Greetings

Thank you for visiting my blog.  I am Carson J. Tucker, an appellate and insurance law attorney.  I use this blog to communicate with my clients and colleagues about important court opinions and legal news.

Please check out my linked in biography, Carson J. Tucker, MSEL, JD on LinkedIn

I intend this blog to generally cover issues of appellate law, with some more targeted and detailed analysis of cases that are important to my clients.

There is a “File Room” drop down on the right, which contains specific subject-matter blogs that I hope to be updating.  For example, “May It Please the Court” part of the familiar introductory phrase in oral arguments before appellate tribunals will contain more general blogs about appellate law . . . the idea being that the “Court” in this case is the court of the viewing public’s opinion; “Starry Dices” a spin on the sacrosanct common-law principle of stare decisis should contain posts about the “lighter” moments of practicing law, but don’t hesitate to engage in more philosophical discussions here, either.  You can read more about me in the Background section.

Here are some of the cases I have handled: Carson J. Tucker’s Recent Appellate Cases

Thanks, please tune in and share your comments.

There is no legal advice intended or imparted by this blog.

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Former Employee’s Alleged Criminal Activities Relevant to Determine “Wage Earning Capacity” for Purposes of Assessing Entitlement to Workers Compensation Benefits

In a case I brought to the Michigan Supreme Court, which remanded in Omian v Chrysler, 495 Mich. 859 (2013), to the Court of Appeals for consideration of my appeal, the Michigan Court of Appeals has now reversed the decision … Continue reading

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Employee’s Reporting of Potential Future Violation of Law, Regulation or Rule Sufficient to Trigger “Protected Activity” Element in Whistleblower’s Protection Act Claim

In Pace v. Jessica Edel-Harrelson, et al, issued on February 24, 2015, the Michigan Court of Appeals addressed a Whistleblowers Protection Act claim. There are two remarkable points to the case.  The first is that the COA panel (Shapiro, Gleicher and Roynayne-Krause) holds that … Continue reading

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Insurance Coverage Not Available to Employer Mistakenly Listed as Insured on State-Required Workers Compensation Forms

The Michigan Court of Appeals ruled on Tuesday, February 17, 2015, that insurance coverage was not available to an employer (Delphi) merely because the insurers had errantly listed the employer on forms required to be filed with the state to notify … Continue reading

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Court of Appeals Issues Ruling On Independent Contractor Case

The Michigan Court of Appeals issued its opinion in a case I briefed (92675_Moore_Appellant’s_Brief_313440.12.26.2013.1838)  and argued in the Court of Appeals last summer, ruling consistent with the Supreme Court’s recent disposition of workers compensation insurance coverage for subcontractors holding themselves out … Continue reading

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Insurance Coverage Case for Health Care Providers Conspiracy Claims Still Awaiting Disposition by Indiana Supreme Court

As I had predicted in my earlier blog post, transfer to the Indiana Supreme Court was sought and granted in this “errors and omissions” insurance and reinsurance coverage dispute in which the insureds sought coverage for underlying claims that a network of health insurance companies and health insurance claims administrators conspired to deny medical care providers and their patients reimbursement of the proper amount of benefits to which they were allegedly entitled.   Transfer was granted in April by order at 6 N.E.3d 950 (2014).

Below is the text of my original blog post with links to the relevant decisions.

In June 2013, a Court of Appeals panel in Indiana issued an unpublished, and therefore, non-binding, opinion speaking to an issue that has significant relevance for several of our insurer and employer clients, and third-party claims administrators with whom we work.

The insurance coverage case, Wellpoint, Inc., et al. v. National Union Fire Ins. Co., et al, arose out of allegations in the underlying lawsuits that a network of health insurance companies, Wellpoint, Inc. and Wellpoint Health Networks, Inc., eventually merged into Anthem (hereafter referred to simply as Wellpoint unless otherwise indicated), conspired with other health insurance companies to deny medical providers’ and doctors’ claims for reimbursement of health care services.

