June 2013 Alerts Edition

Greetings,

Welcome to the June 2013 edition of the FORC Alert. I hope you find the information useful. If you have any colleagues that may be interested in this publication, please forward it on. There is a link below this message allowing them to opt-in so they can receive these FORC Alerts automatically.

Best Regards,

David K. Liggett

Editor, FORC Alert

June 2013 Alerts

Blurb

Category(s): Alabama - 06/01/2013

Important New Unclaimed Property Law in Alabama

On May 8, 2013, Alabama Governor Robert Bentley signed HB192, a corrective measure sponsored by Representative Greg Wren that amends Alabama's Unclaimed Life Insurance Benefits Act.  House Bill 192, which was supported by the domestic life insurance industry, became Act 2013-195.

During the 2012 Legislative Session, Alabama enacted model legislation proposed by the National Conference of Insurance Legislators (NCOIL) that would require life insurers to search the Social Security Death Master File ("DMF") for deceased policyholders.  Like HB192, the 2012 Act was sponsored by Representative Wren, who serves as the President-elect of NCOIL.  The 2012 Act would have required life insurers to compare in-force policies to the DMF beginning June 1, 2014, and to complete their review by January 1, 2017. Thereafter, an insurer was to maintain a program to perform the comparison no less frequently than every three years.  What was potentially problematic was that the 2012 Act applied to all policies, including those already in-force.

Act 2013-195 amends the 2012 law to ensure that the review requirement applies only prospectively, such that insurers are required to search the DMF only with regard to life insurance policies, annuity contracts, and retained asset accounts issued and delivered in Alabama and which are issued or entered into on or after January 1, 2016.   The review and comparison must be completed by January 1, 2019.  Thereafter, insurers must perform this comparison at least every three years.  The 2013 Act goes into effect September 1, 2013.

Stephen W. Still, Esq. - MAYNARD COOPER & GALE PC, (205) 254-1097 , sstill@maynardcooper.com

Category(s): Federal - 06/01/2013

Insurance Capital and Accounting Standards Act of 2013

On May 23 Representatives Gary Miller (R-CA) and Carolyn McCarthy (D-NY), both members of the Housing and Insurance Subcommittee of the House Financial Services Committee introduced HR 2140, the “Insurance Capital and Accounting Standards Act of 2013.”   The bill seeks to have state law capital requirements apply to insurance companies that are depository holding companies, or are subsidiaries of such.  Of interest is Section 5, which would amend the FDIC Act by limiting the ability of a federal banking regulator to treat an insurance company as a source of strength for an affiliated depository institution (including savings and loans institutions).  This bill may be seen as a legislative response to concerns raised by the insurance industry as a result of the unsatisfactory answers members have received from Federal Reserve Board Chairman Bernanke on the issue of whether the FRB would apply bank capital rules to a large insurance company.

Charles T. Richardson, Esq. - FAEGRE BAKER DANIELS LLP, (202) 312-7487 , crichardson@faegrebd.com

Category(s): Florida - 06/01/2013

First District Court of Appeal to Hear Challenge to Personal Injury Protection Reform Law

On April 25, 2013, the First District Court of Appeal accepted jurisdiction in the ongoing litigation challenging the constitutionality of Florida's 2012 Personal Injury Protection ("PIP") reform law.

An April 17 order by Judge Terry Lewis of the Second Circuit Court of Leon County had lifted an automatic stay of his March 2013 Temporary Injunction in which he found that sections of the law requiring a finding of emergency medical condition as a prerequisite for payment of PIP benefits or prohibiting payment of benefits for services provided by acupuncturists, chiropractors and massage therapists are unconstitutional.

To view an up-to-date list of documents filed in the ongoing litigation between the Florida Office of Insurance Regulation and these Florida health care providers, click here.

