Maritime Law: Insurers Not Faring Well with Florida Supreme Court

July 05, 2013

The insurance industry may be feeling like it is taking a beating in the Florida Supreme Court lately. 

In three different cases with very different circumstances, the Supreme Court justices ruled against insurance companies and in favor of policyholders and medical providers. The cases divided the court and, ultimately, all had financial implications for insurers and the other parties.

The first case involved a dispute between Geico and medical provider Virtual Imaging Services, Inc. regarding payments for magnetic-resonance imaging tests that were performed after Geico customer Maria Tirado was injured in an auto accident in 2008. Virtual Imaging sent a $3,600 bill to Geico under Tirado's personal injury protection ("PIP") coverage. But Geico, using a formula derived from Medicare fees, paid slightly less than $2,000, prompting a legal fight. The Supreme Court, in a 5-2 opinion, ruled in favor of Virtual Imaging because it said Geico had not disclosed in the policy that it would use the Medicare-based payment formula.

Justice Barbara Pariente, who wrote the majority opinion, said state law allowed Geico to use the Medicare-based formula, but that the insurer needed to disclose its intent to do so.

The court split along the same 5-2 lines in a second case that involved how much Florida Peninsula Insurance Co. should pay policyholder Amado Trinidad, whose home was damaged in a fire in 2008. Trinidad had what is known as a "replacement cost policy", but did not repair or contract with someone else to repair the home. While Florida Peninsula was still required to pay replacement costs, the legal battle centered on whether those costs should include what otherwise would go to a general contractor's overhead and profit.

In an opinion again written by Pariente, the majority said those general-contractor costs should be factored in, just like other potential replacement expenses such as labor and materials.

In the third insurance case, the justices split 4-3 in a class-action lawsuit that involved interpretation of policies for home health-care services. The dispute focused on the scope of automatic benefit increases included in the policies. The majority, which ruled against Washington National Insurance Co., said language in the policies was ambiguous and, as a result, should be interpreted broadly in favor of policyholders.

The Court is clearly signaling the need for the insurance industry to be absolutely clear in the policies issued to its insureds. Failure to be crystal clear on just what is being excluded or what is being covered can be fatal.

If you are interested in receiving copies of any of these decisions or wish to contact me, you may do so by writing to me at mov@chaloslaw.com.  

Maritime Law: 11th Circuit Keeps Costa Concordia Lawsuits In Miami-Dade Circuit Court

July 02, 2013

After Carnival's cruise ship Costa Concordia ran aground off the coast of Italy, two separate actions were filed by groups of 56 and 48 plaintiffs in the Circuit Court of the Eleventh Judicial Circuit of Florida (our Miami state court). Carnival removed both actions to the federal district court, claiming that the district court had subject-matter jurisdiction under the mass-action provision of the Class Action Fairness Act of 2005 (CAFA), Pub. L. 109-2, 119 Stat. 4. The Plaintiffs moved for remand to the state court on the ground that the district court lacked jurisdiction and the district court granted the motion. The U.S. Court of Appeals for the Eleventh Circuit in Scimone v. Carnival Corp., Docket No. 13-12291 (Jul. 1, 2013) affirmed the federal district court, concluding that the cases were improvidently removed and should have been remanded where, under the plain language of CAFA and 28 U.S.C. 1332(d)(11), the district court lacked subject-matter jurisdiction over plaintiffs' two separate actions unless they proposed to try 100 or more persons' claims jointly.

As noted by Judge Marcus, the plaintiffs "never filed a single complaint naming 100 or more plaintiffs and never moved for consolidation or a joint trial on part or all of their two separate actions." Without meeting those conditions, Judge Marcus found the district court had no federal subject matter jurisdiction.

If you are interested in receiving a copy of this decision or wish to reach me, you may contact me by writing to me via email at mov@chaloslaw.com.

