The Rest of the Story? [UPDATED]

Touching story designed to inflame, but there are many questions not addressed in this short attack advertisement. 



Would the unnamed plant have survived regardless of Bain's action? Venture capital firms don't buy a healthy, profitable business and then close it down. 

When a company closes and/or the group insurance plan is cancelled every state has provisions for continuing health insurance. Why is this not addressed? 

If Mrs. Soptic and her husband were in good health at the time the group insurance plan was cancelled, why didn't they purchase health insurance then? 

Even still, some 35 states either have a high risk pool or some form of guaranteed issue health insurance. Why wasn't health insurance purchased then? 

It seems Mr. Soptic is a bit of a celebrity. The Washington Examiner provides some insight into his story.

Mr. Soptic was a union employee in a steel company that was losing money. Mr. Soptic, along with several others who worked there, were offered a buy out.

Why is Soptic upset? Primarily, its because his pension was cut. In this interview, Soptic clarified that his 401k was not affected but he lost $400 a month from his pension.

But in a January 2012 Reuters story, Soptic reportedly said that he only lost $283 per month from his pension.

Sad, but many have lost much more than that during this bottomless recession.

So why blame Mitt Romney for the failings of a company that appears to have been on its' last legs before Bain? Did Mr. Romney cause the business to fail? Were the prior owners poor business people? Did the union make unreasonable demands? Was the company simply a victim of the times?

Mr. Soptic claimed he had to liquidate his 401(k) to pay his wife's hospital bills following her death. Would he not have been better off by using his 401(k) to purchase a health insurance plan before she became ill or even afterward through one of the guaranteed issue options that have existed for nearly 20 years?

UPDATE

InsureBlog is not a political blog but we do seek the truth, especially when it involves insurance matters. In addition to the comments below that alert the reader to dubious statements about Mr. Romney's involvement (or the lack thereof) it seems there is much more to the story, as reported by no less than CNN:

It's a very heart-wrenching story, but it’s not accurate. Here is the actual timeline:

Romney stopped his day-to-day oversight at Bain Capital in 1999 when he left to run the Salt Lake City Olympics, though he officially remained CEO until 2002. Bain Capital shut down GST Steel in 2001, costing Soptic his job.

According to Mr. Soptic, his wife received her primary insurance through her employer – a local thrift store called Savers – and retained it even after his layoff. Soptic's policy through GST Steel was her secondary coverage.

 In 2002, Mitt Romney formally left Bain. Sometime in 2002 or 2003, Mr. Soptic says his wife injured her rotator cuff and was forced to leave her job. As a result she lost her health insurance coverage and Mr. Soptic's new job as a janitor did not provide coverage for his spouse.

 It was a few years later, in 2006, that Ilyona Soptic went to the hospital with symptoms of pneumonia. She was diagnosed with stage four cancer and passed away just days later.

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Ha, ha, ha - Thud

Apparently, humor doesn't sell so well:

"Geico's quirky gecko, Progressive's peppy Flo, Allstate's mischievous Mayhem ... aren't just ubiquitous but some of the most clever icons created by Madison Avenue."

True dat. My favorite is the Mayhem guy, especially in the family dog commercial. Not a big fan of the gecko, or the Nationwide guy with the microphone. Still, one would think that these kinds of commercials would be highly effective: after all, they get your attention and promote brand recognition.

Turns out, not so much:

"[T]he heavy emphasis on humor-based advertising appears to be generating little more than expensive chuckles ... Nationwide's fourth fresh ad campaign since 2005 is a marked departure from the swelling tide of laugh-infused TV, radio and digital ads its marketers believe is choking consumer interest."

The emphasis appears to be leaning towards "warm and fuzzy" and away from laugh-tracks. The key, of course, is differentiation:

"The challenge is how to stand out from the other guy," says Jon Swallen, a longtime industry ... The fact that Nationwide is changing its approach suggests that they're attempting to carve a place where they can attempt to stand out."

