Former Red Sox Catcher Wins Claim Against Merrill

Former Red Sox catcher Doug Mirabelli has earned another victory, this time off the field.

An arbitration panel ruled on Jan. 13 that Merrill Lynch must repay Mirabelli more than $1.2 million in damages and fees for providing inappropriate investment advice to the two-time World Series champion and his wife, Kristin.

“It’s rare for a FINRA (Financial Industry Regulatory Authority) arbitration panel to award every dollar amount of out-of-pocket loss,” said Barry Lax, Mirabelli’s lawyer, in an interview.

Lax estimates that less than 5 percent of the cases he has dealt with in his roughly 20 years in the industry have resulted in this type of full-repayment ruling — where the claimant receives the complete original investment, in addition to all legal fees and associated arbitration costs.

“The panel basically put the Mirabelli’s back in a position that they would have been in had they never met Phil Scott (the Merrill Lynch adviser),” he said.

The case was argued against one of Merrill’s top advisers, Scott, a Bellevue, Washington-based broker who has been with Merrill for nearly three decades. Scott was ranked the top adviser in Washington State last year by Barron’s and managed about $1.1 billion in client assets.

The Mirabelli’s invested about $1.8 million, all of their liquid assets, with Scott in early 2008, according to Lax. Scott then put those assets into his team’s income portfolio, which is made up of 33 dividend-paying growth stocks.

Because the account was collateralized through loans, if the value of the account fell below $1 million in value, they would need to sell out of the securities held in the accounts — which is what happened in November 2008, amid an industry-wide meltdown of financial markets.

The result was a roughly $800,000 loss for the Mirabelli’s.

Lawyers for the couple argued that Scott put the Mirabelli’s assets in “inappropriate” investments, offering the recommendation and purchase of unsuitable securities; in this case, an all-growth stock portfolio.

Merrill Lynch spokesman Bill Halldin said the firm disagreed with the panel’s decision, given the facts presented in the case.

“This account was handled properly during a very difficult time when there was extreme market volatility,” he said.

(Reporting By Ashley Lau; Editing by Bernard Orr)

via www.insurancejournal.com

Doug Mirabelli had to catch Tim Wakefield's knuckleball all those years he was with the Red Sox. In my opinion, the $1.2 million is hazard pay.

Leave a Comment

via www.insurancejournal.com

I know many readers of this blog are opposed to the federal health care reform law (major portions of which do not take effect for two more years,) but really -- this is what we've come to? Bartering artwork in exchange for health care coverage? I admire the ingenuity of whoever thought this up, but it's not a rational way for a great country to care for the health of its citizens.

My opinion, not IIABNY's.

Leave a Comment

Yangtze Realty, LLC v. Sirius America Insurance Co.

The plain meaning of the exclusionary clause invoked by the defendant bars coverage for, inter alia, property damage arising out of work performed on behalf of the insured by a subcontractor where no prior written agreement exists indemnifying and holding harmless the insured in the event of a loss (see Wilson v Sirius Am. Ins. Co., 44 AD3d 754). The defendant submitted evidence showing that the property damage in the underlying action was caused by the work of a subcontractor hired by the insured plaintiffs, and that the insured plaintiffs' written agreement with this subcontractor did not contain the required indemnity and hold harmless language. Accordingly, the defendant established, prima facie, that it was not obligated to defend and indemnify the plaintiffs in the underlying action (see Global Constr. Co., LLC v Essex Ins. Co., 52 AD3d at 656).

via scholar.google.com

Some insurance carriers have attached so-called "contractor's conditions" endorsements to Commercial General Liability policies covering contractors. A typical such endorsement will condition coverage on the named insured contractor obtaining hold harmless agreements and/or additional insured status from its subcontractors. If the named insured fails to obtain these things, the endorsement reduces or eliminates coverage for ensuing losses.

For those who may be inclined to think that the courts would never enforce such an endorsement, read this December 13, 2011 opinion from the New York Supreme Court Appellate Division, Second Department. The appellate justices dispatched the named insured's claim in four short paragraphs.

The lesson: Be aware of what's in the CGL policies your contractor clients are buying. Make sure your clients are aware. Document that your clients are aware. Look for better options in the market, including the excess line market, if need be.

