April 4th, 2007

Chubb Insurance Trips Over Self In Trying To Regulate Law Blogs

Chubb, which claims to insure 90% of the law firms listed in The American Lawyer’s AM Law 200, seems to have tripped over itself in first trying to stop its insured from blogging, and is now trying to draw a distinction between “informational” and “advisory” blogs.

What the difference exactly is, escapes me. And that is because there are an unlimited number of shades of gray within this constantly morphing space.

Here are the definitions they are trying to create in their own bumbling way:

An informational blog presents information or offers a forum for discussing issues in a neutral, unbiased way. This type of blog offers information similar to that found in an article or presented by an individual in a seminar — informational blogs do not provide advice to a specific individual on a unique matter. Typically, these blogs pose a minimal level of risk from Chubb’s underwriting perspective.

In an advisory blog, however, a law firm offers advice. By its nature, then, it increases the risk of a malpractice lawsuit against the firm. An advisory blog can potentially establish an attorney-client relationship, possibly bypassing such safeguards as determining the suitability of a potential client and checking for possible conflicts of interest. As always, Chubb’s underwriters will evaluate each submission on its own merits.

Now in one recent post of mine I discussed the tough legal issues that any individual claimant faced in regard to the tainted pet food in the news. Is that “informational” or “advisory?” (I would call it my opinion.) The news story is certainly a unique matter.

And if I decide to rip into Chubb for trying to draw a line that doesn’t really exist, does that mean I am not discussing it in a neutral and unbiased way and therefore the blog is now outside their coverage? If I mock them for failing to have counsel review this new policy and I advise them to get it reviewed — for no attorneys in their right mind would ever try to draw such a line, so it stands to reason it wasn’t reviewed — is my posting now advisory instead of informational? If I strongly suggest it was foolish to do this, are my comments advisory or informational?

And how an “advisory blog” establishes an attorney-client relationship, by the way, is beyond me. To establish a relationship one needs to have one-to-one communications, not just an opinion shouted to the world. (I wonder if Chubb considers that comment of mine informational or advisory, regardless of whether it is right or wrong?)

In trying to define the legal blogosphere and place these ever-changing formats into neat categories, Chubb is creating a problem by trying to graft static definitions onto a dynamic beast.

If this is the place that Chubb wants to go, then law bloggers who have them as their insurer need to bring their business elsewhere.

The only thing Chubb seems to have done right here is place a bulls-eye on its back for ridicule.

(hat tip to Kevin O’Keefe at LexBlog, who also has a copy of the Chubb press release)
Addendum: Rush Nigut has a great response at Kevin’s blog:

Chubb is trying to save face. The company realizes it made a mistake with its blanket denial and the press release is a way to say, “We really didn’t mean we wouldn’t cover law firms that have blogs . . . you must have misunderstood us.”

2nd Addendum: Robert Ambrogi at the Law.Com Blog Network chips in more with: Insurer: ‘We Do Cover Blogs, Sort Of’

March 28th, 2007

Medical Malpractice Insurers Price-Gouged Doctors During This Decade

This comes from Americans for Insurance Reform, released today:

NEW DATA CONFIRMS THAT DOCTORS WERE PRICE- GOUGED BY THE INSURANCE INDUSTRY DURING THIS DECADE

NEW YORK — Americans for Insurance Reform (AIR) announced today the release of Stable Losses/Unstable Rates 2007, a new study that examines fresh insurance industry data to determine what caused the most recent medical malpractice insurance crisis for doctors. The study by AIR, a coalition of over 100 consumer and public interest groups representing more than 50 million people, finds that the insurance crisis that hit doctors between 2001 and 2004 was not caused by claims, payouts or legal system excesses as the insurance industry claimed. Rather, according to the industry’s own data:

Inflation-adjusted payouts per doctor not only failed to increase between 2001 and 2004, a time when doctors’ premiums skyrocketed, but they have been stable or falling throughout this entire decade.
Medical malpractice insurance premiums rose much faster in the early years of this decade than was justified by insurance payouts.
At no time were recent increases in premiums connected to actual payouts. Rather, they reflected the well-known cyclical phenomenon called a “hard” market. Property/casualty insurance industry “hard” markets have occurred three times in the past 30 years.
During this same period, medical malpractice insurers vastly (and unnecessarily) increased reserves (used for future claims) despite no increase in payouts or any trend suggesting large future payouts. The reserve increases in the years 2001 to 2004 could have accounted for 60 percent of the price increases witnessed by doctors during the period.

