Monthly Archives: September 2008

Despite the fact that anti-concurrent cause language has been around for quite a few years, if you go looking for the Anti-Concurrent Philosophy Library, you won’t find it — you’d be lucky to find enough to make up a slim book, much less a library or even a shelf in a library.  In other words, as with many insurance coverage issues, there is a great deal of room for scholarly examination.  You might have noticed the same thing I have — when you research just about any tough question, it’s not hard to find stuff that appears to be about the subject, but when you drill down into it, most of what you find is surface area with no core underneath.  The emphasis in the mass of legal literature on discovering what courts do — the search for rules — is often a chimera because, and I say this without rancor, courts often don’t know why they do what they do.  They have to do something so they do it.

Anti-concurrent cause theory is just one example of how a lack of philosophical inquiry and lack of curiosity as to "why" can harm the debate.  If you recall, during Hurricane Katrina litigation, anti-concurrent cause became politicized in large part because there was a very imperfect understanding of what anti-concurrent language was, what it does or why it exists.  That lack of understanding continues today: witness this editorial from Wednesday’s USA Today.  While I generally agree with the main thrust of the editorial — that proposals to "fix" the National Flood Insurance Program by increasing moral hazard and expanding the size of the program are utter folly — I’m suspicious of the depth of understanding of the writers based on these sentences about seven-eights of the way through the article:

Backers of the wind-damage proposal do have one thing right.  Private insurers should not be able to lull people into believing they are covered for hurricanes and then try to dump all the claims on the government.  That’s what some insurers did in 2005. 

Such bait-and-switch tactics could be handled with smarter regulation. Or, better yet, by the government getting out of the flood insurance business and leaving the issuance of policies to the private sector. 

Huh? Where are these guys getting their information, from the Third Book of Scruggs, Chapter 7, Verse 36?  If you’re going to go with the faux populism, at least try to use a line that hasn’t been totally discredited.  Bait and switch?  This issue has been tried in court, and found wanting — the "bait and switch" argument is as mythological as that photo of Sarah Palin with a dead Bigfoot she  shot.  These folks are behind the times — they probably walk into a drugstore and wonder why there are no bottles of laudanum on the shelf, they’re probably sitting around in rocking chairs emitting some Grandpa Simpson-like rant about why the milk wagon is always late, they’re probably trying to figure out how to play CD’s on their Victrolas.  

Which brings me to the question in the headline on this post.  You may recall some time ago I wrote this post about an anti-concurrent cause case in the Colorado Court of Appeals that had cited my work and theory on anti-concurrent cause — Colorado Intergovernmental Risk Sharing Agency v. Northfield.  (I see the link to the case has gone bad in the post, here’s another better link.) A roof on a building collapsed.  At trial, a jury said the damage was 90 percent attributable to the weight of snow on the roof, and 10 percent to rot caused by humidity from a swimming pool.  Damage caused by snow is a covered cause, rot is uncovered.  Therefore, potentially, this is a classic case for consideration of an anti-concurrent cause clause — if the two causes resulted in the very same damage and that damage would not have happened but for the combination of the two forces.  Remember, I said potentially.

The Court of Appeals looked at the damage as being one loss, caused by a concurrent of the two forces.  Since one was uncovered, the anti-concurrent cause language made the entire loss uncovered, the court said.  However, the losing party in the appeal, CISRA, filed a petition for rehearing before the full Court of Appeals (a unanimous three-judge panel decided the case earlier).  It’s been a number of weeks since the petition, and the court has yet to accept or reject the petition, but the fact that it has not rejected it yet might be a favorable sign for CISRA that the justices are seriously considering taking another look at the case. 

The petition for rehearing, which you can see here, comes up with a good argument — did the weight of the snow (a covered cause) actually combine with the rot (an uncovered cause) to result in the loss, or were they two separate forces causing separate damage?   This is the very question I asked regarding Katrina damage, and the answer I came up with, which is now pretty well accepted, was that uncovered flood and covered wind had not acted concurrently in Katrina damage and therefore anti-concurrent language was not implicated at all.  This petition for rehearing is pretty shrewd in driving for the same point — it says that the jury verdict and the evidence at trial were only that two independent causes resulted in different property damage.  I call this shrewd, because if you are going to fight anti-concurrent cause, you don’t win by weighing yourself down with bogus arguments about "bait-and-switch" and such amateur theatrics.  That’s like going into combat carrying an 80-pound cast iron kettle in your arms instead of a battle-ax.   Taking on anti-concurrent language as ambiguous or the like is, in my view, often not the best course. Instead, working within the framework I have explained is the best way to have a sophisticated, informed debate, and this petition does so.