No one wants to be surprised this way at claim time.

Leave a Comment

Leave a Comment

Technology for Agents
Keeping up with technology and how the consumer wants to and will work with the agent is the prime issue for providers going forward to 2012, says Jerry D. Fox, a former agent who is vice president, Agency Operations, for Marshall and Swift/Boeckh (MSB). "I do not believe this is a new issue, but the speed of innovation is ever increasing and the independent agency system is already behind. It will need to make some quantum leaps to catch up."

If that is the case, how will agency budgets play into the technology strategy? "The agency will have to prioritize what they want to do," says Fox. "Fortunately, technology infrastructure (storage, computing power, etc.) is remaining static if not decreasing in price. What the agency will need to do is not worry so much about the hard line items, but more about how they want to be seen by the consumer. It is more about quick, mobile, 24/7/365 support than how fast their PC is. It is a major shift in thinking on how the 'relationship' is made and kept."

Still, according to Fox, "the independent agency system is way behind in almost all areas of technology. They have been worrying about whose data is whose and where it is stored when the whole system should have been thinking about who should have access to what and when.

via www.acord.org

This article in this week's issue of ACORD Weekly Newsletter is worth a read if you're an agent or broker. Fox is saying that, when making technology choices, agents have tended to focus on themselves and not on their clients. In his view, agents who want to have staying power will have to change their ways. It's a mobile-Facebook-Twitter world; insurance producers will have to join it or become obsolete. Pretty sobering thought.

UPDATE: I was remiss in not mentioning Project CAP, an initiative of the Independent Insurance Agents & Brokers of America to help independent agents compete online with the direct writers of the world. There will be a lot of activity surrounding this project in 2012, so stay tuned.

Leave a Comment

Answer: You didn’t mention whether the policies in question are personal or commercial lines. New York Insurance Law Sect. 3425 governs personal lines, while Section 3426 governs commercial. Both laws have the same definition of “nonpayment of premium”:

…the failure of the named insured to discharge any obligation in connection with the payment of premiums on a policy of insurance or any installment of such premium, whether the premium is payable directly to the insurer or its agent, or indirectly under any premium finance plan or extension of credit. Payment to the insurer, or to an agent or broker authorized to receive such payment, shall be timely for the purpose of this section if made within fifteen days after the mailing to the insured of a notice of cancellation for nonpayment of premium.

The New York Financial Services Department has said in the past that a carrier cannot retroactively cancel a non-auto personal insurance policy. Interestingly, the attorney wrote:

Thus, barring a contractual or statutory provision to the contrary…, cancellation notices sent under personal lines non-automobile insurance policies are effective immediately. However, payment of the premium within the fifteen day "grace period" will reinstate the policy without any lapse in coverage… (Emphasis added)

So, if a policy renewed on July 1 and the carrier sent a cancellation notice for non-payment on that date, cancellation is effective on July 1. However, if the insured pays the amount due by July 16, the carrier must reinstate with no lapse in coverage. The main point, however, is that the effective date of cancellation cannot be prior to the date the carrier sent the notice. In the above example, if the carrier doesn’t send the notice until July 5, then cancellation is effective on July 5. The same basic principle applies to most commercial lines. However, the department has also said that it’s perfectly valid for a carrier to require the initial premium payment before the renewal date, then issue a cancellation notice for non-payment to be effective on the renewal date. 
 
While these rules apply to all personal lines, they do not apply to certain types of commercial lines policies – NYAIP, NYPIUA, Medical Malpractice Insurance Plan, surety, workers’ comp, excess lines, inland and ocean marine, and financial guaranty policies.
 
Bottom line, if you want the ability to cancel a policy flat for non-payment, you must send the notice on or before the renewal date.

Leave a Comment

Answer: The other agent is correct. The PIP motorcycles endorsement provides pretty limited coverage. The first two paragraphs of Section I state just how limited the coverage is:

Mandatory Personal Injury Protection

The Company will pay first-party benefits to reimburse for basic economic loss sustained by an eligible injured person on account of personal injuries caused by an accident arising out of the use or operation of the insured motorcycle. This coverage applies only to motorcycle accidents which occur during the policy period and within the State of New York.

