Alert Edition November 2020

Welcome to the November 2020 edition of the FORC Alert. If you have any colleagues that may be interested in this publication, please forward it on. There is a link on the Alerts main page where they can subscribe to receive FORC Alerts automatically.

Regards,
C. Ignacio Matos, Esq., FORC Alert Co-Editor
Ryan Smart, Esq., FORC Alert Co-Editor
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Category(s): Alabama - 11/06/2020

The Alabama Department of Insurance has issued/updated the following Bulletin

October 1, 2020: Bulletin No. 2020-19
Producer, Adjuster, & Title Insurance Agent Licensing Issues in Light of the COVID-19 Emergency Modification of Bulletins No. 2020-03, 2020-10, 2020-12, 2020-15, 2020-16 

Stephen W. Still, Esq. - BALCH & BINGHAM LLP, (205) 488-5512 , sstill@balch.com

Category(s): Colorado - 11/06/2020

Colorado Legislature Limits Insurers’ Failure to Cooperate Defense

In the 2020 Legislative Session, Colorado’s General Assembly enacted legislation (House Bill 20-1290) placing additional barriers to asserting the failure to cooperate defense in litigation between an insured and its insurer. The new statute, C.R.S. §10-3-1118, went into effect on September 14, 2020.  It establishes five steps an insurer must take to be eligible to use the failure to cooperate defense:
  1. An insurer must request information from the insured in writing.
  2. The information requested must not otherwise be available to the insurer without the assistance of the insured.
  3. The written request must allow at least 60 days to respond.
  4. The request must be for information a “reasonable person” would determine the insurer needs to adjust the claim or to prevent fraud.
  5. And finally, the insurer must allow the insured an opportunity to cure any defect by informing the insured in writing of the defect within 60 days and allowing the insured 60 days from receipt to cure the defect.

Daniel Furman, Esq. - HALL & EVANS, LLC, (303) 628-3483 , furmand@hallevans.com

Category(s): Florida - 11/06/2020

2020-2021 Agency Regulatory Plans Released

In early October, multiple Florida agencies released their respective 2020-2021 regulatory plans, detailing anticipated insurance-related actions for the coming year. They can be accessed directly through the following links:

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

Category(s): Florida - 11/06/2020

DFS Activates Application for Emergency Adjuster Licenses

In late September, the Florida Department of Financial Services (DFS) announced  it had activated the emergency adjuster license application. The application is only available in the event of an emergency which impacts the state of Florida, determined by the DFS. When available, Florida-licensed insurance companies and adjusting firms may apply via their MyProfile  account.

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

Category(s): Florida - 11/06/2020

DWC Releases Updated Report on Effects of COVID-19 on Florida’s Workers’ Compensation System

In October, the Florida Division of Workers’ Compensation (DWC) released an updated data summary report outlining the effects of COVID-19 on Florida’s workers’ compensation system. The DWC intends to continually update this report as new data is reported and analyzed. The 2020 report, as of September 30, 2020, can be found here .

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

Category(s): Florida - 11/06/2020

FHCF Proposes Amendments to Insurer Reporting Requirements and Responsibilities Rule

The Florida Hurricane Catastrophe Fund (FHCF) scheduled a rule development workshop to discuss proposed amendments to Rule 19-8.029, F.A.C., Insurer Reporting Requirements and Responsibilities, regarding insurer exposure and loss reporting requirements for the 2021-2022 contract year and insurer responsibilities. The Notice of Development of Rulemaking can be read in full here .

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

Category(s): Florida - 11/06/2020

Florida Cabinet Approves FHCF Amendments to Reimbursement Contract Rule

On September 22, 2020, the Florida Cabinet approved a request from the Florida Hurricane Catastrophe Fund (FHCF) for publication and final adoption of amendments to Rule 19-8.010, F.A.C., Reimbursement Contract.  The rule is being amended to adopt the 2021-2022 Reimbursement Contract, including Addenda.  Following this approval, the FHCF issued its Notice of Proposed Rule  on September 23, 2020.  If requested in writing within 21 days of the notice, a hearing will be held on October 27, 2020.  If no member of the public timely requests a rule hearing or if a hearing is requested and no notice of change is needed, the amendments will be formally adopted.

