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Alex Sink Reception on Monday

It is hard to imagine that I have insurance defense counsel friends going to a fundraiser for Alex Sink at an insurance company and then coming to my home next Monday for a fundraising reception we are hosting for her. Alex Sink has respect from many or she would not have that type of divergent support in her bid to become Florida's next Governor.

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Merlin Law Group Has a New Website

I appreciate the kind comments and suggestions many readers express regarding the educational nature of this Blog. Our new law firm website also has many reference materials and some funny news videos of yours truly trying to comment on a variety of legal issues.

If you have any comments or suggestions regarding our new website, please direct them to Kendra Kenney. We are always looking to improve.

State Farm Dreams

A paralegal at the Port of New Orleans gave me a photograph from the September 22, 2008, Times-Picayune.  She entitled the photo, "State Farm Dreams."  I share it with you below.
[caption id="attachment_206" align="aligncenter" width="300" caption="State Farm Dreams"]State Farm Dreams[/caption]

Slabbed

[caption id="attachment_87" align="alignleft" width="68" caption="William Chip Merlin"]William Chip Merlin[/caption] My collegues and I coined a new term in 2004, following Hurricane Ivan. We became co-counsel with the prominent Pensacola firm of Levin, Papatonio, Thomas, Echner & Proctor. They brought a brilliant attorney, Bobby Loehr, out of semi-retirement to work with me on their insurance claim litigation. We referred to hurricane cases where nothing was left of our clients homes or businesses as "slab cases." It was an important legal designation because of the anti-concurrent causation issues and the then applicable Florida Valued Policy Laws. Upon my arrival in Mississippi just following Katrina, it was obvious to me the same litigation was going to ensue; there were thousands of "slab" cases. We actually noted these cases because they generally had the most significant damage and the most unresolved legal questions. In today's world, information comes from so many sources. Blogs are increasingly providing significant information from those with particular expertise in various disciplines. Some blogs are very amateurish, including mine, and some are extremely commercial. Regardless of the format, they can be a useful additional source of information. One Blog in particular provides great information for policyholders faced with an insurance claim following a catastrophe. It is aptly called SLABBED. Recent posts have correctly noted some of the issues we have encountered in the McIntosh case. One particular post described how wind pulls, lifts, and sucks on the exterior of a building. It details the discussion of an expert, Dr. Sinno. I recommend Slabbed to anybody who has an interest in anything I write about--it is that good and from a policyholder perspective.

A Work and Play Saturday

William Chip MerlinAfter a long day of work, I called a client at 11:38 on Saturday night to confirm the resolution of a long and hard-fought lawsuit. An attorney in our Houston office and my paralegal immediately emailed, thanking me that they could stop working around the clock to prepare the case for trial. My work day started at 5 am, checking out the Hurricane Ike forecast. Following a two hour run with my St. Petersburg running buddies, I was on a plane with David Pettinato, our firm's hardest working attorney. We flew to Ft. Lauderdale to meet with public adjusters and sign the closing of a large case David recently won.  

