Insurance Claims and Bad Faith Law Blog

Planners With Fiduciary Duties: A Definition Given.

     A fiduciary has recently been described as someone who has to work in their client's best interests.  "That means they have to put your interests ahead of theirs at all times by providing advice on investments that will serve you -- not them -- best."  Alina Tugend, "Pick a Planner Who Can Spell 'Fiduciary'" p. B5, col. 1 (New York Times Nat'l Ed., Saturday, April 26, 2008).

     That is one of the better definitions of "fiduciary" in any situation, not just in the stock market or in the business of recommending investments.

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What Role do Conflicting Contractual Duties Play in Establishing Fiduciary Relationships?

 Employers hire Healthcare Cost Managers, companies which reportedly contract to help employers manage their Health Insurance programs "and get medicines at the best available prices."   Milt Freudenheim, "The Middleman's Markup/Benefits Managers Earn Profits With Exclusive Rights on Specialty Drugs" p.B1, col. 2 (New York Times Nat'l Ed., Sat., April 19, 2008).

    Some of these Drug Benefit Managers also contract with some Drug Manufacturers.  Under those separate contracts, the Healthcare Cost Managers assume the duties of exclusively distributing so-called 'specialty' drugs made by the Manufacturers.  Specialty drugs are not called that just because they are novel, but because they have no generic subsitutes.  An example given in the report is an exclusive contract to distribute an anti-seizure drug prescribed for an epileptic child.
   
    If these separate contracts present conflicting duties for the same corporation, which attempts to assume the role of an employer's Manager of Drug Benefits and, at the same time, to assume the duties of Exclusive Distributor for a Drug Company, which if either of these types of contracts establishes a Fiduciary Relation?

    Absent a Fiduciary Relationship, can there be Fiduciary Duties?

    Finally, what if any benefit is conferred upon the contracting employers who think they are paying good money for someone to manage their drug benefits?

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Attorneys at Issue in Bad Faith Cases.

     The past two years have seen two new cases that have shaken Florida Insurance Law.  Neither case has been cited by other Courts -- yet.  This is the time to tell you about them.

     In Barry v. GEICO General Insurance Co., 938 So. 2d 613, 615-17 (Fla. 4th DCA 2006)(subscription required), an Attorney-Expert Witness testified to opinions that GEICO did not act in Bad Faith when it failed to settle the claim in that case, that the injured claimant "made it clear that she was not intending to settle", and that the actions of the Plaintiff and her Counsel "were inconsistent with a willingness to settle."  Here is the official Opinion released by the Florida Appellate Court.  The quoted summary of the Attorney-Expert's testimony appears on page 3 of the attached; see also pp. 5-7:  Download Barry_v. GEICO General Insurance Co. (Fla. 4th DCA Case No. 4D05.206 Opinion Filed Oct. 4, 2006).pdf.

     The U.S. District Court for the Middle District of Florida has expanded Barry's holding.  The District Court denied Plaintiffs' motions "to exclude evidence, argument, and references regarding the motives or conduct" of the claimants' attorney and the attorney's paralegal.  The Federal Court held in yet another Florida Bad Faith failure-to-settle case "that evidence and argument regarding the motives or conduct" of the claimants' attorney and the attorney's paralegal "is relevant and should not be prohibited."  Mendez v. Unitrin Direct Property & Casualty Insurance Co., 2007 WL 2696795 *3-*4 (M.D. Fla. Opinion Filed Sept. 12, 2007)(subscription required).  Here is the Middle District's official Opinion.  Its quoted holding will be found on pages 5-6 of the attached:  Download Mendez_v. Unitrin Direct Property & Casualty Insurance Co. (M.D. Fla. Case No. 8.06.CV.563, Opinion Filed Sept. 12, 2007).pdf.  The Mendez case has an interesting further history.  The case went to Trial which resulted in a Judgment for the Plaintiffs.  Thereafter, the Court's Online Docket shows that the case was settled.  The Federal lawsuit was then dismissed without prejudice in February, 2008.

     As I wrote at the beginning, Barry and Mendez have not been cited by other Courts as yet.  The only case known to include a cite to Barry is Mendez.  No known Court has cited to Mendez -- yet.

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Fiduciary Breach as Cause of Action Alone.

    American International Group has reportedly sued other people for alleged Breach of Fiduciary Duties.  The seven defendants in the case, filed by A.I.G. in the New York State Supreme Court, are all former A.I.G. Officers and Directors including A.I.G.'s former CEO, Maurice R. Greenberg.

    In a twist, it appears that A.I.G. has alleged claims or causes of action only for alleged Breaches of Fiduciary Duties as stand-alone claims, without also alleging any other causes of action of any kind or nature.  "New A.I.G. Jab at Ex-Chief Focuses on Fiduciary Duties" p. C4, col. 4 (Reuters Report published in New York Times Nat'l Ed., Friday, March 28, 2008).

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