Claims and Bad Faith Law Blog

A Poem of Memories Alive During the Pandemic.

For a special treat during social distancing and the pandemic, here is a poem by Diane Neff. For those who can relate and remember some of the scenes in the poem, it will be a boost. Others can read it too. And for lots of reasons, it should be a boost to them too.

Here now, enjoy.

Disco Fever
by
Diane Neff
©2020 Diane Neff.
When the dancing paused, last call was heard.
Intoxicated? No just buzzing bright
atop the disco floor, what happy sight!
My vision seems unfocused, doubled, blurred,
and yet it feels so right, the beat unslurred.
I blame it on the neon flashing lights.
Who thought to place them in the floor tonight?
Who turned the music up? Can’t hear a word.
The heat’s still rising, no one walks away.
We push ourselves. With artificial knees,
gray hair, bad hips, we’re old, we’re boomers, man.
It’s not the seventies, no more, you say?
But dancing has no “best by” date for me.
Just play the songs, I’ll dance the best I can.

Published here with permission of the poet.

FOLLOWING THE RULES OF PUBLIC ACCESS, REJECTING SECRECY BY DECREE.

In Regional Local U. Nos. 846 & 847 v. Mile High Rodbusters, Inc., No. 1:20-cv-00673-SKC, 2020 WL 1865168 (D. Colo. April 14, 2020) (Crews, USMJ), yet again a U.S. Magistrate Judge confronted yet another motion to seal. This case was brought to enforce a judgment in a previous case. The judgment had been entered in favor of the plaintiffs on their complaints that the defendant employers violated a collective bargaining agreement. The plaintiffs including unions filed a one-paragraph motion to seal their complaint.

    But the result in this case was to allow public access and to refuse the plaintiffs' motion to restrict access to their complaint in this case. The USMJ began by publishing the standards adopted by Local Rule in the U.S. District Court for the District of Colorado where this action was brought.

    This is a procedural rule approved by the district judges and magistrate judges themselves. It may be easier for all judges to begin by following rules which they themselves have written, particularly when it comes to the subject of restricting public access to public documents, i.e., sealing them.

   For whatever reason, the USMJ began by looking at the Local Rule on restricting access in this case:

    Pursuant to Local Rule 7.2, motions to restrict must address the following factors:

(1) identify the document or the proceeding for which restriction is sought;
(2) address the interest to be protected and why such interest outweighs the presumption of public access (stipulations between the parties or stipulated protective orders with regard to discovery, alone, are insufficient to justify restriction);
(3) identify a clearly defined and serious injury that would result if access is not restricted;
(4) explain why no alternative to restriction is practicable or why only restriction will adequately protect the interest in question (e.g., redaction, summarization, restricted access to exhibits or portions of exhibits); and
(5) identify the restriction level sought.

D.C. Colo. Local Civil Rule 7.2(c).

http://www.cod.uscourts.gov/Portals/0/

Documents/LocalRules/

2019_Final_Local_Rules.pdf

  [Local Civil Rule 7.2 is located on pages 18-19 of the hyperlinked pdf on the District of Colorado's website.]

Regional Local Union, 2020 WL 1865168, at *1. Here, the plaintiffs requested in one paragraph that their complaint be sealed from public view. They represented that "some allegations" in their complaint "derived from" documents in their earlier case which was apparently filed in 2013 and in which a protective order had been entered.

    This request just did not comply with Local Civil Rule 7.2 in the eyes of this United States Magistrate Judge. More than that, the USMJ compared this request to the Local Rule and concluded, concisely, that the plaintiffs did not even attempt to satisfy the requirements of the Local Rule.

    As to the Constitutional presumption of public access, the Court again held the plaintiffs to the prevailing standard in such a case as this. In order to seal pleadings and other documents the plaintiffs requesting the seal in this case have to demonstrate "'real and substantial interest'" in depriving the public of access to records "'that inform [the court’s] decision-making process'[.]" Regional Local Union, 2020 WL 1865168, at *2 (emphasis by the Court).

    "This is especially true where, as here, a party wants to restrict access to a document that is at 'the heart of the issues' in the litigation, i.e., the Complaint itself." Regional Local Union, 2020 WL 1865168, at *2.

    The Constitutionally required standard to restrict public access to public documents was not met here.

    To sum up, the procedural requirements for restricting public access were not met here, and more importantly, neither were the Constitutionally required standards met here. Result: Motion Denied.

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

WELLS FARGO WON THE PUNITIVE DAMAGES BATTLE, BUT LOST THE WAR.

In Dollen v. Wells Fargo Bank, N.A., ___ P.3d ___, No. A-1-CA-37194, 2020 WL 1699021 (N.M. Ct. App. April 6, 2020), the New Mexico Court of Appeals considered the standards for assessing punitive damages against Wells Fargo, a mortgage servicer in this case. The suit was also filed against an insurance carrier which had issued the deceased homeowner what the appellate court called a mortgage accidental death insurance policy, but the carrier was out of the suit by the time of this decision.

    The Court of Appeals set out the relevant factors, in pertinent part as follows:

    {19} The Due Process Clause of the Fourteenth Amendment entitles litigants to fair notice of conduct that may be punished by a state’s punitive damages system, and fair notice of severity of the penalty that a state may impose.

Dollen v. Wells Fargo, 2020 WL 1699021, ¶ 19, at *4.

    Accordingly, the Due Process Clause imposes certain constraints upon any assessment of punitive damages, according to the case law and to Standard Jury Instructions which are based on the case law:

    {20} One such constraint is the requirement of a reasonable relationship between the punitive damages award and the harm that was or could have been caused to the plaintiff(s). [Citations omitted.] Thus, New Mexico’s jury instructions with respect to punitive damages provide, in part, as follows:

Punitive damages are awarded for the limited purposes of punishment and to deter others from the commission of like offenses. The amount of punitive damages must be based on reason and justice taking into account all the circumstances, including the nature and enormity of the wrong and such aggravating and mitigating circumstances as may be shown. The property or wealth of the defendant is a legitimate factor for your consideration. The amount awarded, if any, must be reasonably related to the injury and to any damages given as compensation and not disproportionate to the circumstances.

UJI 13-1827 NMRA (emphasis added).

Dollen v. Wells Fargo, 2020 WL 1699021, ¶ 20, at *5.

    At that point, the punitive damages ball seemed to be rolling in Wells Fargo's direction in this case. And then it stopped. Wells argued too much by half, as it were, judging by the results. The New Mexico appellate court held that the punitive damages assessment against Wells should be remanded in spite of the evidence in the record that clearly established Wells' wrongdoing in servicing mortgages across the United States, according to the New Mexican judges in this case:

    {23} In arriving at its punitive damages figure, the district court in this case appears to have considered only avoiding an amount of punitive damages that might bankrupt Wells Fargo, rather than considering the amount that would accomplish but not exceed New Mexico’s goals of punishment and deterrence. [Citation omitted.] Because Wells Fargo raised no argument about its wealth, the district court assumed that “any amount it awards will not threaten Wells Fargo’s very existence.” This, coupled with the district court’s reference to findings that Wells Fargo services eight to nine million home loans in the United States, and systemically, remorselessly mishandles mortgage accounts for its own profit, indicates that the district court’s punitive damages award was aimed at deterring a national company with virtually unlimited assets from nationwide wrongdoing. This, again, violated Wells Fargo’s right to a process constrained by fair and permissible considerations, namely: punishment for harm to these Plaintiffs, and deterring only conduct in this state.

