UP draws media attention to
post-disaster insurance woes

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Five steps to take today to protect your home

Every part of the U.S. is vulnerable to some kind of natural disasters: Hurricanes, earthquakes, wildfires, hailstorms, floods… Here’s a reminder: If you haven’t already done it, take steps to protect your home and mitigate the damage.

Executive Director Amy Bach and Homeowner Advisor Ken Klein recently participated in a Mitigation Roundtable convened by CA Insurance Commissioner Steve Poizner. Poizner brought together insurance and firefighting experts to explore how insurers can offer more incentives for property owners to reduce the risk of damage from fires and other natural disasters. Current discounts and programs are far from what they should be.

Basic steps

1. Know your risks. To find out if you’re in a flood zone, go to: www.floodsmart.gov To find out the earthquake risks in your area go to: www.abag.ca.gov/bayarea/eqmaps/pickcity.html
2. Be Proactive. Don’t do nothing just because you can’t do everything. If you’re in a wildfire risk area, know that firefighters say they’re best able to save homes with “defensible space” (brush-free zones around your dwelling), boxed eaves and screened vents. Shutters can be effective against high winds. Seismic shut-off valves are an inexpensive way of preventing a gas explosion during an earthquake.
3. Use the Internet to find out what’s most effective. The Institute for Home and Business Safety is a good resource. www.ibhs.org
4. Contact your insurance agent and ask about all mitigation/prevention discounts.
5. Make sure your dwelling is properly insured. Use our buying tips; www.unitedpolicyholders.org/claimtips/tip_do_donot.html

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U.S. Supreme Court rules on conflicts of interest
in health/disability benefit determinations

Metropolitan Life Ins.Co. v. Glenn, No. 06-923, 2008 U.S.LEXIS 5030 (U.S.Sup.Ct. June 19, 2008).
In the Supreme Court’s 1989 ruling in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), the Court ruled that benefit claims under the ERISA law should be evaluated under principles of trust law which allows discretionary authority to be vested in trustees to determine eligibility to receive benefits and to interpret the plan documents. At the conclusion of the Bruch opinion, consistent with the Court’s reliance on the Restatement of Trusts, the Court remarked, “Of course, if a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a "facto[r] in determining whether there is an abuse of discretion." 489 U.S. at 115 (citing Restatement (Second) of Trusts § 187, Comment d (1959)). That one comment has produced at least 250 appellate opinions in the nearly 20 years since Firestone was issued that have tried to parse the Supreme Court’s meaning and which has resulted in a spectrum of opinions ranging from those those circuits that flatly reject the notion that insurers who both administer claims and pay benefits are acting under a conflict to other circuits which find the mere presence of a conflict sufficient to render a denial of benefits presumptively void. The majority of circuits have applied a sliding scale type of approach giving more weight to the conflict when it is shown the claim determination was the result of bias.

The recently issued ruling in Metropolitan Life Ins.Co. v. Glenn, represents the Supreme Court’s effort to resolve the circuit split and offer a measure of guidance to lower courts dealing with disputes primarily involving health and disability insurance benefits. Glenn involved a very typical claim – Wanda Glenn, an employee of Sears, suffered from severe cardiac disease. When her medical condition rendered her unable to continue working, she took advantage of her Sears-provided employee benefits and applied to MetLife, which insured Sears employees against disability, seeking payment of long-term disability benefits. Her claim was approved, and Ms. Glenn began receiving benefits in 2000 under a definition of disability that entitled her to disability insurance payments if she could not perform the material duties of her regular occupation due to her medical condition. Then, in 2002, utilizing the assistance of a law firm to which MetLife steered her to receive representation, Glenn was also approved to receive Social Security disability payments under a much more stringent definition of disability which required that she not only be incapable of performing her regular job duties; she also had to prove her inability to work at any occupation. The award of Social Security enabled MetLife to recoup monies it had already paid out based on policy provisions allowing the insurer to offset Social Security disability payments against the long-term disability benefits. Despite the Social Security approval, though, MetLife terminated Ms. Glenn’s payments, asserting she failed to continue to qualify for benefits based on a change of definition of disability from an “own occupation” standard to one that required her to prove her inability to work at “any occupation.”

