As attorneys representing policyholders, we often hear some pretty interesting stories about claim denials—many of which make little to no sense. Sometimes, after a lawsuit has been filed, the insurance company puts forth new arguments why the claim should be denied as a post hoc justification. To the experienced claims handling professional, often the later denial (the one often put forth after an attorney got involved for the insurance company) is a more legitimate basis than the one communicated during the claims handling process.
The gut reaction to this is that it’s not right or fair. That notion finds support in a Supreme Court case from 1877, Ohio & Mississippi Company v. McCarthy.1 This case involved the shipment of sixteen train cars of cattle from St. Louis to Philadelphia. While delivering cattle, several of the cattle incurred injuries as a result of certain conduct of the railroad which also caused delays. During the trial, the Defendant offered evidence that the last delay in delivering the cattle was because they did not have enough train cars to ship the cattle on a Sunday. On appeal, the railroad put forth a new argument, that Sunday Law of West Virginia (a law precluding businesses from operating on Sundays) did not allow for the cattle to be shipped.
The Supreme Court disregarded this argument and stated:
Where a party gives a reason for his conduct and decision touching anything involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration. He is not permitted thus to mend his hold. He is estopped from doing it by a settled principle of law.
“The phrase "mend the hold comes from nineteenth century wrestling parlance where it meant "get a better grip (hold) on your opponent.”2 The Supreme Court ruled that where a party has committed to a position, they cannot later change that position to one that may be on firmer legal ground. This doctrine has been applied to the actions of insurance companies in many states. In the coming weeks, I will post more about how different states interpret and apply this doctrine.
Finally, no wrestling discussion would be complete without reference to one of the finer films of the 1980s:
1 Ohio & Mississippi Company v. McCarthy, 96 U.S. 258 (1877).
2 Robert H. Sitkoff, Comment: "Mend the Hold" and Erie: Why an Obscure Contracts Doctrine Should Control in Federal Diversity Cases, 65 U. Chi. L. Rev. 1059 (1998).