The Underlying Lawsuits – The Alleged Conspiracy 

The plaintiffs in the first underlying suit were members of a health plan issued by Wellpoint, which permitted beneficiaries to use the services of out-of-network providers.  The plaintiffs filed an action in Connecticut state court against the Indianapolis-based health insurer, Wellpoint, accusing the company of, among other things, conspiring to underpay for out-of-network payments.  The plaintiffs sought damages for allegedly having received artificially low payments from WellPoint for the reimbursement of out-of-network services.  The lawsuit accused Wellpoint of colluding with other health insurers to deliberately underpay physicians, pushing the burden of excessive payment onto Connecticut patients.

The plan with which the plaintiffs in the underlying suit were associated permitted beneficiaries to use the services of out-of-network providers.  Services at out-of-network providers were reimbursed at the lesser of the billed charge or the “usual and customary” rate (UCR).  Any amount charged for out-of-network services beyond the UCR was the responsibility of the plan member, i.e., the plaintiffs (particularly the physicians).  In making UCR determinations, WellPoint relied on databases owned by Ingenix Inc., which is a wholly owned subsidiary of United HealthCare Corp.

WellPoint was a major contributor of provider charge data for the databases and deleted valid high charges before providing the information to Ingenix, which then removed additional high charges from the data, according to the complaint.  The plaintiffs contended that the Ingenix databases were inherently flawed and invalid and, thus, were an inadequate and improper basis for UCR determinations.  Because WellPoint’s health plans covered out-of-network services only to the extent of the UCRs they used, the plaintiffs say they and thousands of others had to pay more for out-of-network services then they would have absent a conspiracy to manipulate the reimbursement rates.

The plaintiffs’ class action lawsuit alleged, among other things, that Wellpoint failed to timely and adequately reimburse for medical services provided.  The plaintiffs’ complaint contained claims alleging breach of contract, conversion, tortious interference with business expectations, breach of good faith and fair dealing, violation of the Connecticut Unfair Trade Practices Act, and violation of the Connecticut Unfair Insurance Practices Act.

Subsequent to the filing of the aforementioned suit, Wellpoint was sued by several other plaintiffs and plaintiffs groups across the country.  The lawsuits alleged similar practices and included similar claims against Wellpoint.  Claims in these lawsuits also alleged Wellpoint violated the Racketeer Influence and Corrupt Organizations Act (RICO).

Wellpoint’s Insurance Coverage

Anthem (successor to Wellpoint) had set up a complex and multi-tiered arrangement to reinsure itself for “errors and omissions” liability.  (As noted by the Indiana Court of Appeals, “Errors and omissions” coverage is designed to insure members of a particular professional group from the liability arising out of a special risk such as negligence, omissions, mistakes, and errors inherent in the practice of the profession. Stevenson v. Hamilton Mut. Ins. Co., 672 N.E.2d 467, 473 (Ind. Ct. App. 1996), reh’g denied, transfer denied. An errors and omissions insurer of a business does not have the duty to indemnify for the malicious and intentional, rather than careless and negligent, acts of the insured, even where the policy does not specifically exclude intentional acts. Id.)).

The insurance arrangements involved (1) a primary insurance policy, which Anthem issued to itself; (2) a certificate of reinsurance on the primary policy issued by National Union Fire Insurance Company; (3) four excess insurance (or umbrella) policies, which Anthem also issued to itself, each of which “followed form” to the primary policy (incorporating the terms and conditions of coverage (and the exclusions) in the primary policy); and (4) numerous certificates of reinsurance on the excess policies issued by a bevy of additional reinsurers (including Reliance Insurance Company (which went bankrupt and was replaced mid-term of the policy period by Twin City Fire Insurance Company)), in which the reinsurers agreed to assume the rights, powers, privileges, duties and obligations as insurers under Anthem’s policies.  The effective dates on all of the policies spanned from September 30, 1999 to September 30, 2002.