Glenn unsuccessfully sought MetLife’s reconsideration, and her efforts to seek restoration of her benefits was equally unavailing when she brought suit against MetLife under ERISA because the district court applied a deferential abuse of discretion standard of review. Applying that same standard, though, the United States Court of Appeals for the Sixth Circuit reversed. Among other factors, the Sixth Circuit pointed to MetLife’s dual role as plan administrator and the funding source for benefits, and found MetLife acted under a conflict of interest which it deemed a factor to consider in weighing the determination. Other circumstances cited by the Sixth Circuit for reversal included MetLife’s failure to reconcile its determination with the Social Security award, MetLife’s selective consideration of one aberrant physician report which differed markedly from every other prior and subsequent medical report certifying Glenn’s disability, MetLife’s failure to provide all of the treating physician reports to its consultants, and the insurer’s failure to consider the effect of stress on Glenn’s heart condition. All of those factors convinced the Sixth Circuit that MetLife had abused its discretion. Following that ruling, the Supreme Court granted certiorari to consider two questions: 1) whether MetLife’s dual role constituted a conflict of interest; and 2) how such a conflict is to be considered.

The Court’s opinion, authored by Justice Stephen Breyer, began by finding MetLife had acted under a conflict of interest. The Court cited the Third Circuit’s Bruch ruling for the proposition that where a party both funds a plan and evaluates claims, "every dollar provided in benefits is a dollar spent by… the employer; and every dollar saved… is a dollar in [the employer's] pocket." Bruch v. Firestone Tire & Rubber Co., 828 F.2d 134, 144 (3d Cir. 1987). Thus, the Court determined that because the insurer’s financial interest was in conflict with its fiduciary duty owed to claimants under the ERISA law, that dual role exemplified the type of conflict the Court spoke of in Firestone.

Rejecting MetLife’s claim that the purchase of insurance by an employer implicitly waives the conflict, the Court cited a host of trust law authorities holding that even an agreed-upon conflict “does not change the legal need for a judge later to take account of that conflict in reviewing the trustee’s discretionary decisionmaking.” *14. Nor was the Court persuaded that the finding of a conflict would discourage the creation of employee benefit plans since MetLife failed to provide any empirical or other evidence in support of that argument. In sum, the Court rejected all of MetLife’s arguments, finding them “outweighed by ‘Congress' desire to offer employees enhanced protection for their benefits.’" *15 (citation omitted).

The Court was equally unswayed by MetLife’s argument that insurers have an incentive to make accurate claim decisions because the marketplace and/or insurance regulators will punish insurers whose determinations are based more on bias than accuracy. The Court acknowledged that, on the contrary, employers “may be more interested in an insurance company with low rates than in one with accurate claims processing.” *17 (citation omitted). The Court also made it clear that “ERISA imposes higher-than-marketplace quality standards on insurers.” Id. Because insurers administering employee benefits governed by ERISA are required to act "solely in the interests of the participants and beneficiaries" of the plan” [(29 U.S.C. § 1104(a)(1))], those fiduciary obligations “underscore[ ] the particular importance of accurate claims processing.” Id. Finally, the Court pointed out the difference between the existence of a conflict and its significance or severity which can be shown in individual cases.

The Court next turned to the question of how the conflict should be taken into account. First, the Court made it clear the conflict would not change the standard of review to de novo, nor would there be a need for special burden of proof rules or special procedural or evidentiary rules. However, the Court also found it could not “come up with a one-size-fits-all procedural system that is likely to promote fair and accurate review.” *20. Instead, the Court focused on the conflict being merely one of many factors that a court considers in evaluating factfinding. The Court added that “any one factor will act as a tiebreaker when the other factors are closely balanced.” *21. And the conflict of interest “should prove more important (perhaps of great importance) where circumstances suggest a higher likelihood that it affected the benefits decision, including, but not limited to, cases where an insurance company administrator has a history of biased claims administration.” *21. On the other hand, the Court pointed out a conflict would be less important “where the administrator has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking irrespective of whom the inaccuracy benefits.” *22.

Applying this guidance to the specifics of the claim at issue, the Court agreed with the Sixth Circuit that the conflict alone was not determinative but was merely a factor, among many, that showed MetLife had reached an inaccurate conclusion. Indeed, the Court suggested that MetLife’s inconsistency of encouraging the Social Security application and then rejecting the agency’s findings “was not only an important factor in its own right (because it suggested procedural unreasonableness), but also would have justified the court in giving more weight to the conflict (because MetLife's seemingly inconsistent positions were both financially advantageous).” *23. Also mentioned was MetLife’s emphasis on one report that favored a denial of benefits while the insurer failed to consider all of the medical evidence in context or provide its consultants with all of the relevant evidence. The opinion concluded by citing Universal Camera Corp. v. NLRB, 340 U.S. 474, 490, 71 S. Ct. 456, 95 L. Ed. 456 (1951) as a guide for review of factfinding. *24. There, the Supreme Court held:

