Category: USAA

The Price We Pay For “Pro-Business” Courts

As I’ve said in prior posts, I firmly believe Americans can no longer claim we’re “a government of laws not of men” as John Adams, our 2nd US President once pronounced. Adams’ words came to epitomize the venerable “rule of law” in America. In his era, the critical debate was “rule of law” vs. “rule of man.” The prospect that America might become “a government of men not of laws,” is exactly what Adams and our founders feared most, and warned us to stay away from. In their day, “rule of man” referred to the British King George III, who . . . well, just take a look for yourself:

In 1776, the year of our Declaration of Independence, Thomas Paine anonymously wrote a pamphlet titled Common Sense which stated: “in America, the law is king. For as in absolute governments the King is law, so in free countries the law ought to be king; and there ought to be no other.” Adams, a contemporary of Paine, expounded on Paine’s Common Sense, and made sure the Massachusetts Constitution of 1780 included the words “a government of laws not of men.”

In Adams’ and Paine’s day, the King was law, and he served no one except himself. Today, billionaire monopolies are the “King makers.” By purchasing our legislatures, individual judges and elected officials, they bastardize “the rule of law.” Their aim is make America a government of men, not law. This is what happens every day in Latin America, and why we call them “third world.” If we acquiesce, and accept their bastardization of America’s founding premise, we’re right back where we started in 1776. Put another way:

we cannot let this ↓ Continue reading “The Price We Pay For “Pro-Business” Courts”

Da Corban spin continues: AIA prefers denial while the National Underwriter carries III press release calling it news

Robert Hartwig isn’t the only prostitute (I mean shill) who will say or do anything (and I mean anything) for the right amount of money. Not to be left out and preferring denial over Hartwiggian threats the AIA issued the following press release: (Nowdy isn’t it about time we got some more hits out of Montana on my post about former Bush Groupie Marc Racicot)

The decision issued yesterday in the case of Corban v. USAA by the Mississippi Supreme Court confirms that the water damage exclusion and anti-concurrent causation (ACC) clause – two key issues in Hurricane Katrina litigation — are valid provisions of the insurance contract and will continue to be important to insurers in adjusting wind versus water claims, says the American Insurance Association (AIA).

“First, and most importantly, the Corban decision reaffirms the longstanding flood exclusion provision found in most homeowners’ insurance policies, that expressly excludes coverage for hurricane driven water (or storm surge),” said James Whittle, AIA Assistant General Counsel. “The water damage or flood exclusion has now withstood every post-Katrina court challenge, and remains a part of regulator-approved insurance contracts throughout the country.” .

“Second, the court upheld the use of the ACC clause that was at issue before the court,” said Whittle. “With this ruling the court has provided meaningful guidance to consumers and insurers. Nothing in this decision changes the important role that insurers play in recovery by adjusting claims according to their contracts with policyholders.”

Meantime the National Underwriter has emerged from their months long Corban slumber carrying a III / AIA press release billed as a news story. While I don’t necessarily buy into James’ harsh critique of Anita Lee’s report on Corban it is worth pointing out Anita Continue reading “Da Corban spin continues: AIA prefers denial while the National Underwriter carries III press release calling it news”

Corban v. USAA

CORBAN v. USAA – THE 1500 DAY GREEK TRAGEDY

Pardon the obvious patronage, but it’s fitting that Slabbed pay homage to the dedicated lawyers and astute circuit judge who were involved in Corban’s journey to the Mississippi Supreme Court. FOR THE PLAINTIFF: Judy Guice; Clyde Gunn; Richard Phillips; Christopher Van Cleave; Neil Harris; William Corban Gunn. THE CIRCUIT COURT OF HARRISON COUNTY: Honorable Lisa Dodson.

