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Kentucky ERISA Disability & Life Insurance Claim Lawyers

Hospital Argues that ERISA Fees were Reasonable, But Will the Court Agree?

April 18, 2022 | by Mehr Fairbanks Trial Lawyers

Recently, the Boston Children’s Hospital asked a judge in federal court to dismiss a case brought by former employees that alleged the charging of “exorbitant” fees relating to the management of ERISA retirement plans. The Hospital argues that fees associated with the plans were not exorbitant and no damage was sustained by plan members under the class, thus the case against them should be dismissed. The Hospital additionally argues that there was no requirement for them to pick the lowest possible costs for administration of their ERISA plans. Further, they argue that the plaintiffs in the class at issue were not deeply invested in the plans that are involved.

The Plaintiffs (former employees of the Hospital) in the class allege that the Hospital’s fiduciary duties under ERISA were breached when they overcharged participants for fees relating to recordkeeping. Further, the Plaintiffs allege that the Hospital encouraged participants to invest in funds that were more expensive than others and underperformed compared to their counterparts. The case was originally brought by four former employees of the Hospital, with the class now encompassing compensation for 18,580 employees. The Plaintiffs state that while participants in similar plans were required to pay between $23 to $42 per year in recordkeeping fees, participants in the Hospital’s plans at issue paid $73. The large size of the plan, according to the Plaintiffs, would have enabled them to negotiate for lower fees if the Hospital had been proactive about ensuring the performance of their duties to the participants.

The Hospital counters in their motion to dismiss that, “ERISA does not require Children’s to select the least expensive or best performing investment, and Plaintiff’s cannot plausibly allege a breach merely by pointing to alternative target date funds that have some similarities and that purportedly cost a bit less or performed a bit better.” Further, the Hospital alleges that the Plaintiffs are essentially attempting to make arguments that are directly opposed, stating that there are no comparable plans that are both less expensive and perform better than that those at issue in the case. Regarding the plans exemplified by the Plaintiffs as less expensive, the Hospital states that the cheaper plans did not perform as well as those chosen by the Defendant. The plans argued by the Plaintiffs to be comparable also had different payment structures and provided different services to participants, according to the Hospital.

11th Circuit Holds that Settlement Amounts may Count as Basis for Bad-Faith Claims

April 14, 2022 | by Mehr Fairbanks Trial Lawyers

Recently, an 11^th Circuit Court in Florida held that when a private settlement constitutes an “excess judgment” under an insurance policy, the insured(s) can use the amount in the settlement to bring a bad-faith claim against their insurer. This decision overturns a previous 2019 decision (which was unpublished) stating that the only method through which insureds could establish a bad-faith excess judgment claim was after the case had reached a jury verdict at trial. The insureds in this case are now able to bring suit against their insurer, Geico Insurance, for allegedly agreeing to a settlement in excess of policy limits.

The policy at issue in this case was an auto insurance policy that gave coverage for up to $100,000 (per person) for bodily injury. The insureds under the policy were at fault in an accident, causing serious bodily injury to the other party, the costs of which exceeded the policy limits. When the parties could not reach an agreement during settlement negotiations, the injured driver sued the insureds in Florida state court. The insureds were then provided with counsel by Geico for the duration of the suit, as was dictated by their policy. The parties eventually reached an agreement in the form of a settlement, but the amount agreed upon drastically exceeded the policy limits. The terms of the settlement delineated that one of the insureds (the owner of the vehicle involved in the accident, but not the driver at the time) would pay to the injured party $474,000. This amount is small compared to the amount the settlement required of the at-fault driver, which came out to $4.47 million. The settlement also included that Geico would agree to not hold the insureds in breach of the policy through acceptance of the offer.

Florida state law provides that insureds may bring bad-faith insurance claims when the insurer grants an “excess judgment,” meaning that the insurer (in bad-faith) chose to accept a settlement agreement that exceeded policy limits. Under this principle, the insureds filed a claim against Geico, requesting damages amounting to the total agreed upon in the settlement that was over the $100,000 policy limit. Prior to this decision, the case against Geico would have been dismissed since the excess judgment was not award through a jury verdict after trial. Judge Kevin C. Newsom disagreed with this precedent, as his opinion on the matter stated, “a jury verdict is not a prerequisite to an excess judgment in a bad-faith action.” Judge Newsom’s reasoning relies on Florida state law, reiterating that when insureds are, “subject to excess judgments, they [can] prove causation in their bad-faith case.” Further, Judge Newsom states that previous opinions in lower courts which had relied on the older decision may not have properly interpreted the state law. He states that the reliance on the precedent was caused through a misinterpretation of another previous case in which a jury verdict happened to be present, which should not have resulted in a requirement that a jury verdict must exist in all cases.

