AMICUS PROJECT GROWING
The purpose of UP's Amicus Project is to provide judges with a balanced perspective when they review cases involving insurance questions. Amicus briefs are the vehicle through which interested parties other than the parties in a case make points for reviewing judges to consider. Judicial decisions define insurance consumers' rights and insurance companies' obligations, so they are critically important and have long-lasting impact.
Insurers and their trade associations routinely deluge courts with briefs arguing their views. In the majority of cases, judges get no briefs at all that advance the perspective of insureds/insurance consumers. Predictably, the results often favor the insurance industry. UP is striving to change this imbalance through our Amicus Project.
We are increasingly serving as the voice for policyholders in cases all over the country where the rights of insureds are at stake. Unlike insurance companies, however, we do not have unlimited resources to pay attorneys to submit our amicus briefs. We need your help. UP's Amicus Project is growing because of the generosity of a very small number of attorneys who are providing legal services free of charge. We need your help. We need to expand our base of pro bono counsel, and secure donations to cover our expenses. All policyholders benefit from this Project. All policyholders should support this Project.
The following is a partial listing of cases in which UP has recently submitted Amicus Curaie briefs. UP thanks Arizona attorney Cal Thur of Thur & O'Sullivan for his recent support and generosity in representing UP as amicus on a pro bono basis in an important case described below. UP also thanks California attorney William Ford of the Ford Law Firm for agreeing to represent UP pro bono as amicus in Hanstad v. Truck Ins. Exchange. UP continues to rely on the extreme generosity of Eugene Anderson and his colleagues at Anderson, Kill & Olick in representing UP pro bono in a range of important cases throughout the United States.
CALIFORNIA
Dart Industries v. Commercial Union Ins. Co.
This case affects the rights of insureds including Holocaust victims to recover insurance benefits. Such claimants often do not have copies of original policies, but can offer "secondary evidence" of lost documents to prove the existence of the policies themselves. A Court of Appeal decision in Dart Industries obliterated a longstanding rule that secondary evidence suffices to prove the provisions of a lost document.
United Policyholders submitted a formal request to the California Supreme Court last spring requesting that it grant review of the Court of Appeal decision on several grounds. The Court granted review, and through the hard work of John MacDonald and Eugene Anderson of Anderson, Kill & Olick, UP recently submitted a brief on the merits.
Kazi v. State Farm
This case affects policyholders' rights to be defended by insurers against lawsuits involving alleged interference with an easement right. The issues include the definitions of "property damage" and "tangible property", and the "owned property" exclusion, and policy construction. Oral argument before the California Supreme Court was held on December 5, 2000. UP's amicus brief was prepared pro bono by John MacDonald of Anderson, Kill & Olick.
ARIZONA
Haisch v. Allstate
This case involves Allstate's practice of selling Med Pay coverage to consumers without disclosing that if the consumer is insured by an HMO, the Med Pay coverage is essentially worthless. A Court of Appeal decision ignored and directly contradicted controlling legal precedent imposing a duty of disclosure on insurance companies when selling, marketing, or interpreting insurance policies. It held that Allstate could simply keep the windfall premiums it is collecting by selling illusory Med-Pay coverage to HMO insureds. UP amicus curaie brief to the Arizona Supreme Court was prepared pro bono by Cal Thur of Thur & O'Sullivan.
NEW YORK
Security Mutual Life Insurance Company of New York v. Christopher Dipasquale
This case involves the improper denial of an insured's disability claim. The larger issues include the fact that New York State laws are among the weakest in the nation when it comes to protecting insurance consumers. New York State does not recognize "bad faith" by insurance companies, which makes it extremely hard for consumers to secure legal representation and pursue their rights. UP submitted its amicus brief in support of the insured who has no lawyer. Our brief was prepared pro bono by Eugene Anderson of Anderson, Kill & Olick.
If you know of a case on appeal involving important insurance principles where policyholder amicus support is needed, contact UP or Eugene Anderson, Amicus Project Chair, at (212) 278-1000.
While most UP amicus briefs are drafted pro bono, we need funding to ensure that we can participate in any proceeding where we are needed.
