Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

One legal treatise noted the value of sharing information:

“The value of information sharing among plaintiffs in similar cases has been broadly recognized in a growing body of case law in state and federal courts and in the legal literature. A review of the authorities makes clear that a consensus of legal opinion, from a wide variety of perspectives, strongly advocates the practice. Judges and scholars agree that sharing of discovery among plaintiffs is necessary to promote full, fair, and efficient access to information, to deter and detect stonewalling, and to advance the truth-finding function of the judicial system. A restrictive confidentiality order that precludes information sharing among counsel with similar cases.”

Francis H. Hare, Jr., et al, Full Disclosure: Combating Stonewalling and Other Discovery Abuses, 161-62 (AAJ Press 1994).

One reason I wrote Insurance Settlement Preparation, and very publicly posted the information about our case against Lexington Insurance Company, is because we are trying to find out from others if they are having any better luck at figuring out why Lexington seems to be taking such a hard line on claims in Louisiana. We have already learned of other cases with similar problems which we have encountered. It saves a lot of time and money to not have to make a trail that another has already laid. We try to return the favor.

Even the media has picked up on Lexington's claims litigation. The Times-Picayune published a story in Sunday's paper, Court Issues String of Policyholder-Friendly Rulings in Insurance Cases. The article noted how many cases Lexington is involved and losing:

"Another explanation, of course, is that the trend is simply a consistent set of decisions on one company's behavior, since three of the four cases dealt with Lexington, a unit of AIG. Lexington did not respond to phone and e-mail requests for comment."

Examples of how sharing information helps everybody (except the insurers) are plentiful. Much of the discovery concerning State Farm’s claims practices following Hurricane Katrina came about as a result of information coming to light in other lawsuits. For example, we published as exhibits to a complaint a client’s original engineering report which would have provided coverage and also the altered report with the forged signature. Before that, spokesmen for the insurance industry asked Dickie Scruggs to "back up" his allegations with proof. As a result, everybody knew to ask for an original report and not accept what the insurer was providing as the absolute truth.

Any attorney that represents policyholders and is interested in sharing information regarding claims practices of insurers should contact our law firm. We will provide information for joining the American Association of Justice's Litigation Group dedicated to this. And, for any others that might have information that may provide me a better understanding of Lexington and AIG, I am only an email or call away from you.

Slabbed is probably going nuts because I am indicating that another case may be resolved confidentially and without public scrutiny. So, to help Slabbed understand a little (there is more) of what we do and provide Dimechimes with some more adjuster training lessons, I am publishing the Reports of the Claims Expert and the CPCU expert in the case.

If this post is not removed, I would appreciate any ideas on this case and would love to share information about AIG and Lexington Insurance Company with those who are having claims problems with them.

Deborah Trotter in our Gulfport office is the primary attorney on this matter. She has flown from one side of the country to the other working on this case. We are on a contingency fee and we report to a receiver in the Bankruptcy Court. The client went into bankruptcy long before we were retained and the Court approved as counsel.

The mediator for the case is Jim Perry. He has an excellent reputation and was the mediator in our Port of New Orleans case. From my one experience with him, he deserves the reputation.

One commentator with personal knowledge about our firm in replying to The Parable of Hurricane Ike Insurance Claims, indicated that our files are "thick" when we go to settlement conferences. Our experience is that most good counsel prepare their cases thoroughly.

However, there is significant debate whether all facts should be used as leverage at a mediation. Even in our law firm, I have seen a strategy that "less is more" at mediation since the lawyers just end up arguing about which case is factually better. As mediation is purely about money, the attorneys following that theory do the trial analysis and simply give a one page summary: pay or go to trial.

I prefer to provide information prior to the mediation and discuss the facts less while there. As indicated in a post last week, our firm is discussing trial technique because we expect that more carriers will try to delay their day of reckoning through trial and appeal as the current economic climate worsens. Still, I have my trusted presentation advisor, Jack Stein of Trial Exhibits, with me because I feel compelled to make a few more points.

Will this case settle? Who knows? If it does, you may be one of the few who will know it existed.

Later, news reports indicated that New York changed its regulations to allow AIG insurance subsidiaries to provide loans from surplus to help keep the parent AIG solvent. It seemed that the AIG insurance companies were simply bailing out an immediate liquidity problem caused by the paper write-down of assets. This was extraordinary and, while life goes on, there are going to be huge ramifications for corporations and individuals if AIG fails; that company effects everybody. I thought about AIG's claims handling practices in the late 1980's and early 1990's. When Hank Greenburg was then running AIG, we referred to AIG's claims payment culture as similar to Gallo wine: "We pay no claim, until its time." It took forever and a day, with the worst excuses in the world, to get checks from AIG. Greenburg understood how to play the float.

Nevertheless, the government loan was a good thing. An orderly and fair wind-down of AIG business prevents panic and protects everybody. A lot of policyholders are breathing a sigh of relief. I am a firm believer in the free market. A government should be in the business of governing and not running a business. Government and business are separate in a democracy for a number of reasons. 

However, what has happened in the last two weeks shows why financial institutions need regulations regarding their conduct.  People and policyholders need certainty that their savings and financial nest eggs are safe. We lost an understanding of the reasons why regulations of banks and insurance companies were set up long ago. Lobbyists for banks and insurance companies successfully lessened regulatory safeguards that had been in place for years. Over the past decade, in the march for greater profits, insurance companies and banks sought and obtained much more freedom in their financial affairs.. The problem is that in finance, greater rewards of profit generally come with greater risk of failure. We are reminded of those lessons today.