Fred E. Karlinsky, Esq. - GREENBERG TRAURIG LLP, (954) 768-8278 , karlinskyf@gtlaw.com

Category(s): Florida - 06/01/2013

Florida Governor Rick Scott Signs Interstate Insurance Product Regulation Compact, Workers' Compensation Bills into Law

Florida Governor Rick Scott signed various insurance-related bills into law on June 7, 2013.  These include an authorization for mutual insurance companies to transact financial guaranty insurance in Florida, a bill enacting the Interstate Insurance Product Regulation Commission, and other legislation relating to workers’ compensation administration and drug repackaging.

Fred E. Karlinsky, Esq. - GREENBERG TRAURIG LLP, (954) 768-8278 , karlinskyf@gtlaw.com

Category(s): Florida - 06/01/2013

Florida Insurance Commissioner Orders Universal Property and Casualty to Pay $1.26 Million Fine

Florida Insurance Commissioner Kevin McCarty has ordered Universal Property and Casualty Insurance Company ("UPCIC") to pay a $1.26 million administrative fine in relation to issues arising from a recent market conduct examination.  The scope period, which was January 1, 2009, through May 2013, included an examination of UPCIC's practices regarding claims and complaint handling, rate filings, financial transactions, underwriting and other areas. To view the Order, click here.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 768-8286 , fideir@gtlaw.com

Category(s): Florida - 06/01/2013

Florida Office of Insurance Regulation Suspends Insurance Company Tied to 1-800-ASK-GARY

The Florida Office of Insurance Regulation ("OIR") announced on April 25, 2013 that it issued an Order seeking to suspend AGIC, Inc., an auto insurance company whose president is the same Sarasota chiropractor tied to the accident referral service of "1-800-ASK-GARY."

An OIR investigation had determined that AGIC Inc. is in unsound financial condition with a surplus under its required $4 million.  The company also was late in filing financial statements and wrongly comingled funds from other sources to raise its surplus, according to the OIR order.

AGIC, Inc. had 21 days to file a petition requesting a proceeding to contest the OIR's action, during which it remained licensed to operate in Florida.  However, since it did not file a challenge, a Final Order was issued.

To view the Final Order, click here.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 768-8286 , fideir@gtlaw.com

Category(s): Florida - 06/01/2013

Florida Passes Clearinghouse Legislation to Depopulate Citizens

While many of the bills aimed at reducing the size of the Citizens Property Insurance Corporation (“Citizens”), ultimately failed in the Florida Legislature, one significant provision that did pass establishes a ‘Clearinghouse’ within Citizens.  Policies seeking new and renewal coverage from Citizens will have to first be submitted through the Clearinghouse to allow private market insurers the opportunity to offer coverage before being placed in Citizens.  The inclusion of surplus lines companies in the Clearinghouse process was originally contemplated, but ultimately removed in the last few days as concerns raised by House Representatives from the southern coastal area of Florida proved too much to overcome as the Session concluded.

Gary Sumner - MANG & SANTURRI, P.A., (850) 222-7710 , gsumner@manglaw.com

Category(s): Georgia - 06/01/2013

Amica Mut. Ins. Co. v. Gwinnett Cnty. Police Dep’t, A12A1068, Georgia Court of Appeals (February 26, 2013)

A home insured by Amica was damaged when the Gwinnett County Police Department arrested an aggravated assault suspect at the home pursuant to a warrant.  Amica reimbursed the homeowner pursuant to the homeowner’s insurance policy, and then brought a subrogation action against Gwinnett County and the Gwinnett County Police Department, asserting a claim of inverse condemnation under the theory that the damage by the Police Department  constituted a taking of property for which the county owed compensation under Georgia’s eminent domain law, which waives sovereign immunity.  The trial court dismissed the action and Amica appealed as to the County only.  The appellate Court affirmed the dismissal, holding that the exercise of police power is distinct from eminent domain, and as a matter of law, the County was entitled to sovereign immunity against a claim based on damage caused by an exercise of police power to promote the health, morals, and safety of the community.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
Trey Sivley, Esq. - LOCKE LORD LLP, (404) 870-4657 , tsivley@lockelord.com

Category(s): Georgia - 06/01/2013

Arnold v. Neal, A12A2464, Georgia Court of Appeals (March 5, 2013)