Wellpoint’s Request for Defense and Indemnification from its Insurers

Wellpoint tendered the claims in the underlying lawsuits to its insurers and reinsurers, seeking defense and indemnity under the policies.  The insurers (including the reinsurers) refused to undertake the defense of Wellpoint and denied coverage.

Wellpoint filed suit in Indiana state court seeking, among other things, coverage from its reinsurers for claims in the underlying lawsuits.  Twin City counterclaimed seeking a declaration it owed no coverage for specific claims, as well as others in the underlying lawsuits.  The trial court initially granted a summary judgment to Twin City on arguments relating to the time period that the initial claims were made (recall these were “claims made” policies – finding the claims were made and reported before Twin City’s coverage period)) and on the argument that post-2000 claims were interrelated, and related to, the prior claims under the terms of two exclusions in the policy and thus coverage was excluded for those latter claims as well.  In a separate opinion, Wellpoint Inc v National Union Fire Ins Co, 952 N.E.2d 254 (2011), the Indiana Court of Appeals reversed the trial court in that regard.  (On a separate note, perhaps demonstrating its self-imposed status as a forum known for handling significant and complex insurance coverage disputes, the Indiana Court of Appeals in this aforementioned opinion provides a remarkably detailed analysis of the timing of notice and claims under claims made policies, in conjunction with the timing requirements of the insuring agreements vis-a-vis the separate claims in the underlying lawsuits).

However, in this case, the Indiana Court of Appeals addressed Wellpoint’s remaining suit against the insurers and reinsurers seeking coverage for its subsequent settlement of all the claims in the underlying lawsuits.  Wellpoint claimed professional liability coverage under Part II of the policies, which provided in part that the policies would pay the “Loss of the Insured resulting from any Claim or Claims first made against the Insured . . . for any Wrongful Act of the Insured . . . but only if such Wrongful Act . . . occurs solely in the rendering of or failure to render Professional Services.”  The trial court had granted the reinsurers’ motion for summary judgment, holding the claims against Wellpoint did not arise out of acts that occurred “solely in the rendering of or failure to render professional services”. (emphasis supplied).  The Court of Appeals affirmed.

Noting the policy defined the term “professional services” in this instance as “services rendered or required to be rendered solely in the conduct of the insured’s claims handling or adjusting”, the Court of Appeals reasoned coverage was available only if the alleged wrongful acts that gave rise to the underlying litigation happened solely in the conduct of Wellpoint’s claims handling and adjusting.

The Court of Appeals concludes this was not the case.  The underlying lawsuits primarily involved violations under two statutes. Some of the plaintiffs set forth claims for breach of contract, conversion, tortious interference with business expectations, breach of good faith and fair dealing, and violation of the Connecticut Unfair Trade Practices Act (CUTPA).  Other plaintiffs had alleged in part that Anthem conspired with other managed-care organizations to deny, delay, and diminish payments to doctors and set forth causes of action under the Racketeer Influence and Corrupt Organizations Act.  The RICO plaintiffs also asserted other claims including breach of contract and violations of prompt-pay statutes.

As the wrongful acts alleged in the underlying complaints were not professional services in the form of claims handling or adjusting, the Court of Appeals held the policies at issue did not provide coverage for Wellpoint. The majority agreed with the trial court, which had noted the “underlying complaints do not simply allege that [Wellpoint] improperly denied claims. Rather, they allege [Wellpoint] participated in ‘a common scheme’ to ‘systematically deny, delay, and diminish the payments due to doctors.’” It found “the conduct that was central to the RICO claims was [Wellpoint’s] unlawful agreement with other managed care companies to unlawfully reduce payments to Providers,” and such unlawful agreements and conspiracies are not claim handling activities.

Also allegations against Wellpoint did not involve such “mistakes inherent in the practice of that particular profession or business,” they were not “professional services” covered by the Continental and Twin City policies.  The gravamen of the claims against Wellpoint was, as the trial court correctly noted, allegations Wellpoint participated in a common scheme to systematically deny, delay, and diminish the payments due to doctors, and “the conduct that was central to the RICO claims was [Wellpoint’s] unlawful agreement with other managed care companies to unlawfully reduce payments to Providers,” and such unlawful agreements and conspiracies are not professional services in the form of claim handling activities  Even if some professional services were implicated, the underlying actions did not arise “solely” out of Wellpoint’s rendering or failure to render such services. (emphasis in original opinion).