We conclude, therefore, that the Administrative Procedure Act and the Taft-Hartley Act direct that courts must now assume more responsibility for the reasonableness and fairness of Labor Board decisions than some courts have shown in the past. Reviewing courts must be influenced by a feeling that they are not to abdicate the conventional judicial function. Congress has imposed on them responsibility for assuring that the Board keeps within reasonable grounds. That responsibility is not less real because it is limited to enforcing the requirement that evidence appear substantial when viewed, on the record as a whole, by courts invested with the authority and enjoying the prestige of the Courts of Appeals. The Board's findings are entitled to respect; but they must nonetheless be set aside when the record before a Court of Appeals clearly precludes the Board's decision from being justified by a fair estimate of the worth of the testimony of witnesses or its informed judgment on matters within its special competence or both.

Chief Justice Roberts concurred with the majority’s conclusion that “a third-party insurer's dual role as a claims administrator and plan funder gives rise to a conflict of interest that is pertinent in reviewing claims decisions.” *25. However, Roberts disagreed with the majority’s view of how the conflict would be considered, and would not have deemed the bare existence of a conflict without more to be sufficient to “increase the level of scrutiny.” Id. Instead, he would have considered the conflict relevant only where there was evidence the conflict infected the decision. Although Roberts found no evidence of that in this case, he would still have affirmed based on a sufficiency of evidence establishing an abuse of discretion.

Chief Justice Roberts also criticized the majority for its imprecision “about how the existence of a conflict should be treated in a reviewing court's analysis.” *28. Returning to his theme, Roberts pronounced, “It is the actual motivation that matters in reviewing benefits decisions for an abuse of discretion, not the bare presence of the conflict itself.” *30-*31. Thus, he maintained that the conflict need be proven by evidence such as that a plan offers financial incentives to its employees for denying claims or by a showing of a pattern or practice of unjustifiably denying meritorious claims. The factors cited by the majority, according to the Chief Justice’s concurrence, merely prove an abuse of discretion and not a conflict. Indeed, Roberts points out the Sixth Circuit hardly did more than remark about the conflict without giving it any further consideration.

Finally, Justice Scalia authored a dissent joined by Justice Thomas. Although the dissenting opinion agreed that MetLife has a conflict, it disagreed with the majority’s view of how the conflict is to be weighed, finding the majority’s “totality of the circumstances test” would make “each case unique, and hence the outcome of each case unpredictable.” *35. The dissent also cited the Restatement of Trusts as requiring proof that the conflict actually motivated the decision before an abuse of discretion is found. Hence, the dissent found the opinion “painfully opaque, despite its promise of elucidation.” *39. And it accused the majority of offering “nothing but de novo review in sheep's clothing.” *40 Heaping on more criticism, the dissent argues:

Common sense confirms that a trustee's conflict of interest is irrelevant to determining the substantive reasonableness of his decision. A reasonable decision is reasonable whether or not the person who makes it has a conflict. *44.

Thus, Justice Scalia concludes the only basis for finding an abuse of discretion was the conflict between MetLife’s finding and the Social Security decision, but he went on to note that there is no rule requiring congruence between the two findings and suggesting the Social Security decision may have been wrong. Justice Kennedy also dissented (although he, too, agreed MetLife had a conflict), finding the majority ruling a departure from the points made in Firestone.

Discussion: Although the Glenn ruling made it perfectly clear that MetLife was conflicted, this ruling may not alleviate the confusion in the lower courts about how the conflict of interest is to be considered. Perhaps the “fault” goes back to the Court’s Firestone opinion and its adoption of a trust law paradigm in the adjudication of benefit claim disputes. Firestone rejected the Solicitor General’s argument that ERISA plans are contracts and that a contract law approach should be applied. The Court also drew the criticism of leading ERISA scholar John Langbein of the Yale Law School. In his essay, “The Supreme Court Flunks Trusts,” 1990 S.Ct.Rev. 207 (1990), Professor Langbein argued the Supreme Court made a serious error in choosing a trust law approach to ERISA cases, opening the door to granting deference to conflicted fiduciaries. Had a contract law approach been adopted instead, no deference would be granted to either party and the administrative law analogue now routinely applied to ERISA cases would never have taken hold.

