Superstorm Sandy

Connecticut was hit less hard by Superstorm Sandy than New York and New Jersey, but there are still Connecticut-based legal issues arising out of the most destructive hurricane of the 2012 season, I reported for the Connecticut Law Tribune: 

In the 18 months since Superstorm Sandy swept in from the Atlantic, Connecticut lawyers have been untangling knotty legal issues that have arisen concerning insurance coverage for home and business owners who suffered property damage.

Lawyers are litigating some cases in Connecticut. But because New Jersey and New York were hit harder by the storm, some Connecticut-based firms are litigating cases in those jurisdictions as well.

More than 1,000 Sandy-related cases are pending in the U.S. District Court of the Eastern District of New York, and 949 cases are pending in the District of New Jersey, according to reports made by two U.S. magistrate judges at a conference held earlier this month focusing on Superstorm Sandy insurance litigation.

As of May 2013, 47,002 residential-property claims were reported in Connecticut as a result of the storm. There were also 4,460 commercial-property claims, 2,772 flood claims and 1,212 business-interruption claims, according to the Connecticut departments of banking and insurance.

Stephen Goldman and Gregory Varga, both partners with Robinson & Cole in Hartford who are defending insurers in Sandy cases, said that the litigation will be influenced by decisions related to other major disasters in courts in other parts of the country. A lot of case law concerning insurance coverage for property damage and interruption to business operations comes out of catastrophes "because the losses are so numerous and losses are often so large," Goldman said.

Judges and insurance litigators look to past experience with other catastrophes around the country when dealing with the large number of cases that arise out of a natural disaster, Goldman said.

"What we're always looking at [is] … 'What was the most recent experience that was analogous to our situation?'" Varga said.

Hurricane Katrina-related decisions from the Mississippi Supreme Court, Louisiana Supreme Court and U.S. Court of Appeals for the Fifth Circuit could be influential in Sandy cases, Varga said.

Like Hurricane Katrina, Superstorm Sandy raises questions of how courts will interpret policy clauses that address situations when there are multiple weather-related reasons for property damage. Often, these policies block claims when one type of weather is covered by the insurance but another type isn't, Varga said.

Most insurance companies will not cover flood damages, and so-called anticoncurrent cause provisions prevent insurance payouts if both wind and flood could have caused damage, he said.

Leonard Isaac, an insurance litigator with offices in Waterbury and West Hartford, represents policyholders and said Connecticut had more wind damage than flood damage from Sandy, so there are fewer situations in which claims might be rejected. In contrast, there was more rain-driven damage from 2011's Hurricane Irene, which has led to more coverage disputes, he said.

Theresa Guertin, an associate with Saxe Doernberger & Vita, said the Hamden firm is handling as many as 20 Superstorm Sandy cases with policyholders suing insurance companies, including cases pending in the Eastern District of New York. Their claims range from a case Guertin is handling involving damages to a new condominium complex that was being developed on Long Island to businesses whose operations were interrupted because electric power was off for several days.

In past disasters, insurance companies did not do a good job of getting agents out to inspect sites in a timely manner, Guertin said. In Sandy's aftermath, insurance companies generally responded quickly, she said.

Goldman agreed that insurance companies are far better at addressing claims quickly than they were when Hurricane Andrew hit Connecticut 20 years ago. "They've been to this rodeo before," he said.

But there are exceptions. "Superstorm Sandy cases that are going to go to litigation here in Connecticut are going to involve bad-faith claims," Guertin said. She explained those are often cases where there has been a lot of back-and-forth communication between insurers and policyholders with no results. "That leaves policyholders feeling like they've been mistreated, or, in fact, [and] that legally amounts to bad faith," Guertin said.

Also, insurance companies are in a catastrophe mode because of the number of Sandy claims, Isaac said. "As a result, companies sometimes just don't have the ability to take the same positions [in terms of providing coverage] as they might take on an individual claim," Isaac said.

Business-interruption claims are presenting another legal complication, as policyholders must show that their lost profits or additional expenses are directly related to a covered event. Robert Glasser, director of East Coast claims preparation and valuations for Aon Risk Solutions, a risk management and insurance brokerage firm, said it's difficult to define what actual loss of business income is. "If we knew what 'actual' was, you wouldn't need forensic accountants," he said at the conference.

Another emerging issue is "civil authority" coverage, which provides insurance coverage for loss of income if a business had to shut down because of an order made by governmental authorities. Sometimes, government officials don't explicitly prohibit the public from leaving their homes, but they do advise the public that it's best to stay home. In the latter situation, there is litigation over whether businesses affected by the lack of customers can file claims, Guertin said.