Arnold was injured in a motor vehicle accident caused by Neal and offered to settle for the limits of liability under Neal’s automobile policy and a limited liability release with specified conditions (no indemnification language except regarding Medicaid liens and no denial of liability).  The Court found an enforceable contract existed between Neal and Arnold because Neal’s insurer responded to Arnold with correspondence agreeing to settle Arnold’s claim for the policy’s limits, correspondence containing a limited release that adhered to Arnold’s settlement conditions, and delivery to Arnold of a check for the policy’s limits upon which the claims adjuster handwrote “full + final settlement of any and all claims.”  The Court rejected Arnold’s argument that the handwritten language on the check deviated from the conditions of the offer and constituted a counteroffer by Neal.  The Court examined the release language alone and found it clear and unambiguous and that it reflected the parties’ intention, and it was not a counteroffer as argued by Arnold.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
Trey Sivley, Esq. - LOCKE LORD LLP, (404) 870-4657 , tsivley@lockelord.com

Category(s): Georgia - 06/01/2013

Facility Investment, LP v. Homeland Insurance Company of New York, A12A2377, Georgia Court of Appeals (April 16, 2013)

On April 16, 2013, the Georgia Court of Appeals reversed the trial court’s denial of the motion to dismiss by Facility Investments d/b/a Westminster Commons (“Facility”) of an action by  Homeland Insurance Company of New York (“Homeland”) seeking to recoup amounts it paid to resolve claims against Facility that were not covered under Facility's insurance policy and for which Homeland had issued a reservation of rights letter.  The Court held that Homeland waived its right to pursue collection of the uncovered amounts of the settlement payment when it made the payment with knowledge of the circumstances that gave rise to its coverage defense.  The Court found that Homeland defended and settled the lawsuit against Facility with knowledge that Facility asserted claims for losses that were not covered (i.e., based in fraud) under its policy with Homeland, instead of either denying the claim or seeking an immediate declaratory ruling.  Homeland’s failure to deny the claim or alternatively seek a declaratory ruling at the time it became aware that the claim was not covered constituted a waiver of Homeland’s reservation of rights.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
Trey Sivley, Esq. - LOCKE LORD LLP, (404) 870-4657 , tsivley@lockelord.com

Category(s): Georgia - 06/01/2013

St. Paul Fire & Marine Ins. Co. v. Hughes, A13A0702, Georgia Court of Appeals (May 16, 2012)

On May 16, 2013, the Georgia Court of Appeals affirmed the trial court’s grant of partial summary judgment to Wallace Hughes and the denial of the cross-motion for summary judgment by St. Paul Fire and Marine Insurance Company (“St. Paul”) arising from Hughes' action to recover for injuries he sustained while driving a vehicle covered under a St. Paul auto insurance policy.  The primary issue was the application of Georgia’s uninsured motorist law to a policy that was delivered in another state. The Court of Appeals held that Georgia law governed the issue because Georgia was the principal location of risk, St. Paul was licensed as an insurer in Georgia, and the vehicle Hughes was driving was garaged and principally used in Georgia.  The Court of Appeals also noted that there was never a written rejection of uninsured motorist coverage by Hughes, which is a requirement under the uninsured motorist statute.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
Trey Sivley, Esq. - LOCKE LORD LLP, (404) 870-4657 , tsivley@lockelord.com

Category(s): Georgia - 06/01/2013

Turner v. Williamson, A12A2534, Georgia Court of Appeals (March 5, 2012)

On March 5, 2013, the Georgia Court of Appeals reversed the denial of Dylan Turner’s motion to enforce a wrongful death settlement for an automobile policy’s limits.  Following a jury verdict against him for wrongful death, Turner appealed on the grounds a settlement agreement had been reached between the parties.  The Court agreed, finding that Turner’s insurer had unequivocally accepted a settlement offer submitted by the Williamsons, despite Turner’s insurer having sent a release form to the Williamsons containing additional terms to the Williamsons with a request that they “please” sign it.  The Court found that Turner’s sending the release form did not alter the fact that a meeting of minds occurred with regard to the terms of the settlement and the release form was precatory rather than mandatory.  The Court also decided that a prior settlement offer submitted to the Williamsons by Turner’s insurer had not unequivocally been accepted by the Williamsons and therefore was unenforceable as the terms of the limited release contained in that offer had not been disclosed to the Williamsons and they rejected provisions of the release when it was provided to them.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
Trey Sivley, Esq. - LOCKE LORD LLP, (404) 870-4657 , tsivley@lockelord.com

