On your side – not if you’re Helen Politz: Politz v Nationwide

politz-2...Mrs. Politz, who is sixty-seven years old, has lost everything she owned, has moved three times since Hurricane Katrina, undergone open-heart surgery, taken care of her terminally ill husband until he ultimately died during this litigation, and has had to come out of retirement and go back to work to make ends meet due to Nationwide’s denial of her claim…Plaintiffs Response to Defendant’s Supplemental Motion for Summary Judgment and Memorandum of Authorities (page 2).

Politz v Nationwide was introduced to SLABBED readers in a post of randomly selected Nationwide and State Farm policyholder cases in Southern District Federal Court.  A more detailed review was presented several days later following an Order issued by Judge Senter.

Although covered in the post referenced above, a review of what was learned about the Politz claim from Judge Senter’s Memorandum Opinion of the Order will be helpful to the discussion of Mrs. Politz’s claim for mental and emotional distress:

  • John Politz is now deceased, and claims for damages on his behalf are no longer viable.
  • Their residence was insured under a Nationwide homeowners policy providing limits of coverage of $106,800 (dwelling), $10,600 (other structures), $74,760 (personal property), and $21,360 (loss of use).
  • This Nationwide policy excludes damage caused by flooding, including storm surge flooding.
  • Plaintiffs’ home was reduced to a slab by the storm forces.
  • Nationwide denied any liability for the plaintiffs’ loss. Nationwide did not deny that a part of the plaintiffs’ loss was from a covered cause, i.e. windstorm, but Nationwide denied any liability in light of the concurrent cause language in the policy.

Nationwide eventually paid $30, 339.57 for property damage; but, the payment wasn’t offered until July 2007, almost two years after Katrina left the Politzes with nothing more than a slab and an insurance policy providing coverage of $181,560 total for home and contents.

Judge Senter was clear about his position on the part of the case that will be tried in phase one of the trial on the Politz claim.

In Dickinson v. Nationwide, 2008 WL 1913957, I addressed Nationwide’s argument on this point at considerable length. Suffice to say, it is still my view that Nationwide’s concurrent cause language does not exclude any covered damage to the insured property that occurs before the damage done by storm surge flooding.

Since Nationwide is relying on an exclusion from coverage, i.e. the flood exclusion, Nationwide has the burden of proving the merits of this policy defense.

However, that raises the question of how Nationwide can defend the case on its merits without proving the Company failed to use reasonable care when handling the Politz claim.

The underlying concept is that one has a legal duty to use reasonable care to avoid causing emotional distress to another individual. If one fails in this duty and unreasonably causes emotional distress to another person, that actor will be liable for monetary damages to the injured individual.

As Judge Senter points out in his Memorandum, Nationwide believes it has used reasonable care in handling the Politz claim:

Nationwide asserts that its actions in adjusting this claim were reasonable in light of all the facts surrounding the loss and in light of the then existing jurisprudence on the concurrent cause language in the policy. Nationwide therefore seeks summary judgment on the plaintiffs’ claims for negligence and for punitive
damages.

Emotional distress is defined as a claim of damages in lawsuits for injury due to the negligence or intentional acts of another.  Interestingly, if intentional, the intent of the act need not be to bring about emotional distress. A reckless disregard for the likelihood of causing emotional distress is sufficient.

The docket alone provides abundant evidence Nationwide failed to use reasonable care – particularly after the death of Mr. Politz in February 2008 and definitely after April when Judge Senter issued the Dickinson decision.  All but seven (7) of the 267 items on the docket were entered after May 1, 2008.

Judge Senter, however, while declining “Nationwide’s invitation to grant summary judgment” on the Politz claim of  “mental and emotional distress”, did place restrictions on testimony that would support the claim.

In light of…[the testimony of Dr. Mark Babo, one of Mr. Politz’s treating physicians]…I will not permit Mrs. Politz to venture an opinion that Nationwide’s actions were the cause of her late husband’s hypertension, diabetes, anxiety, claustrophobia, depression, or his death from osteomyelitis.

While Mrs. Politz may, in good faith, have the subjective belief that Nationwide’s refusal of her claim for storm damage contributed to her heart condition and to her “depression,” I will not permit her to express that belief in the absence of corroborating medical testimony.

Any discussion of mental or emotional distress will be excluded from evidence during the first phase of this trial when the issue of contract damages alone will be decided…I will limit the evidence that will be admitted in support of the plaintiffs’ claims for emotional distress.