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No More Blue Tarps

 
[caption id="attachment_87" align="alignleft" width="68" caption="William Chip Merlin"]William Chip Merlin[/caption]
In October of 2004, I flew into Pensacola with my exhibit and presentation expert, Jack Stein of TrialExhibits, and dubbed Pensacola the "Blue Tarp Town."  Many roofing contractors were already busy in Punta Gorda and across the central part of Florida through Daytona with Hurricane Charley repairs.  The rest were retained for work stemming from Hurricane Francis, which struck West Palm Beach, going across the center of the state, just north of Tampa.  By the time Hurricane Ivan walloped Escambia County and surrounding areas, there were few roofers and materials left, and the government issued blue tarps as a temporary measure for protection of the thousands of roofs damaged by Ivan. In January of 2007, I was in the federal courthouse in Gulfport, Mississippi, and remarked to William Weatherly and Randy Santa Cruz that it was amazing how many blue tarps we could see from Magistrate Walker's office that were still on residential and commercial structures. I stopped counting at forty.  That was fifteen months after Katrina.
This morning, I flew into Gulfport, and noticed how much green foliage was on the trees. The branches are fewer and many still look pretty ragged, but there is green everywhere and far fewer signs of Katrina's impact until you look within a half mile of the coast.  You see green trees there, but there are spaces and slabs where beautiful homes and businesses once stood.
The Sun Herald recently ran a story about the Bay Waveland Yacht Club having a grand re-opening.  It looks beautiful. But it is certainly a long climb for those sailors to get up and down to and from the bar.  
When my plane left Gulfport for Pensacola, I noticed only two blue tarps on roofs.  As we approached Pensacola, I counted one. However, I was astounded by the number of blue swimming pools. Downtown Pensacola was in shambles following Ivan.  All the business signs were missing and stayed that way for what seemed forever.  Indeed, I recall a hotel we we successfully represented in the Spring of 2005.  It just finished installing its sign in late June, when Hurricane Dennis struck in the first week of July.  On television, I saw the sign blow away again -- the Weather Channel captured it live.  Today, you really have to know what to look for to find businesses that have damage not completely repaired from Ivan or Dennis in Pensacola.  Times change and time heals. Memories fade. Much of the initial shock resolves as the visual reminders of the devastation slowly but certainly disappear. Certainly, areas of New Orleans, the entire Mississippi Coast, and the outer Islands of Florida all have many visual reminders of the 2004 and 2005 storms. Every disaster I have been to over the years has certain distinctions and bizarre scenes, sounds, or smells. I talk with adjusters about them years later as we reminisce. I suspect that only those there and viewing the devastated areas from the air could appreciate how weird it was to see a quilt of blue rooftops. Happily, the Blue Tarp Towns are now a mere memory.      

First Day of Hurricane Season and the First Named Storm is History

William \  Tropical Storm Arthur starts off the 2008 hurricane season with some early inning excitement.  In my line of work, I am always asked during the summer months how many hurricanes there will be and where they will hit.  The newspapers are full of stories from meteorologic prognosticators regarding these events.  I simply reply it is a guess:  the odds are a major hurricane will form in the Gulf of Mexico and there may be an Atlantic Coast hurricane as well.  The truth is nobody knows. But the fact that nobody knows does not mean that you should not be vigilant, especially along the Gulf Coast areas in June and July.  Arthur is a classic early season storm because generally, hurricanes will form only in the Gulf of Mexico early in the season.  Why?  The warm water temperature needed to form major storm systems is most favorable only in the Gulf of Mexico.  The entire Atlantic Caribbean area warms as the summer progresses. The Associated Press ran a story correctly noting that hurricane forecasts should not be the basis for bets.  It quoted Craig Fugate, the Director of Emergency Management in Florida, as stating that these early forecasts "are not useful at all."  Indeed, I believe that most people, having two years of dire forecasts which never materialized, will inevitably become complacent.  This is human nature. Instead, as indicated by the Insurance Information Institute, now is the time to make final preparations for the hurricane season.  The Institute lists five tips:
  1. Buy Enough Insurance;
  2. Buy the Right Insurance;
  3. Create a Home Inventory;
  4. Prepare an Evacuation Plan;
  5. Hurricane-Proof Your Structures.
Numbers one and two are easy enough.  Call your insurance agent and make certain you have high enough policy limits to rebuild your structure--brand new--to new codes.  Obtain Flood Coverage if you live even remotely close to a body of water--even if you are not in a flood zone.  For businesses, buy Business Income and, especially, Extra Expense Coverage.  Many businesses need off-premise power coverage. Nobody does number three.  I have yet to have a residential client who has made an inventory before a hurricane.  Businesses and governmental clients are not much better.  Indeed, some businesses have coverage for non-listed assets.  A before-loss videotape of structures and everything contained in them can be a big help for a number of adjustment reasons. Businesses cannot spend enough time going over a risk management operation plan in the event of a catastrophe.  Safekeeping of records, property and information is one aspect.  Making contingency plans to get back in business as soon as possible is crucial to the survivability of many businesses. Hurricane-proofing residential and business structures is the best thing that can be done.  Repair and maintain the exterior envelope of the building.  Trim trees and remove objects that can crash into structures.  Think about purchasing an alternative energy source if you have a business or can afford one for your home. As I have said before, if you do all of the above five steps, chances are nothing will happen to you.