Austin Mehr Appointed to a Term on the Carnegie Center for Literacy

April 6, 2022 | by Mehr Fairbanks Trial Lawyers

austin-mehr-appointed-to-a-term-on-the-carnegie-center-for-literacy_2-200x300 On March 25, 2022, Lexington-Fayette Urban County Government Mayor Linda Gorton’s recommendation to appoint Austin Mehr to a term on the Carnegie Center for Literacy was approved by The Urban County Council. Austin’s term will extend to September 1, 2025.

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North Carolina Court Grants Class Certification and Approves Settlement Amount in ERISA Case

March 10, 2022 | by Mehr Fairbanks Trial Lawyers

Recently, a Federal Court in North Carolina approved a settlement for over $3 million between a Coca-Cola (Defendant) bottling plant and a class of former employees. The named Plaintiffs brought the action against the Defendant alleging that the company had violated their fiduciary duties by presenting “risky” investment options to ERISA plan holders while additionally charging excessive fees. The Court held that the amount of the settlement was “fair, reasonable and adequate, taking into account the costs, risks and delay of litigation, trial and appeal.” Pursuant to this decision, the Court also ruled that the class presented by the Plaintiffs was appropriate for certification and includes all “participants and beneficiaries” under the plan in question. This totals around 13,000 individuals, according to a motion brought by the named Plaintiffs which is now moot after the Court’s certification of the class.

The details of the settlement agreement include statements that the Defendants denies any “wrongdoing or legal liability,” as well as the Defendants’ opinion that the group of 13,000 individuals was not appropriate for class certification. The specific wrongdoing alleged by the Plaintiffs is that the Defendants could have used their large size as a corporation in order to ensure that record-keeping and management fees were low for plan participants, which the failed to do. Additionally, Plaintiffs contend that the Defendants “imprudently” chose higher cost management services, though they had been presented with lower cost alternatives. According to the Plaintiffs, these decisions made by the corporation and its plan fiduciaries caused monetary losses into the millions. Lastly, the Plaintiffs contend that coupled with the breach of fiduciary duties through the above-mentioned means, the Defendants also breached their duties through their failure to disclose information concerning the fees and “risks” of the investment options they had selected. Further, the Plaintiffs state that the Defendants did not make an effort to actively monitor those in charge of administering their ERISA plans, thus further acting imprudently and in violation of their duties to the participants.

Prior to this proceeding, the Defendants had moved to dismiss the case in early 2021, a request which was subsequently denied in March the same year. The Court ruled that the Plaintiffs had presented a case that should move past the initial pleading stage of the trial process, and thus dismissal would be inappropriate. The parties will now move forward with the settlement agreement, with the Plaintiffs now as a certified class.

Interruptions to Travel in 2020 Spur Travel Insurance Policy Holders to Bring Suit Against Insurers, Arguing for Reimbursement of Premiums

March 3, 2022 | by Mehr Fairbanks Trial Lawyers

In 2020 more than ever, the risk of interrupted travel plans loomed for those seeking to spend time and money planning trips in an uncertain world. With the Covid-19 pandemic an ongoing source of disruption for travelers across the globe, the decision to seek insurance coverage for trips was, and remains to be, justified. But what if the insurer doesn’t hold up their end of the deal? A federal court in New York is preparing to hear such a case in Seibel v. National Union Fire Insurance Company of Pittsburg, PA et al. This case concerns travel insurance policies bought by the Plaintiffs, who are alleging that the insurers overcharged on certain pre-departure and post-departure bundled plans by not reimbursing the “unearned portion of premiums” on trips that had been cancelled.

