Homeowners Insurers Dodge Chinese Drywall Claims

New York (December 17, 2010) -- A federal judge has dismissed a number of homeowners insurance companies from the multidistrict litigation over allegedly defective Chinese drywall in New Orleans, but attorneys said Friday the decision still left the door open to pursue claims related to commercial policies.

Allstate Insurance Co., State Farm Fire & Casualty Co. and other insurers with homeowners' policies at issue in the litigation had exclusions in their plans that precluded coverage, Judge Eldon.

Protecting Your Credit Score From the Medical Bill Maze

IF there is one place where your health and your finances collide, it is on your credit report. That is something Darryle Watson learned the hard way.

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Mark Graham for The New York Times

Darryle Watson of Willow Park, Tex., was unaware that unpaid medical bills were hurting his credit score until he tried to refinance his mortgage.

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Mr. Watson, 52, an automotive service adviser in Willow Park, Tex., and his wife, A. J., tried last fall to refinance their mortgage. But instead of getting a big break on his monthly house payments, Mr. Watson found out he would have to pay more than $9,000 in closing costs because of the couple’s low credit scores.

Mr. Watson was flabbergasted. Both he and his wife are meticulous about paying their bills on time, he said.

The culprit was four unpaid medical bills that the Watsons say they never knew they owed. The largest was for less than $400; one was for about $15. According to the credit report, the bills had been sent to a collection agency. But Mr. Watson said he had never received a notice from a doctor or a collection agency about any of the bills.

Plans to refinance have gone out the window, as Mr. Watson now spends his time trying to unravel what, if anything, he owes and to whom he owes it.

“The thing that is most annoying is that we do the right thing, pay our bills on time, really try to stay on top of it, and when we have the chance to save a little bit of money, instead of being rewarded, we’re being punished,” Mr. Watson said.

An estimated 14 million Americans are struggling with medical bills that they believe were sent in error to collection agencies, according to the Commonwealth Fund, a nonprofit health care research group. Nearly half of all collection accounts that appear on consumer credit reports are unpaid medical bills, according to a study by the Federal Reserve.

Why the startling numbers? Medical debt differs in significant ways from, say, an auto loan or credit card bill.

For one thing, fees often are incurred when patients, coping with difficult diagnoses or outright emergencies, are least able to track them, and the bills can arrive for months afterward in an irregular blizzard from a variety of sources. Often it’s difficult for patients to know what insurers have paid and what still is owed.

And when medical bills do go unpaid, doctors, hospitals or other medical providers rarely report the debts directly to the big three credit reporting agencies — Experian, TransUnion and Equifax — as most creditors would. Instead, they are quick to sell unpaid bills to collection agencies for pennies on the dollar.

A bill can go to collections even as the patient tries to discuss payment with a provider orinsurance company. If the bills are small, collection companies may not bother trying to track down payment. But they will nonetheless report the unpaid balance to the credit agencies, said John Ulzheimer, president of consumer education at the credit monitoring firm SmartCredit.com and a former executive with credit scoring agency FICO and credit reporting agency Equifax.

Because of privacy laws, it can be difficult to determine from the vague information on your credit report where these unpaid bills originated. What’s more, unpaid bills in collection can be some of the most damaging items on your report.

“Collections are weighted more heavily than other unpaid or late bills,” said Rod Griffin, director of public education at Experian. “They will have a more serious effect on your credit score.” Once these black marks show up, they stay on your credit report for seven years, even if you pay the bill.

Legislation passed by the House of Representatives in September would require that paid medical bills be removed from consumer credit reports after 45 days. “This bill would go a long way toward solving the medical debt, credit report dilemma,” said Mark Rukavina, executive director of the Access Project, a consumer advocacy group in Boston, and co-author of a large study on medical debt.

The likelihood of the bill passing the Senate before the end of the year is slim, Mr. Rukavina added, so consumers shouldn’t count on legislative relief anytime soon. In the meantime, here’s what you can do to help prevent health care bills from ruining your credit.

THE PROVIDERS Doctors, hospitals, labs and other medical providers don’t want to be in the business of extending credit. If they were to report delinquencies directly to the credit reporting agencies, the providers would be subject to a host of rules and regulations that creditors must follow when reporting debts. To avoid those, the providers prefer to rely instead on collection agencies.

It is far easier to resolve a billing problem with the provider than with a collection agency. “Always keep in touch with the billing office of your doctor or other provider during any type of delay,” said Gerri Detweiler, personal finance expert at Credit.com. “You want to convince them not to send the bill to collections.”

You have a good chance of succeeding, because the provider will receive much more in payment if you pay your bill than they will if they turn over the account to a collection agency, Ms. Detweiler added.

If you have worked out a payment plan with a hospital or other provider, be particularly diligent about paying on time or contacting the billing office if you cannot. Hospitals are notorious for sending bills to collection agencies after even just one late payment, Ms. Detweiler said.