    {24} Accordingly, we reverse and remand the district court’s judgment on punitive damages, so that the court may reconsider its award within the constraints described hereinabove.

Dolan v. Wells Fargo, 2020 WL 1699021, ¶¶ 23-24, at *6 (italics in original; boldface added).

Constitutional, statutory, and common law standards for the assessment of Punitive Damages against insurance carriers in bad faith cases are analyzed at length in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 13:15 (3d ed. Thomson Reuters West, 2020 Supplements in process).

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

COURT HOLDS NO INJURY FROM KICKBACKS, SO NO COMPLAINTS, PLEASE.

In Baehr v. Creig Northrop Team, P.C., 953 F.3d 244, 258 (4th Cir. 2020), the Fourth Circuit Court of Appeals held that on the record in that case paying kickbacks in real estate transactions for their homes was no injury in fact to the plaintiffs who complained about paying kickbacks.  Therefore, the court ruled, the plaintiffs could not sue as a result of being charged kickbacks.

    The plaintiffs sued under the Real Estate Settlement Procedures Act or RESPA. Congress expressly prohibited kickbacks in RESPA. The Fourth Circuit panel held that Congress did not mean to prohibit kickbacks in all cases. This was one of the outlier cases in their eyes.

    No complaints, please. Just pay the kickbacks.

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

WHEN FIVE MEN RULED AMERICA. AND STOPPED THE VOTE. AGAIN.

"I do not doubt the good faith of my colleagues[.]"
Justice Ruth Bader Ginsburg, dissenting in Republican
Nat'l Committee v. Democratic Nat'l Committee,
___ U.S. ___, ___ S. Ct. ___, No. 19A1016, 2020 WL 1672702, at *3 (April 6, 2020)
(Ginsburg, J., dissenting).

Put this in context. Wisconsin is holding a vote on Tuesday, April 7, 2020. Before the Covid-19 pandemic, Wisconsin law required that mail-in ballots must be postmarked by election day in order to be counted. But many Wisconsin voters still have not received mail-in ballots to mail in.

    Wisconsin, like the rest of the country, is now in the midst of a pandemic. The evidence introduced in Federal Court shows that four days before the Supreme Court majority ruled, there were 1,550 confirmed cases and 24 deaths in Wisconsin as a result of Covid-19.

    In response to the pandemic in Wisconsin, the Governor of Wisconsin issued a stay-at-home order and called the Wisconsin Legislature into special session to allow for more absentee ballots so that people would not have to congregate together in order to cast their votes in person. The Republican leaders of the Wisconsin House and Senate refused even to take the matter up for a vote in their legislature.

    The Wisconsin Governor then issued another order, this one to cancel in-person voting on account of risks to public health. The Republican leaders of the Wisconsin House and Senate requested a stay from the Wisconsin Supreme Court so that voters in Wisconsin will be forced to make a choice: vote in person and risk infection, even death, or just stay home. They calculated that the Republicans on the Wisconsin ballot will stand a better chance of staying in power if Wisconsinites do not show up to vote.

     The Republican majority of the Wisconsin Supreme Court agreed. They voted as if there is no pandemic, and Wisconsinites must vote in person or with the absentee ballot rules they already have, rules which, according to such as the Republican leaders of the house and senate on the Wisconsin ballot, favor the Republicans in Wisconsin.

    On a parallel track at the same time, a Federal District Judge consolidated three cases, collectively aimed at extending the absentee ballot and at postponing in-person balloting during the pandemic. The District Judge declined to disturb Wisconsin's in-person voting requirements, but extended the time that voters would have to vote by mail and avoid Covid-19 under the circumstances.

    Them that want low voter turnout appealed to the Seventh Circuit Court of Appeals. The defendant members of the Wisconsin Election Commission did not appeal the District Court's ruling.

    However, the Republican National Committee intervened to appeal. The Seventh Circuit left the District Court's ruling intact.

    Then the Republican National Committee appealed the case to the U.S. Supreme Court. That is where the extent of the Court's "good faith" was on display. In an unsigned opinion, five Justices refused to give their names but we know who they are: Chief Justice Roberts, and Justices Thomas, Alito, Gorsuch, and Kavanaugh.

    They tried to rule anonymously that preexisting rules for absentee balloting in a pandemic are constitutionally required.  They actually ruled despite the evidence in the record, as they have done before. "The Court's order requires absentee voters to postmark their ballots by election day, April 7 -- i.e., tomorrow -- even if they did not receive their ballots by that date. That is a novel requirement." Republican National Committee, 2020 WL 1672702, at *3 (April 6, 2020) (Ginsburg, J., dissenting).

    This, then, is the background behind the ruling of the anonymous Gang of Five, Roberts, C.J., and Thomas, Alito, Gorsuch, and Kavanaugh, JJ. in favor of the Republican National Committee.

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

 

DEFECTIVE CONSTRUCTION EXCLUSION QUESTION OF LAW; APPEAL BAD FAITH WAIVED.

In Mock v. Allstate Ins. Co., 796 F. App'x 546 (10th Cir. 2020) (Colorado law), the Tenth Circuit Court of Appeals applied Colorado law in an opinion not reported in Fed Third:

{W]hether the undisputed flaw qualifies as faulty, inadequate, or defective design or construction is a legal issue. The statement of a legal conclusion is insufficient to create a material dispute of fact. [Citation omitted.]

    The undisputed facts show that the manufacturer’s design of the EIFS system [exterior insulation finish system] caused water infiltration and damage. We are not presented with any authority for the proposition that a flawed design does not qualify as “faulty, inadequate or defective” merely because the problem was unknown to drafters of past building codes. And as Allstate notes, Colorado courts use the synonyms “flaw” and “defect” interchangeably.

Mock, 796 F. App'x at 550.

    In the same case, the Tenth Circuit panel held that the bad faith claim actually advanced by the policyholder in that case did not legally exist because coverage was excluded in the first place, reaching the same result that the majority of courts have reached across the country.  Mock, 796 F. App'x at 550.  Moreover, the policyholders' unalleged, potential bad faith claim based on delayed payment was waived for appellate review.  More to the point, the record showed that the policyholder did not make a potential bad faith claim in the court below in this case based on alleged delay in payment, and so the appellate court could not review a bad faith claim that was never made.  Mock, 796 F. App'x at 550.

See generally Design/Construction Defect issues discussed by Dennis J. Wall in § 7:11 of CATASTROPHE CLAIMS:  INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS (Thomson Reuters West November 2019, 2020 Supplements forthcoming).

Please read the disclaimer. ©2020 Dennis J. Wall.  All rights reserved. 

FIGHTING THE CORONAVIRUS PANDEMIC: Special Wednesday Edition.

Ways and means are being tested for use in the fight against the coronavirus pandemic.  One tool is to expand the enrollment period for Obamacare to people who have recently lost their jobs and to again offer the opportunity to enroll to people who have previously declined the healthcare coverage.

The expanded enrollment period expands the existing opportunity to enroll whenever a person loses their employer-based health coverage.  Under this extension, the time is now.  The new enrollment period involves less paperwork and also extends the availability of health care coverage to people who, like many baseball teams by analogy, would otherwise have no choice but to wait 'till next year.  Instead, the time is now.