Maritime Law: Fla Supreme Court Weighs in On FNC Test

June 24, 2013

In Cortez v. Palace Resorts, Inc., Case No. SC11-1908 (Jun. 20, 2013), the Florida Supreme Court has provided excellent guidance on how a Florida court should handle a forum non conveniens defense. The issue, as succinctly phrased by the Court, is whether the forum non conveniens doctrine can force a United States citizen to litigate her negligence action in Mexico, when her lawsuit was filed against a corporation with its primary place of business in Florida and where the allegations of the complaint relate to an incident that took place in Mexico but center on conduct occurring in Florida. The Court answered this question in the negative. The Court explained that there is a strong presumption in favor of a plaintiff's choice of forum and this presumption does not apply to only Florida residents.  While this decision does not appear at first blush to assist foreign plaintiffs in asserting Florida as the appropriate forum for their disputes, the case does give excellent guidance on the test to be employed in the Florida courts for evaluating the forum non conveniens defense.

Facts of Case

The  Petitioner, a California resident, was sexually assaulted while vacationing in Mexico. The assault occurred while the Petitioner received a complimentary massage in exchange for her attendance at a resort's timeshare presentation. Petitioner sued the resort, a corporation with its primary place of business in Florida (the "Florida Defendants") for negligent vacation packaging. The Florida Defendants filed a motion to dismiss based on forum non conveniens, arguing that Mexico would be a more convenient forum. The trial court granted the motion. The court of appeal affirmed. The Florida Supreme Court quashed the court of appeal's decision, holding that the court misapplied the forum non conveniens analysis.

Reasoning

The Florida Supreme Court cited two reasons for quashing the Third District Court of Appeal (the "3d DCA") decision: 1) the 3d DCA misapplied the Kinney test by finding that the plaintiff, by virtue of her out-of-state residence, was not entitled to the strong presumption in the forum non conveniens analysis against disturbing the plaintiff's initial choice of an otherwise proper forum; and 3) the 3d DCA erred by failing to focus on the fact that although the lawsuit involved an assault that occurred in Mexico, the allegations of negligence derive from conduct in Florida by defendants with their primary place of business in Florida.

Conclusion

This will be a case that will be cited by defendants in foreign plaintiff cases to suggest that there is no strong presumption available to the foreign plaintiff in the forum non conveniens analysis against disturbing the plaintiff's initial choice of an otherwise proper forum. In other words, foreign plaintiffs should not be allowed to rely on this decision as it specifically references U.S. citizens or residents. Whether this argument will be accepted by the courts as a result of this decision is anyone's guess.

The language from the case that will be cited by U.S. plaintiffs is the Court's language which states "when the plaintiff is a citizen or resident of the United States and the alternative forum is a foreign country, the defendant's burden to overcome this presumption is especially high." This decision will be a helpful one for U.S. citizens attempting to bring cases against defendants which operate and cause damages outside of the U.S. but have offices within the U.S.

If you are interested at receiving a copy of this decision or reach to reach me, you may do so by writing to me at mov@chaloslaw.com. 

Maritime Law: Saving American Seafarer Jobs

June 21, 2013

Last year, Congressman Elijah E. Cummings (D-MD) introduced the Saving Essential American Sailors (SEAS) Act in an effort to repeal section 100125 of the Moving Ahead for Progress in the 21st Century (MAP-21) Act, which reduces the amount of U.S. food aid required to be carried on U.S.-flagged ships from 75 percent to 50 percent. Despite a bipartisan effort, the bill died in committee.

Without the implementation of SEAS and the repeal of the section of MAP-21, it is reported that as many as 2,000 American maritime jobs could be lost and as much as $90 million in lost revenues for U.S.-flag operators. These are figures from the U.S. Maritime Administration. If the offending section of MAP-21 is not repealed, we will have a situation where foreign-owned vessels would have to be depended on by the U.S. to delivery its cargo to our troops overseas. Without the U.S.-flagged sealift capacity, U.S. imports and exports would move solely on foreign shipping lines, many of which are stated-owned lines. The U.S. military would be left dependent on foreign-flagged, foreign-owned ships manned by non-U.S. citizens to carry U.S. military cargoes. 

The plight of the loss of the American seafarer has been detailed in numerous publications (Maritime Executive, Marine Log and others), op-eds and other trade papers, but the word does not seem to be  getting out to the general public. I am always met with surprise when I explain this law to ordinary Americans and they ask me "why haven't I heard anything about this?" Without going on a tangent on the "why", it is imperative that we in the maritime industry educate ordinary Americans of what this law means--saving American seafaring jobs.