Another issue is the liability of insurance brokers, Varga said. Policyholders often argue they thought they had flood coverage, and then when they find out they didn't, "it's my broker's or my agent's fault," he said. That cause of action didn't used to be viable in New York but has become more attractive, Varga said.

Sandy also may lead to changes in how insurance policies are written in the future. Policies are often changed when courts construe policy language in a way no one ever intended, attorneys said.

"You can't make insurance policies clear" because no one would buy them if the exclusions were written in plain language, Jay Levin, a partner at Reed Smith in Philadelphia who represents policyholders, said at the conference. When language is vague, he said, that leads to litigation.

"Insurance is a method of risk transfer of some risk that can be economically modeled and transferred—but not all risk," Levin said. "Insurance is not government handouts."

I'm writing several times a day about products liability and class actions for Law.com/The National Law Journal. Occasionally I cross-post a blog I find particularly interesting.

With federal courts in New Jersey and the Eastern District of New York facing almost 2,000 cases in which insurers are being sued over Hurricane Sandy claims, one judge said that his court is focused on resolving cases.

U.S. Magistrate Judge Ramon E. Reyes Jr. of the Eastern District of New York said he and other judges have asked plaintiffs’ lawyers and defense counsel to get cases ready in order to winnow them down to the most problematic.

What the next phase of litigation will look like after that process is still to be determined, Reyes said.

“I’m the type of judge that acknowledges that I don’t know it all … you folks are the experts. You have to educate me on the best way to handle these things,” Reyes said at a conference held last week about Sandy insurance litigation.

Earlier on, the Eastern District tried to “bucket cases involving the same legal issue, the same policy exclusions,” but lawyers advised that the cases were not ready to be organized that way, Reyes said.

On the one hand, some district judges were ready to start trials without discovery, but, on the other hand, “we were told point blank to forget about arbitration, that no carrier will go to arbitration,” Reyes said.

Now each side has 60 days to respond to n automated discovery process, Reyes said. And the court has a mediation training scheduled for the end of May.

Jared T. Greisman, the defense liaison counsel for Superstorm Sandy cases in the Eastern District and with White Fleischner & Fino in New York, said the Eastern District hopes to get mediations rolling in June.

U.S. Magistrate Judge Lois H. Goodman of the District of New Jersey said her court’s priority also is to get cases moving.

The New Jersey federal judges are aware that people were displaced from their homes and have a right to know if they are entitled to insurance recovery, Goodman said.

Mandatory discovery disclosure was set up for 30 days, Goodman said. “It was giving the attorneys heebie jeebies that we were going to make them go forward without the discovery,” she added.

The federal courts are viewing the process of mediating and settling cases as a way to winnow out cases and then get cases divided into “legal issue buckets,” said Tracey Rannals Bryan, the plaintiffs liaison counsel in the Eastern District and of Gauthier, Houghtaling & Williams, LLP, in Metairie, La.

Reyes said it will be important, once cases are categorized by legal issue, to have the same judges handle cases involving similar legal issues.

Otherwise, cases with conflicting results just wind “up in the circuit [court] and it just creates more work,” Reyes said.

Some of the Sandy litigation has involved class actions, including a lawsuit filed in 2012 accusing several insurance companies of wrongfully denying claims and misinterpreting the term “basement,” a lawsuit over the loss of power in Long Island, and an unsuccessful effort to certify a class about the loss of power in New York City.

Connecticut homeowners who still haven't been paid by their insurers over damage from Superstorm Sandy are running out of time to sue their insurers, I reported for the Connecticut Post and the Stamford Advocate.

Here's the full story:

Homeowners whose insurance companies still have not paid them for Superstorm Sandy damage and may need to sue their insurers will soon run out of time to do so.

Even though Connecticut law provides for six years for lawsuits to be filed over broken contracts, the state has a law on the books that lets insurers limit the time in which disputes about homeowner policies can be taken to court.

And it is industry practice to include in standard homeowners' insurance policies a time limitation on lawsuits, according to several Connecticut attorneys.

Ryan Suerth, a Hartford-based solo practitioner who represents policyholders in insurance disputes, said going to court is a "last-ditch effort" because no one wants to hire a lawyer after already going through a long process to try to get paid by one's insurer after a disaster.

But Suerth said "the only person who is going to look out for the policyholder" is the policyholder.

The law used to let insurers limit homeowners bringing lawsuits to within a year of disasters, but it was changed in 2009 to 18 months. Now homeowners' insurance disputes can't go to court unless they are started within "eighteen months next after inception of the loss," according to the statute.