There is much more at the links, including a copy of the study.
(hat tip to TortDeform)

March 26th, 2007

Conseco Insurance Scandal Follows Movie Plot

As I read the front page story in today’s New York Times on insurance companies that deny, deny, deny — waiting for the policy holder to either give up or die — I was reminded of a movie. The NYT focuses primarily on insurance giant Conseco continually denying claims for benefits based on long-term-care policies.

From the article:

In lawsuits, complaints and interviews, policyholders contend that Conseco, Bankers Life or Penn Treaty denied claims because policyholders failed to submit unimportant paperwork; because daily nursing notes did not detail minute procedures; because policyholders filled out the wrong forms after receiving them from the insurance companies; and because facilities were deemed inappropriate even though they were licensed by state regulators…

In a 2006 deposition, a Bankers Life and Conseco claims adjuster, Teresa Carbonel, testified that she denied claims because of missing records but was prohibited from calling nursing homes or physicians to request the documents. She also testified that when a claim was denied, she was forbidden to phone a policyholder, but instead used a time-consuming mailing system.

Where have we seen this scene before? In Francis Ford Coppola’s rendition of The Rainmaker (book by John Grisham), Matt Damon and Danny De Vito go to trial against an insurance company whose first, second and third courses of action are to deny a claim, hoping the people will give up. This is, apparently, very good for insurance company profits.

Perhaps Conseco took tips from the book or movie on how to run its business. This is the movie version:

Witness (reading): Great Benefit, July 7, 1996. Re: 7849909886. Dear Mrs. Black. On seven prior occasions this company has denied your claim in writing. We now deny it for the eighth and final time. You must be stupid stupid stupid. Sincerely, Evert Luftkin, Vice President, Claims Department.

And this is the real-life version from the article:

Conseco and Bankers Life [a subsidiary] “made it so hard to make a claim that people either died or gave up,” said Betty J. Hobel, a former Bankers Life agent in Cedar Rapids, Iowa.

The executives at Conseco must be very big film or pop literature fans to have followed the Grisham script so closely. It almost makes one wonder if they can be sued not only for benefits, breech of contract and bad faith, but on intellectual property grounds.

Conseco now joins the ranks of State Farm (State Farm to Pay Punitive Damages. Again.), Allstate (Is Allstate really Allsnake?), and Blue Cross of California (Insurer Fined for Dropping the Sick and the Pregnant) who have been exposed this year for improperly denying coverage or claims. And it’s only March.

(Eric Turkewitz is a personal injury attorney in New York)

March 24th, 2007

Insurer Fined for Dropping the Sick and the Pregnant

From the WSJ Health Blog: Insurer Fined for Dropping the Sick and the Pregnant

Blue Cross of California was fined $1 million for cancelling the insurance policies of people who were sick or pregnant, the Los Angeles Times reports today.

The company pulled individual policies held by people who didn’t have coverage through their employers or other groups, according to an investigation by state regulators. The details are sobering. Among 90 randomly selected policy cancellations, the regulators found violations in all 90.

I wish I could say that I am shocked and surprised by this news. But I’m not.

February 14th, 2007

Like A Good Neighbor, State Farm Runs Away

In the wake of Hurricane Katrina, State Farm is baling out of the Mississippi market. Their motto, “Like a good neighbor, State Farm is there,” apparently no longer applies in that storm damaged state. From an AP story today:

State Farm: No new policies in Miss.

State Farm Insurance Cos. is suspending sales of any new commercial or homeowner policies in Mississippi starting Friday, citing in part a wave of litigation it has faced after Hurricane Katrina, a company official said Wednesday.

Mike Fernandez, vice president of public affairs for State Farm, said Mississippi’s “current legal and political environment is simply untenable. We’re just not in a position to accept any additional risk in this homeowners’ market.”

One has to assume this is related to State Farm getting whacked with a $2.5M punitive damage award for failing to honor their Mississippi policies. (State Farm should be used to punitive damages by now, having been hit before and finding the case go all the way to the Supreme Court.)

State Farm’s troubles are probably not helped by the fact that Senator Trent Lott is a State Farm policyholder that had to hire an attorney to recover on his own policy.

Apparently, State Farm finds its easy to collect premiums but isn’t all that thrilled about paying out claims. These are the types of “good neighbors” I can do without.