Category(s): Georgia - 06/01/2013

Woodcraft by MacDonald Inc. v. Georgia Casualty and Surety Company, S12G1317, Georgia Supreme Court (June 10, 2013)

On May 22, 2013, the Georgia Supreme Court affirmed the Court of Appeals’ ruling that Georgia Casualty and Surety Company (“GCSC”) was entitled to summary judgment on its insured's breach of contract claim because the "made whole" doctrine did not require it to demonstrate that the insured had been fully compensated prior to exercising its subrogation rights under the commercial property insurance policy.  The Georgia Supreme Court held that the "made whole" doctrine has not been extended from “personal injury claims and matters involving an insurer’s right to be reimbursed by the insured for paying medical or other benefits for [him or her]” to commercial property claims.  The Georgia Supreme Court observed that it is for the Legislature to determine whether the made whole doctrine should apply as a matter of law to a commercial property insurance policy that grants subrogation rights to an insurer.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
Trey Sivley, Esq. - LOCKE LORD LLP, (404) 870-4657 , tsivley@lockelord.com

Category(s): Pennsylvania - 06/01/2013

Pennsylvania Expected to Join More Than 20 Other States in Banning Abortion Coverage on the Exchange

The PA Legislature approved legislation (HB 818) on June 5th that would ban coverage for elective abortions in insurance policies sold on the Exchange.  Governor Corbett is expected to sign the legislation.  If signed by the Governor, Pennsylvania will join more than 20 other states that have taken advantage of a provision in the Federal Affordable Care Act that allows states to opt out of abortion funding for Qualified Health Plans offered on the Exchange.  Narrowly defeated were proposed amendments that would have allowed individuals to use private funds to pay for abortion coverage as well as a "medical emergency" exemption.

Frances R. Roggenbaum, Esq. - SAUL EWING ARNSTEIN & LEHR LLP, (717) 257-7526 , fran.roggenbaum@saul.com

Category(s): Tennessee - 06/01/2013

Commissioner McPeak Appoints Deputy Commissioner

Tennessee Commissioner of Commerce and Insurance Julie Mix McPeak has named Chlora Lindley-Myers as Deputy Commissioner for Insurance, Securities and TennCare.  In her expanded role, Deputy Commissioner Lindley-Myers now oversees all activities of the Insurance, Securities and TennCare Oversight Divisions at the Department of Commerce and Insurance.

T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758 , staylor@bassberry.com
Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259 , rledyard@bassberry.com

Category(s): Tennessee - 06/01/2013

Custody Agreement Regulation Becomes Final

A new Tennessee Department of Commerce and Insurance regulation governing terms of custodial agreements and the use of clearing corporations took effect on May 26, 2013.   The final regulation (Chapter 0780-01-46) supplants an emergency rule and implements a law that took effect last July to broaden eligible custodians of insurer assets to include banks, broker/dealers, trust companies and Federal Home Loan Banks.

T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758 , staylor@bassberry.com
Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259 , rledyard@bassberry.com

Category(s): Tennessee - 06/01/2013

Tennessee Assistant Commissioner for Insurance Retires

Larry Knight, the longstanding Assistant Commissioner for Insurance, has left the Tennessee Department of Commerce and Insurance effective June 3 after a distinguished 20 year career.   Deputy Commissioner Chlora Lindley-Myers is handling the Assistant Commissioner duties until a permanent successor is named, which is expected by the end of 2013.

T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758 , staylor@bassberry.com
Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259 , rledyard@bassberry.com

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