As Counsel for Mrs. Politz points out in the Motion for Clarification and Reconsideration, Judge Senter’s Order was even more restrictive.

The Court’s Order goes even farther than the Court’s  Memorandum Opinion, stating that the Defendant’s Motion to strike the Plaintiffs’ claims for emotional distress will be granted “as to any evidence that Mrs. Politz’s heart condition or ‘depression’ was caused by Nationwide’s actions in adjusting the Politzs’ claim and as to any evidence that Nationwide’s actions caused Mr. Politz’s hypertension, diabetes, anxiety, claustrophobia, depression, or his death from osteomyelitis.”

As this Court has already ruled that Mr. Politz’s damages are not recoverable since he is deceased, that portion of the ruling appears to be moot and will not be addressed in this Motion.

Although no one would desire this result,  from Mrs. Politz’s perspective, excluding the impact of Nationwide’s actions on Mr. Politz may be like letting the Company get away with murder.  Research on the impact of stress suggests that, in a sense, she would be correct; and, the absence of consideration based on the easily accessible research is where Nationwide falls short of reasonable care with the agressive litigation evidenced on the docket.

Katrina caused the property damage and Nationwide had no more control over that than the company had over the way its policyholders would react to their loss.  What Nationwide controlled was the way it reacted to its policyholders.  Judge Senter appears to make a distinction in the Company’s conduct before and after his April 2008 ruling in Dickinson v Nationwide:

I do not believe an insurer can be found to be negligent or to be acting in bad faith when it is following a reasonable interpretation of its policy language, even if its interpretation is not adopted by the courts.

Mr. Politz died approximately two months prior to that ruling.  However, it is possible to be negligent in terms of reasonable care with or without bad faith in claims handling.  Consequently, to the extent Nationwide’s claims handling can be shown in research as having a negative impact on his health, testimony should be allowed as his death impacted the health and well-being of Mrs.  Politz.

Findings from scientific research have a proven reliability that should be accepted as corroborating medical testimony.

Osteomyelitis is a bone infection that often starts in another part of the body and spreads to the bone through the blood.  A summary of Psychological Stress and the Human Immune System: A Meta-Analytic Study of 30 Years of Inquiry (Segerstrom & Miller, 2004) reports:

Chronic, long-term stress suppresses the immune system. The longer the stress, the more the immune system shifted from they adaptive changes seen in the “fight or flight” response to more negative changes, first at the cellular level and later in broader immune function. The most chronic stressors – stress that seems beyond a person’s control or seems endless – resulted in the most global suppression of immunity. Almost all measures of immune system function dropped across the board.

The immune systems of the elderly or those already sick are more subject to stress-related changes.

The authors also found that age and disease status affected a person’s vulnerability to stress-related decreases in immune function. It seems that illness and age make it harder for the body to regulate itself.

The longer the stress, the more the immune system shifted from potentially adaptive changes (such as those in the acute “fight or flight” response) to potentially detrimental changes, at first in cellular immunity and then in broader immune function. This analysis suggests that stressors that turn a person’s world upside down and appear to offer no hope for the future probably have the greatest psychological and physiological impact.

Mr. Politz’s other conditions would have been similarly vulnerable to the reduced immunity from stress.  Although not mentioned, it is likly he experienced some stress related cognitive disfunction.  Johns Hopkins researchers have linked high levels of the stress hormone cortisol with a decline in cognitive performance in older individuals, as reported in Archives of General Psychiatry

The researchers found that as cortisol levels rose, cognitive performance declined in a manner comparable to the aging process. For example, the cortisol-related slide in language skills was similar to what would be expected from someone who had aged nearly six years. A possible explanation is that chronic stress leads to malfunctions in the brain pathway that both regulates cortisol production and influences the health of brain cells, resulting in a greater degree of wear and tear on the brain.

Other research suggests stress induced memory processes could account for some of the inconsistencies in Mrs. Politz’s testimony, for example:

Stress is a major modulator of brain function and cognition. Depending on the circumstances, stress can either facilitate or impair memory processes…

Of particular interest is how well  Mr. Politz was able to control his diabetes during this period.  Research from the National Institute on Aging published in Nature Neuroscience explains the link.

Scientists identified one potential mechanism underlying the impaired cognitive abilities associated with diabetes.

