Amendments to California Insurance Code to Require Enhanced Claims Handling Requirements for Claims Arising Out Of Catastrophic Events
September 04, 2019 —
Jon A. Turigliatto, Esq. & Ravi R. Mehta, Esq. – Chapman Glucksman Dean Roeb & Barger BulletinSenator Bill Dodd, who represents Napa County and surrounding areas in the California Senate, has recently introduced Senate Bill 240, known colloquially as The Insurance Adjuster Act of 2019. S.B. 240 would amend the California Insurance Code to streamline and organize claim processing, particularly during a state of emergency / catastrophic events. The proposal is in response to a series of devastating wildfires which ravaged the Sonoma County and Napa Valley wine country during the 2017 fire season (Atlas, Tubbs, and Nun fires). Many of Senator Dodd’s constituents reported difficulty in navigating the claim process due to multiple claim professionals handling a single claim, many of whom were outside of California, and many of whose capabilities were challenged.
S.B. 240 would direct the Department of Insurance to issue annual notices setting forth legal developments as they relate to property insurance policies, including best practices for evaluating damage caused by an emergency, and requires out-of-state claims professionals to certify, under penalty of perjury, that they have read these notices along with claim adjusting literature also prepared by the Department of Insurance.
S.B. 240 would also require insurers to designate a primary point of contact for their customers during a state of emergency until the claim is closed or litigation is initiated. While the proposed legislation would not prohibit multiple claims professionals handling a single claim, it would provide for training standards issued by the Department of Insurance on how best to handle claims in a state of emergency.
Further, S.B. 240 would require claims professionals who are not licensed in California (1) to be supervised by a licensed California claims professional, and (2) to read and understand the annual emergency claim adjusting literature issued by the Department of Insurance within 15 calendar days of beginning adjusting of claims in California.
The bill passed the Senate by unanimous vote and is pending in the Assembly. The bill is also supported by Insurance Commissioner Ricardo Lara. Accordingly, the bill is expected to pass the Legislature. Once enacted, S.B. 240 would significantly elevate claim adjusting requirements related to emergencies, such as natural disasters, by placing greater oversight in the Department of Insurance, and greater responsibility on claims professional within and outside of California. How pragmatic these requirements are and what practical impact they will have on the industry are developments which we will follow and provide further commentary as this bill makes its way through the California legislature and into the California Insurance Code.
Reprinted courtesy of
Jon A.Turigliatto, Chapman Glucksman Dean Roeb & Barger and
Ravi R. Mehta, Chapman Glucksman Dean Roeb & Barger
Mr. A.Turigliatto may be contacted at jturigliatto@cgdrblaw.com
Mr. Mehta may be contacted at rmehta@cgdrblaw.com
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California Supreme Court Holds “Notice-Prejudice” Rule is “Fundamental Public Policy” of California, May Override Choice of Law Provisions in Policies
November 12, 2019 —
Anthony L. Miscioscia & Timothy A. Carroll - White and Williams LLPOn August 29, 2019, in Pitzer College v. Indian Harbor Insurance Company, 2019 Cal. LEXIS 6240, the California Supreme Court held that, in the insurance context, the common law “notice-prejudice” rule is a “fundamental public policy” of the State of California for purposes of choice of law analysis. Thus, even though the policy in Pitzer had a choice of law provision requiring application of New York law – which does not require an insurer to prove prejudice for late notice of claims under policies delivered outside of New York – that provision can be overridden by California’s public policy of requiring insurers to prove prejudice after late notice of a claim. The Supreme Court in Pitzer also held that the notice-prejudice rule “generally applies to consent provisions in the context of first party liability policy coverage,” but not to consent provisions in the third-party liability policy context.
The Pitzer case arose from a discovery of polluted soil at Pitzer College during a dormitory construction project. Facing pressure to finish the project by the start of the next school term, Pitzer officials took steps to remediate the polluted soil at a cost of $2 million. When Pitzer notified its insurer of the remediation, and made a claim for the attendant costs, the insurer “denied coverage based on Pitzer’s failure to give notice as soon as practicable and its failure to obtain [the insurer’s] consent before commencing the remediation process.” The Supreme Court observed that Pitzer did not inform its insurer of the remediation until “three months after it completed remediation and six months after it discovered the darkened soils.” In response to the denial of coverage, Pitzer sued the insurer in California state court, the insurer removed the action to federal court and the insurer moved for summary judgment “claiming that it had no obligation to indemnify Pitzer for remediation costs because Pitzer had violated the Policy’s notice and consent provisions.”