In addition, the National Association of Insurance Commissioners argued in an amicus brief filed in the Glenn litigation (http://www.abanet.org/publiced/preview/briefs/pdfs/07-08/06-923_RespondentAmCuNAIC.pdf), that giving deference to insurers who render health and disability determinations is contrary to public policy; and the NAIC has stood behind that position by promulgating a model law prohibiting the inclusion of discretionary clauses in health and disability insurance policies which has now been adopted in many jurisdictions (See: 50 Ill.Admin.Code §2001.3 (2005)).

Obviously, an easy and workable universal solution that would avoid the problems set forth in both the concurring and dissenting opinions would have been to impose the de novo standard in all benefit claims adjudicated by insurers; however, it is clear the Court was reluctant to overturn Firestone. Thus, the only way out is for Congress to step in.

Until that happens, though, the Glenn ruling leaves much uncertainty. For example, will discovery be expanded? It would be difficult for a plaintiff to convince a court the conflict was a factor sufficient to be the tiebreaker in a close case if the plaintiff is not given the opportunity to show whether a consultant hired by an insurer may be biased. Certainly, if the insurer is going to argue that it took steps to insulate itself from the conflict by hiring an independent consultant, the plaintiff should have the opportunity to investigate the consultant’s independence. Likewise, if the insurer asserts that the claims personnel have been shielded from financial decisionmaking or that management controls have been implemented, plaintiffs need to be able to investigate. An insurer’s self-serving interpretation of a policy provision must also be subject to discovery as to consistency of application both historically and from claim to claim since the existence of a conflict would promote an interpretation more favorable to the employer/insurer than the claimant and a “reasonable” interpretation may no longer be sufficient to win the day.

Undoubtedly, though, the Court’s ruling will still be somewhat confusing since it remains unclear how the conflict is to be assessed and how strongly or weakly it will be a factor in ensuing litigation. However, the citation to Universal Camera and the Supreme Court’s clear signal “that courts must now assume more responsibility for the reasonableness and fairness of [ERISA plan fiduciary] decisions than some courts have shown in the past,” (340 U.S. at 490) means the current lenient regime of claim reviews is over.

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Medicare Advantage—Whose Advantage?

By, Alice J. Wolfson, J.D., Chair, UP Board of Directors,
Co-Founder, National Women’s Health Network

On July 9th Senator Ted Kennedy flew directly from Boston following his chemotherapy treatment for his malignant brain tumor to cast a decisive vote in favor of proceeding to final passage of a medicare bill. His vote silenced attempts to cut Medicare payments to doctors by over 10% a move which would have benefited the private alternative to Medicare, known as Medicare Advantage. Sick as he was, Senator Kennedy felt that standing up for senior citizens against what he saw as a profit grab by insurance companies was worth the effort. The public and Congressional debates over this bill, however, revealed that few people actually know the difference between Medicare and a Medicare Advantage plan.

For many people turning 65, the question of the difference between a traditional medicare part B plan supplemented by a private “medigap” plan and the insurance company sponsored program known as Medicare Advantage poses a nearly insolvable problem. The purpose of this article is to shed some light on the mysteries that surround this choice.

The Medicare program is structured as a uniform national benefit on the social insurance model. Medicare Advantage plans, or private “Medicare” are the successors to the now failed “Medicare÷ choice program.” The idea behind these programs was that managed care, or the HMO (health maintenance organization) model would reduce Medicare costs and care through better management. But that’s not what happened. Nearly 44 million Americans are now Medicare beneficiaries.1 80% of these Americans get their health care services through the traditional Medicare program—a government sponsored entitlement program and many say, the best thing about turning 65.

About 8.7 million people currently receive medical care through “private” Medicare Advantage (MA) plans. The basic cost of these private plans is borne by the federal government. The government typically pays providers an average of 12% more under MA plans than it would pay for the same services under traditional Medicare plans. These overpayments can exceed 50% and cost each Medicare part B recipient a minimum of $2 more each month whether they are enrolled in the advantage plan or not.

We have all heard lots about Medicare’s fiscal problems. But few people know that many economists place much of the blame for these woes squarely on the shoulders of MA plans. According to the Congressional Budget Office, increased payments to MA plans are a threat to Medicare’s financial future, accelerating the depletion of the Medicare Trust Fund.