The suit was filed by the named Plaintiff, Nicholas Seibel, on behalf of a class including other individuals who held travel insurance policies with the Defendants, and were allegedly improperly required to pay premiums due to the policies’ failure to distinguish between pre-departure and post-departure coverage plans. This class is stated to be over 100 members, all purchasers of “lump-sum travel policies.” There is an additional subclass, asserting violations of Pennsylvania state law, specifically the Pennsylvania Consumer Protection Act. In the main case at issue, Seibel alleges that the Defendants routinely charge policy holders for all-inclusive travel insurance plan premiums, then subsequently refuse to reimburse any portion of the premium costs that were not earned. In fact, these premiums were impossible for the policyholders to earn due to cancellations occurring before the chance to depart.

Seibel had purchased two policies from the Defendants, one for a 10-day trip to Paris and one for a 5-day cruise to Miami. The Paris trip cost over $29,000 (as it was Seibel and four other travelers), and was cancelled in August of 2020, two months before the proposed departure date (intended to be in October, 2020). Each policy respectively provided the same pre- and post-departure coverage, the former including a promise of reimbursement for “non-refundable deposits” upon the cancellation of a trip before departure. The post-departure coverage included provisions for reimbursement for interruptions of the trip, medical emergencies, and the loss or theft of baggage. Essentially, Seibel argues that since premiums are paid to cover risks that may take place post-departure, if said departure never occurs, the insurer should be required to refund the amount of premiums paid on the policy. The Plaintiffs’ complaint further alleges that the policy does not include any provision for how to deal with the reimbursement of unearned premiums that have been pre-paid by the policy holder and qualifies the areas that are covered under a provision as “indemnification for travel related perils.”

Are Insurers Required to “Make Good” on their Promises of Coverage? A California District Court is Poised to Interpret the Novel Issue of a “Making Good Provision”

February 28, 2022 | by Mehr Fairbanks Trial Lawyers

When a policy contains a “cost of making good provision,” is an insurer able to wholly deny coverage falling under its purview, even if it just applies to a small part of the claim? This question was recently brought to the Central District Court of California in The Haven at Ventura, LLC v. General Security Indemnity Company of Arizona, et al. In this case the Plaintiff, Ventura, brought suit against the Defendant, General Security, alleging an improper denial of benefits under a $69 million “builders risk policy.” The underlying circumstances giving rise to a claim for coverage in this action began in September of 2020, and concern mold damage to new, incomplete buildings on the Plaintiff’s property. After expert evaluation, it was determined that the buildings needed “detailed remediation,” a request for the cost of repairs subsequently filed with the Plaintiff’s insurer. During this period, the correction of the damage sustained caused the opening of the residential property to be delayed, thus resulting in additional financial damages to the Plaintiff. The claims brought by the Plaintiff under the builders risk policy included “faulty workmanship” and “excluded dampness of atmosphere.” Coverage was subsequently denied by the named Defendant and several other involved insurance providers.

The Plaintiff states that multiple attempts were made to avoid the process of litigation, but upon the inability to come to an agreement, they felt it necessary to file suit. The Plaintiff brought their claim against the Defendants for breach of contract and is asking the Court for upwards of $5 million as a result of the loss of income from their inability to collect rent during the period that the damaged buildings were undergoing repairs. An interesting aspect of this litigation is the novelty of the “cost of making good provision” at issue in the policy, as it is not yet as common in the United States as in foreign courts in Europe and Canada. This kind of provision essentially requires the insurer to cover the costs of making a covered property “good” or in other words, back to its original condition after damage as occurred. The Plaintiff’s argument relies on the intent and purpose of such a provision, and states that a complete denial of coverage is in opposition with the intended results of its inclusion in the policy. The Plaintiff further argues that in order to determine how the “make good” provision should be interpreted the Court should look to the example set by countries that have applied them for decades. The Plaintiff asserts that under this method of interpretation, their argument that the “make good” provision did not apply to the entirety of the claim and thus cannot be relied upon to deny the claim in full must prevail.

Counsel for the Plaintiff states that an argument blaming “damp atmosphere” for the mold damage is not based on adequate evidence, and thus the Defendants’ assertion that this was the underlying cause of the mold damage is incorrect. Further, the Plaintiff contends that the relevant provision applies to damages from “faulty workmanship” taking place directly adjacent to a loss, and not the kind of damages at issue in this circumstance, therefore the Defendant’s justification for denial under the “make good” provision is invalid. The Defendants have not yet responded to the allegations, though the next steps in this case will undoubtedly be cause for attention due to the novelty of the provision at issue.

