Life, Health and Disability Insurance Law Blog : Life, Health and Disability Insurance Law Blog : California Disability Lawyer & Attorney : Barger & Wolen Law Firm : CA Life Insurance & ERISA Law, Life Health Disability

Fairbanks v. Superior Court, __ Cal. 4th __, 2009 WL 1035264 (April 20, 2009). 

California has long been known to insurance bad faith practitioners for its consumer-friendly insurance bad faith laws. But seemingly not content with their common law bad faith remedies, bad faith plaintiffs’ lawyers have periodically attempted to sue insurers for claims based on California’s Consumers Legal Remedies Act (Cal. Civ. Code sections 1750 et seq.) (the “CLRA”). The advantages in doing so arguably include a slightly different definition of wrongful conduct and an independent basis on which to seek an award of attorneys’ fees. Regardless, the issue is now moot: On April 20, 2009, the California Supreme Court issued its decision in Fairbanks v. Superior Court, __ Cal. 4th __, 2009 WL 1035264 (April 20, 2009). There, the Court definitively ruled that the sale of life insurance is not a service that is subject to the CLRA’s remedial provisions.

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We are very pleased to welcome you to our life, health and disability insurance law blog. We have thought about launching a blog like this for some time but this year, after much hard work and a little luck, it is here. It is one of the first blogs in the country to focus exclusively on life, health and disability insurance law issues. The goal of this blog is to become a resource for clients and attorneys by providing legal commentary, articles, news and regular law updates covering ERISA, insurance bad faith, punitive damages and other areas of the law that impact upon life, health and disability insurance law issues, with a special emphasis on California law, the Ninth Circuit Court of Appeals and federal district courts within the Ninth Circuit.

We hope you find this to be a useful resource and we look forward to your comments and feedback. 

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The Defense Research Institute’s For the Defense has published an article by Jerel C. Dawson entitled “The Conundrum of Self-Reported Symptoms.”  This article addresses some of the issues surrounding self-reported symptoms in ERISA disability cases.  Mr. Dawson’s expert discussion talks about objective medical evidence of fibromyalgia, chronic fatigue syndrome and judicial acceptance of subjective complaints.  “The Conundrum of Self-Reported Symptoms” provides an excellent overview of the relevant issues for ERISA attorneys facing claims of self-reported symptoms.  

Republished with Permission Here

About the Author:

Jerel C. Dawson is a Partner at Shutts & Bowen LLP
1500 Miami Center, 201 South Biscayne Boulevard | Miami, FL 33131
Phone: 305-358-6300

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The Mega Life and Health Insurance Company v. Superior Court (Closson), 2009 WL 989386, __ Cal. App. 4th __ (April 14, 2009)

The California Court of Appeal recently addressed the issue of whether a widower, who was not a party to the health insurance policy at issue, could sue the health insurer for fraud in his individual capacity. In The Mega Life and Health Insurance Company v. Superior Court (Closson), 2009 WL 989386, __ Cal. App. 4th __ (April 14, 2009) , the court held that although the non-contracting party spouse could properly sue as his spouse’s representative to receive all damages legally available on her behalf, he had no separate and individual tort claim based on the policy.

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On March 9, 2009, the Ninth Circuit denied a petition for en banc review of Golden Gate Restaurant Ass’n v. City and County of San Francisco, 546 F.3d 639 (9th Cir. 2008) wherein the Court of Appeals found that a San Francisco city ordinance requiring that all employers in the city make mandatory contributions towards employee health costs was not preempted by ERISA. Eight (generally conservative) judges joined a dissent authored by Judge Milan Smith, Jr. criticizing the decision not to rehear the case en banc, and noted that there is now a split with the Fourth Circuit; specifically, Retail Industry Leaders Ass’n v. Fielder, 475 F.3d 180 (4th Cir. 2007). In light of this split, many believe that the United States Supreme Court will accept an expected petition for certiorari.

See also Golden Gate Restaurant Ass’n case summary.

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The annual meeting of the Defense Research Institute took place on October 22, 2008 in New Orleans, Louisiana. Presented at the meeting was this article titled, “The Top Life, Health, Disability and ERISA Decisions of 2008.”   Written by three prominent defense attorneys, this article highlights some of the most influential decisions from 2008.

The article, available here, was authored by:

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On March 31, the U.S. Supreme Court ended a long-running standoff with the Oregon Supreme Court over the handling of a punitive damages suit against Philip Morris brought by the widow of a smoker who died from lung cancer in 1997.  In a rare procedural move, despite conducting oral argument months ago, the Supreme Court, in a one-sentence opinion, dismissed the case of Philip Morris USA Inc. v. Williams as "improvidently granted."

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Major v. Western Home Ins. Co., 169 Cal. App. 4th 1197 (2009).

Emotional distress damages in an insurance bad faith action must be “tied” to economic loss in order to be recoverable. Specifically, emotional distress damages are not recoverable without economic loss, and emotional distress damages must relate to the amount of economic loss suffered.

The Majors sued their home insurer, Western, for losses arising out of a fire that destroyed their home and all personal belongings. The Majors obtained a jury verdict in their favor consisting of, among other things, approximately $31,000 in economic damages and $450,000 in noneconomic damages. The factual findings included a determination that Western unreasonably handled the Majors’ claim and that the Majors were financially vulnerable. Western asserted on appeal that the noneconomic, or emotional distress, damages awarded were excessive as a matter of law.

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Like most other states, California has experienced a spike in stranger-originated life insurance transactions, a relatively recent and emerging phenomenon commonly known as “STOLI.” As the name suggests, STOLI transactions are initiated by a third-party investor who does not have an insurable interest in the insured’s life. The policy’s premiums are funded by the investor, and the insured – usually a wealthy and elderly individual – receives a large cash payment up front in exchange for an agreement to transfer full ownership of the policy to the investor within a short period of time after the policy’s issuance or, in some cases, at the expiration of the policy’s two-year contestability period.

The insureds in a STOLI scheme usually are unaware that the large policy may reduce, if not eliminate, their ability to obtain other life insurance coverage for the benefit of their loved ones. And according to some, one of the problems STOLI transactions present for life insurers is that most insurers’ premium rates are based in part on statistical lapse rates – considerations that do not apply when a policy is secretly funded by an investor, as is the case with STOLI transactions.

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