Hurricane Sally insured losses are estimated at up to $3.5 billion; Maryland adopts the Daubert standard; and the Southern District of New York broadens the scope of the Families First Coronavirus Response Act (FFCRA), vacating several features of the Department of Labor’s Final Rule.
Failure-to-Cooperate Defense Modified
The Colorado Supreme Court has long recognized that there are reciprocal duties owed by insurers and their insureds: The insurance provider has a duty to act in good faith in investigating claims, and insureds owe contractual duties of cooperation and reporting. Nonetheless, C.R.S. §10-3-1118 took effect Sept. 15, imposing significant hurdles on insurers seeking to invoke the failure-to-cooperate defense. (The August 2020 National column reviews the law’s specific requirements.) Any carrier who fails to jump through the legislation’s many hoops will be precluded from asserting the claimant failed to cooperate with the insurer’s attempts to investigate the claim. This statute significantly modifies the failure-to-cooperate defense in first-party insurance matters and may constitute an impermissible interference with contracts by the legislature. For now, revision of applicable policies and procedures may be necessary to ensure that insurers are able to enforce the language in their policies.—From CLM Member Laura M. Martinez
Nursing Home Verdicts Buck Trend
In Cook County, Ill., in Anne Groh v. Glenview Terrace Nursing, the plaintiff alleged that a resident developed a wound at the defendant’s facility and there was no documentation assessing the wound before the resident was transferred to the hospital. The plaintiff requested damages of $1.85 million. The defense argued that the appropriate interventions were put in place and implemented for the resident. After a 90-minute deliberation, the jury returned with a verdict for the defense. In Ronald and Kathleen Smith as Independent Co-Executors of the Estate of Margaret Corbett v. Park Villa Nursing & Rehabilitation Center, LLC et al., plaintiffs raised allegations of negligence and violations of the Illinois Nursing Home Care Act against a nursing home. While the jury returned a verdict for the plaintiff, the $380,000 in damages fell far short of plaintiffs’ request of $5 million in damages. The pair of nursing home verdicts, within a few days of each other, offers hope for stemming the tide of social claims inflation in a traditionally difficult venue.— From CLM Members Paul Motz and Andrew J. Kovarik.
Federal Court Bars “Reptile Theory” Questions
In McNamara v. Navar, the District Court for the Northern District of Indiana recently issued a protective order barring plaintiff’s counsel from asking “reptile theory” questions during the deposition of a commercial truck driver in a wrongful-death case. The defendant truck driver sought to prohibit questions, including hypotheticals, regarding his knowledge of, and the purpose underlying various safety rules for, tractor-trailer operation on the basis that such questioning would create confusion around the applicable duty of care by attempting to replace it with safety rules. The district court agreed and explained that, because the truck driver had not been designated as an expert witness, his testimony should be limited to what he perceived, and questions about safety rules fall outside the scope of permissible fact discovery.—From Northeast Ohio Chapter President, Michael C. Brink
Up To $3.5 Billion in Insured Losses Expected for Sally
Hurricane Sally—which made landfall near Gulf Shores, Ala. on Sept. 16—is expected to cause between $2 billion and $3.5 billion in insured losses, according to RMS. The estimate includes wind, storm surge, and inland flood losses across parts of the Gulf and Florida regions; and encompasses property damage and business interruption to residential, commercial, industrial, and automobile lines of business. It also includes between $400 million and $800 million in estimated National Flood Insurance Program (NFIP) losses. “We expect Sally to be a sizable event for the NFIP,” says Rajkiran Vojjala, vice president, Model Development, at RMS. “The majority of NFIP take-up occurs in coastal counties, especially in the states most impacted by the hurricane, notably Alabama and Florida. However, the inland extent of heavy rainfall from this event means we’ll likely see NFIP losses stemming from inland flood as well.” In the days before making U.S. landfall, Sally intensified, weakened, and then strengthened again before striking near Gulf Shores as a Category 2 storm.—From Managing Editor Phil Gusman
State Adopts Daubert Standard
Maryland became the 40th state to adopt Daubert as its admissibility standard for expert testimony, overturning its 1978 opinion Reed v. State, which adopted the “general acceptance” test for admissibility that was initially embraced by the D.C. Court of Appeals in 1923’s Frye v. United States. The Supreme Court later adopted a new “reliability” standard in 1993’s Daubert v. Merrell Dow, holding that Federal Rule of Evidence 702, which set forth a list of “flexible factors” for courts to use in making a threshold determination of whether expert testimony was reliable, superseding Frye. While Maryland adopted Maryland Rule of Evidence 5-702, as patterned from FRE 702, in 1994, it did not go so far as to overrule Frye-Reed. This resulted in 42 years of duplicative analysis as parties addressed both Frye-Reed and MRE 5-702. By finally adopting Daubert’s multi-factor reliability analysis, Maryland clarified its prior muddied approach to expert testimony.—From CLM Member Jessica Butkera
Paid Leave Expanded Under FFCRA
In August, the Southern District of New York broadened the scope of paid sick leave for employees seeking relief under the Families First Coronavirus Response Act (FFCRA). The court expanded employee benefits by vacating several features of the U.S. Department of Labor’s (DOL) Final Rule regarding administration of the FFCRA. The DOL will likely appeal this ruling to the Second Circuit. Until then, employers should anticipate and prepare for more employees to request paid leave pursuant to the expanded benefits under this decision. The decision vacates the Final Rule’s work-availability requirement, its broad definition of health care providers (under the FFCRA, employers may exclude health care providers from coverage, in their discretion), its requirement for employer consent for all intermittent leave arrangements, and its mandate that employees provide employers with documentation outlining the details of their need for leave as a condition to taking the leave.—From CLM Members Matthew Ross, Dana Ring, and Michelle Arbitrio