Yesterday, October 8, 2009 – exactly one thousand five hundred (1,500) days after Katrina – the Supreme Court unanimously ruled that the Harrison County Circuit Court erred in applying the Fifth Circuit’s interpretation of an ACC clause.  First, when I say “erred,” that doesn’t mean the Judge botched it. She didn’t. As a matter of fact this particular Judge, Lisa Dodson, did exactly what a judge is supposed to do in this situation – defer. Asked to rule on competing summary judgment motions, Judge Dodson was forced to chose between the devil – in this case 5th Circuit Judge Edith Jones – and the deep blue sea – our own Supreme Court. She did the right thing, though it meant walking with the devil a while. More on “Dodson’s dilemma” below.

First, let’s de-bone Corban. The decision says the ACC clause cannot be used to defeat a wind loss, unless the insurer, by a preponderance of the evidence, first proves that wind and water acted indivisibly, and “contemporaneously converged” in causing the loss. Second, the Court trashed the “in any sequence” language in the ACC, finding it “ambiguous.” So, post Corban, “Mississippi Insurance Law for Dummies” might read something like this: “in Mississippi, the ISO-type ACC clause does not apply to all-risk policy losses, and can’t be legitimately invoked, except in one rare instance: when the loss was caused by the indivisible forces of wind and water, and the insurer can prove it.” In a word, Corban says “you get the loss you bought.” But, as astute Bam Bam readers will see, there’s still a problem.

The heart and soul of Corban is on page 22 of the opinion: “The ACC clause applies only if and when covered and excluded perils contemporaneously converge, operating in conjunction, to cause damage resulting in loss to the insured property.” See the problem yet? Let me re-write the quoted part putting “wind” and “water” where they belong:

“The ACC clause applies only if and when [wind] and [water] perils contemporaneously converge, operating in conjunction, to cause damage resulting in loss to the insured property.” Continue reading “Corban v. USAA”

Reaction to Corban Ripple Across the Media

Anita Lee’s story on Corban is here with commentary from head III shill Robert Hartwig himself (picture found here). The bottom line per Judy Guice:

“To me, this was always much more than just a business issue. This was a personal issue to me. Getting the law straight was really one of the critical parts of my recovery and I’m relieved that has now happened.

“The overwhelming feeling I have right now is relief that our children and grandchildren, and everybody else who had to suffer like we’ve all suffered since Hurricane Katrina, will not be stuck with the harsh law, the incorrect law that was previously created and has now been corrected by our Mississippi Supreme Court.”

Chip Merlin has written a series of 3 posts on Corban which address all the fine points of the decision. This is from Part 2:

This ruling confirms State Farm’s Wind/Water Protocol is the wrong test under Mississippi law because it improperly shifted the burden upon the policyholder to prove that the wind caused the damage rather than the insurer having to prove that the damage was excluded. Corban undermines the Fifth Circuit reversal of Judge Senter in Broussard vs. State Farm and as I suggested in Broussard’s Bad Faith Decision Impaired by the Mississippi Supreme Court.

There is one important mistake the Court did make in its decision when it held: Continue reading “Reaction to Corban Ripple Across the Media”

The ACC Bee Is Still In My Bonnet

ACC, the anti-concurrent cause issue, is burning up my head again. With health care insurance all the rage, it don’t hurt to remind ourselves how Big Insurance grew to be cracked-out body slammers. Most people don’t know that way back in 1945 the McCarran-Ferguson Act exempted Big Insurance (“Big-I”) from federal anti-trust law so long as long as the states “regulated” insurance. What a farce. Big-I and ISO hand out cash Tootsee Rolls to puppet commissioners and presto, before you know it, we’ve got regional, full-blown monopolies. Take health coverage: Wellpoint controls 71% of the Maine market; Blue Cross controls 90% of the North Dakota market and 100% of the Alabama market. All that said, keep your fingers crossed, the House Judiciary Committee (Senator Leahy) introduced an amendment to the health bill which would strip Big-I’s anti-trust exemption.

