Around the Nation: November 2014

State news and updates from CLM chapters, reps, and committees.

By Bevrlee J. Lips

CALIFORNIA: Statements in Mediation Used Against Insured in Coverage Dispute

California claims professionals have been debating whether statements of an insured made during mediation can be used as evidence in a coverage dispute. Presently, there is no California legal authority dealing specifically with the privilege of statements made by the insured in mediation. However, California Evidence Code Section 1119 states that no evidence of anything said during mediation is admissible or subject to discovery in any civil action. In Benesch v. Green, the U.S. District Court in Northern California addressed the admissibility of private conversations that transpire between attorney and client during mediation and held that those conversations remain privileged even in a subsequent malpractice dispute. Hence, it stands to reason that if these statements are inadmissible in subsequent disputes, private statements between insured and insurer in mediation are inadmissible in a subsequent coverage dispute, as well. However, there are two cases similar to Benesch that are up for review by the California Supreme Court, which means that the protection afforded by Benesch may no longer exist if the court finds applicable exceptions to the mediation privilege.—From Orange County Chapter Member Robert A. von Esch IV, Esq.

DELAWARE: Medicare as a Collateral Source

Delaware follows the collateral source rule, which provides that a tortfeasor may not benefit from any money the injured party may receive from sources other than the tortfeasor. An injured party is permitted to recover all reasonable medical expenses proximately caused by the tortfeasor. However, if the collateral source is Medicare, Delaware has conflicting opinions. In Stayton v. Delaware Health Corp., the court ruled that the plaintiff was limited to actual amounts paid by Medicare because it is mandatory public insurance funded by taxpayers, and to allow double recovery runs counter to reducing medical expenses. The court also reasoned that the collateral source rule does not apply to write-offs of expenses that are never paid.

However, in Sweiger v. Delaware Park LLC, the court denied the defendant’s motion in limine to preclude medical expenses written off and not paid by Medicare. The court held that the collateral source rule is firmly embedded in Delaware law and the plaintiff is entitled to recover all reasonable medical expenses.—From CLM Member Paul A. Bradley

MASSACHUSETTS: Tesla Prevails in Direct Sales Challenge

The Massachusetts State Automobile Dealers Association (MSADA) sued Tesla Motors, alleging that its Natick Mall gallery violates M.G.L. c. 93B. The statute regulates the manufacturer-dealer relationship and prohibits manufacturers from selling directly to consumers. In affirming the dismissal of the MSADA’s claims, the Supreme Judicial Court held that the statute did not apply to Tesla because the legislative purpose of the statute was to protect dealers from unfair acts and practices directed at them by their own brand manufacturers. The statute, however, did not confer standing on a motor vehicle dealer to maintain an action against a manufacturer with which the dealer was not affiliated.—From CLM Member Michelle Byers

NEW JERSEY: No Criminal Background Checks During Hiring Process

New Jersey recently joined a growing number of states by enacting its own version of the “Ban the Box” campaign. Signed into law by Governor Chris Christie, the legislation known as the Opportunity to Compete Act will place restrictions on an employer’s ability to inquire about a job applicant’s criminal history. The act, which becomes effective on March 1, 2015, is designed to reduce recidivism rates by providing individuals who have been previously arrested or convicted of a crime with new opportunities for employment.

The act will apply to employers with 15 or more employees that conduct business, employ people, or accept applications for employment within New Jersey. Under the law, employers will be prohibited from posting job advertisements that exclude individuals who have been arrested or convicted. Additionally, employers no longer can require applicants to disclose their criminal histories during the initial application process, which includes not only the boilerplate paper application itself, but also the first interview. Only after completion of the first interview can an employer run a criminal background check on an applicant. The act does not apply to law enforcement, corrections, homeland security, the judiciary, or to other positions where the law requires or permits inquiry into an applicant’s criminal history.—From CLM North New Jersey Chapter Member Stefani C. Schwartz, Esq.

NEW YORK: Service by Facebook Earns Thumbs Up

Recently, a state family court authorized a new substituted service of process when it became impractical for a party to serve process under CPLR 308(1), (2), and (4). In Noel B. v. Anna Maria A., the father could not locate the mother via phone or an address, but he knew the mother had an active Facebook page because of the recent “likes” he saw in the account. The court permitted substituted process under CPLR 308(5); a digital copy of the summons and petition were to be sent to the mother via her Facebook account and mailed to her last known address.—From Past New York State Chair Howard S. Shafer

OREGON: ADHD Does Not Qualify Under ADA

In Weaving v. City of Hillsboro, a terminated employee claimed that his attention deficit hyperactivity disorder (ADHD) constituted a disability under the Americans with Disabilities Act (ADA) and filed suit against his former employer. Pursuant to the ADA, a “disability” is a physical or mental impairment that substantially limits one or more major life activities of an individual. The U.S. Court of Appeals, Ninth Circuit, concluded that the employee’s lack of interpersonal skills attributable to his ADHD and his inability to get along with coworkers did not amount to a disability under the ADA.—From CLM Member Jack Levy

TEXAS: Texas Limits Position on Prejudice

In Greene v. Farmers Insurance Exchange, the Texas Supreme Court held that prejudice does not apply to the enforcement of the vacancy condition in a homeowners’ policy. In Texas, prejudice is rooted in the contract law principle that one party is excused from performing under a contract only if the other party commits a material breach. The court held that the vacancy provision effectively extends coverage after an insured vacates the property and cannot be breached by the insured. Greene effectively limits prejudice to provisions that condition performance by the insured, even if the provision does not contribute to the loss.—From CLM Member Chris Gabriel





Bevrlee J. Lips was managing editor of Claims Management magazine (now CLM Magazine) from January 2012 until March 2017.

Top Industry News

Powered by : Claimspages

AM Best