Another Hurricane Season

June 1st starts another hurricane season.  USA Today quoted the Climate Prediction Center as saying, "there's no reason to think that break [from hurricanes over the past two years] will continue."  In short, they think the probabilities are good (or bad, if you think about it) that a few times this year somebody, somewhere, is going to get whacked along the coastal areas. There are several things people and businesses should do now to prepare and then to remember as the season progresses.  First, buy the proper insurance in case something really bad happens.  Many people think I am anti-insurance because I spend so much time filing lawsuits against insurance companies.  Not true.  If I were not litigating against wrongful claims practices for a living, I'd be selling the product. You need insurance.  If you are fortunate enough to be wealthy, you need it even more.  You need to spend time with your agent, go over the value of your possessions and the contingencies of what would happen to your life and business in the event of disaster, and insure for it. For instance, the National Flood Program has raised its limits.  We know from Hurricanes Katrina, Rita, and Dennis that "flood" (I almost feel like footnoting that word given all the litigation about the meaning of it) waters can extend seven to fifteen miles inland along some coastal areas.  Get coverage for the right amount now if there is even a remote chance of a flood.  The more valuable your property, the more you need the coverage and peace of mind.  Given the nature of chance, once you buy the coverage, the disaster will never happen to you. Second, ask your agent about "endorsement" coverages.  These coverages fill in the limitations and exclusions which most modern all-risk policies contain.  For example, many of our clients purchase "deductible buy down" coverage in order to lower the deductible because most policies now have large percentage deductibles if a hurricane strikes.  Agents should bring these to your attention.  It is our experience that most do not. Third, complete the structural "hardening" process you were planning.  A new roof, weather stripping, new windows, glass coatings, and such should be completed now.  The severity of most hurricane and windstorm losses can be significantly reduced by these improvements. Fourth, have a plan and stick to it.  Do not get stuck in a structure on top of a dining room table or crawling into the attic as waters are rising.  We had a client in the Pensacola area area film the surge waters, and it was quite disturbing to hear him sob as the water continued to rise several feet in his home. Finally, do not become complacent in a season where there are multiple warnings and no storm appears.  For example, Miami-Dade County refused to close as Hurricane Irene was heading north to strike Naples.  This was about the fifth "close call" of the season.  I was furious that morning because I had a hearing in downtown Miami and the judge did not cancell the hearing despite the fact it appeared that the hurricane was going further east and into the Everglades--right next to Miami.  I was driving in the outer bands of the hurricane an hour before the hearing, when the judge's secretary called in a panic and cancelled the hearing because the authorities closed all government buildings. The call was too little and far too late.  People rushing home from work were caught in a mess.  A powerline blew over at a flooded intersection not far from where I was.  Several people were electrocuted.  It all could have been avoided, but the "cry wolf" syndrome made the authorities complacent. Will a major hurricane hit this year?  I think so, but who really knows?  Do what you can and prepare.  There is peace of mind by doing so, and chances are nothing bad will happen anyway.  But just in case. . . .

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The Good Hands Gets the Iron Fist

