It’s always fun to write about Sen. Trent Lott of Mississippi, so I guess I’m a little disappointed he’s not going to trial in his Katrina lawsuit against State Farm. This story by Mike Kunzelman of the Associated Press says he and State Farm have settled. The terms were not disclosed. Coincidentally, I checked the docket in Lott’s case late last week to see if anything was going on in the case, and noticed that Magistrate Judge Robert Walker considered Lott’s motion to unseal deposition transcripts where State Farm employees had taken the Fifth, and denied it in part. The depositions in question were taken in another case, McFarland v. State Farm. Here’s a pdf of the order. Judge Walker said where that in any case where the witnesses had invoked their Fifth Amendment privilege against self-incrimination, the depositions would remain sealed. In any cases where they had not invoked the Fifth, however, the transcripts could be unsealed.
Monthly Archives: April 2007
Tell you the truth, one thing I miss a lot about being a newspaper reporter is the ability to call anyone, anytime you want, and ask questions about stuff that interests you. That’s the only way I’m going to get to talk to John McCain, which I used to do on a sometimes basis when I covered Phoenix city government back in the day. I’ve wondered more than once whether Louisiana officials were going to follow the example of Mississippi AG Jim Hood and go after insurance companies over Katrina claims handling. Thanks to Mike Kunzelman of the Associated Press, who can call folks anytime he wants, we now know the answer: No. However, Louisiana lawmakers are considering whether to beef up the state AG’s oversight of the insurance industry.
I took passing interest in this story in the South Florida Sun-Sentinel about the Florida Legislature considering whether to extend the state’s no-fault insurance law. I don’t know how you folks in Florida feel about it, but when I lived in Michigan and had no-fault insurance, I hated it. I thought my auto premiums were high when I lived in Arizona, but when I moved to Michigan, they took a big jump, and being in law school, I was trying to watch every penny. Seems like things haven’t changed since I left. Right after I read the Florida story, I just happened to run across this story from the Detroit News about how high Michigan premiums, blamed mainly on the state’s no-fault law, have led many people to scrimp on their coverage.
If you have ever read The Octopus, by Frank Norris, or The Jungle, by Upton Sinclair, or even any of the social critiques by Sinclair Lewis like Main Street, Elmer Gantry or Babbitt, you will find echoes of those books in the rhetoric of Florida Gov. Charlie Crist. In its April 20 edition, the Wall Street Journal carried an editorial ripping on Crist for reckless endangerment of his state’s finances by pushing increasing amounts of risk onto Florida taxpayers in his confrontation with the insurance industry. Yesterday Crist fired back in a WSJ op-ed piece, invoking the name and words of the great trust-buster, the Roughrider, the inspiration for the teddy bear — Theodore Roosevelt himself, and let us note, TR is of the same vintage as the authors mentioned above.
Here’s a sample of Crist’s style:
While I applaud and welcome the motivation of business to profit, I will not abide profiteering on the backs of the people. Perhaps in time, the insurance industry will return to competitive free-market behavior without the need for government intervention or stimulus. In the interim, this responsible, bipartisan approach to a crisis threatening both personal quality of life and continued economic expansion was and is the only right thing to do. The "Trust Buster" would have done no less.
It’s hard to figure how state residents are the big winners in this battle Crist is waging, when they get man-sized portions of risk slopped onto their plates and are left to choke it down if a big hurricane season hits. That will sure show the insurance companies: let’s compete with them by making the state-run insurer take on lots of new risk, and at the same time force articificially low prices so that we make no money on running the insurer, and are left to pay losses out of taxpayer and homeowner assessments. Let’s also be honest about it: the reductions in premiums state residents have seen so far have been pretty minimal, not at all what folks were hoping for.
I recall reading an economic study of the great newsweekly magazines of the first half of the 20th century — Collier’s, the Saturday Evening Post, Life, Look — all of which began to suffer circulation and revenue declines in the 1950s as other media began to meet consumer demands. I think it was Collier’s that reacted by going all out, mouth-foaming mad to raise its circulation, and it did. One problem: Collier’s was losing money on every copy it sold, so selling twice as much just drove them into the ground faster. The magazine quit publishing in 1957.
I agree with the reasoning reflected in this post — insurers’ obligations to pay must be determined by the language of the contract and the facts of the event, not squishy concepts of what people need when they suffer a loss. And I have to say that if I didn’t agree with it, engaging in coverage analysis and litigation, whether for insurers or policyholders, would be the wrong field for me: the right field for me would be politics, where you can say anything you want, no matter how stupid, as long as you posit some supposed moral imperative.
Now, contract interpretation and performance are not inherently amoral — Kant’s concept of a categorical imperative would say the same thing. Obviously, bad faith laws also recognize that there is a duty to treat others as you would be treated yourself. But that is not what we’re talking about. Instead, we are talking about the idea that deciding to just say the heck with the contract and pay to each according to his need can itself be an immoral act. If you don’t buy that, run it through Kant’s three categorical imperatives and you will see that I am right. That is as much philosophy as I am going to talk today, because I have a friend who has an advanced degree in philosophy and he is the kind who always wants to correct some aspect of what you say about any given ethos. So the less I say, the less the danger I will have to listen to him.