THE COLLECTORS If your bill has already gone to collections and you hear from a collection agency, offer to pay the bill promptly if the agency promises to have the bill removed from your credit report.

“The collection agencies want to get paid, so usually this strategy works,” Mr. Rukavina said. “But if you pay first and then ask to have the bill removed, you won’t have any leverage.”

Sometimes, said Ms. Detweiler, the agency may be calling you before they have sent information to the credit reporting agencies. Be sure to ask. If that’s the case, work out a payment with them with the promise that they will not report you.

Anytime you negotiate a payment plan with a doctor or hospital, or if you negotiate to have a bill that has gone to collections taken off your credit report, get the agreement in writing. Should the bill end up in dispute, you will need to be able to show written proof of the agreement.

THE CREDIT REPORT Check your credit report at least once a year. (You can get a free annual copy of your report from all three reporting agencies atannualcreditreport.com.)

If you find unpaid medical bills on your credit report that you don’t believe are correct, write to each of the credit reporting agencies explaining the error and including copies of any documents that prove your point. Credit reporting companies must investigate legitimate complaints. For more details on how to dispute credit report errors, go towww.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm.

If the problem is not resolved, you are by law allowed to submit a statement of dispute or explanation of account telling your side of the story. Here you can explain that the bill was submitted in error, that you are negotiating payment with an insurance company — or whatever the case may be. These statements are limited to 100 words, so you’ll need to be concise and persuasive.

Michigan Health Insurer Seeks Dismissal of U.S. Suit

Blue Cross Blue Shield of Michigan asked a federal judge on Friday to dismiss the Justice Department’s antitrust lawsuit accusing it of driving up prices for patients and other insurers. The Justice Department filed the suit Oct. 18, saying the company’s clauses with health care providers guaranteed that competing health care plans could not obtain better rates and, as a result, discouraged competition. Blue Cross said Friday its antitrust exemption served the public goal of providing health coverage at reasonable cost and was supported by previous Supreme Court decisions. Michigan Blue Cross’s vice president and chief lawyer, Jeffrey Rumley, said the suit failed to recognize that the Michigan Blue Cross plan was enabled by state law to provide health care across the state at reasonable costs. The Justice Department said it would file a response to the motion.

Affordable Vehicle Insurance Estimate – Financial Savings Points

Do you find getting low-priced auto insurance quotation too cumbersome and also time consuming? Are you currently still making calls and spending precious time going to insurance organisations simply to get motor vehicles insurance offers? In line with the development in technology, you really should approach the entire procuring method in another different way. Seriously look into finding competitive motor vehicle insurance offer from the web.

Just before getting cost-effective vehicle insurance premium on the web, you must be aware exactly what is the motor vehicles insurance protection that is required. Is there some minimum requirement for the types as well as levels of protection required by the region that you are currently living in? If this is the case, this should be clearly communicated to your car insurance organization so that you are going to be buying at least the bare minimum compulsory coverage.

The internet is a good place if you want to initiate your own search for most inexpensive motor vehicle insurance prices. With so many motor vehicles insurance enterprises that market themselves via internet, you will have a sufficient amount of information and even comparisons that you can analyse.

To begin with, you may decide to try a search for the top motor vehicles insurance firms through a widely used internet search engine. Just type in your search criteria and you will get a long listing of motor vehicle insurance providers that can possibly give you reasonably priced motor vehicle insurance offer.

In addition to evaluating vehicles insurance rates furnished directly by insurance organisations, many people also want to look for affordable motor insurance quote from comparison internet sites. These websites are in general independent third party agencies which often supply you the vehicles insurance rates that are available from a range of motor vehicle insurance providers. You can easily make use of many of these comparison niche sites for research, as you can have all of the estimates in one glimpse. You possibly can fairly quickly see which company gives you the least expensive vehicles insurance price.

In case you have a solid driving track record, do emphasize this to the insurance provider as you are looking for online motor vehicle insurance price. You will likely be given an economical vehicle insurance premium, for the reason that solid driving track record is among the greatest methods for getting motor vehicles insurance financial savings.

The other way to get affordable motor vehicles insurance premium would be to select increased deductible. Since increased deductible has a significant bearing on you when there is claims, you might want to think through this choice carefully before making a decision to settle on increased deductible.

Conduct your analysis and comparisons diligently in order to ensure that you are receiving the best deal with the best vehicle insurance enterprises. Plenty of people find it gratifying because they are able to secure lowest priced car insurance quotes that helps save a great amount of dollars and match their particular spending budget.