Donations to support UP’s Amicus Project should be sent to:
PMB 262
110 Pacific Avenue
San Francisco, CA 94111
UP Meets with New CA Ins. Commissioner
UP Executive Director Amy Bach met this fall with California Insurance Commissioner Harry Low to discuss a range of issues. Specific topics included improving the CDI's complaint handling operation and strengthening claim settlement regulations. Low outlined the many challenges he faces and Bach offered UP's input and assistance. As a follow up to the meeting, UP submitted proposed improvements to the Fair Claim Settlement Regulations. The current regulations can be viewed on the Department's website at www.insurance.ca.gov/LGL/Fairregs.htm.
Bach encouraged Low and CDI Consumer Services Deputy Keith Newman to return Market Conduct Exam expert Leone Tiffany to a position in the Market Conduct Bureau where she can resume her important work. She also commended the department's decision to end Cindy Ossias' suspension and restore her very important role as a Compliance Attorney. (See "Quackenbush Update" for more about Ossias).
New Option for Buying EQ Insurance
By Paul Coupin, ISU Coupin Insurance Agency, Oakland
Effective December 1, 2000, Arrowhead General Insurance Agency expanded its specialty product lines to include a Residential Earthquake program.
The carrier for the program is ACE American Insurance Company, an A.M. Best "A" rated, admitted carrier. Three products are offered by Arrowhead: A Standard Policy, a Comprehensive policy and a Condominium policy.
The rates are competitive with the two other major stand-alone earthquake programs on the market, Pacific Select and GeoVera, but Arrowhead has one important difference. They offer a 10% deductible in most areas of California. Pacific Select, GeoVera, and most all other carriers primarily offer a 15% deductible in California.
For more information about this program, call (510) 654-4491 or send an email to: pcoupin@isucoupin.com, and be sure to identify yourself as a member of United Policyholders.
PLEASE NOTE: United Policyholders neither sells nor profits from the sale of insurance. The information provided in this newsletter is a public service to our readers. We do not warrant the quality of any product or vendor identified in this newsletter.
FOCUS ON NEW YORK
Faulting Proposed Changes to NY No-Fault Rules
In response to a purported increase of fraudulent auto accident claims, the New York Department of Insurance announced a proposal to shorten the time frame in which consumers can report accidents and injuries. Under the proposal, the deadline for reporting an accident would be reduced from 90 to 30 days; "proof of medical" claims would be reduced from 180 to 45 days.
On behalf of a number of medical professional organizations and consumer groups, including United Policyholders, Eugene Anderson of Anderson Kill & Olick submitted a request to delay implementation of the new regulations until an in-depth analysis of consumer, provider, and insurance company fraudulent practices can be completed.
A consumer who misses the current or proposed deadlines generally loses his or her insurance benefits. While the regulations do allow that an insurance carrier can consider if the claimant has a "clear and reasonable justification" for missing the deadlines, there is no standard definition of "reasonable." Each company will create its own definition, leading to disputes and confusion.
In 1999, the Insurance Department Frauds Bureau created a special No-Fault Unit to focus on the problem of staged accidents, fraudulent provider billing, and "medical mills. Anderson argues "Give this enforcement program a chance to demonstrate its long-term impact on the problem before consumer rights are curtailed".
Anderson also points out that the Department should investigate insurance company fraud in the use of "IMEs" to deny claims. IMEs are so-called "independent" medical exams that insurance companies routinely conduct to challenge policyholder claims. They are generally conducted by practitioners selected and paid by the insurance company because they are known to minimize and/or disallow claims.
The fundamental principle upon which No-Fault Law is based is the imperative to deliver prompt medical care to people who are injured in an auto accident. Anderson cautions that "Any new plan to address fraud should first exhaust all available opportunities to target the guilty before considering placing constraints on the innocent".
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The Powers That Be in New York |
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| Assembly Insurance Committee Chair Honorable Peter Grannis (518) 455-5676 grannis@assembly.state.ny.us |
Senate Insurance Committee Chair Honorable James Seward (518) 455-3131 seward@senate.state.ny.us |
Merger to Create Giant HMO Lobby–CONSUMERS BEWARE!