Cortisol production is controlled by the hypothalamic-pituitary axis (HPA). People with poorly controlled diabetes often have an overactive HPA axis, and the adrenal gland produces excessive cortisol.

The scientists note that this might also explain the connection between stress-related mood disorders and diabetes found in human population studies.

Am I suggesting an insurer write a check without investigating the claim if the policyholder is retirement age or older? Not at all.  However, what I am suggesting is that insurers have  a responsibility to exercise reasonable care that requires consideration of  the age and health status of their policyholders when adjusting a claim.

Reduced immune system and cognitive functioning are only two of the medical conditions associated with stress.  None can be ignored, particularly following a disaster.  Otherwise, we will continue to see the situation described in the Motion for Clarification filed by Mrs. Politz’s counsel a year after her husband died:

Prior to Hurricane Katrina, Mrs. Politz and her husband were retired, living on the Mississippi Gulf Coast. When Hurricane Katrina hit, they lost everything they owned. Even then, they would have been able to move on, had Nationwide acted in good faith and paid their claim. It paid them virtually nothing for two years. As a result of its conduct, Mr. and Mrs. Politz were forced to take out two SBA loans (one for the slab where their home used to be, one for the house they had to purchase many months later to get them out of the FEMA trailer).

They were eventually forced to file suit against Nationwide to pursue their claim, and fought vehemently for almost three years. Mr. Politz then died not knowing whether Nationwide would ever pay what it owed, and without knowing whether his wife would ever be taken care of. Mrs. Politz, still stuck with Nationwide refusing to pay her claim, even after suit had been filed, even after her husband died, had to go back to work to make ends meet at sixty-seven years of age.

Nationwide is not on her side.

13 thoughts on “On your side – not if you’re Helen Politz: Politz v Nationwide”

  1. The courts have to punish companies for these unjustifiable delays and denials. This is not a game for the lawyers. They are toying with peoples’ loves.

  2. Brian:

    Actually, it is a game for some lawyers, and one for which they are well-paid. In late 2006 a State Farm lawyer (an older man who has been around for a long time) told me when we were walking out of the Eastern District of Louisiana courthouse, “These cases are really fun.” That kind of summed things up for me.

    Great, informative post, Nowdy.

  3. Mrs Politz’s subjective belief as to what caused her husband’s unfortunate death isn’t admissible. That shouldn’t be a surprise to anyone. Although you never say this explicitly, it ‘s clear that Mrs Politz has no competent (read “medical”) evidence that stress caused her husband’s death. No one would argue the science you cited – chronic stress can cause health problems. This is general causation. Mrs Politz lacks specific causation – evidence that stress caused Mr Politz’s health problems. Absent that proof, Judge Senter gets it exactly right.

  4. Courts have allowed such testimony most recently in Dickerson v Lexington which was affirmed by the 5th Circuit.

    The legalease is pure pretend IMHO. You lose your house and your insurer does not pay. To pretend the associated stress is not severe without health impacts is beyond silly.

    Having lived the slabbed experience I’ll grant Nationwide’s outragious behavior may have been but one of several stresses faced by the Politzs but it is also equally true Nationwide was the primiary obstructionist in Mr and Mrs Politz’s lack of ability to move on absent going deep into debt with the SBA.

    Is anyone else struck by the fact that once again the taxpayers have ultimately funded Mrs Politz’s recovery as Nationwide did not honor their contract with them?

    sop

  5. All of us who lived through Katrina (as well as those of us who lived through Camille) suffered stress from the storm and from dealing with our insurers. But what “all of us know” shouldn’t be enough in court. Courts require proof – facts admissible under the Rules of Evidence, both state and federal. Sympathy for Mrs Politz, as well-deserved as it is, is no substitute for evidentiary fact.

  6. I don’t talk about Camille so much after Katrina Jim.

    I think that is my point, the stress evidence is so obvious it slaps us all across the face. As I’m not a lawyer I can’t comment specifically on the rules of evidence, all I know is in Dickerson testimony about the impacts of the insurer’s conduct on the insured was allowed.

    BTW – Welcome back Jim.

    sop

  7. I’m on borrowed time as my computer is out for a check-up – which means I’m also without access to my research notes.

    However, I wanted to add my welcome to Jim and offer a few related points that I’ll back up after I pick up my computer late today.

    “Stress” research falls into at least two categories – one of which speaks to the type of stress associated with events such as disasters.