Persons who have lost their employer-based health coverage because they have lost their jobs in the pandemic, and people who previously declined coverage but would like to enroll now to protect themselves and their families against the healthcare costs of Covid-19, and enroll because of a broad special enrollment period in these States:

• California.
• Colorado.
• Connecticut.
• Maryland.
• Massachusetts.
• Minnesota.
• Nevada.
• New York.
• Rhode Island.
• Vermont, and
• Washington.

The District of Columbia reportedly is also opening its own broad special enrollment period.

People living in other areas will still be subject to the enrollment periods offered in those places, some of which are simply not  broadly available even in this crisis.  No word yet from the current regime whether they will open up enrollment with "a special enrollment period for the 32 states with markets it manages." 

See Margot Sanger-Katz and Reed Abelson, Eleven States and D.C. Are Letting Uninsured Sign Up For Obamacare, NEW YORK TIMES, Tuesday, March 24, 2020, at A19.

Please read the disclaimer. ©2020 Dennis J. Wall.  All rights reserved.

 

 

LATEST ON FAIRLY OR REASONABLY DEBATABLE DEFENSE TO BAD FAITH.

The fairly or reasonably debatable defense to an insurance bad faith claim as generally applied across the United States was under the microscope in Hayes v. Acuity, No. CIV 17-5015-JLV, 2020 WL 1322269 (D.S.D. March 20, 2020).  The plaintiff's motion for partial summary judgment was granted in that case.  The Court ruled that on the record the defense was not available to the carrier, with a proviso that a jury question would be presented should the carrier change its position that it denied coverage for reasons other than a fairly or reasonably debatable defense.  The carrier's "actual intent remains a jury question consistent with this order."  Hayes, 2020 WL 1322269, at *9.

    Hayes involved a worker's compensation carrier.  Putting aside issues of immunity that arise in other jurisdictions,¹ this case addresses when the fairly or reasonably debatable defense applies to any carrier accused of bad faith.

    Hayes was a case in which the issue involved a question of law, i.e., the carrier's interpretation of statutes.  Hayes, 2020 WL 1322269, at *7.  In what would become only the first administrative hearing on the plaintiff's claim, the carrier answered the plaintiff's claim that the plaintiff's claim met the requirements of coverage.  Then the claim was dismissed without prejudice because the plaintiff and the carrier settled and stipulated to dismissal.  Hayes, 2020 WL 1322269, at *3.  

    Then came a second administrative hearing, in which the plaintiff filed a new claim that his circumstances changed and he met the requirements for additional coverage.  The carrier denied the claim.  The administrative agency ruled in the carrier's favor because it found that the injury was not covered in the first place.  The plaintiff appealed to the Circuit Court, which affirmed the administrative agency's decision.  Hayes, 2020 WL 1322269, at *3.  The plaintiff then appealed directly to the State Supreme Court.

    The Supreme Court reversed.  It held that the carrier's admission of coverage in the first administrative proceeding was a judicial estoppel that there was coverage in the first place.  The Supreme Court held that judicial estoppel prevented the carrier from contending later that there was no coverage.  Hayes, 2020 WL 1322269, at *4. 

    The plaintiff then sued the carrier for insurer bad faith, among other things.  The plaintiff made several arguments in the bad faith case.  One was derived from the Supreme Court's finding of judicial estoppel in the underlying case:

    The plaintiff's provocative argument based on judicial estoppel in this particular case is worth reading in its own right:

    A “fairly debatable” showing is not made by the fact that a party convinced/tricked a tribunal into accepting barred arguments. If it were otherwise, insurers would have significant incentive to “cheat” the system and “pervert the judicial machinery,” because they would have an “absolute” legal defense to bad faith. Bad action should not be rewarded; the law cannot permit a party to profit from its deception. Essentially, [the carrier in this case] is again attempting to gain “unfair advantage” as a result of its own estopped arguments.... These arguments should be judicially estopped, here.

    “Getting away with it” is not a defense. [The carrier's] argument that it should have an absolute legal defense because it succeeded in perverting the judicial machinery is an absurd argument and that asks for an untenable result.

Hayes, 2020 WL 1322269, at *6.

    The Federal District Court ultimately accepted one of the plaintiff's arguments that there was no room in this case for a fairly or reasonably debatable defense.  However, the Court did not rule on mendacity or the possible appearance of it in this particular case.

    Besides judicial estoppel, the plaintiff also argued that when the Circuit Court affirmed the administrative agency it was an error of law.  Significantly, the plaintiff urged that the trial court was simply wrong in its interpretation of the applicable statutes.  Hayes, 2020 WL 1322269, at *5. 

    The plaintiff's legal argument based on interpretation of statutes at the time the agency and the court denied the plaintiff's claim appears to have been  the basis for the Federal Court's rulings.  The Federal Court granted the plaintiff's motion for partial summary judgment and denied the carrier's motion for partial summary judgment on whether the fairly or reasonably debatable defense was available in this bad faith case.  The Federal Judge ruled:

    The question of [the insurance carrier's] actual intent is a factual matter which must be resolved by the jury should the defendant claim the breach of its duty to Mr. Hayes “occurred for reasons other than fairly misunderstanding its legal obligation under the statute.” [Citation omitted.] What the decisions of the South Dakota Supreme Court before Hayes clearly prohibited was an argument [that the carrier] reasonably believed it had the right to terminate benefits to Mr. Hayes [before he petitioned the administrative agency and its ruling was affirmed by the Circuit Court in this case].

    Defendant’s motion for summary judgment is denied and plaintiff’s motion for partial summary judgment is granted, with the proviso that [the insurance carrier's] actual intent remains a jury question consistent with this order.

Hayes, 2020 WL 1322269, at *9. 

    The effects of this ruling will predictably extend beyond the borders of the particular case and the particular place in which it was made, to other insurer bad faith cases across the United States.

^{1The immunity of worker's compensation carriers from bad-faith claims, recognized in many jurisdictions, is explored at length in Section 11:14, Waiver, in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (3d Edition & 2019 Supplements, with 2020 Supplements in process, published by Thomson Reuters West).}

Please read the disclaimer. ©2020 Dennis J. Wall.  All rights reserved.

RATES NEED MORE THAN FILING. THEY NEED TO BE APPROVED.

The filed rate defense is not about the filed rates, it's about filed rates that are approved.  That includes insurance rates, if there is any chance to convince a Court that the filed rate doctrine applies to insurance rates at all.   See Dane v. UnitedHealthCare Ins. Co., 401 F. Supp. 3d 231, 239 (D. Conn. 2019) ("Because he is seeking relief for an injury allegedly caused by the payment of a rate on file with a regulatory commission, Dane's claims are barred by the filed rate doctrine.").

Please read the disclaimer. ©2020 Dennis J. Wall.  All rights reserved.

DISMISSAL v. ABATEMENT OF PREMATURE BAD FAITH CLAIMS.

Disagreeing with what it recognized to be a minority of decisions from the Middle District and the Southern District of Florida, a federal judge in the Southern District followed the majority rule and dismissed a premature insurance bad faith claim without prejudice, in Terenzio v. LM Gen. Ins. Co., ___ F. Supp. 3d ___, 2019 WL 7841718 (S.D. Fla. April 18, 2019).  The Terenzio case presented a premature claim of Uninsured/Underinsured Motorist carrier bad faith under Florida law:

    The Court finds that dismissal is a better remedy than abatement. For one, it appears that a majority of federal district courts in Florida have ruled in favor of dismissal. [Citation omitted.] Because it is unsettled whether abatement of a premature bad-faith claim is permitted in federal court, the Court favors the outcome that does not risk running afoul of Article III of the Constitution or the Federal Rules of Civil Procedure. Therefore, the Court will dismiss without prejudice, rather than abate, Plaintiff's bad-faith claim.

