CLM National: April 2020
News and verdicts that affect you from across the country
By Phil Gusman
Health care professionals in New York granted immunity from civil lawsuits arising out of COVID-19 care, Georgia’s insurance commissioner issues a directive on COVID-19-related policy cancellations, and, in Florida, courts move toward finding that public adjusters on a contingency fee cannot serve as “disinterested” appraisers.
Courts Rule on Statute Prohibiting Arbitration Agreements
Two recent decisions addressed the application of a Washington statute, RCW 48.18.200, which prohibits arbitration agreements and foreign choice-of-law provisions in policies issued to Washington insureds. First, the 9th Circuit, in Allied Professionals Ins. Co. v. Anglesey, held that the Washington statute did not prohibit an arbitration clause in an insurance policy issued to a Washington insured by a risk-retention group chartered in Arizona. The court explained that the arbitration provision was enforceable because the Washington statute was preempted by the Liability Risk Retention Act of 1986, 15 U.S.C. § 3901 et seq. Second, a Washington federal district court held in Washington Cities Ins. Auth. v. Ironshore Indem. Co. that the Washington statute voided arbitration and New York choice-of-law provisions in a reinsurance contract issued to a Washington risk pool. In reaching this result, the court rejected the contention that reinsurance was not insurance subject to the statute.—From CLM Member Geoff Bedell
Cellphone Use Alone Insufficient for Punitive Damages
In Manning v. Barber, a trial court sustained the defendant’s preliminary objections and struck the plaintiff’s punitive damages claim, which was based on the sole allegation that the defendant had acted recklessly by looking at her phone and/or texting while driving. The court determined that Pennsylvania law requires “some other indicia of recklessness” besides a plaintiff’s allegation of a defendant’s cellphone usage to support a punitive damages claim. Notably, this ruling acknowledged that there is a budding policy argument that texting while driving per se constitutes recklessness. Indeed, there is a growing trend nationally to move towards a framework where punitive damage claims can withstand preliminary objections and motions for summary judgment based upon mere allegations of distracted driving caused by cellphone use. The question going forward is for how long Pennsylvania’s “other indicia of recklessness” will remain a prerequisite to sustain punitive damage claims in distracted-driving cases.—From Northeast Ohio Chapter President Michael C. Brink
Tornado Property Damage Expected to Exceed $1 Billion
Total damage to property from severe thunderstorms and deadly tornadoes that struck Nashville on March 3 is expected to exceed $1 billion, according to CoreLogic. CoreLogic says its Tornado Path Map estimates that the storms affected approximately 250 square miles, in a 50-mile-long band that extended well beyond the Nashville metro area. The Associated Press reports that the tornadoes killed 20 people and destroyed over 140 buildings. Artemis reports that insurance and possibly reinsurance losses could “easily extend” into the hundreds of millions of dollars based on early damage assessments.—From Managing Editor Phil Gusman
Are Public Adjusters “Disinterested” Appraisers?
Florida appellate courts are moving toward a consensus that public adjusters working on a contingency fee cannot serve as “disinterested” appraisers. Analyzing State Farm’s appraisal language, the 5th District joined the 4th District in holding that public adjusters do not qualify as “disinterested” appraisers if they are the insured’s agent with a pecuniary interest. The 5th District cases are State Farm v. Thompson; State Farm Fla. v. Cadet; and State Farm Fla. v. Crispin. The 4th District case is State Farm v. Valenti. These decisions may influence the 3rd District to recede from prior case law allowing public adjusters to serve as disinterested appraisers, an issue the court is currently considering rehearing in State Farm v. Sanders.—From CLM Member Kimberly Jones
Commissioner Issues Policy-Cancellation COVID-19 Directive
Insurance Commissioner John F. King issued a directive instructing property and casualty insurers not to cancel any commercial policies for non-payment for the next 60 days. (He specifically mentioned policies dealing with business interruption or business income coverage.) King also called on health insurers to refrain from cancelling policies for nonpayment “until further notice.” The directive is designed to protect consumers and businesses negatively impacted by COVID-19.
“[This] directive ensures that no one in Georgia loses critical insurance coverage for non-payment due to these circumstances beyond their control,” says King. The directive also halts all in-person, onsite exams, audits, and licensing requirements; and suspends all non-federal filing deadlines and applicable late-filing fees until business operations return to normal. King also said he will offer immediate and expedited review for any insurance products that are critical to COVID-19 and its effects.—From Managing Editor Phil Gusman
Executive Order Grants Immunity for COVID-19 Care
A March 24 executive order from Gov. Andrew Cuomo grants health care professionals qualified immunity from civil lawsuits for any injury or death alleged to have been sustained directly as a result of an act or omission in the course of providing medical services pursuant to the state’s response to the COVID-19 outbreak. The order directs that actions against health care professionals providing medical services in response to the outbreak can only be maintained if gross negligence is established, which is a higher standard than traditional malpractice and general negligence. The executive order grants immunity to all physicians, physician assistants, specialist assistants, nurse practitioners, licensed registered nurses, and licensed practical nurses, and modifies § 6527(2); § 6545 and § 6909(1) of New York’s Education Law.—From CLM Members Sara Aksu and Juliann O’Meara