One last thing. In writing this post, I was doing some channel surfing on the Web, going from a search window on, say, NFL mock drafts to a search window on morality in contract law, and I ran across this scholarly article. Let me ask you a favor. Read the first big paragraph, and give me a summary in one sentence of 20 words or less of what the author is saying. I am almost totally at a loss as to what is being said, but here is my guess: "Theories about how contracts should work depend on assumptions about how contracts actually do work, but these assumptions can be wrong." You see? I couldn’t do it in less than 21, and my guess may be way off base. I made a determined effort to read this article, mostly out of curiosity as to what the author is talking about, but I got to only about page 8. The biggest stumbling block? Besides the obvious, the word qua is used, and I hate the word qua. If I met qua on the street I might physically attack it — at the very least I would call the authorities. About page 8 these resentments built up to such a degree I couldn’t go on.
What’s the answer to high insurance rates in the private market? Well, you know the answer: create a government-run insurance company that is sure to be run much more efficiently, can draw on the capital of the entire state through the Legislature’s taxing power, and will be able both to insure all the higher risks that many insurers don’t want to and offer cheaper rates! It’s so simple I don’t know why every state isn’t doing what Florida is doing.
As many of you know, Florida is in the midst of "fixing" its high homeowners insurance rates through a variety of moves, one of which is to attempt to change state-run Citizens Property from the insurer of last resort into the insurer of first resort. So far all the fixing hasn’t produced much of a change, but Gov. Charlie Crist, in a new weekly Q and A feature in one newspaper, says "help is on the way," and begs folks not to move from Florida till he has a chance to straighten the mess out.
Incidentally, this weekly question-answering by Crist, from what I can figure out by reading the feature, seems to be a deal where people e-mail questions, and then Crist and/or his staff get to sit around and mull over what the answer should be. How about an online chat at a designated time every week, wouldn’t that achieve the same result and be more authentic? As always with these kind of things, the most interesting stuff by far is in the online comments, which you should take a look at. My favorite: "Stay in Florida because help is on the way. Makes me wanna move faster."
UPDATE: This list of the most expensive states to insure your home comes from Forbes.com and is based on data a couple years old, so it misses the big run-ups in premiums in parts of Florida, Mississippi and Louisiana. It was interesting to me that Oklahoma had higher average premiums than Florida, and that Kansas and Alaska also made the Top 10. Here’s the Forbes’ main story that the list accompanies.
Somewhere along the line, without planning to, I became a full-time Katrina blogger. But after approximately four straight months of writing about little else, I didn’t see much Katrina stuff of interest to write about today. On a far different subject, however, this post from Ben Stevens of the South Carolina Personal Injury Law Blog caught my eye.
Ben’s post is about a case where a man named Ronnie Cooper wanted to stack underinsured motorist coverage under a policy issued by GEICO to one Yolanda Goethe. However, the insurer denied the claim, saying he was not a Class I insured because he was neither Goethe’s spouse nor a resident relative. It appears GEICO filed a declaratory action to clarify its obligations under the policy, and that Cooper, in response, Cooper brought an action in family court to validate what he says is a common law marriage, with the intention of bolstering his case against the insurer. GEICO tried to join or intervene in the family court case, but the judge said no. The South Carolina Supreme Court, over a dissent, upheld the trial court and said GEICO’s interest was too peripheral to give the insurer standing:
Although the rules of joinder and intervention are to be liberally construed, permitting GEICO to join in a family court action in which it has no real interest stretches beyond liberal construction and creates a situation in which any party with a remotely tangential interest will be allowed to interject themselves into pending litigation. We do not interpret the rules to allow such manipulation.
Not as exciting as Scruggs versus State Farm, but interesting nonetheless. Here’s a link to the case.
Only a small percentage of people who use the internet use feedreaders, I realize, but for those who do, I’ve made a change in the RSS feed for Insurance Coverage Blog. From now on, all posts will appear as full text in your feedreader, rather than as excerpts. RSS, of course, means Really Simple Syndication, and it is a way to get feeds from multiple sources coming to your feedreader without taking the time to go to a bunch of web addresses to check to see if there is new content. Full text means you don’t have to click to my blog to read the full post. A small change and perhaps more in the category of keeping up with the virtual Joneses than one of substance, but full text RSS is the new wave in blogging and I’m riding it. If you care at all about this issue, read more about it from the St. Paul of Blogging himself. If you don’t care, which is more likely, don’t worry, I’m done talking about it.
After the big State Farm settlement announced earlier this year with Scruggs clients in Mississippi, I wondered if we’d see other mass settlements. Here’s the answer: the Scruggs Katrina Group yesterday announced a settlement with Nationwide that will include up to 227 Mississippi policyholders. Here’s a story from Mike Kunzelman of the Associated Press. Here’s another story from Anita Lee of the Sun Herald, which says the Scruggs Group still has 280 Katrina cases pending against Allstate. Here’s the announcement from the Scruggs Group website. Terms of the settlement were not disclosed, but I suppose they will leak out eventually, considering all the people who have to be told about it. This settlement, of course, doesn’t include cases filed by other lawyers.
Residents of the Mississippi Coast to see further jump in premiums.
Nationwide agrees to readjust 500 Mississippi slab claims.
Louisiana legislator decries "corporate welfare" approach to getting insurance companies to take business of the hands of the state-run insurer.
More Louisiana homeowners premiums to rise.
Louisiana will allow use of controversial hurricane-risk model in setting insurance premiums. (The story is by Rebecca Mowbray of the Times-Picayune, who judging by the long and excellent Katrina stories she writes, obviously has been eating her Wheaties).
U.S. District Court for the Southern District of Mississippi has 669 Katrina cases pending.
A very good story from Lavonne Kuykendall of Dow Jones Newswires: in the wake of the verdict in Weiss v. Allstate, the insurer says it won’t change the way it adjusts claims.
Mississippi lawyer makes public records request for copy of agreement between State Farm and Insurance Commissioner Dale.