Terenzio, 2019 WL 7841718, at *3.

The decision by a federal court in Terenzio in Florida has implications for solving the same problem in federal courts across the United States.

 

HAPPY ST. PATRICK'S DAY 2020!

Please read the disclaimer. ©2020 Dennis J. Wall.  All rights reserved.

 

"Oh, Bedvidere! Come here boy!" Foghorn Leghorn goes silent with SPO.

A Stipulated Protective Order was signed in the insurance case of Bedivere Ins. Co. v. Blue Cross & Blue Shield of Kansas, Inc. & Allied World Specialty Ins. Co., Nos. 18-cv-02371 & 18-cv-02515, 2020 WL 1140394 (D. Kan. March 9, 2020) (O'Hara, USMJ). It was written by the parties, all of them insurance companies, and their lawyers of course. The lawyers of record came from Miami and Chicago and California, as well as local counsel from Kansas. They came bearing a proposed stipulated protective order.

    The Clerk wrote this on the Docket Entry for the proposed order, which Westlaw did not pick up in its report: "AGREED PROTECTIVE ORDER. The court finds good cause to enter the order submitted by the parties. Signed by Magistrate Judge James P. O'Hara on 3/9/2020." Bedvidere Ins. Co. v. Blue Cross & Blue Shield of Kansas, Inc., Case Nos. 18-cv-02371-DDC & 18-cv-02515-DDC, DE #88, proposed "Agreed Protective Order," filed March 9, 2020.

    The ones who wrote the proposed order said that their "Agreed Protective Order is based on the District of Kansas Model Protective Order." Bedvidere, 2020 WL 1140394, at *1. Except that it isn't.

    The lawyers included three categories of protection for "confidentiality" that the lawyers select in the first place. Interestingly, the lawyers wrote categories of confidentiality based on lawyers and not on their clients seeing the materials: "In particular, the parties have included three levels of confidentiality -- Confidential, Confidential -- Attorneys' Eyes Only, and Confidential -- Outside Counsel Only[.]" Bedvidere, 2020 WL 1140394, at *1. The District of Kansas Model Protective Order does not include such categories of secrecy, and neither do the District of Kansas Guidelines for the Model Protective Order.

    And what was so important that it has to be kept secret and available only in these two consolidated lawsuits and no others? This is an insurance coverage case. It involves competing coverages under Directors' and Officers' and Errors and Omissions insurance policies. See Download Bedvidere Ins. Co. v. Blue Cross & Blue Shield of Kansas Inc. No. 18-cv-02371-DDC DE #55 Amended Complaint filed 10.14.19 (D. Kan.).

    Very hush-hush indeed.

    Seriously, though: If you can get a stipulated protective order signed to keep your insurance coverage secrets, then what if anything must be disclosed?

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

 

SECRECY IN DISCOVERY AND SECRECY AT TRIAL ARE TREATED DIFFERENTLY.

In In re: Bard IVC Filters Prod's Liab. Litig., No. MDL 15-02641-PHX-DGC, 2020 WL 1070328 (D. Ariz. March 5, 2020), the District Court faced questions of secrecy claims over discovery materials and also secrecy claimed for trial exhibits. Like most Courts, this one treated the questions differently: Most Courts are willing to indulge secrecy in pretrial discovery but not for exhibits introduced in evidence at trial.

    First, the parties submitted a Stipulated Protective Order "governing the designation, handling, use, and disclosure of confidential discovery materials[.]" As is usual with such stipulated orders, the determination of "confidentiality" was made in the first place by the parties and their lawyers.

    Then a Case Management Order (CMO) "governed redactions of material from additional adverse event reports, complaint files, and related documents in accordance with" HIPAA.

    Third, the parties and their lawyers crafted another SPO specifically for Electronically Stored Information (ESI). "[T]o expedite production of ESI, the parties agreed to a primarily 'no-eyes-on' document production as to relevancy while still performing a privilege review for this expedited ESI document production." A CMO was amended apparently to accommodate this SPO.

    Thereafter the Court conducted three bellwether trials or demonstration trials. In Multi-District Litigation like this MDL, these trials offer a sampling of the likely outcomes. The Court in this case denied the defendants' motion to seal trial exhibits and otherwise to keep them confidential as to each of the three cases that were tried. "A list of exhibits admitted at the bellwether trials (excluding case-specific medical records) and documents deemed no longer subject to the protective order are attached as Exhibit 2." In re: Bard, 2020 WL 1070328, at *7.

    Familiarity with the principles of law is presumed here. The Court did not engage in a long discussion of them. Instead the Court ruled and the context of its rulings are known to people familiar with the principles of law they reflect. This opinion is very much worth reading for the outcomes in this regard.

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

 

ATTORNEY'S FEES AWARD UPON BAD FAITH FINDING ... Continued.

This article continues an article posted here earlier this week, LODESTAR ATTORNEY'S FEES AWARDED FOR BAD FAITH ... OF PLAINTIFF'S COUNSEL.

As promised, this is the hidden story embedded in the attorney's fees application and award in Baker v. Allstate Ins. Co., No. 2:19-cv-08024-ODW (JCx), 2020 WL 978729 (C.D. Cal. February 28, 2020). Let's try to break this down into the way the District Judge must have seen it all.

First, on November 26, 2019, Allstate's attorneys filed an "Application" requesting sanctions in the amount of $6,370.00 against the plaintiffs' former counsel in the case. The lead attorney for Allstate testified in a declaration submitted with the Application at that time.

Allstate's lead attorney testified in November that only he and another attorney for a total of two attorneys handled Allstate's Application. Baker, 2020 WL 978729, at *1. After holding a hearing on the request for sanctions in December, the Court granted the request.

The month after the Application and testimony in November, and shortly after the December hearing at which the sanctioned former counsel "also agreed to pay monetary sanctions," Allstate's lawyers requested a new amount of $41,748.00.  They represented to the Court that their firm actually "had three attorneys bill on this matter[.]" Baker, 2020 WL 978729, at *3 (emphasis added).

Besides testifying that there were only two Allstate lawyers involved in presenting the Application, the lead attorney for Allstate also testified in November that the Application was the product of 13 hours. The Court noted that this representation was "made under the penalty of perjury[.]" Baker, 2020 WL 978729, at *3. A month or so later, Allstate's lawyers were representing to the Court that they had actually "expended 33.2 hours to bring [Allstate's] Application." The Court characterized this later representation as seeking "a do-over[.]" The Court also described this as the lawyers' "attempt to back door an additional 20.2 hours[.]" Baker, 2020 WL 978729, at *3.

The sanctioned former counsel took the position that these representations were not what he had agreed to when he agreed to monetary sanctions based on the Application and the initial testimony of Allstate's lawyers about how many lawyers, how many hours, and how much money Allstate claimed in the first place. He requested "that the Court award Allstate no more than its original request of $6370." Baker, 2020 WL 978729, at *3.

However, the Court did not grant his request.

Instead, the Court applied its understanding of the rule in the Ninth Circuit that "[g]enerally, in assessing attorneys' fees, the court should calculate the 'lodestar' figure," which involves multiplying the number of hours reasonably claimed by a reasonable hourly rate. Even after that, the Court noted, it could still adjust the claim down depending on "reasonableness." Baker, 2020 WL 978729, at *2.