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

Category(s): Florida - 11/06/2020

Florida Cabinet Approves OIR Proposed Rules

On September 22, 2020, the Florida Cabinet approved requests  from the Florida Office of Insurance Regulation (OIR) for publication and final adoption of multiple insurance rules. These rules were in development  throughout 2020 and will be formally adopted if no member of the public timely requests a rule hearing or if a hearing is requested and no notice of change is needed.  The respective notices for the proposed rules are as follows:

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

Category(s): Florida - 11/06/2020

Fourth DCA Rules for Insurer on PIP Benefits

On September 23, 2020, Florida’s Fourth District Court of Appeal ruled for an insurer regarding a group of medical providers’ contention that an ambiguous Personal Injury Protection (PIP) insurance policy entitled their patients to full reimbursement for medical treatments. The insurer argued section 626.736(5)(a)1 requires them to cover up to 80% of the $10,000 limit for emergency services. A copy of the ruling can be found here .

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

Category(s): Florida - 11/06/2020

Governor Extends Emergency Declaration for COVID-19

On September 4, 2020, Governor Ron DeSantis issued Executive Order 20-213  to extend the state of emergency declared for the entire state due to COVID-19.  The order extends the state of emergency declared in Executive Order 20-52  for another 60 days, until November 3, 2020.

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

Category(s): Florida - 11/06/2020

NCCI Proposes Premium Decrease for 2021 Workers’ Comp Rates

The Florida Office of Insurance Regulation (OIR) announced  on September 1, 2020 that it had received the 2021 Florida workers’ compensation rate filing by the National Council on Compensation Insurance (NCCI), which proposes a statewide average premium decrease of -5.7%.  The new rates would become effective January 1, 2021.  The OIR held a rate hearing on this proposal on October 13, 2020. GT’s meeting recap  outlines the discussion.  The record will remain open for public comment until October 23, 2020, and the OIR will decide if they approve or disapprove of the rate filing.

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

Category(s): Florida - 11/06/2020

OIR Begins Rule Development to Update Home Warranty Associations Rules

On September 29, 2020, the Florida Office of Insurance Regulation (OIR) issued a Notice of Development of Rulemaking  to update Chapter 69O-199, F.A.C., Home Warranty Associations. The preliminary text can be found here . If requested in writing and not deemed unnecessary by the agency head, a rule development workshop will be scheduled. Questions or comments regarding the proposed rule development can be directed to Michael Lawrence, Jr., Chief Legal Counsel, Michael.LawrenceJr@floir.com, (850)413-4112.

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

Category(s): Georgia - 11/06/2020

Georgia’s ACA Section 1332 Medicare Waiver Phase 1 Granted

On October 15, 2020, the federal Center for Medicare & Medicaid Services (CMS) granted Georgia’s Medicare expansion waiver request for the state’s Pathways plan, which will expand coverage eligibility for uninsured, single adults with annual incomes up to 100% of the federally established poverty level (roughly $12,000 annual income). Under this waiver, which will become effective in July 2021, individuals who are otherwise eligible based on their annual income amounts must also satisfy certain “qualifying activities”, such as working at least 80 hours per month. Georgia has a second waiver request pending, which, if granted (which is expected to occur during the next few weeks), would authorize the state under its Access plan to establish a new reinsurance facility for ACA-qualified health plans purchased through a new state-run online portal in lieu of the federal healtcare.gov website. If approved, this second waiver would become operative in January 2022.

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

Category(s): Georgia - 11/06/2020

Georgia’s First COVID-19 Business Interruption Loss Insurance Case Results in Carrier Victory

In Henry’s Louisiana Grill v. Allied Ins. Co. of America (Civil Action No. 1:20-CV-2939-TWT), decided October 6, 2020, Georgia’s Northern District Court (Atlanta Division) granted the insurer’s motion to dismiss the business interruption insurance coverage claim of the restaurant and denied its motion seeking to have the Georgia Supreme Court weigh-in on an certified question of law. Like many other courts around the country, the federal court held that the eatery did not experience a “direct physical loss of or damage to property” because of the Georgia Governor’s March 14, 2020 COVID-19 related Public Health State of Emergency executive order, which did not impose any physical change on the covered premises. Also, the court did not find the policy’s language ambiguous.  Likewise, the civil authority coverage under the insurance policy at issue was not triggered because the executive order did not prohibit patrons from accessing the restaurant and was at most a stay-at-home advisory order, recognizing an already present public health threat. As a result, the court declined to exercise its discretion to certify the question of what is the meaning of “direct physical loss of or damage to property”, rejecting the plaintiff insured’s argument that there is a “substantial doubt regarding the status of state law” on the issue, which is requirement for certifications of questions of law to the state’s supreme court.