If you are or about to be a Medicare beneficiary and you are considering joining a MA plan, you should consider the following:

• MA could cost you more than traditional Medicare. MA plans are required to provide a benefit package that is as good as Medicare but, and this is a big but, the plans do not have to cover every benefit in the same way. Some plans may require a higher co-payment or could place limits on the frequency of services;
• MA plans may advertise increased benefits but there is no guarantee that the plan actually offers more than Medicare offers;
• You may be denied reimbursement if you are traveling in an area out of your network and need emergency care. You may also find that your access to specialists and hospitals out of the network will be restricted or you will have to pay large co-pay for such treatment;
• You may be forced to change your current health care provider if he/she is not in your plan’s “network.”
• You have little protection from fraudulent marketing. Nearly 80% of states report complaints of deceptive or high-pressure sales techniques surrounding the sale of Medicare Advantage plans, but there are few state regulations to protect you. Such techniques have led some Medicare beneficiaries to join a plan without fully understanding that they did not enroll, and thus left, traditional Medicare.
• Plans are not required to provide a prescription drug benefit
• Many plans do not limit the amount of out of pocket payments you may be required to make;
• Without a cap on out-of-pocket spending there is no protection against catastrophic medical expenses;
• The quality of care varies across plans. To date, there is no evidence that the care you receive with a Medicare Advantage will be better than the care you will get from traditional Medicare.

54% of 505 MA plans surveyed in 2004 by the nonpartisan Medicare Payment Advisory Commission charged 20% more for Part B drugs (which include chemotherapy).2 19% of MA’s charged more than 20% or higher for radiation services with only 1/3 capping out-of-pocket spending. 50% of enrollees were in plans with no cap on out-of-pocket spending. 20% were in plans with a cap that applied only to inpatient hospital care.

So when Ted Kennedy left his sick bed to heroically vote for the Medicare Reform bill, he was not just voting against cuts in pay to doctors but he was also voting against Medicare continuing to pay private insurers 13-17% more than traditional Medicare would spend if it covered these services directly, a cost that would have been borne by all medicare recipients across the board. His vote was also against the ongoing attempt to privatize Medicare which would have allowed private insurance company executives (rather than elected legislators) to make all future decisions about what Medicare covers, how much seniors have to pay in deductibles, co-pays, and all the other concerns listed above.

In the end President Bush vetoed the bill on the grounds that it took money away from private health insurers. Senator Kennedy’s heroic vote provided a veto proof majority and marks only the third time that Congress has had the muscle to override a Bush veto.

1. Alliance for Retired Americans, Issue Brief, August 2007, with permission of the Alliance for Retired Americans Educational Fund
2. California Health Advocates, Sept 2007. Informed Choice: The Case For Standardizing and Simplifying Medicare Private Health Plans: www.calhealthadvocates.org/advocacy

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Bach Talk

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New York News

The good news: New York’s highest court denied an insurer’s request to re-argue a landmark case that was decided in favor of policyholders earlier this year. The case, Bi-Economy Market, Inc., v. Harleysville Insurance Co. Of New York, (2007) Case No. SC06-1303, made new law that gives victims of unfair claim practices an important remedy. To read the amicus brief United Policyholders filed in the case, or the final opinion, click on this link: http://www.unitedpolicyholders.org/pdfs/Bi-EconvsHarleyAmicusBrief.pdf

The bad news: Property owners on Long Island and lower Westchester now have something in common with Gulf Coast residents… their insurers are raising premiums, excluding windstorm damage from homeowners policies and imposing percentage instead of fixed dollar deductibles for wind damage. Pay more get less…

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Car Insurance for Teens

Your baby is learning to drive. One of you is going to pay hefty premiums for insurance. With the help of a teenage volunteer, United Policyholders has published a new brochure that educates young drivers on keeping their rates as low as possible. Here are some of the main tips that parents and their teenage drivers should consider:

1. Don’t buy a new car for a young driver.

2. Teenagers need to be specifically named on the family auto policy in order to be covered by that policy. Choose an insurance company that will let you assign a specific car to a specific driver and assign the least valuable car to the teenage driver. If your teenager is a permit driver, check with your insurance company to make sure your policy covers him or her.

3. Raise your deductible to the highest amount you’ll feel comfortable paying out of pocket in the event of an accident.

4. Don’t put in claims for minor accidents or damages unless someone has been injured in which case you must report it promptly.

5. Have your teenager take a safe driving class.

6. Be diligent about reminding your teenage driver that:

a. No one under the age of 18 can drive and use a cell phone in CA and many other states.

b. No one can drive and use a cell phone without a hands-free device in CA and many states.

c. A DUI citation or conviction will raise your rates and may result in losing insurance coverage. Drive sober.

d. Don’t leave valuables, GPS devices or face plates visible in the car.

e. Don’t speed: tickets can trigger big rate increases.

f. A 3.0 or higher GPA will discount your auto premium.