Significantly, the Court proceeded to apply the general rule to this particular case.  The Court considered the lawyers' higher request for fees in this particular case anyway. Along the way to a higher award than Allstate originally requested and its lawyers testified, the Court reduced the lawyer's newly claimed hours because certain hours "provide no description," other hours "were unnecessarily incurred," some hours were nothing more than "block-billing," and still other hours were submitted "for travel time and straightforward research, tasks which do not require great litigation skill." Baker, 2020 WL 978729, at *3-*5.

It is also significant that the Court "lowered" every one of Allstate's lawyer's hourly rates to $420.00/hour.

Then the Court awarded $17,808.00 in attorney's fees. Baker, 2020 WL 978729, at *5.

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

LODESTAR ATTORNEY'S FEES AWARDED FOR BAD FAITH ... OF PLAINTIFF'S COUNSEL.

An insurance carrier received a lodestar award of attorney's fees for bad faith of the plaintiffs' former counsel in Baker v. Allstate Ins. Co., No. 2:19-cv-08024-ODW (JCx), 2020 WL 978729 (C.D. Cal. February 28, 2020). Here is the concise summary of the reasons behind the award from the Court's own opinion:

    On December 16, 2019, the Court determined [Plaintiffs' former counsel] acted in bad faith by sending numerous profanity-laced emails, using discriminatory epithets, and repeatedly threatening physical violence against Allstate's witnesses, attorneys, and their families purportedly as negotiation tactics. [Citation omitted.] Accordingly, exercising its inherent powers, the Court ruled that Allstate was entitled to costs and attorneys' fees for bringing its Application. [Citation omitted.] At the hearing, [Plaintiffs' former counsel] also agreed to pay monetary sanctions.

Baker, 2020 WL 978729, at *2. Allstate then filed a motion for attorney's fees and costs. In response, the Court entered a lodestar attorney's fees award of $17,808.00 to Allstate.

The Court's response includes an embedded hidden tale of the hours that ended up being submitted to the Court for the award. That tale deserves telling. The next post in this space will afford a larger space fit for the telling.

To be continued ....  Please read the disclaimer. ©2020 Dennis J. Wall.  All rights reserved.

NO INSURANCE COVERAGE, NO INSURANCE BAD FAITH.

In HSBS Bank USA, N.A. v. Fid. Nat'l Title Ins. Co., No. 3:19-cv-00265-MMD-WGC, 2020 WL 886940 (D. Nev. February 20, 2020), a U.S. District Judge applied Nevada substantive law. The federal court granted the defendant title insurance carrier's motion for judgment on the pleadings in that case with respect to the implied covenant of good faith and fair dealing because there was no insurance coverage in the first place.

The Court granted the defendant carrier's motion as to a claim of what the Court called "contractual" breach of the implied covenant, and also granted the motion as to an alleged "tortious" breach of the implied covenant in that case. "Here, Fidelity had a reasonable basis to deny coverage because HSBC's claim was not covered by the Policy, as discussed above. The Court will therefore grant the MJP [motion for judgment on the pleadings] on HSBC's claim for tortious breach of the implied covenant." HSBS Bank, 2020 WL 886940, at *6.

Where there is no insurance coverage, there is no insurance bad faith: That was the reason for the ruling in this case as in so many other cases in the United States, though not all.

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STIPULATIONS, PROTECTIVE ORDERS, GOOD CAUSE AND ... OUTHOUSE OR IN-HOUSE COUNSEL?

The case of Allscripts Healthcare, LLC v. DR/Decision Resources, LLC, d/b/a Decision Resources Group ["DRG"], No. 19-11038-NMG, 2020 WL 837444 (D. Mass. February 20, 2020), is a contract dispute. The defendant, DRG, wanted to tighten the confidentiality of one document beyond even the stipulated protective order that the parties had already obtained in that case. DRG wanted to "enhance" the existing protective order to bar review of one document by the plaintiff's in-house counsel and limit review strictly to the plaintiff's "outside counsel."

The District Judge's resolution of this matter was clear and succinct:

    A party to a stipulated protective order seeking to modify the order must demonstrate good cause for modification. [Citation omitted.]  DRG fails to proffer a persuasive reason for its speculation that Allscripts’ attorneys, who are officers of the Court and bound by the Protective Order, would flout their duty and disclose to Allscripts’ employees information labeled as “Confidential-Attorneys’ Eyes Only” in violation of the Protective Order.

    Accordingly, DRG’s motion to enhance the Protective Order will be denied.

Allscripts, 2020 WL 837444, at *4-*5.

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SPECIAL APPEALS IN MARYLAND: INSURANCE COVERAGE FOR LEAD POISONING.

Two insurance coverage issues were addressed by the Maryland Court of Special Appeals in Pennsylvania Nat'l Mut. Cas. Ins. Co. v. Jeffers, ___ A.3d ___, No. 960, 2020 WL 502612, at *1 (Md. Ct. Spec. App. January 31, 2020) (stated not released for permanent publication):

    This case involves two issues of insurance coverage that have arisen in the context of judgments for lead poisoning.

[* * *] 

    We shall hold that the insurer in this case was not obligated to indemnify the insured for bodily injury that occurred before its policy period began or after its policy period ended. Although we recognize that an unborn child may suffer bodily injury from exposure to lead while in utero, we shall hold that the evidence in this case was insufficient to establish when any such injury began, and thus insufficient to establish an obligation on the insurer’s part. Finally, we shall hold that the insurer must pay postjudgment interest on the entire amount of the judgment even if it is obligated to indemnify its insured for only part of the judgment.

Based on these rulings, the appellate court reversed a summary judgment effectively entered against the carrier on the issue of interest liability, affirmed a summary judgment in favor of the carrier on the issue of "bodily injury" liability coverage, and remanded.

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GIVING FLORIDA STANDARD BAD FAITH JURY INSTRUCTION HELD REVERSIBLE ERROR.

Giving the Florida Standard Bad Faith Jury Instruction resulted in reversible error when a jury instruction specifically tailored to the insurance bad faith case was called for, in Cooper v. Federated Nat'l Ins. Co., 285 So. 3d 1036, 1038-39 (Fla. 5th DCA 2019).

The Florida Standard Bad Faith Jury Instruction at issue in the Cooper case is Fla. Std. J.I. (Civ.) 404.4. The Coopers requested a complementary instruction based on the theory of their case, that the defendant carrier violated Fla. Stat. § 626.9541(1)(i)3. The trial court's denial of this requested specific instruction as a complement to the Standard Jury Instruction was the basis of its reversible error, in the eyes of the Florida appellate court in this case.

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JUDGE AMY BERMAN JACKSON, WHAT IS YOUR SENTENCE NOW?

This post is updated and changed here from Claims and Issues Blog, where it originally appeared on Wednesday, February 12, 2020.

William Barr's Justice Department has withdrawn its own prosecutors' sentence recommendations for convicted felon Roger Stone. Instead of 7 to 9 years behind bars, Mr. Barr objects. He leaves the substituted recommendation open-ended without committing to anything beyond leaving the sentencing decision to the judge, who will have the final say in any event.

That happened on Tuesday.  On Wednesday, the federal judge presiding over Roger Stone's case was reportedly attacked on Twitter.  As one commentator observed, 'The Marshal's Service will be very busy now, protecting Judge Amy Berman Jackson from physical harm.'  Here is the report in the Washington Post.

