Hawaii grants a motion to compel genetic testing in an asbestos lawsuit, the Supreme Court of Texas decides noneconomic damages must match the evidence in the case, and a life insurance ruling in Colorado regarding the use of third-party data and algorithms may pave the way for changes impacting P&C insurers.
California
Insureds Can Depend on The Duty to Defend
The District Court for the Southern District of California held that a professional liability insurer has an obligation to defend its insured. The question of coverage arose from a case in which several of MG Properties’ customers alleged the company maintained unlawful security deposit policies, affecting some customers’ credit scores. Plaintiffs sought damages for defamation due to the allegedly unlawful policies and adverse credit effects. MG Properties sought coverage and defense under its professional liability policy. Its carrier denied the claim, citing illegal profits and conversion exclusions. The exclusions allegedly barred coverage and a legal defense when insureds gain any unlawful profit or when they misappropriated or commingled the funds of their customers with their own. MG Properties filed suit in federal court seeking relief in the form of a defense by its carrier while disputing the underlying case. The federal court sided with MG Properties and concluded the insurance carrier owes a duty to defend, which extends beyond the duty to indemnify. —From CLM Member Ty Maynarich, Tyson & Mendes
Colorado
Life Insurer Rules Offer Glimpse of Future for P&C
P&C insurers should closely follow the rollout of new Colorado regulations that govern life insurers’ use of external consumer data and information sources. Colorado’s first-in-the-nation rules for how life insurers use external consumer data illustrate the growing regulatory scrutiny of insurance practices that could lead to unfair discrimination. The rules may be a harbinger of similar regulations for P&C insurers’ use of third-party data and algorithms. The revised rules require insurers to establish a risk-based governance framework and regularly test their algorithms for potential bias. Additionally, insurers must maintain documentation of how external data is used and tested for unfair discrimination, available upon the regulator’s request. While the new Colorado regulations aim to prevent unfair discrimination, they raise concerns about the potential for algorithms and machine learning to amplify biases present in the underlying data. —From Mark Friedlander, Insurance Information Institute
Hawaii
Court Grants Motion to Compel Genetic Testing
A Hawaii court ruled on 3M’s motion to compel genetic testing in an asbestos matter. Hawaii First Circuit Judge Ashford granted 3M’s motion in McCabe v. 3M Co., et al. Randolph McCabe filed suit in Hawaii’s First District. McCabe worked as a warehouse employee for Acuron and Associated Insulation Co. in the 1980s. He alleged that, although he occasionally wore respirators (including 3M’s 8710 model), he suffered asbestos exposure leading to his mesothelioma. 3M moved to compel McCabe to undergo genetic testing. 3M argued the court had the authority to order the test and contended genetic testing would likely become routine soon. 3M said the test would not overly burden McCabe. Finally, 3M asserted good cause existed for a genetic test since asbestos exposure is not the cause of all mesotheliomas—genetic mutations have also proved to be a source. As 3M argued, recent trends throughout the country suggest an increase in defendants seeking genetic testing. —From CLM Member Susan R. Allen-Robbins, Goldberg Segalla
Texas
No Blank Checks for Noneconomic Damages
The Supreme Court of Texas issued a decision addressing the award of noneconomic damages in a wrongful death case and emphasizing the need for a nexus between noneconomic damages and the evidentiary record. The driver of an 18-wheeler lost control of her vehicle, causing an accident with multiple fatalities. Family members sued the driver and trucking company, claiming compensatory damages. For an award of noneconomic damages, plaintiffs’ counsel used the $71 million cost for a Boeing jet and the $186 million valuation for a Rothko painting to provide context for the jury. The court found these analogies improper and disapproved of this anchoring attempt, stating there was no rational connection between the value of a jet and the loss of a human life. In considering how to determine noneconomic damages, the court acknowledged the inherent difficulty in placing a value on mental anguish, but returned to the need for an evidentiary basis to support damages. —From CLM Member Robert W. Hellner, Wood Smith Henning Berman
Illinois
No Agency Relationship Between Shipper Broker and Carrier
The Illinois First District Appellate Court reversed a trial court’s ruling and granted a judgment notwithstanding the verdict on appeal. The court declined to find an agency relationship where a shipping broker hired a motor carrier but did not control the motor carrier’s operations. In Cornejo v. Dakota Lines, Inc., the court considered whether a shipping broker, Alliance, that contracted with a motor carrier, Dakota, to transport goods for one of the shipper’s clients was vicariously liable for the carrier’s driver’s negligence since neither the driver nor the carrier were the shipping broker’s agents. The Appellate Court reviewed the relationship between Dakota and Alliance and found the contract between Dakota and Alliance explicitly identified Dakota as an independent contractor responsible for its employees and agents. The court found Dakota held complete autonomy over its operations and personnel and concluded no reasonable jury could deduce an agency relationship between Dakota and Alliance. —From CLM Member Lara Lickhalter, Wilson Elser
Pennsylvania
Acting Within Reasonable Time Is Only Duty for Property Owner
The Superior Court of Pennsylvania affirmed summary judgment in favor of the defense in a slip-and-fall case. Plaintiff filed suit against the defendant property owner claiming she slipped and fell because of unsafe amounts of snow and ice. The trial court ruled the defendant was responsible for exercising reasonable care in maintaining the property, but that slippery conditions existed in general and therefore the “hills and ridges doctrine” applied and precluded an instant liability action. On appeal, plaintiff attempted to argue the ice was a localized condition as she fell on a patch of ice behind her vehicle, which she claimed defendant negligently allowed to accumulate. The appeal was denied on the hill and ridges doctrine. The court found plaintiff was aware of the active freezing precipitation at the time of her fall and ruled the only duty upon the property owner is to act within a reasonable time after notice to remove snow and ice. —From CLM Member Nicholas Hubner, Freeman Mathis & Gary