Which, of course, makes sense.

On a related note, Progressive's "Snapshot" program seems to be paving the way for a new auto insurance rating model: pay-as-you-drive. This also makes sense: think about cell phones. A lot of us have monthly plans but leave minutes on the table, or run up big overage bills. But stop into Target or Walmart (to name just two) and one is faced with a broad array of pre-paid options. Whether or not this type of business model will work with car insurance is anyone's guess, but at least the industry's starting to think a bit outside the box.

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Court holds duty to pay not triggered where liability insured not liable to a 3rd party

S.C. Appellate Court Holds Insurer’s Duty to Pay Not Triggered Where Insured as to Liability Coverage Not Liable to a Third Party

On August 1, 2012, the South Carolina Court of Appeals affirmed the decision of the trial court, holding that BMW was an insured only as to liability coverage, not comprehensive coverage, and therefore was not afforded coverage where it was not liable to a third party due to the damage caused to the vehicles.

Post by Logan Wells

In BMW of North America, LLC v. Complete Auto Recon Services, Inc. and Colony Insurance Co., BMW of North America entered into a service agreement with Complete Auto Recon Services (CARS) that stated CARS would provide washing and maintenance services on a fleet of BMW vehicles used at a BMW test track. One of CARS’s employees left the windows to six BMW vehicles open during a severe rainstorm, resulting in property damage totaling $601,720.

Colony Insurance Co. had issued a Garage Insurance Policy to CARS under which CARS was the only named insured. The policy included both liability and garage keepers coverage. Under liability, the coverage included "all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which [the insurance applied] caused by an 'accident' and resulting from 'garage operations' other than the ownership, maintenance or use of covered 'autos'" and "all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which [the insurance applied] caused by an 'accident' and resulting from 'garage operations' involving the ownership, maintenance or use of 'covered autos.'" Within the garage keepers coverage, the policy provided for two different types of coverage labeled "comprehensive" and "collision." Generally, the garage keepers coverage provided:

[The insurer will] pay all sums the "insured" legally must pay as damages for "loss" to a "customer's auto" or "customer's auto" equipment  left in the "insured's" care while the "insured" is attending, servicing, repairing, parking or storing it in your "garage operations" under:

a.         Comprehensive Coverage From Any Cause Except:

(1)        The "customer's auto's" collision with another object; or

(2)        The "customer's auto's" overturn . . .

c.         Collision Coverage Caused By:

(1)        The "customer's auto's" collision with another object; or

(2)        The "customer's auto's" overturn.

The Policy also included an endorsement naming BMW as an additional insured;

Under LIABILITY COVERAGE WHO IS AN INSURED is changed to include [BMW], but only for liability arising out of the ownership, maintenance and use of that part of the described premises which is leased to [CARS].

The endorsement did not mention any other types of coverage, nor did the Policy include any further endorsements with respect to BMW.

BMW filed a claim for the damage to the six vehicles with Colony. Colony investigated and declined to make payment. BMW sent two subsequent letters requesting Colony pay the claim, citing reprimands issued to two CARS employees and sufficient notice of the severe storms. Colony again denied BMW’s claim. BMW then filed suit against CARS and Colony. As to Colony, BMW alleged breach of an insurance contract and bad faith refusal to pay. Colony counterclaimed asking the court to enter a declaratory judgment stating Colony owed no duty to BMW with regard to the damaged vehicles.

Colony moved for summary judgment arguing it owed no duty to BMW because BMW’s coverage under the policy was limited to third party liability coverage, and BMW was not liable to a third party for the damage to the vehicles. BMW responded arguing that (1) because BMW was listed as an additional insured in the policy and the policy included comprehensive coverage, Colony owed a duty to BMW; (2) the policy language was ambiguous and should be interpreted in favor of coverage; (3) an interpretation that BMW was only afforded liability coverage under the policy would render it meaningless as to BMW; and (4) even without a breach of the policy, Colony could still be liable for a bad faith claim. The trial court granted Colony’s motion for summary judgment.