This was not an ambiguous criminal case. It was clear from the start to everyone involved. The jury in Mr. Stone's case deliberated for only seven hours before they returned convictions on every count, every charge against Mr. Stone.

"In their initial sentencing memorandum federal prosecutors said that Mr. Stone should serve up to nine years because he threated a witness with bodily harm, deceived congressional investigators and carried out an extensive, deliberate, illegal scheme that included repeatedly lying under oath and forging documents." Katie Benner, Sharon LaFraniere, and Adam Goldman, Justice Dept. Acts to Ease Sentence ... / 4 U.S. Prosecutors Quit Stone Case After Bosses Step In to Overrule Them, NEW YORK TIMES, Wed., Feb. 12, 2020, at A1.

After his indictment and before he was tried, Mr. Stone reportedly also violated the Court's gag orders against speaking out and threatened Judge Amy Berman Jackson, the judge presiding over his criminal case. She is also the judge who will sentence him following his convictions.

One of Mr. Stone's defenses to all this is that Mr. Stone was once riddled with anxiety but that he is much better now, the New York Times reports.

So, Judge Amy Berman Jackson, what sentence if any will you impose for these crimes? "Our nation turns its lonely eyes to you."

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WHEN PERMISSIVE STIPULATIONS BECOME MANDATORY.

In Sanchez v. County of Sacramento, No. 2:19-cv-01545-MCE-AC, 2020 WL 605882 (E.D. Cal. February 7, 2020) (Claire, USMJ), a U.S. Magistrate Judge ordered all parties to execute a stipulated protective order.

The Local Rules for the Eastern District of California where this ruling was made regulate the Mechanics of Obtaining a Protective Order.  Local Rule 141.1(b) (emphasis in the title of this Local Rule).  On its face, it is clearly permissive, certainly where pretrial discovery like that at issue in this case is involved, not mandatory.  See Local Rule 141.1(b)(1).

If U.S. Magistrate Judges in the Eastern District of California are nonetheless empowered to order the parties to stipulate to secrecy orders, are they also empowered to order the parties to stipulate to anything else? And if not, then what are the limits on their power to mandate stipulations of any kind?

And what becomes of the First Amendment right of public access to court files which is recognized, for example, in the same Local Rules of the Eastern District of California?  See Local Rule 141.1(a).

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PARTICULARIZED SHOWING OF COMPELLING REASONS TO SEAL CORPORATE POLICIES & PROCEDURES.

Trevino v. Golden State FC LLC & Amazon.Com, Inc., et al, No. 1:18-cv-00120-DAD-BAM, 2020 WL 550702 (E.D. Cal. 02.04.20) (McAuliffe, USMJ),
is a decision in a case which does not identify the causes of action or claims advanced by employees against Amazon and other corporations.

The decision-in-the-dark, so to speak, continued with a holding that Amazon and the other defendants were entitled to seal certain documents that set out their corporate policies and procedures. Other than conclusions, the decision apparently left the reasoning out of the decision. At least I cannot find the reasoning and if someone else can, I would appreciate learning the knowledge.

The documents to be sealed were filed in the Court File in opposition to the plaintiffs' motion to certify a class against Amazon and the other corporate defendants. The U.S. Magistrate Judge in this case held that Amazon's request to seal the corporate policies and procedures were subject to a showing of "compelling reasons" to seal them. Trevino, 2020 WL 550702, at *2. Yet, I cannot find any "compelling reasons" beyond a conclusory statement that the records are "confidential" because they would hurt Amazon's "competitive" position. (Really? Amazon's competitive position?)

Further, the USMJ held that the showing that Amazon and the other defendants made to her for sealing these documents was "particularized" as required, Trevino, 2020 WL 550702, at *2, although the decision does not contain a further description of the showing beyond saying that it was "particularized" concerning unspecified corporate policies and procedures that now are sealed from public view.

This decision puts a spotlight on the need for judges to show the reasoning for their decisions particularly concerning what is and what is not "particularized." Declaring a showing to be "particularized" without necessarily disclosing why the showing is "particularized" is simply not enough disclosure.

This decision may provide some guidance on sealing corporate policies and procedures, at least in other cases involving Amazon perhaps, as Amazon and its lawyers undoubtedly know what was involved in this case.

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"THINK THE SUBPRIME CRISIS IN 2008 WAS BAD?" BUCKLE UP!

"Imagine a real estate crisis caused by rising sea levels and coastal flooding that renders thousands of square miles of land uninhabitable or useless for farming." Think the catastrophe will be insurable? Or is it a known risk? Will the resulting damages be covered, will they be payable under any insurance policy?

Bankers think it is a known risk. See Jack Ewing, World's Banks Racing to Prepare for Climate Risks, NEW YORK TIMES, Friday, Jan. 24, 2020, at B3 (online access at your own risk, The New York Times may put up a paywall, depending).

What do you think?

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EXPERTS AT WIND 2020 IN FIRST-PARTY INSURANCE CLAIMS -- ...

--INCLUDING IN BAD FAITH CLAIMS.

There was a difference of opinion among the presenters and among the attendees at a WIND class on experts in bad faith cases.

Some people questioned whether experts are even necessary in first-party bad faith cases.

Others look to the insurance industry for their experts in claims handling.  This may be a valid example of useful "peer review" in another context, namely, the selection and use of expert witnesses.

One attorney related his own experience that he encountered Daubert challenges to the qualifications of experts and their testimony under Federal Rule of Evidence 702(b) and (c).  For your ease of reference, here is the entire text of Federal Rule of Evidence 702 including (b) and (c), courtesy of Cornell Law School's posting of the text:

Rule 702. Testimony by Expert Witnesses

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:

(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

The class also reported that in their experience Federal Rule of Civil Procedure 26 has been used far more often to strike experts than FRE 702 has been used to disqualify experts.  (Rule 26 is one of the longer rules in the Western World, but you can read it here if you want, again courtesy of Cornell Law School.)  Rule 26 can serve as a basis for striking an expert (not often granted) because of a late report or no report, to cite perhaps the most common example.

Finally, differences between State rules and Federal rules governing the admissibility of Expert testimony produced this recognized truth:  Consult the laws of your particular jurisdiction before you retain an Expert or list them as your witness in a First-Party Insurance Bad Faith case.

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EXPERTS AT WIND 2020 IN ALL KINDS OF PROPERTY CLAIMS.

Anecdotal evidence can be useful.  In addition to reported cases, attorneys and adjusters representing policyholders and insurance carriers have collectively retained expert witnesses in presenting or defending first-party insurance claims.  The collective list of their experiences includes engineers, building consultants, architects, meteorologists, building code specialists, thermal imagers, estimators, and drone operators.

Some have even used contractors to present their claims as experts on the ground that they are familiar with the facts.

Pick and choose at your own informed discretion.  Each case is different, each claim is different, and the attorneys and adjusters and their clients are different.  It must be clearly understood when deciding on whether to retain experts and if so, who and what kind:  No one size will fit all.

© 2020 Dennis J. Wall.  All Rights Reserved.

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WIND 2020, EXTRACONTRACTUAL CLAIMS AND "THE BIBLE OF BAD FAITH."

Attorneys and adjusters representing policyholders outnumbered the show of hands from attorneys and adjusters representing insurance companies at the WIND Conference 2020 yesterday.

 

Copyright 2020 Dennis J. Wall.