George Dale
George Dale

But, let’s revisit the magnolia ACC a minute. In prior posts, I talked about how Nationwide (probably with ISO’s help) quietly slipped the ACC into Mississippi in the ’80’s. By “slipped,” I mean they submitted a new policy form to the Commissioner for approval. Natch, it was instantly accepted. Recall, Mr Commissioner was indicted in ’94 for taking bribes from Big-I, but never went to trial. Undaunted, a mere 5 years later the legislative PEER committee caught him approving rate requests for State Farm, Allstate, Nationwide et al without any actuarial review. Over 380 rate requests, 59% of all, weren’t even looked at by actuaries.

MID Peer Report

Lee Harrell

  Some of you may recall that Dale’s deputy commissioner was the one who incessantly chatted with sycophantic law clerks overseeing Katrina, and probably caused the so-called “MID mediation plan” to be crammed down the throats of Katrina homeowners. Using Dale to the fullest, State Farm employed this sham mediation procedure to defraud hundreds and perhaps thousands of insureds. Evidence was produced showing State Farm staged the mediations in advance and actively concealed material evidence from homeowners during the “mediation” process. Continue reading “The ACC Bee Is Still In My Bonnet”

Empty handed on hand down Thursday – Corban v USAA

Another great Bam Bam post and once again I am thinking about our supremely slow Supremes, Corban v USAA and counting by the calendar again – empty handed for the 15th Thursday following Oral Arguments.Corban continued2

A virus called

A lot of Mississippians woke up on August 30, 2005, to no house, and thus no net worth. Estimates are 100,940 homes were destroyed or major damaged in the three coastal counties. These families lost nearly everything they owned. Most didn’t even have a copy of their policy, and God forbid, had to trust State Farm to faithfully reproduce it. Homeowners knew little or nothing about FEMA, wind-water protocol, George Dale, Computer Science Corp., David Maurstad, WYO’s or the strychnine phrase “anti-concurrent cause” (“ACC”). Some had policies with “Hurricane Deducible” emblazoned across the top page. (Right away the court declared, nothing misleading about that, it’s okay for insurers to write “hurricane” on the top page of the policy; that doesn’t mean you’re covered for a hurricane). However, in due time all these homeowners would come to realize insurers had sold them a rigged all-risk policy form, approved by a kept man facetiously known as “the insurance commissioner.” Yep, it was some awakening people were in for on August 30, 2005 . . . the nightmare called “Katrina” hadn’t ended, it’d just begun.

The virus that did them in was buried in the labyrinthine FP-7955, a 25 page word salad created exclusively by State Farm’s team of scriveners. The FP (form policy) – 7955 contained 13,859 copyrighted words, not a one of which was ever negotiated or actually consented to. Here was a stupefying irony: the biggest asset most people owned, very often the predicate of their entire net worth, was wrapped up in a junk contract they had no part in making or negotiating, and hadn’t even signed. For all the high and mighty principles contract law stood for, sermonized in treatises like Corban on Contracts, “bargained-for-exchange, reasonable expectations, mutual consideration, good faith and fair dealing,” this most precious of all contracts was nothing but a pile of 13,859 rigged words tethered to a central trap door – the ACC clause.

The fantasy of policy negotiation had been entrusted, “proxied” if you will to Mr Insurance Commissioner. Here again lay a hidden problem. Mr Commissioner was so in the pockets of big insurance he nearly went to prison back in the early 1990’s. Indicted January 12, 1994 on two sets of federal charges involving campaign contributions (bribes) from big insurance, somehow all the charges got mysteriously dismissed without a trial the very next year. I suspect big insurance wasn’t about to sit by and let an investment they’d been building on since 1975 just get pushed off a cliff.

It didn’t take long to see the trap people had stepped into. State Farm began to paper everyone with denial of coverage letters featuring the ACC. If fully invoked, the ACC was a fast action trap door that could drop an insured out of coverage in a nanosecond. Applied full nelson, the insurer could simply declare: “look, read the ACC, anything touched by a molecule of water, at any time, regardless of prior or concurrent wind, is not covered, period.” Of course insurers know pigs get fat, hogs get slaughtered. The better approach was half nelson because the real objective was to buy off legal liability with cheap releases, not break necks and hatch lawsuits. The wise corporate predator knows the policy is a tool to diminish the actual and full value of claims, not renounce all coverage and provoke ugly, one-sided lawsuits.