It's about time.  For a decade, Allstate has refused to comply with discovery and court rules regarding its internal documents which demonstrate who, how and why Allstate redesigned everything in its claims program to simply pay less on claims. The Florida First District Court of Appeal issued an opinion which condemns many of the tactics Allstate and its attorneys have long used to thumb its nose at judges.  Anybody with the right to view the internal information explaining why Allstate has been changing its culture since it was spun off from Sears in the early 1990's has been stonewalled and shut down.  Indeed, a recent creative lawsuit has been filed in Montana against Allstate for abusing the legal process through such tactics.  (Simonsen v. Allstate) The Tampa Tribune and St. Petersburg Times have been closely covering this story since it started last fall.  They noted that the Office of Insurance Regulation was trying to find out why Allstate broke a promise of lower rates in return for Florida selling it undermarket reinsurance and taking on a greater share of the Cat Fund obligation in the event of a hurricane.  Well, Allstate went into what many of my attorneys so often see in civil proceedings---a complete shut down and refusal to tell the truth. An example noted by the Florida Appellate Court was when Allstate produced a witness that was supposed to have knowledge and documents to show which trade organizations Allstate belonged to.  Simple enough.  The witness acknowledged his purpose but did not have any documents.  Huh?  That's right.  Furthermore, Allstate has its attorneys do this all the time throughout the country in bad faith cases. Allstate has been a bad corporate citizen for a long time.  They consistently refuse to tell the truth and it is about time courts damn this type of behavior.  Everybody has to play by the rules--even multi-billion dollar corporations.

That's 3 Billion, with a "B"

That's the annual revenue of United Casualty parent, Unitrin, a company with a branded glass tower at One Wacker Drive in Chicago.  To put things in perspective, even if United Casualty had paid policy limits to our clients for damages caused to their homes by Hurricane Charley, it would have probably still been shy of the $4.1 million CEO Richard C. Vie made in 2006, according to Forbes Magazine. Associated Press reporter Anthony McCarthy offers a glimpse of how over 40 low-income families are still living in mold-infested homes, some in very poor health as a result, nearly four years after the storm hit. I wonder if that sort of CEO compensation is justified when leadership risks shareholder value simply because it can't live up to the services promised at the very core of its product.  I will bet that the senior management have never been to one of their customer's homes in Arcadia before or after the loss.  It is pretty obvious what the company management wants out of the relationship with its policyholder customers.

The Insurance Lobby

If there is any question about whether consumers or insurance company officials have the power and control the legislative process, all one has to do is read the Linn's Stamp News article of May 12, 2008.  It speaks for itself:
Bill set to name post office for lobbyist By Bill McAllister, Washington Correspondent Nothing in Washington more shows congress' control of the United States Postal Service than its practice of naming hundreds of local post offices in honor of community heroes, often for military personnel killed in Iraq. Rep. Lamar Smith (R-Texas) got a lot of attention April 15 when The Washington Post disclosed that the Republican wants to name a San Antonio post office after what the report called "a prominent, very-much-alive lobbyist." Columnist Jeffrey H. Birnbaum also reported that Smith's renaming legislation began moving through the House on the day that the lobbyist's employer donated $5,000 to him. Smith's bill is to honor Cyndi Taylor Krier, the vice president of Texas government relations for USAA, a large financial services and insurance company based in San Antonio, by naming a post office for her. Krier's employer, USAA, provides banking, insurance and financial services for active, reserve, retired and former service members and their dependents in the United States and overseas. Krier, 57, was described as a longtime Texas politician and officeholder whose grandfather, grandmother and mother worked for the Postal Service.

"Deal, or No Deal?"

Either the Governor of Florida or Allstate is not telling the truth. The lead front page story of the St. Petersburg Times stated the following:"Gov. Charlie Crist confirmed the Allstate offer was floated recently, and he promptly rejected it. Allstate officials said.....that no offer had been made."
Which is it? Is Allstate accusing the Governor of making this up? Maybe they are playing the "would ya, if I coulda , then ya shoulda" game where no offers are "officially" made. Still, Allstate better get its agents back on the reservation because they claim Allstate offered $10 million. I know Charlie Crist. He has always been up front regarding his views even if I do not agree with him. Our relationship is good enough that when I told him I was supporting another friend for Governor, Jim Davis, Charlie said he understood, but hoped I would reconsider in the future. The Allstate spokesperson's version of the truth is another matter. Throughout the ordeal regarding McKinsey documents, Allstate maintained those claims documents had nothing to do with Homeowners' claims. I told the press Allstate was simply not telling the truth. Now that Allstate has placed those documents on its website, everyone can see Allstate lied, because McKinsey "redesigned" the methodolgy for handling homeowners claims as well.
Allstate's ads ask, "Whom do you trust?" The answer should be clear to everybody--not Allstate.  
 