According to www.insure.com, the two leading HMO trade associations are joining forces to create a single powerhouse lobbying force in Washington. Insure.com reports that the Health Insurance Association of America, (HIAA) and the American Association of Health Plans, (AAHP), have signed a preliminary merger agreement, and that current HIAA president Chip Kahn may become the next chief of the Health Care Financing Administration, (HCFA), under a George Bush administration.
Both organizations have worked hard to defeat the Patients Bill of Rights and consistently kill legislation to protect consumers against profit-driven claims decisions by HMOs.
(See "HMO Trauma: When Denied Treatment, Defend Yourself" in the Summer 2000 issue of What's UP, and www.makingakilling.org, for more information).
Quackenbush Scandal Update
Law enforcement investigations of former California Insurance Commissioner Chuck Quackenbush remain in progress. Federal and State law enforcement agencies are examining a wide range of documents pertaining to alleged improprieties by Quackenbush and staff members George Grays and William Palmer. Quackenbush moved with his family to Hawaii several months ago.
Whistleblower Cindy Ossias was reinstated by the CDI after a suspension and continues to serve as a Senior Staff Attorney. However, since her reinstatement she has not been assigned to claims-related matters. Although she is an expert on claims handling laws and regulations and has extensive experience in counseling disaster victims on insurance problems, Ossias was not among those sent by the department to assist Napa earthquake victims this fall.
Ossias was an invaluable resource to victims of the Oakland/Berkeley firestorm and the Northridge earthquake. A State Bar investigation of potential ethical violations in connection with Ossias' release of documents evidencing wrongdoing by Quackenbush has been closed. The State Bar found that "Ms. Ossias did not engage in conduct which warrants disciplinary prosecution." Ossias has received numerous commendations and honors for her courageous actions, and has been profiled in the California Lawyer, the San Francisco Chronicle, and other publications.
Insurers’ Effort to Deny Relief to Northridge Victims Rebuffed by CA Supreme Court
On November 29, 2000, the California Supreme Court rejected a petition by three insurance industry trade associations and Century National Insurance Company to block SB 1899, the new law that gives Northridge earthquake victims a one year window in which to assert legal claims. This is certain not to be the end of insurers' legal challenges, but it is a promising start for consumers. UP supported SB 1899 and wrote to Governor Davis urging him to sign it into law.
Information about widespread claims handling violations by insurers after Northridge was revealed in California Department of Insurance Market Conduct Exam reports released publicly by State Senator Martha Escutia last spring, (thanks to whistleblower Cindy Ossias). These revelations led State Senator John Burton to sponsor SB1899 that gives Northridge victims a one-year window starting January 1, 2001 to assert legal claims.
After learning about the content of the CDI reports, many Northridge victims hired construction professionals to re-inspect their homes and learned they were misled by insurance company adjusters about quake damage and insurance coverage. Under the new law, these homeowners will not be "time-barred" from pursuing their full rights under their quake policies and California law, provided they meet the requirements of the statute and file suit within the next year.
LIEFF, CABRASER ET AL PROVIDE GRANT FOR UP WEBSITE
Thanks to a grant from Lieff, Cabraser, Heimann, and Bernstein, LLP , UP's website is being constructed and should be in operation by early 2001.
Lieff Cabraser is a national law firm with offices in San Francisco, California, New York, New York, Boston, Massachusetts, and Nashville, Tennessee representing plaintiffs in federal and state courts across America in cases involving dangerous or defective products, consumer fraud, unlawful employment practices, environmental torts, securities and investment fraud, and antitrust violations.
IS YOUR HOME OFFICE COVERED?
By Shannon Haworth, Independent Insurance Agent, Martinez, CA.
More and more people are choosing to set up a home office. Whether it is to be used as your main business location or just to telecommute, the traditional homeowners’ policy was not designed to cover this type of exposure. Standard homeowner’s policies only include $2500 in coverage for business personal property, and exclude liability coverage for business pursuits. If you have a home office, make sure you know what limits your carrier places on business property, especially if your employer has loaned you a computer or other equipment. Property of others is often not covered or restricted even further than business property owned by you.