Coverage

On appeal, BMW argued the policy showed CARS was paying premiums for comprehensive coverage under the garage keepers coverage, which was separate and distinct from any liability premiums CARS paid, and BMW was an additional insured to that coverage. BMW further contended that the policy was ambiguous as to the comprehensive coverage. The court disagreed, finding that under the unambiguous language of the policy, BMW was only an insured for purposes of liability coverage: 

We find the trial court did not err in determining BMW was not afforded coverage under the Policy as to the Vehicles. BMW is not a named insured on the Policy itself. As a result, the Policy as a whole does not initially cover BMW as an insured. However, BMW is added to the Policy by way of an endorsement to the Policy. This endorsement, however, which is the only way BMW under the policy could be an insured, provides only liability coverage. Importantly, the endorsement makes no mention of comprehensive coverage. Additionally, the endorsement specifically provides, "The provisions of the Coverage Form apply unless modified by the endorsement." Thus, because "WHO IS AN INSURED" as to the comprehensive coverage was not modified by the endorsement, the original form applies, meaning only CARS, the named insured, is entitled to that coverage. Therefore, according to the plain language of the Policy, BMW is only an insured as to liability.

Accordingly, the court found that, in order for Colony’s duty to pay BMW as an insured to be triggered, BMW must have first been liable to a third party for the damage to the vehicles:

Because BMW is only an insured as to liability coverage under the Policy, for Colony's duty to pay BMW as an insured to be triggered, BMW must have first been liable to some third party. See Trancik v. USAA Ins. Co., 354 S.C. 549, 554, 581 S.E.2d 858, 861 (Ct. App. 2003) (stating liability insurance contracts are generally contracts "whereby the insurer . . . agrees to pay the insured . . . the amount of any damages the insured may become legally liable to pay to a third party"); see also Black's Law Dictionary 997 (9th ed. 2009) (defining liability as "[t]he quality or state of being legally obligated or accountable; legal responsibility to another"). BMW failed to present any evidence tending to show it was in any way liable to a third party due to the damage caused to the Vehicles. Further, in BMW's response to Colony's request for admissions, BMW admitted no one had filed suit against it regarding damage to the Vehicles.

Thus, the court found the trial court did not err in determining the policy did not afford BMW coverage with respect to the damaged vehicles.

Bad Faith

BMW also argued the trial court erred in granting Colony’s summary judgment motion as to the bad faith claim because BMW was an additional insured under the Policy and by ignoring BMW’s correspondence, refusing to provide explanations as to the denial of coverage, and refusing to acknowledge CARS’ liability, Colony acted in bad faith in processing and denying BMW’s claim. In response, Colony argued that because no coverage existed as to the claim BMW made, Colony could not have acted in bad faith in refusing to pay BMW. The court agreed with Colony, likening the case presented to situation in Myrick v. Prime Insurance Syndicate, Inc., 395 F.3d 485 (4th Cir. 2005):

As previously discussed, with respect to the Vehicles, the Policy did not afford BMW coverage for this claim. The Fourth Circuit, in Myrick v. Prime Ins. Syndicate, Inc., 395 F.3d 485 (4th Cir. 2005), while interpreting South Carolina insurance law, determined a similar situation to the present case provided reasonable grounds for the insurer to deny coverage. In Myrick, the insured sought to insure three pieces of equipment from loss. Just weeks after the policy became effective, a fire destroyed one of the pieces of equipment the insured sought to have covered under the policy. After the insured made a claim on the destroyed equipment, the insurer correctly determined although the policy at issue did provide property coverage for one machine of the type destroyed, it did not provide such coverage for the specific machine that burned. As a result, the court held that although the parties admitted a contract existed between them, the insurer's refusal to pay benefits was reasonable because the subject matter of the claim allegedly triggering payment did not actually fall within coverage.