 

Times Story Not Accurate

The St. Petersburg Times ran a story regarding our firm's involvement with influencing pro-policyholder legislation and regulation.  One would think that if the insurance industry was truly most interested in their customers, they would support our efforts. The exact opposite is what happens, and my impression of the worst offenders in Florida are Citizens, Allstate and State Farm.
These three insurance companies (Citizens is actually a governmental entity, by legislation it lobbied for) lobby our regulators and legislators to block laws that support and protect consumers as well as limit what few rights policyholders have through statute. Their financial and manpower resources are significant. These resources implemented through studied strategy along with well crafted propaganda in the news and ads make them formidable opponents to laws that would even the playing field for policyholders. Heck, they even have their bought for legislators use scare tactics if such pro-policyholder laws or enforcement of the same were to occur as exemplified in this past Thursday's front page article regarding insurance reform.
We sent a letter in response to inaccuracies of the Times article:
Reporting, or Just Being Played?  Only Big Insurance Benefits from such Sensationalistic Reporting

In Response to State Senate panel awards $80,000 contract to law firm with attorney linked to anti-insurance group

 

First, my law firm is not "anti-insurance".  We believe in the product and actively encourage individuals and corporations to be as fully insured as they can afford to be.  We are a group of professionals who advocate against insurance companies that do not put the interests of their customers as their highest priority. 

 

Jon Moyle was retained by the Merlin Law Group for three years to assist our efforts to promote legislation enhancing the rights of insurance customers and to counter the legion of insurance company lobbyists trying to do the opposite. Our aim is to level the playing field so consumers can trust in the "peace of mind" they seek to obtain from insurance companies.

 

When Mr. Moyle and his new firm were awarded work for the Florida Senate, he immediately resigned from representing our firm.  This was clearly pointed out to Ms. Liberto, who was originally seeking to confirm that Moyle was still employed by our firm while working for the Senate. 

 

Ms. Liberto also questioned our firm's donations to Senator Atwater's campaign.   Senator Atwater is an honorable man and well respected leader in the Florida Senate. We will continue to support Senator Atwater's diligent efforts to protect insurance policyholders' rights.  We also clarified with Ms. Liberto that the campaign contributions were made at a fund raiser.

 

It is smart for the Senate to want Mr. Moyle and his team-- Mr. Moyle's firm is familiar with big insurance claim practices, and they are the right firm for the job.  Concerning the issues at hand, it would be foolish to hire lawyers that inherently protect insurance companies.

 

Ms. Liberto's article conveniently comes at a time when a very important piece of pro-policyholder legislation sits on the Senate's desk.  It makes public claims practices documents detailing how Allstate, and presumably others, systematically reduce benefits to policyholders for the sake of profit.  Obviously, Allstate, and countless other insurers, are shaking in their boots over the disclosure of how they actually handle their customers' claims.  If passed, these laws would force "big insurance" to finally do the right thing for Florida policyholders.

 

It is unfortunate to see my firm's 25 years of focus on insurance law editorialized as "anti-insurance."  Merlin Law Group protects and pursues policyholder rights.  If "big insurance" would play by the rules and deliver on promises to policyholders, there would be no need for our services.

 

Ms. Liberto pointed out to us that it was the St. Petersburg Times' responsibility to report all the facts, which I agree with and am all for.  But she clearly did not have the story she originally thought and decided to pursue a different approach..  The only beneficiary of this report is "big insurance" -- and once again at the expense of policyholders.