If you need more coverage than the limited amount included in your policy, many carriers have add-on coverage that can increase the amount of coverage for contents and add liability coverage for a home office. The cost of this "add on" can be as little as $100 a year depending on the amount and type of coverage you need. Most home offices that are not a primary place of business qualify for this type of coverage.
If your home office is your primary place of business, you may not qualify to add liability coverage to your homeowner’s policy. Many consultants and freelancers who not only work at their own office but also at clients’ can not qualify for coverage under their homeowners policy. Another option for home based businesses is to write a Business Owners Policy or BOP with a carrier such as Hartford. This type of policy can offer broader coverage and higher liability limits than the traditional homeowners’ policy. While this type of policy is slightly more expensive, starting at around $600 a year, it is available for almost any type of business.
Review your policy and contact your agent to make certain that you have the coverage you need.
Shannon Haworth is an independent insurance agent with Larson-Clark-Darnell-Haworth Insurance Associates in Martinez, CA. Shannon has volunteered her time over the past two years to provide invaluable technical assistance to UP.
PILLSBURY & LEVINSON DIRECT SETTLEMENT FUNDS TO UP
The San Francisco firm of Pillsbury & Levinson recently secured court approval for settlement funds from a class action suit to be directed to UP. Pillsbury & Levinson specializes in representing individuals and businesses in insurance disputes. Partner Arnie Levinson serves as UP's Legislative Advisor and worked closely with Oakland/Berkeley firestorm survivors to secure passage of the Homeowners Bill of Rights in 1993.
UP RECEIVES PIC GRANT
UP was among the organizations selected to receive a 2000 PIC (Public Interest Committe) grant from the Consumer Attorneys of California, ("CAOC"). CAOC does outstanding work defending the interests of consumers against the powerful and numerous insurance industry lobbyists in Sacramento, and we greatly appreciate their support and hard work.
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The Powers That Be in Sacramento |
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| Assembly Insurance Committee Chair Honorable Thomas Calderon (916) 319-2086 thomas.calderon@assem.ca.gov |
Senate Insurance Committee Chair Honorable Jackie Speier (916) 319-2086 senator.speier@sen.ca.gov |
SAFECO Drops 600 Policyholders in East Bay Hills
by Shirley Roberson, UP staff
"What’s UP" reader Charlie Boije of Oakland alerted us that SAFECO Insurance Company is non-renewing policies on homes in the East Bay hills, the site of a devastating 1991 Firestorm.
We researched the issue and offer the following information:
SAFECO insures 9,000 homes in the seven-county region and has scheduled nearly 600 for non-renewal. The company states that the reduction of concentration of policies in the area has been planned for a long time. They contend that they waited to implement this reduction plan until a sufficient number of competitors were available to offer their customers replacement policies.
For those people who are being dropped, however, getting new coverage is proving difficult and nerve-wracking. Elaine Savage of Berkeley moved her policy to SAFECO after the Firestorm because she felt they were fairer to their clients. Now dropped, she is struggling to find an equivalent policy.
UP contacted several independent agents in the East Bay to get their perspective: Agent Shannon Haworth reports that Allstate seems to be interested in expanding their market share and are writing new policies.
Agent Jim Cantwell recommends Lloyds of London, which offers a homeowner's policy with extended replacement coverage. He warns, however, that their policies may cost 50-100% more than your old policy. He also identifies CNA, Kemper, Allied, Fireman's Fund, Encompass Insurance, and Hartford as options.
According to agent Paul Coupin, a company called "Diamond States" has accepted some high value homes in the area. Coupin suggests Danielson National Insurance and Alliance United as other options.
Since the first of SAFECO's non-renewals were effective in December, we anticipate that many more of you will be affected and encourage you to contact UP to share your experience.
Jim Cantwell, Paul Coupin and Shannon Haworth are independent insurance agents in Oakland, California. UP thanks them all for their input.
CALIFORNIA EARTHQUAKE AUTHORITY TO BE AUDITED
- Thanks to State Senator Martha Escutia
It has now been a year and a half since my family applied for a free earthquake safety home inspection from the California Earthquake Authority. (See "Long Wait for Free CEA Seismic Inspections" in "What's UP", Summer 2000). We're still waiting.