"The moral of the story," says Leonard Isaac, an insurance litigator with law offices in Waterbury and West Hartford, is that "if your policy has a limit that's the minimum provided by Connecticut law, the lawsuit has to be served on the insurance company within 18 months of when your loss took place. That means it has to be delivered by the marshal to the insurance company by that time."

Policyholders thinking about taking their insurance company to court can't show up on a lawyer's doorstep a week before the deadline, Isaac said, because time has to be allowed for the lawsuit to be served on time to meet legal deadlines.

Isaac said he has had people consult him after major storms, particularly winter storms, when they've run out of time to sue. After major storms, many people think the "insurance company is moving slowly but they're moving," but then it can be too late to seek legal recourse, he says.

The National Flood Insurance Program, which is administered by the Federal Emergency Management Agency, only allows for lawsuits to be filed within a year of a policyholder's loss, Suerth added.

Gerard O'Sullivan, program manager of the Insurance Department's consumer affairs unit, recommends that consumers who are having problems with their insurance claims call the department. It will see if they can mediate the claim and bring it to a conclusion without the need for litigation, O'Sullivan said.

Gregory Podolak, an attorney representing policyholders with Saxe Doernberger & Vita in Hamden, suggests policyholders crack open their policies and see if they have a limitation-of-suit provision in there.

If they are running up against a deadline, policyholders can see if their insurers will agree to "toll" that part of the contract, Podolak said. An agreement to temporarily put on hiatus the requirement that policyholders only can go to court within 18 months of when Sandy struck would allow insurers to avoid premature lawsuits, he said. That's especially the case if "you are adjusting your agreement in good faith and cooperation," Podolak said.

Isaac suggests that policyholders can use public adjusters to help negotiate with their insurance companies.

Michael McCormack, who represents policyholders as well as insurance industry clients in regulatory proceedings with Hinckley Allen & Snyder in Hartford, said that insurance companies limit the time in which lawsuits can be brought because they "don't want to be subject to a claim six years down the road. They want to have notice and resolve claims."

Not all claims against insurance companies are limited, but in these situations, things get more difficult quickly. Policyholders can still sue over truly wrongful behavior by insurance companies like acting in bad faith, McCormack said, but such behavior is rare and is harder to prove.

Suerth said he finds it unfair to allow contractual limitations on the six-year statute of limitations because it "doesn't help the policyholders and there are other insurance policies out there that don't have any limitations at all."

There are other insurance issues arising out of Superstorm Sandy that people may not be aware of, attorneys said.

Many policyholders are not aware that, without going to court, they can invoke a clause in their polices if they're in a dispute over the value of their loss, McCormack said. Connecticut law requires that disputes over the amount of loss in standard homeowners' police go to an outside neutral process called appraisal.

Insurance companies don't always advise their insureds that a dispute over the value of loss can be taken to this form of arbitration, Isaac said.

"Instead they say this is all we're going to pay. They say take it or leave it," Isaac said.

The appraisal process is more consumer-friendly because it's less expensive than litigation, McCormack said.

Isaac estimates that half of the disputes he sees are over the value of the loss.

Both the policyholders and the insurance company get an appraiser, and there is a neutral umpire to make a final determination on the claim's value.

Both parties pay for their own appraiser, and a neutral umpire is paid by both sides to decide the dispute over the value of the claim, O'Sullivan said.

Natural disasters like Sandy are a reminder to make sure people have the insurance coverage they want, insurance experts say.

"One of the important things of any catastrophe like this" is for people to determine if they are comfortable with their deductibles and to understand that flood insurance is separate from a homeowner's policy and must be obtained separately, O'Sullivan said.

Michael E. DiGiacomo, a forensic accountant with BlumShapiro in Shelton who often is called in to evaluate claims, said that his impression of Sandy is that many businesses did not have the proper insurance coverage in place to recover for their losses.

For example, businesses wanted to keep their insurance costs down and forewent coverage of the interruption of their businesses, DiGiacomo said.

"Sandy just brought that to light because of how devastating it was," DiGiacomo said.

In light of Sandy it might be a good idea for businesses to go over their policies with their brokers to make sure they have the coverage they want, DiGiacomo said.

An excerpt of my piece for the Connecticut Law Tribune about the legal impacts of Superstorm Sandy:

 Superstorm Sandy struck a less-devastating blow to Connecticut than it did to New Jersey and New York. Still, the Oct. 29, 2012, hurricane cut a wide swath in terms of affecting the state's legal community.

There are expectations of litigation over insurance coverage. Attorneys working for governmental agencies have helped to put into place better disaster planning. And there have been pro bono efforts to assist storm victims.

