project team drew upon three sources of information concerning traffic injury rehabilitation.

1.    The team critically reviewed the contents and evidentiary basis of published clinical practice guidelines for the management of traffic injuries.

2.    They carried out an exhaustive search followed by a rigorous methodological evaluation of the current scientific literature concerning the management of traffic injuries published in peer-reviewed journals in the English language. They screened 234,995 abstracts and conducted in depth reviews of 597 scientific papers. This effort was summarized in 43 new systematic reviews of the literature.

3.    They also conducted a new study in which they gathered and carefully considered the narratives of Ontarians who have sustained injuries in traffic collisions and received health care.

The Final Report of the Minor Injury Treatment Protocol Project, titled "Enabling Recovery from Common Traffic Injuries: A Focus on the InjuredPerson" (Final Report) was delivered to FSCO at the end of December 2014

What does the Final Report recommend?

The Final Report recommends a new classification of traffic injuries. The natural history of the initial injury is the basis for classification. A Type I injury is likely to recover within days to a few months of the collision; but during the period of recovery the patient may benefit from education, advice, reassurance and time-limited evidence-based clinical care. Type I injuries are the focus of this report. A Type II injury is not likely to undergo spontaneous recovery, and the injured person may require medical, surgical and/or psychiatric/psychological care. Type III injuries are a subset of Type II injuries, that involve permanent catastrophic impairment or disability. The care for Type II and Type III injuries is not covered in this report.

Persons with Type I injuries should be educated and reassured from the outset that their own inherent healing capacities are likely to lead to a substantial recovery. They should also be informed that only a discrete set of treatments show evidence of any benefit; and that the same evidence shows that benefit is largely on the basis of pain alleviation. Healthcare professionals need to listen to the patient’s concerns and emphasize measures to assist them to cope, recognize and avoid complications.

The MITP includes clinical prediction rules to screen for patients who may be at higher risk for developing chronic pain and disability. In addition, it focuses on treatment outcomes, and provides health care providers with numerous milestones to measure progress.

Interventions for Type I injuries should only be provided in accordance with published evidence for effectiveness, including parameters of dosage, duration, and frequency; and within the most appropriate phase. The emphasis during the early phase (0-3 months) should be on education, advice, reassurance, activity and encouragement. Health care professionals should be reassured and encouraged to consider watchful waiting and clinical monitoring as evidence-based therapeutic options during the acute phase. For injured persons requiring therapy, time-limited and evidence-based intervention(s) should be implemented on a shared decision-making basis, an approach that equally applies to patients in the persistent phase (4-6 months).

Sixteen care pathways have been developed to cover the clinical management of:

·         Neck pain and associated disorders

·         Soft tissue disorders of the upper extremities

·         Temporomandibular disorders

·         Mild traumatic brain injuries

·         Low back pain

What’s next?

FSCO had been conducting a consultation process with stakeholders.  Before any final guidelines can be implemented, the government will need to make changes to the Statutory Accident Benefits Schedule. 

The complexity of the proposed changes will require a substantial educational initiative.  Clinicians and insurance company claims staff will need to be educated and trained on the recommended care pathways.  In some cases there may be resistance.  In addition, it is advisable that a public education campaign be undertaken to educate the general public on the proper management of soft tissue injuries.  It is not clear who would fund such a significant education campaign.