After determining the alleged conspiracies and unlawful agreements were not “professional services,” the trial court found they “plainly did not occur solely in the performance of claims handling”; they were, rather, allegations of conduct in furtherance of the RICO conspiracies including Wellpoint’s involvement in trade associations that developed industry standards and in industry groups that disseminated unified information and exchanged upper-level employees in order to facilitate unified action, and its participation in a managed care enterprise.

Notably, the Court of Appeals also refused to accept Wellpoint’s attempt to “bifurcate” the claims in the underlying lawsuits, some of which, it alleged, did properly implicate the policy’s coverage of “errors and omissions” in the rendering of “professional services” as further defined by the policies.  On this point, the Court of Appeals reasoned the terms of the policy provided coverage only for allegations against Wellpoint that arose “solely”, i.e., exclusively or entirely, out of its claims handling activities.  Since the common theme of the underlying lawsuits alleged a conspiracy and designed scheme which was not the provision of professional services within the meaning of the policies, the allegations did not arise “solely” or “exclusively” out of the provision of professional services.

One judge of the three judge panel dissents, arguing there is a question of fact, at least, whether all claims did or did not arise out of the common scheme.  The dissenting judge also argues the majority reads the “exclusivity” provision too narrowly with reference to the use of the term “solely”.

Transfer of the case to the Indiana Supreme Court is likely to be pursued by the losing party.  It is an important and enlightening opinion, which provides important guidance to both insurers and insureds in the conducting of their day-to-day business insurance interests.

Posted in Appeals, Appeals and Legal Research, Appellate Lawyer, Business and Commercial Litigation, Contract Law, Errors and Omissions, Insurance and Indemnity, Insurance Coverage, Insurance Coverage Disputes, Insurance Law, Insurance Lawyer, May It Please the Court, Recent Judicial Dispositions | Tagged , | Leave a comment

Amicus Curiae Brief Filed in Fifth Amendment Takings Case on Behalf of Wayne, Oakland and Macomb Counties

Today, I filed another friend of the court (amicus curiae) brief in the Court of Appeals for the counties of Macomb, Oakland and Wayne.  The plaintiff filed suit against the state of Michigan claiming administrative user fees paid into the county court Friend of the Court system are an unconstitutional taking of private property in violation of the Fifth Amendment to the U.S. Constitution.

The position in the brief I wrote on behalf of the three largest metropolitan counties in Michigan is that the user fees are not separate property that the users are compelled to part with as a result of unconstitutional governmental regulation.

Although Fifth Amendment jurisprudence concerning taking of private property without just compensation, and the legal definitions of what constitutes property and what constitutes a taking has been described as a confusing “bramble bush” by some commentators, here I reduce the main branches of the jurisprudence and explain each of the seemingly divergent categories of “takings clause” jurisprudence.

In the end, the plaintiff’s attempt to make this case similar to ones in which individuals are actually compelled to part with a separate, cognizable property interest as the result of a government’s interference fails.  Here, the user fees at issue do not even qualify under any of the analyses applied to consider whether a taking has occurred because the fees at issue are not a separately cognizable “property interest” under the Fifth Amendment to the United States Constitution.

Read the brief here:  (FINAL)Trantham.Amicus.Brief.filed.1.23.2015

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International Environmental Justice Brief Filed in United States Supreme Court – Amicus Curiae Brief Filed for Hispanic Bar Association of Michigan

In the Supreme Court of the United States, Lawrence Garcia and Stephani Labelle of Garcia Law Group, PLLC, and myself collaborated on behalf of the Hispanic Bar Association of Michigan in this international environmental justice case, drafting and filing an … Continue reading

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