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ChuckDeaton
USA
373 Posts |
 Posted - 05/02/2003 : 10:15:41
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| Use in and effect on claims with Attorneys and PA's involved. Comments? |
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JimF
USA
1014 Posts |
Posted - 05/02/2003 : 11:11:28
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| Recall that most policies have a provision that a policy (or policy interest) cannot be assigned without carrier's prior agreement. |
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ChuckDeaton
USA
373 Posts |
Posted - 05/02/2003 : 13:48:13
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| Situation is this, insured has a claim and reports it to the carrier. An adjuster is assigned who determines the facts and makes a partial denial. An attorney sends a notice of representation which is received by the Carrier. Carrier issues payment. Time goes by and the attorney realizes that he did not receive his cut of the payments. The attorney queries the carrier and sends a signed contract and power of attorney. However, he does not provide an assignment of interest. Is the attorney entitled to receive payment from the carrier? |
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katadj
USA
315 Posts |
Posted - 05/02/2003 : 14:13:54
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| Did the "notice of representation" include a direction of payment? |
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william s cook
53 Posts |
Posted - 05/02/2003 : 15:00:04
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Assignment of benefits are well established parts and parcels of insurance claims. Assignment of the policy requires the written confirmation from insurers that they have approved the assignment of the policy. If carriers are on written notice of legal involvement and they failed to process the payment throught the legal representative or health provider assignment and that oversight allows the payees to shuck the attorney or health provider, courts have held that they must pay for that oversight to the same degree of entitlements under the employment or service contract that can be proven to be in effect between the attorney and his client or a doctor or hospital and their patient.
Just my thoughts others may have differing opinions, and that is how I learn.
William S Cook
Public Adjuster |
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fivedaily
USA
258 Posts |
Posted - 05/02/2003 : 15:24:10
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Just a question, but why would the carrier be responsible to pay the insured's lawyer fee in this circumstance? I have thankfully never had any lawyer involvement on my claims, but would assume it is similiar to the PA's fees, they are owed by the insured, not the insurer.
Jennifer |
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rr
USA
45 Posts |
Posted - 05/02/2003 : 16:47:26
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It is my feelings that if you receive an assignment of interest it is your duty to report this to the company and also recommend their names be added to any payment.
It is normal when you receive one it is signed by the insured and if not I would still sent to company with note was not signed.
Again just my thoughts after 32 years.
rr |
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william s cook
53 Posts |
Posted - 05/02/2003 : 16:51:50
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It may be considered a breach of professional ethics or state statutes for a carrier to deal directly with an insured after being placed on notice of representation. The carrier at a minumum should have sent the payment to the legal representative of the insured to avoid such problems as the carrier is now forced to deal with. If there was assignment language in the notice of representation, then insurers have very little defense for their oversight or intentional exclusion. Absent the legal enforcement of assignment language then many contractors, vendors, or health providers would not begin work on a project until the responsible party made substantial deposits. Some insurers could use the no protection procedure to create discord between the client and his representative.
William S Cook
Public Adjuster |
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Linda
USA
127 Posts |
Posted - 05/02/2003 : 22:02:10
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The carrier has no duty to include anyone on any payment except the Insured and the mortgage company or additional Insureds. It will take me a while to dig it out but the Texas courts held that the carrier has no contractural obligation to anyone other than the Insured. The Insured cannot involve the carrier without prior approval of the carrier.
Chuck it seems to me, and this is only my opinion, the attorney needs to seek legal remedies against his client, the Insured, who contracted with him.
There are varying opinions of the different states on this subject. |
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ChuckDeaton
USA
373 Posts |
Posted - 05/03/2003 : 07:25:07
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| Assistance is appreciated. Any case cites will be greatly appreciated. We have a Texas defense attorney writing an opinion, if possible I will share his thoughts. |
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ChuckDeaton
USA
373 Posts |
Posted - 05/03/2003 : 08:36:31
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From the Texas Homeowners Policy – Form B
SECTION I AND II – CONDITIONS
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7. Assignment. Assignment of this policy will not be valid unless we give our written consent.
This appears to address posts by JimF and katadj and a portion of the post by william s cook. As regards the second part of the post by william s cook, the attorney got involved at the end of this claim and did not send his letter directly to the claims handler. Because of timing the claim was not "adjusted" with the attorney and payment was made directly to the insured. It is difficult to say whether or not any duty was owed to the attorney. Protecting his interest by putting his name on the payments was not required as the attorney did not have an approved assignment of interest. However, had we been on timely notice routing the payments though the attorney would have been appropriate. I think this also addresses comments made by fivedaily. I agree with Linda's statement when she says, "The carrier has no duty to include anyone on any payment except the Insured and the mortgage company or additional insureds."
Stay Tuned
More to come as this situation develops. Professional comments are invited. |
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CCarr
Canada
1200 Posts |
Posted - 05/03/2003 : 19:06:34
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Chuck, at first when the thread started, I was confused doubly by the minimalism of your question and the 'words' of the thread title. However, now I think the picture is clearer.
I do think the parameters of the issue are governed by the insurance contract, subject to any case law interpreting to the benefit of a party outside those named in the contract. Linda mentions that Texas courts have heard similar arguements, and that the insurance contract has stood up to the test.