 

William F "Chip" Merlin, Managing Partner, Merlin Law Group

 

The $500 Billion Hurricane

Moniker  Is the Insurance Industry Trying to Justify Increases in Rates or Simply Justifying Leaving the Risk Business Along Coastal areas?  These questions came to my mind after reading an article in the February 2008 edition of Natural Hazards Review.  The article, Normalized Hurricane Damage in the United States: 1900-2005 , claims that by 2020 a $500 billion dollar hurricane loss could happen in South Florida.  Of course, those are in 2020 dollars -- but that is off the charts compared to any previous loss. The study was made primarily by people working for the insurance industry.  Accordingly, some bias may exist and consumer activists may find my questions justified.  The $500 million figure seems surreal given the Katrina's calculated damage was $156 billion dollars.  The study has two undeniable findings and conclusions.  First, the population along coastal areas has grown.  Thus, more property is in potential danger of hurricanes.  The most concentrated areas are South Florida, Tampa, and the greater Houston area.  All three areas have experienced significant population increases over the past century.  Second, the per capita wealth has also increased over that period.  Not only are more people and properties in harm's way, these people have more and more expensive properties at risk.  In simple terms, we have more and better stuff to insure on an individual basis. These statistics are important.  Determining the amount at risk and the amount of available insurance is important to a community and state. Since we cannot expect people are going to move away from the coast, the obvious long term solution is better risk management.  The enforcement of building codes and stronger building codes are inevitable.

States Seek McKinsey Reports

Moniker The Tampa Tribune reported Friday that the Florida Department of Insurance is seeking McKinsey & Company consulting reports which are allegedly tied to an Allstate plan to underpay claimants.  These documents are at the heart of contention in a Colorado case where Allstate is being fined for not providing them, and also in a Missouri Department of Insurance investigation where Allstate is being fined $25,000 per day for refusing to cooperate with the state regulator's investigation.  I am seeking similar documents in an Indiana case in which Allstate has been already sanctioned and ordered to provide them. For over a decade, I have criticized Allstate's reliance on a claims program which appears to unethically calculate the value of an individual's bodily injury claim and not honestly disclose how Allstate arrived at its determination. The situation is analogous to an Emergency Hospital charging you too much and then not providing the details of the bill nor an honest explanation as to how it arrived at its numbers.  Allstate has understandably been reluctant to disclose its claims practice and expose itself to the Civil and Regulatory penalties that should accompany such a breach of the public trust and its knowing failure to act in good faith.  In case after case, Allstate simply refuses to fully comply with legal requests for the internal memoranda or ties up compliance through delay and stonewalling. The amazing aspect of the Department of Insurance request is that it has come so late after Allstate's claims processes were changed. The McKinsey documents were primarily generated over a decade ago, and I obtained them when I chaired a Bad Faith Litigation Group.  See, Mark Ballard, Allstate's Master Plan?, Nat'l Law Rev., November 9, 1998, at A1, (col.2).  One of my colleagues, David Berardinelli, wrote a book on this topic:  From "Good Hands" to Boxing Gloves - How Allstate Changed Casualty Insurance in America.  We suspect the most revealing documents are contained in management emails regarding the performance and profits of Allstate's claims programs.  In our experience, internal emails by management are more revealing than reports generated for display to many employees.  The Department should seek these in addition to the McKinsey documents.     It is refreshing that regulators are finally seeking transparency of Allstate's claims practice.  Still, one has to wonder why it has taken so long and if the Department is looking in all the right places.  They should visit our law office to obtain some of what they are seeking; we've had some, but not close to all, of these documents for 10 years.  Based on past experience, Allstate will not be in a hurry to provide anything which would expose how it treats its customers and which could expose it to further penalty or criticism.  It is unlikely Allstate will voluntarily allow a third party to challenge its claim that "you're in good hands with Allstate." 

Previous Incarnation of Insurance Blawg

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About the Merlin Law Group

Since 1985, the Merlin Law Group has exclusively focused on Insurance Claim Presentation & Litigation, Insurance Coverage and Claim Disputes, and Insurance Bad Faith for both residential and commercial property insurance policyholders.     The firm's goal is to ensure that insurance policyholders are treated fairly and adequately by insurance companies when they suffer a loss. It helps to level the playing field for policyholders when faced with teams of adjusters and attorneys protecting the interests of insurance companies and no one to protect their own.