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

Category(s): Georgia - 11/06/2020

Insurer Waived Defense of Non-Coverage for Failure of Timely Reservation of Rights

In Penn-America Ins. Co. v. Morgan Fleet Services Inc. (Case Number: A20A1513, August 14, 2020), the Georgia Court of Appeals affirmed the trial court’s grant of summary judgement to Morgan Fleet Services and denial of summary judgment requested by Penn-America, finding that it waived its right to void the commercial general liability and property insurance policy issued to Morgan Fleet Services. In its insurance application to Penn-America, Morgan Fleet Services described its business operations as the installation of seat covers in buses. A bus driver sued Morgan Fleet Services for her injuries sustained while exiting a school bus using its emergency exit when the bus had burst into flames, claiming that Morgan Fleet Services negligently performed its duties under its service contract with the school system to service, maintain and inspect the buses. Penn-America claimed it would not have issued the insurance policy had it known that Morgan Fleet Services was performing bus inspections. However, Penn-America first sent an email to its outside counsel indicating that it was investigating the potential of non-coverage for the bus driver’s claim against Morgan Fleet Services. A few days later, Penn-America sent an email that it would provide a defense under a reservation of rights and a letter to that effect would be (as in future tense) provided and that it wanted outside counsel to defend Morgan Fleet Services in the lawsuit; Penn-America sent its official reservation of rights letter six months later. Thus, the court held that Penn-America had waived its defense of non-coverage because it had engaged outside counsel to represent Morgan Fleet Services in the lawsuit before sending its reservation of rights letter.

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

Category(s): Georgia - 11/10/2020

Lapsed Insurance Policy Found Where Independent Agent was Not Authorized to Collect Insurance Premiums for Insurer

The Georgia Court of Appeals reversed the trial court’s denial of the insurer’s motion for summary judgment on its denial of insurance coverage under a farm owners insurance policy for a claim based on the total destruction of a residence due to a fire in American Reliable Ins. Co. v. Lancaster (Case Number: A20A0869, October 2, 2020).  The Lancasters purchased an initial insurance policy for their farm from insurance agent Macie Yawn, who worked for the Charles Robinson Insurance Agency. She collected the insurance premiums paid by the Lancasters for that initial policy. Towards the end of the period of the initial policy, American Reliable sent a policy renewal notice to the Lancasters instructing them to pay the premiums due for the renewal policy through a website or by mailing a check directly to American Reliable; payment of premiums to Charles Robinson Insurance Agency was not listed as an available premium payment method. After not having received the premium payment for the policy’s renewal period, American Reliable sent a notice of cancellation for the policy that included notice that the premium could be paid online, by phone or by mailing a check directly to American Reliable. The policy lapsed five months before the fire loss occurred, and during that period the Lancasters had paid premiums to agent Yawn who did not remit them to American Reliable. In reversing the lower court’s denial of American Reliable’s motion for summary judgement on the Lancasters’ bad faith denial of insurance coverage claim, the Court of Appeals found that agent Yawn, who later pled guilty to 10 counts of insurance fraud for pocketing insurance premiums paid by her customers, did not have apparent authority to collect premiums from the Lancasters on behalf of American Reliable for the renewal policy, which never became effective because Yawn never paid those premiums to American Reliable. Because the policy’s renewal and cancellation notices clearly stated that the renewal policy was a direct bill, not an agency bill, policy, there was no justifiable reliance by the Lancasters on the prior course of conduct for how they had paid the premiums for the initial policy to Yawn.

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

Category(s): Georgia - 11/06/2020

Pearson VUE to Become Georgia Insurance Department’s Agent Licensing Vendor

Effective November 1, 2020, Pearson VUE will take the reigns as the vendor for the Agent Licensing Division of the Georgia Insurance Department, as noticed in Georgia Insurance Commissioner’s Bulletin 20-EX-11 (October 1, 2020). Because of transitional delays in processing agent license renewals due to the change of vendor from PSI Services, all agent licenses due for renewal during the services transition period will have their license terms extended through December 31, 2020, as noticed in Georgia Insurance Commissioner’s Bulletin 20-EX-12 (October 13, 2020).