State Senator Martha Escutia, (Chair, Senate Judiciary Committee and Subcommittee on Bad Faith Liability and Consumer Rights), wants to know why. By law, the CEA is supposed to be spending a specific portion of its premiums collected to help consumers retrofit their homes and minimize the risk of earthquake damage. This is because preventing quake damage may well be more cost-effective than buying insurance and paying for repairs.
Senator Escutia requested earlier this year that the Joint Legislative Audit Committee direct the State Auditor to audit the CEA's performance on two fronts:
- Is the CEA following its legislative mandate to use a specified portion of premiums to assist consumers in seismically retrofitting their homes?
- Is the CEA spending too much to buy "reinsurance" and thereby unduly depleting its ability to pay claims?
Senator Escutia's request was granted and the results of the audit should be available soon.
UP SURVEY FINDS CEA POLICIES USELESS IN NAPA
A UP survey of all Napa homeowners whose homes were severely damaged or deemed unsafe after the September 2000 quake yielded few surprises. According to the completed survey forms, very few homeowners had quake insurance, and of those who did, no one received insurance benefits.
Here are some quotes from the respondents:
"We would have wanted our $43,000 deductible to be lower" (CEA policyholder).
"Paid zero from insurance. FEMA paid chimney removal, stucco repair and interior dry wall repair" (CEA policyholder)
These results were consistent with the CEA's shocking report in November 2000 that it received a total of 137 claims in Napa and expected to pay less than $100,000 on all 137 combined. (See "UP Aids Quake Victims" below). UP thanks all those who returned completed survey forms.
Lessons Learned–Be Prepared!
On a hot windy day this past October, another fire erupted in the Oakland hills, exactly nine years after the catastrophic firestorm that destroyed over 3,000 homes and took 25 lives. No homes or lives were lost in this recent fire which was contained in about 10 acres of open land by firefighters, but it was a poignant reminder to be prepared.
Whether it's the danger of fire, earthquake, flood, hurricanes, slides, do what's feasible to protect your property and possessions. Inventory your possessions, update the inventory periodically and keep it along with receipts in a safe place away from your home. Being prepared is also knowing what is most important to grab if you have little time to get out of your home. Thinking ahead and taking action is the key. Those who survived the 1991 firestorm know how difficult it can be in a time of crisis to prioritize clearly about what to take. They also know how agonizing it was to prepare personal property inventories after the fact.
Lafayette Independent Insurance Agent David Shaffer sends his clients a disposable camera and a form for inventorying their possessions. This is an excellent way to save yourself head and heartaches reconstructing lost or damaged property.
Only you know what your most important possessions are, so think through in advance what and where they are located. "Lina", who lives across the street from the recent fire area, shared her priorities with UP: Her two children and two boxes under the master bed containing irreplaceable items with sentimental value. Give some thought to your priorities.
UP is preparing a tip sheet on being prepared and we want your input. Please write to us at UP, PMB 262, 110 Pacific Ave., San Francisco, CA. 94111 or call (510) 763-9740.
UP Aids Napa Quake Victims–Most Were Uninsured
The 5.0 September 3, 2000 Napa quake was the first real test of how a California Earthquake policy would work in real life, and the results were very disappointing. UP contacted thousands of quake victims to offer information and assistance and to assess the CEA in action. We learned that only 2-10% of those affected had earthquake insurance, and of that small number, most recovered no insurance benefits anyway because they had CEA policies with high deductibles. So, victims who visited the county's disaster assistance center got far more benefit from UP's advice on buying earthquake insurance than our claim tip sheets. Very few people had claims to settle, let alone settle fairly.
UP Executive Director Amy Bach testified at a November 2, 2000 public hearing in Napa run by State Senator Jackie Speier, (Chair Senate Insurance Committee). Although the purpose of the meeting was to give community residents a forum for airing their insurance problems, insurance industry lobbyists and spokespeople outnumbered residents. Bach called on the panel, which included Insurance Commissioner Harry Low and a representative of CEA Board Member Phil Angelides, to address the root causes of why so many Napa residents were uninsured and underinsured. UP has long urged consumers how and why to shop for and buy non-CEA quake policies.