Financial Pressures on Insurance Vendors and Experts

Outcome oriented investigations plague the insurance adjustment process. Outcome oriented techniques arise in number of forms, from limiting the information sought, writing reports with no more than what is called upon, not informing the policyholder of other areas of possible damage, de-selecting those that write reports which provide too much information and lead to greater coverage, and simply trying to form opinions of loss or damage that are not truthful. Insurance adjusters often try to convince me that they do not retain outcome oriented investigators who look for ways to limit their customers' recoveries, it is amazing to me how much additional loss is usually found with a little more honest work.

Vivian Persand has recently written two posts on this topic, What Role Does an Insurer's "Preferred Contractor Program" Play in a Bad Faith Lawsuit? and What Role Does an Insurer's "Preferred Contractor Program" Play in a Bad Faith Lawsuit? Part II. Slabbed recently noted evidence of the problem in Judge Senter Issues Three Orders in Rigsby Qui Tam Case. Slabbed linked a Memorandum Opinion which contained the following admissions by a State Farm expert engineering firm:

8. WHEREAS Forensic admits that it understood State Farm’s financial interests in having engineering reports submitted by Forensic that attributed the cause of storm damage to flood rather than storm winds;

9. WHEREAS Forensic admits that it believed State Farm would not continue employing Forensic unless Forensic agreed with State Farm’s assessment that the properties where secondary reports were requested were damage by water instead of wind and focused on any possible evidence of flood damage to support that finding;

10. WHEREAS Forensic admits that at State Farm’s request, Forensic sent a second professional engineer to re-evaluate 19 loss sites, and Forensic admits that it changed the conclusions in those 19 reports based on the second engineer’s inspection and after the initial reports were already sent to State Farm;

11. WHEREAS Forensic admits that it was asked not to perform a thorough structural evaluation or cost appraisal of the amount of damage identified at a given site, and Forensic agreed to follow State Farm’s instructions to describe only the predominant cause of damage to a home when attributing that damage to wind or flood;

12. WHEREAS Forensic admits that for certain properties it submitted subsequent reports that did not reference the existence of the initial report and that such a practice allowed State Farm to have the option of either removing and replacing the initial report in its file if it so chose[.]

With this type of claims gamesmanship, policyholders don't stand a chance of receiving the full benefit of the process. I noted that consumer protection laws are paramount to insurance profits derived wrongfully and unethically in Frank Artiles Responds to Post as Florida Insurance Politics Starts to Heat Up -- this is an example of how profits can be derived in a wrongful manner.

The problem is that this type of evidence is difficult to obtain. Nobody is going to advertise or publicly announce that they are coercing this type of behavior or doing it as a result of financial pressure. Nobody wants to admit to themselves that they are participating in an unethical game where they are trying to appear to provide full indemnity, but purposefully using methods to prevent it. Nobody wants to admit to being the "bad guy."

One simple step to help prevent these common activities would be to give policyholders a copy of the insurance company claims file and the entire file of the experts and vendors, including drafts. California currently allows policyholders to obtain the claims file by law before any litigation. Transparency is a wonderful tool if honesty is a significant value.

Supreme Court Denies Petition To Review Ruling In Asbestos Coverage Lawsuit

WASHINGTON, D.C.- (Mealey's) The U.S. Supreme Court on Nov. 30 denied an insurer's petition for certiorari seeking review of the Second Circuit U.S. Court of Appeals' ruling that a 1986 injunction issued in asbestos manufacturer Johns-Manville Corp.'s bankruptcy proceedings does not apply to Chubb Indemnity Insurance Co. because Chubb did not have constitutionally sufficient notice of the injunction (Travelers Indemnity Co., et al. v. Chubb Indemnity Ins. Co., No. 10-244; U.S. Sup.).
Travelers Indemnity Co. and Travelers Casualty and Surety Co. provided 30 years of primary liability coverage to Johns-Manville from 1947 to 1976.  The world's largest manufacturer of asbestos materials filed for bankruptcy in 1982.  The debtor's reorganization plan, which was confirmed in 1986, contains an injunction that permanently enjoins "all persons" from bringing any action against any of the settling insurance companies to "directly or indirectly" collect or recover payment regarding any claim or other asbestos obligation.
U.S. Bankruptcy Judge Burton R. Lifland of the Southern District of New York ruled that the confirmation of Johns-Manville's plan prohibited the direct actions. 
The Second Circuit U.S. Court of Appeals held that the Bankruptcy Court lacked subject matter jurisdiction in 1986 to enjoin direct actions.  The Second Circuit issued the ruling in an appeal of a settlement that three classes of plaintiffs reached with Travelers in 2004, holding that the Bankruptcy Court's authority to clarify prior orders could not be used to enjoin claims over which it had no jurisdiction.
Travelers Indemnity, Travelers Casualty, Travelers Property Casualty Corp. and the Common Law Settlement Counsel filed petitions for writs of certiorari with the Supreme Court appealing the Second Circuit's ruling.  
In a June 18, 2009, opinion, a majority of the Supreme Court declined to decide whether any particular party is bound by the 1986 injunction and instructed the Second Circuit to address Chubb's due process argument and other objections on remand.  Chubb seeks to pursue contribution and indemnity claims against Travelers Indemnity.
On March 22, the Second Circuit found that the 1986 injunction issued in Johns-Manville's bankruptcy proceedings does not apply to Chubb because the insurer did not have constitutionally sufficient notice of the 1986 injunction.
Travelers filed a petition for writ of certiorari in the Supreme Court on Aug. 18. 
The Supreme Court denied the petition.  Justice Sonia Sotomayor did not take part in the decision.