    One falls under “social science research”. We often see these findings in news and magazine articles in some variation of “the leading cause(es) of stress. One study I reviewed was a poll with the results ranked. #1 was finances and a close #2 was work with a noted relationship between the two. We saw evidence after Katrina – people trying to pay for a place to live and pay mortgage on the damaged or destroyed they were living in before the storm.

    There’s also a lot of research showing the stress associated with moving – including the not often mentioned loss of relationships with nearby friends and neighbors. And, then, there is grief with on noted researcher suggesting the grief process applies to all loss, not just death.

    The impact of this type of stress on individuals varies with some more resilient that others – but IMO these stressors are what most of us typically associate with Katrina.

    We know more today than ever about pervasive stress – and more about the impact of stress on populations that are vulnerable by virtue of age or health status.

    The very young and the not so young (older but not just the frail elderly), for example, are age vulnerable to pervasive stress. In the very young this type of stress can actually inhibit brain growth and development. Later in life, it’s reflected in reduced cognition, memory loss the most common. The reduced functionality of the body’s immune system is a significant factor that has even greater impact when there is an underlying physical condition.

    I recall from my notes that claims of mental/emotional distress falls into different categories. In my non-lawyer language, one is distress by neglect and the other intentional – and within the intentional there is one where the intent doesn’t have to be an intent to distress and another, the most severe, where the intent to cause distress is deliberate.

    It is my understanding that only claims of the most severe (i.e., claims of the deliberate attempt to cause mental/emotional distress) actually may (but not always) require a collaborating medical testimony.

    I believe Mrs. Politz’s claim is for neglect and and the lesser form of intentional distress – neither of which requires a collaborating medical opinion according to the plain English reading of the law Judge Senter quotes.

    I will add, however, that the insured value of the property is inversely proportionate to the docket. In other words, this case has a lot more lawyering than one would expect from the money involved – suggesting, perhaps, that I’m not the only one who thinks the death of Mr. Politz is relevant to Mrs. Politz’s claim for a level of mental and emotional distress far beyond that experienced to some extent by all victims of a disaster.

  8. There is a lot of possible evidence in addition to or instead of the widow’s opinion. It is too convenient to say he is dead so whatever they did to him is moot. There must be observations by her and others of changes in his behavior, statements he made, etc that would be valid evidence to consider, more valid and more scientific than a State Farm expert’s engineering report. These tactics took years off a lot of lives. And still are.

  9. Now that we’ve experienced disaster on this scale, it seems pretty obvious that the most cost effective way to deal with the situation is to add a wind coverage option to the flood policy.

    We have to be able to get families and communities back on their feet faster.

  10. FEMA should start billing the insurers for the costs of trailers and other taxpayer assistance to shelter people during the year or two or three that their insurers delayed the fair reolution of their claims.

  11. It’s a shame the state is stuck with the long-term cost of all the adverse outcomes – and that federal assistance after a disaster does so little in terms of the family support services needed to prevent/reduce those adverse outcomes.

  12. Many years ago, I learned about the function of “Risk Managers”. That position has different titles in different industries but, it makes the insurance industry look like the classic three monkeys.

    To wit: What do you do?
    First monkey: I sell insurance.
    Second monkey: I collect premiums.
    Third monkey: I deny claims.

    Case studies prove that a word or two, buried in the small print of a long paragraph of legalese, will never be discovered by the goose that lays the golden monthly premium… until it’s too late. Further, the court system is not now and never has been about true and reasonable justice. It’s about submitting an argument with supporting evidence, no matter how thin or weak, that convinces a judge or jury to agree with your side of the argument.

    I do not know this Mrs. Politz but I sympathize with her plight and that of so many others who “thought” they had insurance that would pay specified amounts in the event of a disaster (or illness) only to find out that the insurer classified the event as one of the “specific exclusions”. Logically, the insurance company should have weighed the legal fees and court costs against the amount claimed and made some form of settlement. In cases like this however, someone probably advised the “company” that, such a settlement would set a very expensive precedent.

    The amount of money spent litigating denied claims is a huge and very profitable business so, why would it change? Look who’s making the laws under which it operates.

  13. It is even worse in this case Mr Politz because there was no wind exclusion in Mrs Politz’s policy. This case has just settled and I am certain that Nationwide, with the help of Magistrate Robert Walker were able to get out on the cheap. Fair enough – it is the price we pay for putting right wing idealoges with insurance defense backgrounds on the bench.

    You comments are well taken and spot on.

    sop

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