Reprinted courtesy of
Timothy Carroll, White and Williams and
Anthony Miscioscia, White and Williams
Mr. Carroll may be contacted at carrollt@whiteandwilliams.com
Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
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Arizona Purchaser Dwelling Actions Are Subject to a New Construction
September 04, 2019 —
William L. Doerler - The Subrogation StrategistArizona recently amended its Purchaser Dwelling Action statute to, among other things, involve all contractors in the process, establish the parties’ burdens of proof, add an attorney fees provision, establish procedural requirements and limit a subcontractor’s indemnity exposure. The governor signed the bill—2019 Ariz. SB 1271—on April 10, 2019, and the changes go into effect and apply, retroactively “to from and after June 30, 2019.” The following discussion details some of the changes to the law.
Notice to Contractors and Proportional Liability
Under the revised law, a “Seller” who receives notice of a Purchaser Dwelling Action (PDA) from a residential dwelling purchaser pursuant to A.R.S. § 12-1363* has to promptly forward the notice to all construction professionals—i.e. architects, contractors, subcontractors, etc., as defined in A.R.S. § 12-1361(5)—that the Seller reasonably believes are responsible for an alleged construction defect. A.R.S. § 12-1363(A). Sellers can deliver the notice by electronic means. Once construction professionals are placed on notice, they have the same right to inspect, test and repair the property as the Seller originally placed on notice. A.R.S. § 12-1362(B), (C).
To the extent that the matter ultimately goes to suit, A.R.S. § 12-1632(D) dictates that, subject to Arizona Rules of Court, construction professionals “shall be joined as third-party defendants.” To establish liability, the purchaser has the burden of proving the existence of a construction defect and the amount of damages. Thereafter, the trier of fact determines each defendant’s or third-party defendant’s relative degree of fault and allocates the pro rata share of liability to each based on their relative degree of fault. However, the seller, not the purchaser, has the burden of proving the pro rata share of liability for any third-party defendant. A.R.S. § 12-1632(D).
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William L. Doerler, White and Williams LLPMr. Doerler may be contacted at
doerlerw@whiteandwilliams.com
N.J. Appellate Court Confirms that AIA Construction Contract Bars Insurer's Subrogation Claim
September 10, 2019 —
Saxe Doernberger & Vita, P.C.On April 4, 2019, the Appellate Division of the New Jersey Superior Court confirmed that the waiver of subrogation provision in a commonly used form construction contract, American Institute of Architects (AIA) form A201 — 2007 General Conditions of the Contract for Construction, precluded an insurer’s claims against a subcontractor.
In Ace American Ins. Co. v. American Medical Plumbing, Inc., the court considered Ace American Insurance Company’s (Ace) subrogation claim against a plumbing subcontractor who was allegedly responsible for a water main leak that caused approximately $1.2 million in damages to Ace’s insured, Equinox Development Corporation (Equinox).
In March 2012, Equinox entered into a contract with Grace Construction Management Company, LLC (Grace) to build the “core and shell” of a new health club. Equinox and Grace used AIA form A201 for their contract. Grace then hired American Medical Plumbing, Inc. (American) as a plumbing subcontractor for the project. In April 2013, the water main failed, flooding the health club.
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Saxe Doernberger & Vita, P.C.Saxe Doernberger & Vita, P.C. may be contacted at
coverage@sdvlaw.com
Reduce Suicide Risk Among Employees in Remote Work Areas
November 24, 2019 —
Sandra Moran - Construction ExecutiveIn the construction industry, a disturbing and unnerving trend has been developing over the past few decades. Construction and resource extraction have the highest rate of deaths by suicide compared to any other industry. This phenomenon is not limited to a single country. The statistics from three developed countries with strong construction and resource extraction industries (United States, United Kingdom and Australia), reflect the same pattern.
A major risk factor that has not been given much attention and scrutiny is the requirement for many workers to be away from their homes for long periods of time, based in remote locations and basecamps. This isolation contributes to loneliness and disconnectedness that increases the vulnerability to employees at risk due to underlying mental health disorders, such as depression and anxiety, or those with suicidal ideations or prior attempts. Basecamps or remote work locations remove workers from the support networks of family, friends, and even medical and psychological caregivers.
Employers placing employees in remote work locations should be mindful that simply wanting to work in a remote location does not necessarily equate to being able to cope well in such an environment—unless appropriate supports are provided. Companies need to become proactive to lead employees to become true teams to help reduce the risk of suicide among their workers.
Reprinted courtesy of
Sandra Moran, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Survey Finds Tough Labor Market Top-of-mind for Busy Georgia Contractors
July 30, 2019 —
Scott Hazy - Construction ExecutiveIn February 2019, the results of the third Annual Georgia Construction Outlook Survey were released. The survey respondents includes general contractors (44%), specialty contractors (53%) and heavy contractors (3%) with gross revenue size that ranged from in excess of $1 billion to less than $5 million. Three-quarters of respondents reported revenues of less than $25 million. Here’s what they had to say about the state of construction in Georgia.