The ACC virus had been imported into Mississippi in the mid 1980’s, ironically by the same company (Nationwide) whose attorney explained in the Corban v. USAA hearing how the ACC applies. Continue reading “A virus called”

Keeping Score #5 – Who is telling the story?

We’ve don’t engage much in self puffery here at Slabbed, Nowdy and I always figured the cream would rise to the top on its own when it came to our core topics of insurance in general and the insurance litigation in particular. And while those with responsibility and culpability would love to be able to dismiss us they find it impossible to ignore us. A colleague of mine that works for the NSA has a favorite saying that goes “Facts are your friend” and indeed they have been very friendly to us. In fact the facts are what sustain us, especially in the face systemic denial and engrained cognitive biases we’ve found prevalent among insurance professionals not on the claims side of the equation. It has not been lost on us the cyber chatter has quieted a good bit since Nationwide’s lawyer beclowned himself before Justice Pierce at the Mississippi Supreme Court with his now famous “5% oral argument” in Corban. But that doesn’t mean this topic isn’t being discussed, it’s just that it is being discussed now on a more national stage.

So Who is Telling the Story?

Amy Bach at United Policyholders is telling the slab story as we’re linked in their Katrina library. United Policyholders is a national organization of consumers that was founded in the aftermath of extraordinary insurer bad faith claims handling after the two major 1990s California earthquakes and various wildfires. A self help group, Amy does great work but unfortunately ran into a road block trying to help coastie Kevin Buckel obtains claims data from our industry friendly Insurance Commish.

Who is Telling the Story?

Policyholder attorney Chip Merlin is telling our story most recently today on his blog as he helps make certain Magistrate Judges cyber famous or infamous as the case may be:

Discovery in Mississippi Katrina litigation has proven difficult. There is little downside for an insurer to refuse to turn over Continue reading “Keeping Score #5 – Who is telling the story?”

Merlin: Insurance industry is using the “letter of the contract” to defeat the promise they sell

Here are two new posts on Merlin’s blog that are a great fit with Sop’s View from the trenches on the disconnect at the National Underwriter –Leading Insurance Academic Proves State Farm Accepts “Reasonable Expectations” of Insurance Coverage and Insurance Advertisements Stress an Expectation of Coverage and Service.

Both posts go to the heart of every Katrina case – the “illusory coverage” policyholders found they were sold and told would cover loss from a hurricane.

The first, Merlin wrote this past Tuesday:

Professor Jeffrey Stempel is among the best legal writers of matters pertaining to insurance. When reading his work, I often think “why can’t I explain my thoughts so clearly and eloquently?” Maybe that is why he is the insurance law professor, and I am in the middle of legal muck and controversies.

While following up on Saturday’s Post, “Fireworks are Loved by Americans–and Insurance Companies Seeking Not to Pay Fourth of July Fires,” where I quoted Barry Zalma at length for the proposition that insurance companies often advertise one product but sell another, I came across a related article on the LexisNexis Insurance Law Center written by Stempel. His article, March Madness Makes It “Official: State Farm Embraces the Reasonable Expectations Doctrine and Rejects Linguistic Literalism, is a must read for those trying to prove that even the industry leader recognizes what it advertises is not what it sells. This is the point I was trying to make in my post, “Is the State Farm Policy Really Worth Anything?“

I felt the following paragraphs best sum up Stempel’s points: Continue reading “Merlin: Insurance industry is using the “letter of the contract” to defeat the promise they sell”

in pictures and with a 1000 words – the Congressman of the slabbed

Like the really good neighbor he is, the Congressman of the slabbed – on your side on YouTube!

[youtube=http://www.youtube.com/watch?v=yP4izb9e7dQ]