The present case bears comparison to Myrick. Just as destruction of the machine in Myrick could never trigger coverage as to the insured because it was not covered in the policy, so too could there never be coverage under the Policy where, as here, BMW did not face any sort of liability to third parties. As a result, just as was the case with the insurer in Myrick, we find Colony had reasonable grounds upon which to not only contest, but also refuse BMW's claim.

(Internal citations omitted). The Court of Appeals further noted the Myrick court also determined that the insurer adequately investigated the insured’s claim; however, in the case presented, BMW’s argument regarding bad faith claims processing was not preserved. The court of appeals therefore found the trial court did not err in granting Colony summary judgment on BMW’s bad faith claim.

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MassCare Floundering

It's lobster season (or so I've been told), and the water's boiling on the progenitor of ObamaCare::

"Sure enough, 79% of the newly insured are on public programs. Health costs—Medicaid, RomneyCare’s subsidies, public-employee compensation—will consume some 54% of the state budget in 2012, up from about 24% in 2001"

Oy, that's a 225% increase in the overall "curve." Adding insult to injury, health care spending by the state's government has increased almost 60%. And to top it all off, the Bay State "spends more per capita on health care than any other state ... Costs are 27% higher than the U.S. average"

So, more money, but better care, right?

Right??

Maybe not:

"Under [a recently passed “cost containment” bill], all Massachusetts doctors, hospitals and other providers must register with a new state bureaucracy as a condition of licensure—that is, permission to practice. They’ll be required to track and report their financial performance, price and cost trends, state-sanctioned quality measures, market share and other metrics."

More red-tape means less time for health care delivery.  But wait, it gets even more Orwellian:

"No registered provider is allowed to make “any material change to its operations or governance structure ... without the commission’s approval ... As the commission polices the market, it can decide to supervise the behavior of ... doctors and hospitals that are spending too much on patient care."

Well, I'm sure that will gladden the hearts of actual health care providers. Because that kind of thinking worked out so well in the 70's.

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Arghhhhh!

Some days I wonder why I even bother answering the phone . . .

Hello

Hi Bob, this is Greg. We talked last year about health insurance and it was too expensive then but I understand premiums have dropped under the Obama plan.

Really? Premiums in my world are going up more than they would if not for Obamacare.

Well I heard they are going down and the health insurance companies can't turn anyone down because of a medical condition.

True, but that starts in 2014.

We now want to look at a group plan. My wife has a business and we think some of them might like to buy health insurance. Can you come out next week, show us some rates and tell us how it works? We know the group rates are much lower so we can probably afford something then.

For starters, group health rates are at least double a comparable individual major medical plan. The carrier will require the company to pay at least 50% of the employee cost and you must have at least 75% of the eligible employees participate. If your participation does not meet the requirements you have to pay more of the premium.

That can't be. My accountant bought a group plan and it was less premium. They didn't have to cover any of their employees.

I have only been doing this since 1975. Perhaps the rules changed last week and I didn't get the memo. How long has your accountant been writing health insurance?

I don't know why anyone would buy health insurance unless they were sick. It is so expensive now, young people can't afford it. That's why we have our kids on PeachCare (SCHIP) because it is free and better than any health insurance plan we would have to pay for. The government made health insurance affordable for kids, why not adults?

It sure seems like you have a handle on things. Obviously I can't help you. Have a nice day.

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He's baaaack!

My better half and I spent last week in beautiful, friendy and clean Montreal. It was an amazing trip, a truly historic city filled with friendly, warm and helpful people, great food and interesting sights (and sites). I would recommend it to anyone who wants a taste of Europe without a "hop across the pond."

A very special Thank You to Bob for holding down the fort here at IB all week. He's a great co-blogger, and an even better friend.

Now, back to the grindstone for moi.

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