At a class on Extracontractual issues, many issues were discussed.  For openers, the two main reasons for insurance bad faith claims were identified as Delay and Undervalued.  Insurance bad faith claims tend to be made in the greatest numbers, by far, when claims are delayed and when they are undervalued.

In Florida terms, a "CRN" or "Civil Remedy Notice" under Florida's Bad Faith Statute, Section 624.155, was discussed a lot.  Good advice for those writing CRN's:  Provide enough information in this statutory condition precedent to a bad faith claim to allow the carrier the opportunity to resolve the damages claim under the policy, and so resolve the alleged bad faith behavior beforehand.  That is clearly the statutory purpose of the 60-day period under the Florida Statute.

"Peer review" may be the next shorthand reference in claims handling.  This is admittedly anecdotal evidence, but anecdotal evidence in this context may simply be evidence that has not yet found its way into a court file.  Hopefully it never will.  The term has been used so far by a property insurance carrier in Pennsylvania to deny loss mitigation claims on the ground that after a "peer review" the policyholder essentially did not follow the prevailing standard of care by paying for a certain way to clean up the mess after a property loss such as a fire or flood.  "Peer review" can be extended of course to many other things such as asserted lack of cooperation or claimed failure to protect the property after loss.  "Peer review" may go down in the annals of claims handling along with such phrases as "round tabling," which was established long ago to identify a process in which many people go around a table to express their views about whether a claim is covered in essence.  Time will tell.

Returning to Florida Insurance Bad Faith Law, the Florida Bad Faith Statute incorporates other statutes that in turn were written based on a Uniform Claim Settlement Procedures Act.  Neither the Florida statutes nor the Uniform Act clearly identify or define what is a "General Business Practice."  In Florida, proof of a GBP is a required element of a punitive damages claim.  It was not mentioned yesterday but apparently the people that wrote the Uniform Act had case law and statutes in other areas of the law in mind, particularly Labor Law where it is a defined term, when they wrote about a "General Business Practice" in the context of Insurance Bad Faith.

All told, a very knowledgeable group attended the Extracontractual class at WIND 2020 yesterday.  There was universal agreement with the spoken recognition of LITIGATION AND PREVENTION OF INSURER BAD FAITH as "The Bible of Bad Faith."  As far as I am concerned, these were clearly people of good taste!

Copyright 2020 Dennis J. Wall.

Dennis Wall is the author of LITIGATION AND PREVENTION OF INSURER BAD FAITH, now in Two Volumes in its Third Edition with 2020 Supplements in process published by Thomson Reuters West.

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Postscript: NO, actually, THEY are TAKING YOUR HEALTHCARE COVERAGE AWAY.

This is a P.S. to NO, actually, THEY are TAKING YOUR HEALTHCARE COVERAGE AWAY: III, posted here on January 21, 2020.

Another effect of taking the Affordable Care Act away is taking away one of the ACA's protections of Medicare. Since it was enacted in 2010, the Affordable Care Act has whittled away at the so-called "doughnut hole" for Medicare Part D premiums.

    Medicare Part D has been notorious for a "coverage gap." After reaching a certain choke point or threshold, Medicare Part D required Medicare recipients to pay 100% of their drug costs from that point until they reached a second threshold where "low deductible, catastrophic coverage" would kick in. In other words, people on Medicare would pay low premiums for drug expenses, up to a point.

    When that point was reached Medicare recipients became responsible for every penny of drug costs and you can only imagine how expensive that was for many people. The experience gave rise to many stories of cutting pills into smaller pieces, stretching supplies by taking your pills every other day or every third day, and similar workarounds. Then once the patients paid enough money to reach a second threshold, they qualified for catastrophic coverage which it turns out was well-named for more than one reason.

    The Affordable Care Act changed all that by making the costs of prescription drugs even under Medicare Part D, well, affordable. If the ACA is taken away, affordability will go away too.

    "(Of course, if the Supreme Court ends up striking down the Affordable Care Act, the hole will return.") See Paula Span, The New Old Age / A Medicare Part D Coverage Gap Closes (Mostly), NEW YORK TIMES, Tuesday, Jan. 21, 2020, at D3, available at https://www.nytimes.com/2020/01/17/health/medicare-drug-costs.html?searchResultPosition=1.

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RULES FOR A "NO-SHOW" TRIAL.

This is a special edition of Claims and Bad Faith Law. This article is about bad faith without a system of justice.

The U.S. Constitution requires a "Trial" once the president is impeached. The Constitution does not say how to conduct that Trial.

The leaders in charge of the U.S. Senate have stepped into the vacuum and supplied rules. They use the word "Trial," and it will not be like a "show trial" under Stalin. It will be a "no-show trial" under McConnell.

The leaders proposed their Trial rules at 6:00 on the evening of a national holiday before the "Trial" would begin the next day. They have known for weeks that they would have to define rules for the Trial. The leaders have talked about using the Clinton Impeachment Rules as a model. If they had wanted, they could have done a Global Find and Replace "Clinton." With that, you're pretty much done, so it's on to the Trial from there.

That is not what the leaders did, though. Their proposed marathon rules allow opening statements to begin today, Tuesday, January 21, 2020 and to wrap up the opening statements long before the week is over. They require opening statements to be delivered in marathon sessions of 12 hours a side over 2 days. In redefining a Trial to mean a no-show Trial, they have also redefined what a "day" means.

The Senate will stay in session each day until the next day to complete that day, so a "day" means that they will complete the opening statements within 12 consecutive hours even if they begin at say 1:00 PM and they end after Midnight and go into the following calendar day.

Their proposed rules do not call for anything but opening statements. They do not commit to considering evidence. They require a separate vote to consider even the evidence from the House impeachment proceedings, i.e., to consider the reasons that we are even in the Senate for a constitutionally required Trial.

That takes care of the old evidence. The proposed rules do not provide for any new evidence at all.

The proposed rules do not even address consideration of new witness testimony or documentary evidence. Under these rules, U.S. Senators would not have to listen to any testimony or read any documents.

The leaders propose that their no-show Trial will not show up to be seen or heard by the American people, either. The press in particular will be required to do their reporting from a pen away from whatever is going on in the Senate. Have you ever attended a political rally and seen the press in pens? It will be like that.

Television coverage if any will be like C-Span is now. The camera will be rigid and focused on the speaker. It will not show what else is going on in the chamber. (The Senate Chamber is mostly empty during proceedings now, and the C-Span cameras are certainly not allowed to show that, for example.) The single television camera that the leaders allow will be focused on what the powerful want you to see of their power.

The leaders have called for a fast acquittal. They want to wrap up the whole thing before the State of the Union, which is scheduled for February 4th. Parenthetically, can they arrange things such that the no-show Trial actually wraps everything up that day so that the leaders can declare an "exoneration" that night?

These arrangements look like reverse engineering. Someone perhaps started with the idea of a no-show Trial and worked backwards from there on how to achieve it. Again, these rules are proposed for the opposite of a show trial under Stalin. They propose instead a no-show Trial.

I had thought about writing this article that way. That is, I would break down the no-show Trial, deconstruct it. But I recognized that you are capable of delivering your own verdict, of reaching your own judgment, once you are presented with the evidence.

Unlike the person or persons who wrote these proposed rules for a no-show Trial.

Mitch, today is the day in January that you lost your majority in November.

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NO. actually, THEY are TAKING YOUR HEALTHCARE COVERAGE AWAY: III.