COVID-19 AND INSURANCE CLAIMS

February 18, 2022 | by Mehr Fairbanks Trial Lawyers

covid-19-and-insurance-claims Though the COVID-19 pandemic may now be the new normal to many of us, courts are continuing to address new questions stemming from ongoing issues related to the pandemic. As businesses struggled to remain unharmed by the pandemic and protect their employees from illness, some insurers have made the task even more difficult through denials of coverage relating to COVID. A Federal Court in Virginia recently dealt with one such issue in Carilion Clinic v. American Guarantee and Liability Insurance Company.

The Plaintiff in this case, Carilion Clinic, brought suit against their insurer alleging damages for the insurer’s denial of coverage under the Plaintiff’s $1.3 billion property damage and business interruption policy, for which they paid approximately $1 million in premiums. The insurer failed to honor the terms of the policy and provide coverage after more than 10% of the Plaintiff’s employees became ill with COVID. The Plaintiffs alleged that this failure manifested in two ways, first that the insurer failed to provide coverage for property damage sustained through the spread of COVID on company property, and second for denial of coverage relating to business interruption.

Though many courts have held that damages related to COVID do not require coverage, the Court in this case stepped away from that line of thought and stated that the Plaintiff’s claims relating to business interruption warranted extended discovery, as the filing deadline resulted in a hasty discovery process and issues relating to business interruption had not been fully presented to the Court.

M. Austin Mehr Announced as One of the Top 100 Civil Plaintiff Trial Lawyers in Kentucky

January 13, 2022 | by Mehr Fairbanks Trial Lawyers

The National Trial Lawyers Announces M. Austin Mehr as One of Its Top 100 Civil Plaintiff Trial Lawyers in Kentucky For Immediate Release

The National Trial Lawyers is pleased to announce that M. Austin Mehr of Mehr Fairbanks Trial Lawyers has been selected for inclusion into its Top 100 Civil Plaintiff Trial Lawyers in Kentucky, an honor given to only a select group of lawyers for their superior skills and qualifications in the field. Membership in this exclusive organization is by invitation only and is limited to the top 100 attorneys in each state or region who have demonstrated excellence and have achieved outstanding results in their careers in either civil plaintiff or criminal defense law.

The National Trial Lawyers is a professional organization comprised of the premier trial lawyers from across the country who have demonstrated exceptional qualifications in criminal defense or civil plaintiff law. The National Trial Lawyers provides accreditation to these distinguished attorneys, and provides essential legal news, information, and continuing education to trial lawyers across the United States.

MFP RECEIVES FAVORABLE ORDER REMANDING CASE TO STATE COURT

October 19, 2021 | by Mehr Fairbanks Trial Lawyers

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In the case of Legacy Health Services, Inc. v. Illinois Union Insurance Co. and Columbia Casualty Co., Defendant Illinois Union Insurance Company filed a Notice of Removal, which transferred the case to federal court in the Western District of Kentucky. On behalf of the Plaintiff, Legacy Health Services, Inc., Mehr Fairbanks Trial Lawyers filed a motion to remand the case back to Christian Circuit Court. On October 14, 2021, the federal court granted Plaintiff’s motion to remand, finding that Defendant Illinois Union Insurance Company had not met its burden of showing that removal was proper. Since the federal court did not have jurisdiction, removal was improper. The case has been remanded to state court.

Mehr Fairbanks Trial Lawyers Wins Discovery Fight with Allstate

September 9, 2021 | by Mehr Fairbanks Trial Lawyers

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In the Kentucky bad faith case of Wright v. Allstate Property and Casualty Insurance Company, Allstate refused to turn over its claim file except for a two-month window, even though the claim duration was from 2014 to 2019. MFP filed the case against Allstate for unfair claims settlement practices act violations, alleging delays in making a fair offer to Mr. Wright who was seriously injured in a car crash. The trial Court rejected Allstate’s argument and ordered Allstate to produce the entire file, which would include those portions of the claim file that was created after the bad faith claim was initiated.

The ruling follows Kentucky law that says claims files are potential evidence that the claimant lawyers should get to see, because they can provide proof of bad faith. An insurance company is required by law to record its activities in the claim file. This can provide an excellent record of what the Insurance company was doing, what they were really thinking, and what they were NOT doing.