Essentially, the petition considers the concept of "loss,"  which in the analysis I advocate, is the first step.  If you can find two losses, you can find a way to argue that anti-concurrent cause does not apply.  If you can find only one loss, it’s much harder, because then you have to try to peg the covered cause with 100 percent of the loss, and that is a harder row to hoe — many anti-concurrent cause clauses explicitly say any combination of covered and uncovered causes (theoretically 99 percent versus 1 percent) results in non-coverage.  So again, it’s vital to find different losses caused by separate forces acting independently and not concurrently. 

Does this petition for rehearing do a good job of that?  I think yes.  The facts of this case are more involved than I gathered upon just a reading of the Court of Appeals decision.  Whether this will convince the Court of Appeals to rehear the case or not, or to reverse it upon rehearing, I don’t know.  It is a very sophisticated argument, though.  One component of the argument, it seems to me, is somewhat different than just looking for two separate causes of loss, it ventures into uncharted territory — if a covered cause was sufficient in and of itself to cause the damage, can it truly be said the two causes contributed to the loss.  To use an extreme example, does it matter if a garage was weakened by rot if it is blown into toothpicks by a falling meteorite? Could the rot be said to be a concurrent cause of the loss in any meaningful sense?  I think if we ask for a show of hands or commission a Gallup poll, most people will say no.  So my question is this: if the weight of the snow on the roof would have caused its collapse regardless of the presence of rot, is the rot a concurrent cause?  Just asking.  Seems to me if the Court of Appeals takes up that issue, there is some new ground to be broken. 

Here are some additional thoughts I promised about the end of the McIntosh case.

— You may remember my post from last week about the plaintiffs’ dismissal of extra-contractual claims, or in other words, bad faith and punitive claims against State Farm.   Well, the entire case is over now.  The insurer announced in a press release Monday that the contract claims were settled for $250,000, and you can look at Judge Senter’s order of dismissal and see that each side bears its own attorney fees.  However, seeing as how the McIntoshes got the full federal flood payment for their home, $250,000 seems like somewhat more of a sum than you would suspect would be directly linked to covered wind damage to the house, especially as the plaintiffs admitted in their motion to dismiss the bad faith claims that "State Farm properly tendered payment to Plaintiffs for wind damage covered under their homeowners insurance policy prior to the time that the dwelling was inspected by an engineer."

The way these things often work, the settlement includes some consideration that the plaintiff’s lawyer has to eat, and that gets built into the settlement if it isn’t otherwise explicitly paid.  I don’t know what arrangement the Merlin Law Group had with the McIntoshes — almost certainly it was a contingency fee case, and contingency fees typically run from around 30 percent to as high as 40 percent. Incidentally, I see nothing on the Merlin Law Group blog about the case.  It’s also not unheard of for an insurer to up the amount just a little, giving all possible benefits of the doubt and then some to the plaintiffs, to get something to go away if the insurer gets something it wants out of the deal.  And in this instance, what State Farm gets is the chance to say that the signature Katrina case against it brought by Dickie "I’ll Fly Away" Scruggs was bunk of immense, Scruggsian proportions.   

— Just think again for a moment what the plaintiffs’ motion said: "no credible evidence that State Farm engaged in bad faith with respect to the adjustment of Plaintiffs’ claims under their homeowners policy."  I mean, that’s a heck of a thing to say, isn’t it?  That is what is supposed to happen when a lawyer realizes claims are unsupportable — dismiss them — but in the real world it happens all the time that lawyers hang onto dubious and even obviously bogus claims until you pry them from their cold, dead hands.  When such claims are dismissed in a settlement, the settlement is almost always a confidential complete release with both sides saying no one makes any admissions about nothin’.  So to see that in writing was startling to me, and could only happen where a) a plaintiff’s lawyer had no stake whatsoever in defending the conduct of his predecessor, b) his clients would benefit by distancing themselves from that conduct and c) the claims truly were unfounded and the lawyer would face ethical problems by saying otherwise (if "c" were not true, the lawyer would just be supplying ammunition against himself and other clients in other lawsuits, which itself would give rise to ethical problems). 