Financial Performance and 2019 Outlook
It was no surprise to see the majority of respondents reporting increased revenues and margins in 2018. Average gross margins from all respondents increased to 11.3%, up from 9.33% in the prior year. Overall, 72% of respondents saw their gross margins increase and/or remain the same. The largest decrease in margins was seen in the heavy contractor sector, with 33% of respondents reporting a decrease in margins. When it comes to backlog, Georgia is seeing a record number of months in the pipeline and 57% of respondents reported higher backlogs than in the previous year. The increase in backlog helps explain why 84% of respondents are expecting increase in revenues in 2019 over 2018. Interestingly, of those expecting increase in revenue, 40% are anticipating an increase of more than 10% from the prior year. So, the overall financial health of Georgia contractors looks to remain strong at least through 2019.
Reprinted courtesy of
Scott Hazy, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Hazy may be contacted at
scott.hazy@btcpa.net
Breaking with Tradition, The Current NLRB is on a Rulemaking Tear: Election Procedures, Recognition Bar, and 9(a) Collective Bargaining Relationships
September 09, 2019 —
Keahn Morris, John Bolesta & James Hays - Construction and Infrastructure Law BlogIn its 84-year history, the National Labor Relations Board (NLRB, Board or Agency) has promulgated a very small number of rules pursuant to the Administrative Procedures Act, relying, instead, on individualized adjudications to establish the Board’s legislative policies. However, breaking with that long tradition, the current Board now appears to be on the verge of a formal rulemaking jag for on May 22, the Board released its “Unified Agenda” of anticipated regulatory actions which, in addition to proceeding with rulemaking regarding joint employer standards, announced the Board’s intention to consider formal rulemaking in a number of critical areas. Consistent with that wide-ranging Agenda, on August 12, the Board published a Notice of Proposed Rulemaking (NPRM) over the objection of Democratic appointee, Lauren McFerran, that would amend the Agency’s rules and regulations governing the filing and processing of election petitions in three very important ways. This NPRM, therefore, deserves attention.
The first possible amendment will modify the Board’s administrative election blocking charge practice by establishing a regulation-based vote and impound procedure to be used when a party, typically a union facing possible decertification, files an unfair labor practice (ULP) charge and, based thereon, seeks to block the holding of an election.
The second possible amendment will modify the Board’s current recognition bar case law by codifying prior Board case doctrine and creating a regulation-based requirement of notice of voluntary recognition to affected employees and a 45-day open period within which affected employees may call for an election before that voluntary recognition will be allowed to operate as a bar to employees raising later questions concerning the union’s representative status (QCR).
Reprinted courtesy of Sheppard Mullin attorneys
Keahn Morris,
John Bolesta and
James Hays
Mr. Morris may be contacted at kmorris@sheppardmullin.com
Mr. Bolesta may be contacted at jbolesta@sheppardmullin.com
Mr. Hays may be contacted at jhays@sheppardmullin.com
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As Some States Use the Clean Water Act to Delay Energy Projects, EPA Issues New CWA 401 Guidance
August 26, 2019 —
Anthony B. Cavender - Gravel2GavelIn just the past few weeks, three states have used their Clean Water Act 401 authority to delay, for an indefinite period, FERC-authorized pipeline expansion projects. On May 6, 2019, the Oregon Department of Environmental Quality denied, without prejudice, Jordan Cove’s application for a Section 401 water quality certification. Jordan Cove plans to build an LNG export terminal at Coos Bay, Oregon, if it can obtain the necessary federal and permits. Under Section 401(a) of the Clean Water Act, any applicant for a federal permit to conduct any activity, including the operation of facilities which may result in any discharge into the navigable waters, shall provide the permitting agency a certification from the State in which the discharge may originate that any such discharge will comply with the applicable provisions of the Clean Water Act, including effluent limitations and state water quality standards. The States have a “reasonable time”—which shall not exceed one year after the receipt of the 401 application—in which to act, or the state’s authority may be waived by this inaction. The Oregon DEQ concluded that Jordan Cove has not demonstrated that its project, as presently configured, will satisfy state water quality standards. The 401 applications submitted by Transcontinental Gas Pipe Line Co. (Transco) to the New Jersey Department of Environmental Protection and the New York State Department of Environmental Protection were similarly rejected without prejudice on May 15, 2019 (New York) and June 5, 2019 (New Jersey). This use of the states’ 401 authority has frustrated plans to build and operate LNG pipelines around the country.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
