Insurance Company’s Best Friend

Your home is insured. Your car is insured. Your life may be insured. Your dog is insured?

Recent insurance industry headlines discuss insurance companies and the growing trend of policies insuring man’s best friend with coverage for pets injured or killed in a crash or other covered loss. One company providing pet coverage to its customers is The Chubb Group of Insurance Companies. Vice President at Chubb, and new products and services manager, Christie Alderman states, “As an industry, we need to look at what matters most to customers and what they are passionate about and how can we help those protections.” Chubb is adding $2,000 in coverage which will help pay to treat, board or replace domestic pets, even if they were pulled in trailers.

However, Chubb is not the first insurance company to provide insurance for pets. According to an article posted on the website for Progressive Insurance on December 17, 2007, most insurance companies would cover pets under liability insurance, but only if you were not at fault as the driver. Progressive Insurance’s website claimed to distinguish itself from other insurance companies as follows: “If you have Collision coverage on your Progressive policy, up to $1,000 of our exclusive Pet Injury coverage is automatically included. No other insurance company offers this, and what makes this coverage unique is that it protects your pets in accidents, even if they’re your fault.” Id. If your dog or cat is injured in a car accident, theft, fire or flooding, Progressive will pay vet bills up to $1,000.

Recently, Progressive upped the ante by adding pet coverage to their commercial auto insurance policies. Progressive previously provided the $1,000 in pet coverage free to their auto, RV, and boat policy customers. Cory Fischer, Progressive’s product manager, discussed the fact that one (1) in five (5) companies now allow dogs at work as a reason for extending pet coverage policy to commercial auto policies. Id.

In times where the market is flooded with television and radio commercials with all companies claiming to have the best rates, many insurance companies seek to differentiate themselves by discussing that which appeals directly to the customer. Though pet coverage may have existed previously, bringing this to the public’s attention may certainly entice the pet-loving public and provide an extra “leg up” on the competition.

Author: Drew M. Rothman

Third District Quashes Orders Allowing Depositions of Apex Officials

Recently in the State of Florida, the Third District Court of Appeals overruled a trial court’s orders compelling the depositions of the CEO and former corporate secretary of an insurance company that was being sued by its insured for claims arising from windstorm damage after a hurricane in August 2004. General Star Indemnity Company v. Atlantic Hospitality of Florida, LLC, 3D10-3109, 2011 WL 798909 (Fla. 3d DCA March 9, 2011)

The insured argued that both officials’ signatures appeared on the insurance policy, and that the company’s president received and had knowledge of a loss assessment that was authored by a field level employee.
The insurance company sought a protective order and filed a supporting affidavit establishing that the senior officers had no role in the investigation or adjustment of the claims. The affidavit further established that the CEO’s pre-printed signature appears on every policy issued by the company in the State of Florida, and argued that if she was required to testify in every case involving claims for which she has no personal knowledge, she would be unable to perform her job.

The motion for protective order was denied and orders were entered compelling the depositions.

On appeal, the insurance company urged the Third District to apply the “apex doctrine” and require the insured to depose lower level employees before deposing its “apex officials”, but the Court acknowledged that it has never adopted the “apex doctrine.”

Nonetheless, the Court noted that,

“The job of the president of the company is to manage the company, not fly around the United States in depositions about policy-related claim disputes of which the president has no personal knowledge … If all claimants demand and obtain the same right, the chief executive officer manages his or her deposition schedule, not the company.”

The Court concluded that, “[d]iscovery is intended to be part of the ‘just, speedy, and inexpensive’ determination of disputes – not a device to get greater attention at an adversary’s headquarters”, and quashed the trial court’s orders.

While the Third District stopped short of adopting the “apex doctrine”, this decision clearly demonstrates the Court’s willingness to exercise its discretion in limiting discovery in order to prevent harassment, undue burden or expense.

Author: Albert M. Rodriguez

Cignet Health First to be Fined Under HIPAA’s Civil Money Penalty

The U.S. Department of Health and Human Services has issued the first Civil Money Penalty (“CMP”) under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). The Office of Civil Rights (“OCR”) is responsible for investigation and enforcement of HIPAA complaints and recently fined Cignet Health to the tune of $4.3 million for failing to provide patients with medical records. Under HIPAA, a covered entity must provide a response to a patient who has requested copies of medical records within thirty (30) days and under no circumstances, after sixty (60) days. See 45 C.F.R. § 164.524 for more information. It appears forty one (41) individual patients filed complaints with the OCR against Cignet stating the company failed to provide copies in a timely fashion. Cignet’s delay lead to a substantial number of violations, as each day beyond the allowed time period constitutes a separate HIPAA violation.

Cignet also failed to comply with the OCR’s investigations. The OCR eventually filed an action in the United States District Court to enforce its subpoenas and a default judgment was entered against Cignet. Cignet then complied with the OCR’s efforts. However, in the process, the company provided a significant number of records for patients who did not request copies or file complaints with the OCR. This compounded Cignet’s difficulties because the company inadvertently disclosed protected information under HIPAA’s Privacy Rule.
Ultimately, the company was issued a combined CMP of $4.3 million. $1.3 million of the CMP related to Cignet’s failure to provide records within the allotted time frame. However, the bulk of the CMP, $3 million, pertained to Cignet’s failure to comply with OCR investigations and for “willfull neglect” in refusing to honor subpoenas.

A few critical lessons should be taken from Cignet’s misfortune. The first of which is, the OCR is now actively enforcing HIPAA requirements through CMPs. It appears the surest way to find oneself on the ugly end of things is to ignore an OCR investigation.

Secondly, covered entities should be careful to note that for each day over the allotted period, a new and distinct violation will accrue under the law. This, in turn, can lead to substantial CMPs.

Lastly, it would be wise to note that the Privacy Rule of HIPAA will be strictly enforced and inadvertent disclosures will not be ignored, even where the disclosure is to a federal entity. During the OCR investigation, Cignet failed to redact medical records for patients who were not included in the complaints and, even though these records were not disclosed to the general public, the OCR viewed the disclosures as violations.

OCR Director Georgina Verdugo warned, “The U.S. Department of Health and Human Services will continue to take action against those organizations that knowingly disregard their obligations under these rules.” It is now clear the OCR’s “actions” will include significant Civil Money Penalties.

Author: Kevin B. Elmore

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