To summarize, there have been three judges in these lower federal Fifth Circuit cases who have held the ACA's individual mandate unconstitutional now. All three are members of the Federalist Society. In each case, the votes of all three accurately reflect the opinions of the Federalist Society.

One additional judge dissented. She is not a member of the Federalist Society and her opinion does not look like the opinions of the Federalist Society. The dissenting judge is Judge Carolyn Dineen King on the Fifth Circuit panel.  Judge King pointed out the undeniable fact that the true legislative history of the ACA shows that Congress never amended or repealed the individual mandate provision. Congress did one thing only; it reduced the tax penalty for failure to comply with the mandate to zero dollars. Command without coercion is not unconstitutional in the eyes of the dissenting judge.

The effects of the lower federal Fifth Circuit rulings perhaps do not change the outcomes of their persuasive capacities if any. Regardless, the collective effects of these lower court decisions are a catastrophe causing uncertainty in healthcare and in every other area affected by the Affordable Care Act. The other areas affected by the ACA include financial, regulatory, and commercial planning. The introduction of uncertainty in these areas is a fact, not a contest.

State and local government agencies rely on billions of dollars in aid under the ACA each time they set their budgets. Government budget planning can take months and even years. Insurance companies too plan for years in advance based on the ACA. Carriers must decide far in advance of implementing their decisions of how and whether to ask for any changes in regulated health insurance premiums and health insurance markets.

The pending catastrophe also includes consumer and individual life-changing decisions such as whether to move, to change a job, to start a family, or to care for an aged parent. Without being able to rely on healthcare required by the ACA, individuals as well as businesses, and state and federal government agencies, face uncertainty whether their reliance on the ACA has been misplaced and the uncertainty of what if anything will replace the availability of healthcare insurance under the ACA.

In short, after the lower court decisions in the federal Fifth Circuit, all healthcare decisions will have to be made without knowing whether the ACA will ultimately be held valid by judges, or not.  As Judge King put it in her dissenting opinion in the Fifth Circuit:  "It is unlikely that Congress would want a statute on which millions of people rely for their healthcare and livelihoods to disappear overnight with the wave of a judicial wand." Put another way, "it is difficult to imagine that this is a matter Congress intended to turn over to the judiciary."

And now it's on to the U.S. Supreme Court once again, and let's see if they have the votes there to "repeal, defund, delay, or otherwise amend the ACA."

Continued from Claims and Issues Blog on January 15, 2020 and Claims and Bad Faith Law Blog, here, on January 16, 2020. Adapted by the author from his new Chapter 18E forthcoming in the Spring of 2020 in the book, CATASTROPHE CLAIMS: INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS (Thomson Reuters). Please Read The Disclaimer. ©2020 Dennis J. Wall. All Rights Reserved.

 

 

 

 

 

 

NO, actually, THEY are TAKING YOUR HEALTHCARE COVERAGE AWAY: II.

In 2017 Congress passed what it called the Tax Cuts and Jobs Act. One section of it affected the ACA's individual mandate. It did not repeal it, but it levelled the tax involved to zero dollars. The 2017 law ("TCJA") touched upon many statutes.  With respect to the Affordable Care Act in particular, the TCJA amended the individual mandate by resetting to zero the amount to be paid to the I.R.S. if a person failed to obtain their own statutory minimum level of health insurance coverage.

    Even as the 2017 law reset to zero the amount of the tax imposed for failure to comply with the individual mandate, Congress still did not have the votes to change or repeal the Affordable Care Act. Having no other choice, Congress left each and every other provision of the ACA intact and unchanged.  Congress did not even have the votes to change the individual mandate other than the naturally popular vote, by itself, to reset the penalty to zero dollars.

    Two months after the TCJA reduced the penalty behind the individual mandate of the ACA to zero dollars, two individuals and a group of states filed a lawsuit in a district court in Texas.  The objective of the lawsuit was once again to declare the ACA unconstitutional.  This would be the second time that the attack on the Affordable Care Act would reach the U.S. Supreme Court.

    This time, the plaintiffs argued in the trial court that a majority of Justices had held in the first case in which the constitutionality of the ACA was attacked in court, in the National Federation of Independent Businesses case, that the individual mandate penalty was a tax.  They continued their argument that since the 2017 law reduced the collectible tax under the 2010 law to no money, that meant that not only the individual mandate but also the entire Affordable Care Act must be unconstitutional.

     The plaintiffs in Texas were undeterred by the ACA's legislative history, including the failure of repeated attempts to persuade Congress to repeal the individual mandate and even the ACA itself. The federal district judge in Texas agreed. "The Individual Mandate no longer triggers a tax, so the saving construction crafted in NFIB no longer applies," he wrote.

    In his rulings in this case the district judge ruled not by persuasion but by power. The district judge demonstrated the power of unrestrained judicial activism in triple holdings: first, that the plaintiffs have standing to sue for a declaration that the ACA is unconstitutional; second, that the individual mandate is now unconstitutional because its enforcement penalty collects zero dollars in tax, and third and finally, that not a single one of the hundreds of other provisions of the ACA can be severed from the individual mandate meaning that each and every one of those provisions, too, is unconstitutional.

     The district judge not only refused to consider the evidence, but he actually recoiled from the Intervenor Defendants' reliance on evidence of the positive effects of the ACA and of Congress's previous refusal to invalidate the entire ACA itself. Texas v. United States, 352 F. Supp. 3d 665, 685-89 (N.D. Tex. 2018), aff'd in part, rev'd in part, 945 F.3d 355 (5th Cir. 2019), petition for cert. docketed, No. 19-840 (U.S. Jan. 3, 2020) & petition for cert. docketed, No. 19-841 (U.S. Jan. 4, 2020).

    On appeal from the district court's rulings, two judges on a panel in the Fifth Circuit Court of Appeals affirmed the district court in part.  The two judges agreed with the district judge that all the plaintiffs have standing to ask federal courts to declare the ACA unconstitutional, and that the individual mandate is unconstitutional because it would now impose a penalty of zero dollars for noncompliance.

    However, the two judges reversed the district judge's ruling that all the other provisions of the Affordable Care Act must be unconstitutional, too.  The two judges voted to remand the case on the issue of severability of the remaining ACA provisions, sending the case back to the same district judge who had already ruled that the remaining ACA provisions cannot be severed and so they too are unconstitutional.

    And now it's on to the U.S. Supreme Court once again, and let's see if they have the votes there to "repeal, defund, delay, or otherwise amend the ACA."

Continued from Claims and Issues Blog and to be continued next on Claims and Bad Faith Law Blog. Adapted by the author from his new Chapter 18E forthcoming in the Spring of 2020 in the book, CATASTROPHE CLAIMS: INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS (Thomson Reuters). Please Read The Disclaimer. ©2020 Dennis J. Wall. All Rights Reserved.

SECRECY IS DECIDED BY GOOD CAUSE, COMPELLING REASONS, NOT AGREEMENTS.

Just because lawyers and their clients have agreed to keep things a secret does not mean that the Courts must keep those things secret now, let alone for all time.  "Specifically, parties often disregard the precedent that holds, the fact that the Court has entered a stipulated protective order and that a party has designated a document as confidential pursuant to that protective order does not, standing alone, establish sufficient grounds to seal a filed document."  MetroPCS v. AZZ Connection, LLC, No. 2:15-cv-01412-JAD-DJA, 2020 WL 127550, at *5 (D. Nev. January 10, 2020) (Albregts, USMJ).

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