CLM National: November 2019

In a five-to-four decision, the Washington Supreme Court reverses the appeals court in Keodalah; a settlement agreement is reached in Nevada over the 2017 Las Vegas mass shooting; and, in Texas, a recent tornado event appears to be the costliest in state history.

Washington

Supreme Court Reverses Keodalah

The Washington Supreme Court, in a five-to-four decision, reversed the Court of Appeals in Keodalah v. Allstate Insurance Company and held that insurers’ employee adjusters are not subject to personal liability for insurance bad faith or Consumer Protection Act (CPA) claims. Keodalah, the insured in this case, argued that the plain language found in RCW 48.01.030 subjects employee adjusters to bad faith and CPA claims. Smith, the insurer’s employee adjuster, argued that RCW 48.01.030 does not expressly create a private right of action, and that the appellate court did not employ the three-pronged test articulated in Bennett v. Hardy for determining whether a statute includes an implied cause of action. The Supreme Court reasoned that the interest addressed in RCW 48.01.030 is expressly stated to be the “public interest,” and the statute indicates its purpose is to protect the “integrity of insurance.” Thus, the court concluded that it cannot be said that the statute was enacted for the particular benefit of insureds.—From CLM Member William Cornell

Nevada

Parties Agree to Settlement Over 2017 Shooting

MGM Resorts International reached a settlement with counsel representing plaintiffs in litigation concerning the Oct. 1, 2017 shooting at an outdoor country music festival that resulted in the deaths of 58 people. MGM Resorts owns the Mandalay Bay Hotel, from where Stephen Paddock carried out his attack on the crowd. The total settlement amount is between $735 million and $800 million, depending on the number of claimants participating, and MGM Resorts says the entire settlement process is expected to be completed by late 2020. The settlement will be funded by MGM Resorts’ insurers to the settlement-minimum of $735 million and up to $751 million, with MGM Resorts adding amounts to reach the $800 million figure, if necessary. Under the agreement, parties will dismiss and release all pending litigation.—From Managing Editor Phil Gusman

Colorado

New Law Carries Hefty Penalties for Insurers

A new law, HP 19-1283, may leave Colorado auto insurers open to potential secondary litigation from auto-accident claimants. Under the law—which is intended to bring more transparency to the claims process and encourage settlement—insurers that issue commercial or personal automobile policies must provide personal injury claimants and their counsel with a copy of any applicable insurance policy and other information, including liability limits and the name of each insured party. The law also requires an insurer to provide its insured with a complete copy of the insurance policy if requested. If an insurer fails to provide the required information to a claimant within 30 calendar days of a request, claimants can recover damages of $100/day, as well as attorneys’ fees and costs incurred in enforcing the non-compliance penalty. The law takes effect Jan. 1, 2020.—From CLM Member Jesse Brant

Texas

Tornado Outbreak Could Be State’s Costliest

The Insurance Council of Texas (ICT) estimates there are $2 billion in insured damages from a series of tornadoes that struck in and around Dallas County, which would make the October 2019 outbreak the costliest tornado event in the state’s history. ICT says its preliminary projected estimate includes over 30,000 auto and home claims, and notes commercial and business claim projections that are still coming in could further increase the financial impact. “The multiple tornadoes uprooted decades-old trees, brought down power lines, made many roads impassable, and immeasurably changed the landscape of some neighborhoods,” says ICT. Despite large-scale property damage, though, ICT notes that the event caused no fatalities. —From Managing Editor Phil Gusman

Louisiana

Unconfirmed Drug Test Cannot Be Used to Deny Benefits

The Supreme Court of Louisiana reinstated an Office of Workers Compensation judge’s ruling that an unconfirmed drug test cannot be used to deny a claimant’s benefits. The claimant, Jerome Parson, was injured during the course of his employment. A drug test the following day came back positive, but no confirmation testing was performed. The OWC judge granted Parson’s motion in limine asserting the unconfirmed drug test was inadmissible for any purpose. The Court of Appeals for the Second Circuit reversed, stating that §1081 prohibits unconfirmed tests as a basis for disqualification in an intoxication defense, but unconfirmed drug screens are not excluded from evidence in fraud claims under §1208. The Louisiana Supreme Court disagreed, stating, “It would be illogical to prohibit the unconfirmed drug test to be used to deny a claimant benefits under §1081, yet allow the same unconfirmed drug test to be used as proof of fraud to ban a claimant’s benefits under §1208.”—From Managing Editor Phil Gusman

New York

Summary Judgment Granted for AII in NYCAL Talc Case

In Germain, et al. v. American International Industries, et al., plaintiffs claimed a decedent, Michelle Germain, developed mesothelioma from exposure to asbestos-containing cosmetic talcum powder in the 1970s. One of the powders was allegedly manufactured by a company that American International Industries (AII) acquired the assets of in the 1980s. AII moved for summary judgment, asserting the asset acquisition did not make it liable for its predecessor’s torts. The New York Supreme Court, New York County, agreed, holding that the four exceptions to New York’s successor-liability rule were not met. AII did not purchase the predecessor’s manufacturing facilities, equipment, or real property. It paid cash for the assets and did not acquire stocks. The purchase did not result in merger. Rather, AII and its predecessor maintained separate assets, employees, owners, and officers. The court also found no evidence that the decedent was exposed to asbestos from talcum powder for which AII was liable, dismissing all claims.—From CLM Member Ashley R. Presson