The title of the thread bears two words that each have a significant and distinct meaning in the insurance contract; quite different from each other and serve their respective purpose. Your addition of the word "of" between those two 'terms' then creates in itself a term that I don't believe is found in a property insurance policy.
"Assignment" is as you stated, as found in Section I and II - Conditions of a homeowners policy; but I don't think it has any relevance to the scenario at hand.
"Interest", within the context of the presented scenario, would be related to "Insurable Interest" as stated in Section I - Conditions of a homeowners policy; but I don't think it has any relevance to the scenario at hand.
What I think governs the scenario at hand is Section I - Conditions #10 Loss Payment. "We will adjust losses with you. We will pay you unless some other person is named in the policy or is legally entitled to receive payment ....".
What needs examination and discussion within that piece of wording, relative to the scenario at hand, is; ".... or is legally entitled to receive payment ....".
What creates the legal obligation of a party to a contract (insurer) to pay someone else (other than the insured or some other person named in the policy) who has established a legal entitlement?
Death would be one scenario, but the policy wording deals sufficiently with that eventuality and how legal entitlement shifts.
Aside from 'usual' office practices in the receiving and handling of documents that arrive daily to an insurer's office, what does "receipt of" a document mean when it arrives in that office - whether it is a hard copy document, fax or email?
I am not familiar with the wording of an 'attorney notice of representation', therefore can not comment on its intent and purported affect. I'm accoustomed to receiving a phone call or a 'letter' stating, "I represent ....".
How was that 'notice' received by the carrier? Was it date stamped or otherwise logged? To me, that could be more important than any apparent lack of action or compliance by the adjuster to the 'notice', or any statement by the carrier that the adjuster had not yet seen it prior to taking the action he did.
Does that 'notice' create the legal obligation to allow the attorney to be "legally entitled to receive payment ...."?
I agree with Bill Cook regarding the established protocol of 'assignment of benefits', it does allow the "wheels" of the processes to operate in a predictable fashion or pattern. I also agree with Bill regarding the possibility of breaching professional ethics or statutes, if an insurer representative continued to deal direct with an insured after "receiving" notice of representation. But again, does that notice comply to satisfy creating the legal entitlement to receive payment?
I had a look for some case law, but it is an obscure piece of the contract; anyway I couldn't find anything relevant.
I'd welcome any further discussion on what I think is the principal piece of the wording in this scenario, ".... or is legally entitled to receive payment ....".
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ChuckDeaton
USA
373 Posts |
Posted - 05/05/2003 : 07:30:24
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First, my initial wording was intended to "leave the door open" to any and all discussion.
Second, we are on the right track the question is, is the attorney. "legally entitled to receive payment."
Does policy wording provide for payment to representatives of the insured, directly or indirectly, and are there avenues, created thru documents i.e. power of attorney, unilateral assignments, bilateral assignments, before or after the fact, case law that provide for the payment of, in this case, an attorney fee after the fact. That is to say in addition to the loss payment.
The controlling policy is a Texas HO-B. |
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Jim Lakes
USA
37 Posts |
Posted - 05/05/2003 : 21:38:56
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To Chuck and All:
Bill Cook and Linda are both on track.
It really depends on the state the case is in and “what is ethical.”
In some states carriers will include the atty’s name on the draft as a matter of ethics. In others they could care less, just as some do with PA’s.
I contend and recommend to the carrier, that if a letter of representation was received in a timely manner that the name of the atty should be included on the draft. If the that letter was not received by the carrier or the adjuster handling the claim there is no moral or ethical responsibility on the part of the carrier to include them.
Is there a legal case to draw on in this matter? I do not know. I believe that it is more of a ethical matter more than anything and again, if no letter of representation has been received by the time payment is made, there is no obligation to the atty whatsoever.
I would refer to Bill Cook when it comes to PA’s. I know in FL if the insured is represented by a PA and he has provided a copy of the contract and a copy of his license to the carrier, the carrier would include their name on the draft or face serious ramifications. I would think that it would be the same for atty’s.
Again, it depends on the state and the carrier. Both can be testy!!
Jim Lakes, RPA
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ChuckDeaton
USA
373 Posts |
Posted - 05/06/2003 : 07:17:55
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| Would each of you, take responsibility for a state, research the attorney/PA, Insured, company relationship with an emphasis on the company, Attorney/PA relationship including duties owed and post your findings here? Please provide cites for your reference material. I will handle Texas with assistance from Miz Linda. |
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fivedaily
USA
258 Posts |
Posted - 05/06/2003 : 07:20:19
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I have a question, why would you include someone other than the insured or the leinholder on the draft? You do not owe payment to an attorney or a PA, assuming this is a property loss from hail with no liability or third parties. Beyond there being a law in some states requiring it, I don't see the reson, ethically or otherwise. (And I am an ethical person.) They way I understand the insurance contract is that it is between the carrier and the homeowner/leinholder. Now, if I had ocassion to have an attorney on a claim, I might send the check to him/her since they are representing the insured, but I don't understand why it would be unethical to not put their name on it. Does anyone care to shed more light on this for me?
Jennifer |
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Assignment of Interest
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