As of May 2013, 47,002 residential-property claims were reported in Connecticut as a result of the storm. There were also 4,460 commercial-property claims, 2,772 flood claims, and 1,212 business interruption claims, according to the Connecticut Department of Banking & Insurance.

Disaster Litigation

While it's been nearly 14 months since the storm hit, Sandy-inspired litigation will take a while to fully develop, said Ryan Suerth, of Ryan Suerth LLC in Hartford, who represents policyholders. He explained that it often takes more than a year for policyholders to learn that their insurance claims have been denied or that they will get less money than they had hoped.

"Any major weather is going to lead to litigation, just for the reason there is a lot of damage and not all of it gets covered by insurance," Suerth said.

Michael McCormack, a Hinckley Allen attorney who chairs the Connecticut Bar Association's Insurance Law Section, said he has seen few Sandy-related claims being filed in court so far. One reason, he said, is "the insurance companies responded quickly. They worked with policyholders as best as they could." Secondly, he said, many consumers lack flood insurance, meaning that instead of making a claim on their homeowner's policy they must apply to Federal Emergency Management Agency's National Flood Insurance Program.

But Regen O'Malley, an insurance defense lawyer with O'Connell, Attmore & Morris in Hartford, predicted that Sandy will ultimately result in more legal activity than did 2011's Tropical Storm Irene. One insurance issue that often prompts legal disputes is the question of whether property damage was caused by rain or flooding.

"It really depends upon what the policy says [is covered] for those types of claims," O'Malley said. "And with [Hurricane] Katrina and now Sandy, there might be multiple causes. There might be wind, flood, storm surge and something else."

For some policies, coverage is denied if multiple factors caused damage and some of those factors are not listed in the policy.

 Gregory Podolak, of Saxe Doernberger & Vita in Hamden, explained that some homeowner polices cover only "named perils." The most common of these include lightning, fire, rain, windstorms and theft. But exactly how these terms are defined in a specific policy can have a dramatic impact on a consumer's "coverage position," Podolak said. Many policies have specific deductibles and coverage limits related to specific named perils, he added. And Legal issues arise when there are multiple perils that could have caused property damage, he agreed.

Another insurance issue arising from Sandy is business interruptions caused by the loss of electric power. Some parts of the state lost power for a week or more, and businesses filed claims seeking lost revenues for days they could not operate.

"What Sandy and Irene have done is highlight some of the issues that don't come to the forefront as often," Podolak said.

Cases that do go into litigation may involve claims of bad faith by insurers and violations of the Connecticut Unfair Trade Practices Act and the Connecticut Unfair Insurance Practices Act. There also may be litigation against insurance brokers and agents for allegedly not recommending sufficient coverage, attorneys said.

Marathon swimmer Diana Nyad made her record-breaking swim from Cuba to Florida just recently. This morning, she started a 48-hour charitable swim to raise funds for Hurricane Sandy survivors. But, as her coach said, “I can’t imagine what it would be like to lose everything — everything you’ve worked for and strived for in your life, gone. It’s not easy. These are the people who become heroes. These are the people who pick up and start over.”

My piece for Hearst's Connecticut News Group starts: "When Lindsay O’Brien’s 15 minutes are up, she’s not going to linger one second longer than she has to in a 120-foot, two-lane pool that is going to be installed in New York City’s Herald Square.
'The minute that clock hits the 15 minutes I am jumping out of there,' said O’Brien, the project manager for Hurricane Sandy relief at Stamford-based AmeriCares, a nonprofit global health and disaster-relief organization.
When she and others from AmeriCares undertake 15 minutes of nonstop swimming as part of a fundraiser for Hurricane Sandy relief, it will challenge their endurance. But the true endurance test will be undertaken by marathon swimmer Diana Nyad, who plans to swim for 48 hours straight — from 8:30 a.m. Tuesday to 8:30 a.m. Thursday — in an effort to raise money to help Sandy survivors.
Nyad, who is fresh off her record-breaking, 53-hour ocean swim from Cuba to Florida, said in an email that she wanted to help her hometown of New York City raise storm-relief money after Sandy hit. After a conversation with Carol A. Robles-Roman, New York Mayor Michael Bloomberg’s deputy mayor for legal affairs and counsel, Nyad came up with the idea of constructing a pool in 'in the heart of Manhattan, where I would swim for 48 continuous hours, in solidarity with those who had suffered great loss, and invite guest swimmers to shadow swim with me in the next lane' she wrote."

The rest of the story: http://blog.ctnews.com/stamford411/2013/10/08/stamfords-americares-swims...