Stanford Judge Refuses to Stay Discovery of Insurer's Requests for Admissions

Pendergast-Holt v. Certain Underwriters at Lloyd's of London, No. H-09-3712 (S. D. Tex. Aug. 11, 2010) see Order.
This seemingly minor order denying the insureds' motion for a protective order barring certain discovery probably marks the begining of the end for Robert Allen Stanford's (and other directors of the doomed Stanford financial entities) quest for D&O insurance coverage for their criminal defense expenses.  You remember Stanford and his fellow directors, who sued Lloyd's in 2009 to restart the flow of insurance proceeds to fund one of the costliest criminal defense trials of the modern age.  (Lloyd's had initially agreed to fund defense costs but stopped after one of the directors, Leornard Davis, copped a plea and told the bizarre tale of Stanford's ponzi operations.  In Lloyd's judgment, Davis's plea triggered an exclusion in the policy by establishing "in fact" deliberate wrongdoing).  The judge presiding over the criminal trial also ruled in the coverage lawsuit that Lloyd's had to continue funding the criminal defense.  On appeal, the 5th Circuit remanded the case back to the lower court for a new determination by a different judge but ordered Lloyd's to continue paying defense costs until the new judge ruled.  I described the peculiar circumstances of the 5th Circuit ruling here.
The new judge understood her instructions from the 5th Circuit as follows: (1) whether excluded conduct "in fact" occurred was something that Lloyd's could not arbitrarily decide on its own; a court must decide; (2) the court overseeing the criminal trial could not also determine the insurance issues; and (3) Lloyd's must continue to advance defense expenses until the court decides whether, and at what point, excluded conduct was judicially established "in fact" (i.e., when Davis pled out, when Stanford et al. admit to wrongdoing, or some other trigger the court decides).  The new judge noted that as of July 30, 2010, Lloyd's had advanced more than $15 million for defense costs (out of potential total limits of $90 million).
Which brings us to this discovery order.  Because the coverage action is a civil lawsuit, Lloyd's gets to ask the other side questions in interrogatories and, more important, gets to ask the directors to admit or deny certain things, like all of Davis' admissions in his plea.  Like many criminal defendants, Stanford et al. are, or will be, standing on their 5th amendment right to remain silent rather than self-incriminate, a right they say answering Lloyd's discovery will violate.  Hence the motion for protective order that they not be required to answer the discovery.
The court denied the motion.  Following the lead of the 5th Circuit, the court noted that the insureds bargained for a D&O policy with an "in fact" trigger for the relevant exclusion.  Also available are so-called "actual adjudication" policies, under which the conduct exclusions do not apply until a fact finder establishes the excluded conduct in the trial itself.  Lloyd's, therefore, is entitled to an "in fact" determination of the conduct "in which all admissible evidence is welcome," said the 5th Circuit.  Also, Lloyd's continues to bleed.

[The insureds] will not be permitted to seek through this suit ... continued payment of defense costs under the Policy, while simultaneouly denying [Lloyd's] discovery that [Lloyd's] seeks in an effort to defend themselves against Plaintiffs' claims and thus liability for those costs.

What about the directors' 5th amendment rights?  The judge acknowleged that other courts have on occasion stayed discovery in a civil action rather than force criminal defendants to choose between their right to remain silent and some advantage in a civil suit.  The difference here is that the insureds filed the coverage lawsuit; the insureds were defendants in the other cases.  Also, Lloyd's is under a continuing injuction to fund the criminal defense to the tune of millions of dollars. 

The plaintiff who retreats under the cloak of the Fifth Amendment cannot hope to gain an unequal advantage against the party he has chosen to sue.  To hold otherwise would, in terms of the customary metaphor, enable plaintiff to use his Fifth Amendment shield as a sword.

With this loss, the Stanford defendants must either find a way to respond to Lloyd's discovery requests that does not establish "in fact" the excluded wrongdoing or go down to swift defeat by summary judgment.  Maybe the directors might hope to raise fact questions in their responses that avoid summary judgment and keep the tap flowing until a jury decides the coverage issues.  But even so, the civil trial is likely to occur on an expedited basis before the criminal trial.