Eligible Injured Person

An eligible injured person is any person who sustains a personal injury arising out of the use or operation of the insured motorcycle while not occupying the insured motorcycle, any other motorcycle or a motor vehicle.

Therefore, a person can collect benefits under this endorsement if he: 1) sustains an injury arising out of the use or operation of the insured motorcycle; 2) was not riding the motorcycle; 3) was not riding another motorcycle or any other motor vehicle; and 4) was in New York. Basically, it covers pedestrians in New York. Cross the state line into Connecticut and even they don’t have coverage. The insured driver and passengers have no coverage under this endorsement. I agree with the other agent – the underinsured motorist coverage is the next logical place to look for coverage.

Leave a Comment

• Flores v. ERC Holding, LLC. The New York Supreme Court Appellate Division, First Department threw out an injured construction worker's claim under Labor Law Sections 240 and 241. The construction project's owner and general contractor were not liable under 240 and 241, the court said, because the worker was not on the actual construction site at the time of the injury. He was preparing and moving steel beams, destined for the building under construction, at his employer's premises. The court said he was not performing construction work or in a construction area at the time of the injury, and therefore 240 and 241 do not apply.
• National Union Fire Insurance Company of Pittsburgh, PA v. Great American E&S Insurance Company. An electrical contractor, believing that Workers' Compensation benefits would be the exclusive remedy for an employee injured on a job site, took more than a year to report the incident to its Commercial General Liability insurance carrier. The contractor was required to hold harmless the owner and general contractor, both of whom were named in the employee's lawsuit. However, the CGL carrier denied coverage due to late notice of the claim from the insured. The trial court sided with the contractor, but the appellate court reversed the decision.:

 "Although a reasonable good faith belief of nonliability may, in certain circumstances, excuse a failure to give timely notice ..., such circumstances do not exist here. (The contractor) contends that because it believed Best's exclusive remedy was under the Workers' Compensation Law, it could not be held liable for her injuries. However, this claimed belief was not reasonable under the circumstances... Moreover, (the contractor) never sought clarification of the coverage at issue, either from its counsel or insurance carrier...It was not reasonable for (the contractor) to believe that (the injured worker) would not seek further recovery from the site owner and project manager, both of which (the contractor) had agreed to defend and indemnify. In the face of this indemnification requirement, coupled with the fact that (the injured worker) was taken by ambulance to the hospital and remained out of work for over a month, (the contractor) is unable to show a reasonable belief in nonliability."

• Medina v. City of New York. In this Labor Law case, the First Department ruled partly in favor of the injured worker and partly in favor of the owner. The court ruled that the worker's claim under 241 should be returned to the trial court because there were questions of fact as to whether the worker was performing demolition work at the time of the injury (the trial court had thrown this claim out.) However, the court dismissed his claim under 240 because his injury did not result from a hazard "directly flowing from the application of the force of gravity to an object or person." Since this was not a gravity-related injury, 240 does not apply.

I think it's interesting how the First Department is resisting broader interpretations of 240 and 241. The courts have traditionally read these laws as providing very broad protections for injured construction workers. These decisions show that even 240 and 241 have their limits.

Are any of you seeing these narrower interpretations in Labor Law cases? Give us the details in the comments.

Leave a Comment

OFF BEAT: Velvet Underground back together in court 

January 12, 2012 - 2:39pm

Business Insurance, Jan. 12, 2012

Okay, I guess I'm showing my age here, but this particular court fight got my attention. It has absolutely nothing to do with property-casualty insurance, but if you're old enough to have walked on the wild side with Syracuse University alumnus Lou Reed (or at least did so in your teenage fantasy years,) you have to get a kick out of this. And, as an observer of the U.S. legal system, I'll be very interested to see if the court agrees with the band. They're saying that common law gives them the legal rights to the image, even though neither party has trademarked it. 

The inescapable conclusion: That is one hot banana. Rock and roll!

Leave a Comment

Take five minutes to peruse the new issue and check out the other blog posts. You'll find posts about strange claims, what to expect in insurance regulation, insurance policies that are wastes of money, and more. Agree or disagree, you'll find some interesting reading there.

Happy insurance geek reading.

Leave a Comment