Check with your insurance company to see if it is cheaper to have a separate policy for your teenager or to add him or her to your policy and ask if they offer any other discounts or incentives.

Remember: there are big fines for driving without insurance, so make sure your teenager is covered.
You can request a copy of United Policyholders’ Teen Car Insurance Tips brochure by emailing Emily@unitedpolicyholders.org. These tips were developed for United Policyholders by Luke Barnesmoore.

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Know thy adjuster – Know thy rights

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“From Good Hands to Boxing Gloves,
The Dark Side of Insurance”

by David Berardinelli, Trial Guides Press, 2008.

You don’t have to be a disaster victim, a trial lawyer or a regular visitor to “Allstatesucks.com” to enjoy this book. It’s a good read for anyone interested in what happens when a corporate giant takes the advice of high priced consultants and starts throwing hardballs at its own customers to increase profits. In From “Good Hands” to Boxing Gloves, a well written narrative, New Mexico attorney David Berardinelli tells how he gained exclusive access to documents that exposed Allstate’s unethical practices. Berardinelli is one of the best known policyholder-side experts in the country on the Allstate group of companies. His name is often linked with “The McKinsey Documents.” These documents connect the dots on how Allstate implemented profit-driven strategies with the global business consulting firm of McKinsey & Associates. Allstate fought for years to keep them secret, flaunting court orders, disobeying Florida’s insurance regulator, running up millions of dollars in contempt fines and even temporarily losing their license to sell insurance in the state of Florida. In 2006 Berardinelli and Michael Freeman published a book for plaintiff lawyers only titled: From “Good Hands” to Boxing Gloves - How Allstate Changed Casualty Insurance in America: The Definitive Guide to Handling Allstate Claims. It contains a foreword by UP Amicus Project founder Eugene R. Anderson, Esq. Lawyers around the country rely on the book when trying cases against the nation’s largest property insurer. This year Berardinelli published a public version and we highly recommend it to one and all. Highlights include how Allstate hired McKinsey and Company to create the “Claims Core Process Redesign” that allowed Allstate to increase its profits at taxpayer and policyholders’ expense and how Allstate fought Berardinelli and courts to avoid revealing the slides to the public. To buy the public version of From “Good Hands” to Boxing Gloves, The Dark Side of Insurance.” Visit www.trialguides.com

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October 17, 2008 Live Webcast:
Good Hands to Boxing Gloves: Allstate on the hot seat

Hear attorney/author David Berardinelli and policyholder advocate Amy Bach discuss recent developments relating to Allstate, the McKinsey Documents and unfair claims handling practices during a live Webcast sponsored by Trial Guides. Lawyers can get CLE credit, the program is open to the public. 12-2pm EDT, 9-11am PDT. Register at http://trialguides.com/webinars.htm