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

Category(s): Georgia - 11/06/2020

Three Key Insurance Bad Faith Questions of Law Certified to Georgia Supreme Court

Last month, the Eleventh Circuit Court of Appeals certified three novel questions of law involving bad faith insurance claims to the Georgia Supreme Court in Whiteside v. GEICO Indemnity Co. (D.C. Docket No. 4:16-cv-00313-CDL):
  1. When an insurer has no notice of a lawsuit against its insured, does O.C.G.A. § 33-7-15 and a virtually identical insuring provision relieve the insurer of liability from a follow-on suit for bad faith?
  2. If the notice provisions do not bar liability for a bad-faith claim, can an insured sue the insurer for bad faith when, after the insurer refused to settle but before judgment was entered against the insured, the insured lost coverage for failure to comply with a notice provision?
  3. Does a party have the right to contest actual damages in a follow-on suit for bad faith if that party had no prior notice of or participation in the original suit?
In this case, Bonnie Winslett, while driving her friend’s auto, hit cyclist Terry Guthrie. GEICO had insured the auto at the time. Guthrie received medical treatments following the accident. GEICO notified Winslett (not the GEICO policyholder) that GEICO would handle the injury directly with the cyclist’s attorney. Guthrie’s attorney sent a demand letter to GEICO requesting $30,000, the policy’s limit, in response to which GEICO offered $12,000. GEICO never received a response to its counter off. Unbeknownst to GEICO, Guthrie sued Winslett, six days after GEICO sent its counteroffer. Winslett did not notify GEICO of the lawsuit, never responded to it and had a $2.9 million default judgment entered against her. GEICO was unsuccessful in setting aside the default judgment. Guthrie then forced Winslett into an involuntary Chapter 7 bankruptcy proceeding, and Guthrie’s bankruptcy attorney became the trustee of Winslett’s bankruptcy estate. Winslett’s bankruptcy trustee, being represented by her insurance coverage counsel, then sued GEICO for bad faith for failure to accept Guthrie’s original settlement demand. GEICO lost in the trial court, arguing that (i) it was relieved of liability under Georgia’s notice statute (O.C.G.A. § 33-7-15) because it never received notice of the original lawsuit, (ii) it was not the proximate cause of the default judgment because of its lack of notice and (iii) it would be unfair and unconstitutional to use the default judgment as the measure of damages for GEICO’s liability because it had no opportunity to contest the damages in the default judgment proceeding. O.C.G.A. § 33-7-15 requires an insured to send to its insurer, as soon as practicable after receipt thereof, a copy of every summons or other process relating to the coverage under the policy and to cooperate otherwise with the insurer in connection with the defense of any action or threatened action covered under the policy, and if the insured fails to do, such failure is a breach of the insurance contract which, if prejudicial to the insurer, relieves the insurer of its obligation to defend its insured under the policy and of any liability to pay any judgment or other amount on behalf of its insured. The Georgia Supreme Court will next decide how the notice statute interacts with the tort of bad-faith failure to settle.

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

Category(s): Virginia - 11/06/2020

Virginia Approves ISO 2018 Personal Auto Policy Form and Related Endorsements as Standard Auto Forms

The Virginia Commissioner of Insurance issued Administrative Order No. 12113 on August 24, 2020, approving the ISO 2018 Personal Auto Policy form and several related endorsements as the standard auto forms.  These standard forms are available for use by all insurers for policies effective on and after January 1, 2021 and are mandatory and must be the only standard forms used by all insurers for policies effective on and after January 1, 2022.  At the same, the ISO 2005 Personal Auto Policy form and several related endorsements are withdrawn for policies effective on and after January 1, 2022.  With the withdrawal of certain standard forms, insurers will have additional flexibility to affiliate with ISO or file their own optional endorsements.

Scott J. Sorkin, Esq. - BLAND & SORKIN P.C., (804) 747-6667 x12 , ssorkin@blandsorkin.com

Category(s): Washington - 11/06/2020

General Motors, LLC Ordered to Cease & Desist Selling Extended Limited Warranty in Washington

The Washington State Insurance Commissioner issued a cease & desist order to General Motors, LLC on October 23, 2020 to stop selling its Extended Limited Warranty. Order 20-0785 includes allegations that General Motors, LLC is acting in Washington as an unlicensed vehicle contract service provider and must immediately stop the alleged unlicensed activity. Click here  to read Order 20-0785 on state’s website.

Steven Beeghly, Esq. - KREGER BEEGHLY PLLC, (206) 618-6110 , sb@kregerbeeghly.com

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