— Let’s talk about the State Farm press release for a bit.  The tone of it, to me, is remarkably restrained, considering they could have climbed on top of Scruggs’ burial mound and crowed and crowed about this.  Go back and read it again — it works better to undersell it, don’t you think? 

— I was interviewed last week by Chad Hemenway of A.M. Best about the insurance landscape after Katrina.  Chad, by the way, is one of my favorite interviewers — great sense of humor and, of course, dude knows insurance. One of the things I told him (I think I did, I tended to ramble on somewhat in the interview) was what I’ve said before, the State Farm merger of Katrina legal and public relations strategy was the most sophisticated I have ever seen or heard about from a corporation.  And I say this as both a lawyer who knows a few things about insurance and as a former journalist (and current interested observer of press and public relations matters).  No matter what you think of State Farm. I think it’s beyond dispute that, beginning about early 2007, they could not have handled the Katrina controversy any better, from their perspective, than they did.   

Let’s just take a look in the rear-view mirror at some of what happened.

• Scruggs and the Scruggs Katrina Group disqualified from Katrina cases.
• The Rigsby Sisters barred from testifying and driven off into the wilderness in disgrace for the "sham consultancy" with the SKG.
• A successful federal court lawsuit against Jim Hood, the Mississippi Attorney General, that forced him to back off further criminal investigations of the insurer.  
• Hood’s later dismissal of the civil suit he filed against State Farm for allegedly breaching an agreement with Hood to institute a claims procedure re-evaluating thousands of Mississippi Katrina claims (the agreement fell apart when Judge Senter refused to approve parts of the deal, and State Farm later reached a similar agreement with then-Mississippi Insurance Commissioner George Dale). 
• The Trailer Lawyers were run off Ex rel. Rigsby, the ever-shrinking False Claims Act case.
• Federal prosecutors have apparently ceased their investigation of alleged insurer fraud, which had been pursued for years with an Inspector Javert-like tenacity.  Someone remind me — how many millions of taxpayer money was spent on that investigation?  

You can probably supply some additional bullet points, but you get the idea.  Some of this, you might say, was luck — like the conspiracy to bribe Judge Lackey totally discrediting Scruggs and anyone connected with him, and forcing a new look at the "whistleblower" Rigsby sisters and the entirety of the Katrina Follies.  I wouldn’t use the word "luck," however.  Chance always plays a part in human designs, but you always have a choice about what to make of the chance.  Also, was it really luck that Scruggs Scruggsed himself, or given the way he’d comported himself since the beginning of Katrina litigation, was it more likely than not that the Scruggs Katrina Group would fall into infighting, leading to The Great Unraveling? 

— You know, I mentioned last week I heard some journalist is going to write the definitive Scruggs story, and I wish him all the best.  If asked, I’ll provide whatever help I can, including possible book titles such as The Rise and Fall and Kersplat of Dickie Scruggs.  

— How long till that Mississippi Insurance Department market conduct survey comes out on State Farm?  You can tell what it’s going to say, if you’ve been paying close attention to the smoke signals.  It will cite instances where State Farm made mistakes in adjusting, but will find no evidence of malicious intent or a company-wide plan to underpay.  However, it will cast shadows on Scruggs, Hood and the Rigsby sisters, among others. 

— One thing I hope someone writes about is the mindless tribalism that rode the Scruggs Express down the tracks.  You could paint some other names on the side of that train — such as Hood, Lott, Taylor.  How stupid do those Congressional hearings look now?  I said as much at the time.  Emotions are hard to contain during times of actual or perceived crisis, I know.  But I also know what Thucydides said about the Peloponnesean War: war is a harsh teacher that lowers the character of men to the level of their fear.  And believe me, it’s not just war — you can see the same thing in the political rantings going on right now.  Things haven’t changed much since the time of Thucydides, which is why he called his history a gift for the ages — because the things that were are the things that will be, as long as human beings are the way they are.   And they ain’t never gonna change.  If they were, they’d have done it by now.

— Hard to believe, I know, but there is still a lot to tell about this Katrina saga.  We’ll talk more about this soon.