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Amicus Project Update

Gene Anderson, Esq., the moving force behind UP’s Amicus Project.		One of the many ways United Policyholders promotes policyholders’ interests is by standing up for insureds in court. We do this by filing “friend of the court” briefs in cases all over the United States. Our goal is to support laws that protect those who pay for insurance protection. Laws are critically important because they force insurers to keep policyholders’ interests in balance with their profit goals. All of United Policyholders’ amicus curiae briefs are prepared and filed by experienced attorneys who specialize in insurance and/or appellate law. Most of the organization’s briefs are prepared and filed pro bono – without charge by volunteers. We are honored and fortunate to have an ever-growing team of Amicus Project brief writers and we are deeply grateful for the contributions they make to our organization’s work. Below is a short synopsis of cases where United Policyholders has appeared as an amicus (friend of the court) thus far in 2008. To read the briefs online, visit the Lawyer/Advocate Resources section at www.uphelp.org. CALIFORNIA DeBruyn v.Superior Court (Farmers Group, Inc.) (2008) Supreme Court of California, Case No. S161000. Issue: Coverage for property damage that is caused by more than one event. This case examines the efficient proximate cause doctrine and Insurance Code section 530 in the aftermath of CA. Supreme Court’s opinion in Julien v. Hartford Underwriters Insurance Company (2005) 35 Cal.4th 747. UP’s brief was written pro bono by Denise Jarman of The Law Office of Denise Jarman in Davis, CA and Chipman Miles and Joel M. Westbrook of the law firm Miles, Miles & Westbrook in Walnut Creek, CA. Everett v. State Farm General Insurance Company, (2008), Fourth Division 2, Case No. E41807, 08 C.D.O.S. 5181. Issue: Insurer and agent/broker liability for failing to procure adequate property insurance policy limits. UP worked hard to convince the CA. Supreme Court to depublish an appeal court decision that puts the onus for setting policy limits on people who are not trained or competent to do so. Amicus briefs on the policyholder side were also filed by the CA. Department of Insurance, San Diego City Councilman Brian Maienschein, RB United, Rebuilding Mountain Hearts and Lives and Case Western Law Professor Ken Klein. UP’s amicus brief was written by UP’s Executive Director Amy Bach with input from Denise Jarman, Gerry Mannion and Alice Wolfson. Fairbanks v. Superior Court of California, Farmers New World Life Insurance Co., et al, real parties in interest, (2008) Case No. S157001, In the Supreme Court of California. Issue: Scope of the CLRA. Whether the provisions of the Consumers Legal Remedies Act, Civil Code Section 1750, et seq. (“CLRA”) which prohibit “unfair methods of competition and unfair or deceptive acts or practices” in the sale or lease of “goods or services” to consumers should apply to the sale of insurance. UP’s amicus brief was written pro bono by Kim E. Card of The Law Office of Kim E. Card in Berkeley, CA. Medina v. Safe-Guard Products International, Inc., (2008) Fourth District Court of Appeal, Division Three, Case No. G038816. Issue: Sale of insurance by unlicensed agents Qualcomm, Inc. v. Certain Underwriters at Lloyd’s, London (2008) CA Supreme Court Case No. S163293 (Fourth App.Dist.Div.One, No. D050433) Issue: Primary versus excess. UP took the position where a policyholder settles with a primary insurance for less than the full amount of the policy, the policyholder may still collect from its excess insurance company if a judgment is rendered or a settlement reached for more than the limit of the primary policy. This brief was written for United Policyholders pro bono by William G. Passannante of Anderson, Kill & Olick P.C. in New York, NY. Safeco Insurance Company vs. Parks, (2008) Court of Appeal, Second Appellate District, California. Case No. B199364 (consolidated with B200267). Issue: Insurers’ duty to disclose all applicable benefits coverages, deadlines etc. under 10 Cal. Code Regs. Section 2695.4(a). This brief was filed pro bono by Sharon J. Arkin of The Arkin Law Firm in Los Angeles, CA. Watanabe v. Blue Shield, (2008), State Court of Appeal, 2nd Appellate District, 2nd Civ No.B 195725 BC (324008) Issue: Bad faith – health ins. Blue Shield of California tried to shield itself from bad faith liability by claiming that Maria Watanabe’s benefits were denied by a medical group which had a contract with Blue Shield. But California law is clear: an insurer cannot delegate its implied covenant duties. The Know-Keene Act does not immunize insurance companies from bad faith liability. To allow an insurer to delegate its implied covenant obligations would effectively allow insurers to eliminate its bad faith liability. Absent the threat of bad faith liability, an insurer has little incentive to afford policy benefits. This brief was written pro bono by Daniel J. Koes of The Law Offices of Daniel J. Koes in Los Angeles, CA. GEORGIA Morrill and The Estate of John Prestiss v.Cotton States Mutual Insurance Company (2008) In the Court of Appeals, State of Georgia. Case No. A08A1391. Issue: Statute of limitations. Insurer attempted to apply contractual one year statute of limitations in contravention of the public policy of Georgia, as established by statute and precedent allowing policyholders two years from the date of loss to file suit. The trial court erred by (1) applying the time limitation provision to a liability claim that is not subject to this provision, (2) ignoring current insurance laws, regulations, and public policy, and (3) refusing to let a jury decide whether estoppel and waiver apply in this case. UP’s brief was written pro bono by Tim Law, formerly with AKO, Phila. now with Reed & Smith, Philadelphia, PA. LOUISIANA Landry et al., v. Louisiana Citizens Property Insurance Corporation (2008), Supreme Court of Louisiana. Companion case to Williams. [Katrina case] Issue: Value Policy Law requires the insurer to make full payment to the insureds regardless that the total loss was a result of a combination of covered and excluded perils under the insurance policy so long as the efficient proximate cause of the loss was a covered peril. UP’s amicus brief was written pro bono by John Ellison formerly with AKO, now with Reed Smith L.P. in Philadelphia, PA and Drew Ranier of Ranier, Gayle & Elliot, L.L.C. in Lake Charles, LA. MISSISSIPPI Corban v. United Services Automobile Association a/k/a USAA Insurance Agency (2008) Supreme court of Mississippi, Case No. 2008-M-645 [Katrina case] Issue: Wind vs. Water etc. (1) In an “all risk” policy, once the insured proves that “a direct physical loss” was sustained, the insurer has the burden of proof to establish what portion of the “direct physical loss” was caused by a specifically excluded event or cause. (2) With a Katrina loss, which contains components of both wind and flood, the insurer should still have the burden of proving, through non-speculative evidence that personal property damage was caused by a specific exclusion. (3) If the court finds the anti-concurrent clause is not ambiguous, it should rule that wind and water damage are separate and only the “flood” damage is subject to the exclusion. (4) If the policy contains Additional Coverage for “collapse” the policy’s exclusion for “water damage” should be inapplicable. UP’s amicus brief was filed pro bono by William F. Merlin, Jr. and Mary E. Kestenbaum of the Merlin Law Group, P.A. in Tampa, FL. PENNSYLVANIA AstenJohnson Inc., v. Columbia Casualty Co. and Fireman’s Fund Insurance Companies, (2008) Case No. 07-2305, United States Court of Appeals for the Third Circuit, On Appeal from the United States District Court for the Eastern District of Pennsylvania. Issue: Asbestos exclusion. Policyholders should have the right to select the policies under which they seek coverage, without fear of prejudice to any Laches or Course of Performance Argument. Courts should not hamstring a policyholder’s efforts to obtain evidence of custom and usage in the insurance industry, particularly where evidence regarding trade usage provides the basis for interpreting the language in the policy. It is essential that policyholders have the opportunity to take broad discovery on matters relating to custom and usage in the insurance industry. Insurance companies should not be allowed to adopt an interpretation that renders a policy provision meaningless. UP amicus brief was written pro bono by Andrew M. Roman and Richard A. Ejzak of the law firm Cohan & Grigsby, P.C. in Pittsburgh. WISCONSIN Plastics Engineering Company v. Liberty Mutual Insurance Company (2008) State of Wisconsin Supreme Court, Appeal No. 2008AP333. Issue: “Occurrence” and “allocation of risk.” Because the incident giving rise to liability was each individual plaintiff’s continuous or repeated exposure to asbestos and not the business decision to manufacture asbestos or a failure to protect against their alleged hazards, the only plausible way to interpret “occurrence” is that it refers to the immediate proximate cause of each claimant’s injuries. UP argued that the Court should conclude that each underlying claimant’s exposure to asbestos constitutes a separate “occurrence.” The Court should also hold that each CGL policy triggered by an asbestos claim must pay “all sums” up to its policy limits, subject to the insurer’s right to seek contribution from other insurers whose policies are also triggered. This brief was written pro bono for United Policyholders by Paul G. Kent and Alan G.B. Kim, of Anderson & Kent. SUPREME COURT OF THE UNITED STATES Jewell v. Life Insurance Company of America (2008) Supreme Court of the United States, Case No. 07-1121. Issue: Denial of disability benefits; ERISA preemption and standard of review. UP’s brief was written pro bono by Eugene Anderson of Anderson, Kill & Olick in New York, NY. Met Life v. Glenn, (2008)U.S. Supreme Court, Case No. 06-923 Issue: Conflict of interest by ERISA plan administrators [See related article on page 2 of this issue] This brief was prepared pro bono by Mark DeBofsky of the Chicago firm of Daley, DeBofsky and Bryant. It was submitted jointly on behalf of the National Employment Lawyers Association (NELA). Pacific Palisades policyholder/ERISA attorney Ron Dean represented NELA and worked with Mark on the brief. Please support UP's Amicus Project with a financial contribution today via the enclosed envelope or online at: www.uphelp.com. We need money to continue this important work and continue our very efficient balance of donated labor and funded expenses.

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WHAT IS UP?

United Policyholders is a non-profit tax-exempt organization founded in 1991 and dedicated to educating the public on insurance issues and consumer rights. UP is a practical resource and a respected voice for insurance consumers throughout the United States. We provide claim assistance to disaster victims, monitor marketplace developments and publish materials on personal and business insurance topics. We file pro-policyholder briefs in precedent-setting insurance cases in every major state. We speak on behalf of insurance consumers in public policy forums.

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