ERISA Claim Deadlines Extended Due to COVID-19

ERISA-governed insurance claims are subject to specific deadlines that claimants have to meet in order to protect their rights. Normally, the consequences of missing a deadline are draconian. For instance, appealing an ERISA claim denial even one day late can irrevocably waive the right to dispute the denial, no matter the reason for the delay.

The good news is that these deadlines have been relaxed in light of the COVID-19 pandemic. The Department of Labor, the federal agency responsible for overseeing ERISA-governed employee benefit plans, has issued an order extending certain ERISA claim deadlines due to the COVID-19 pandemic. This order comes pursuant to authority granted by Congress in the Coronavirus Aid, Relief, and Economic Security Act (a/k/a the “CARES” Act).

DOL is extending these deadlines so that plan participants, beneficiaries, and employers have additional time to make critical coverage and other benefit decisions during the pandemic. The upshot is:

  • Disability insurance claimants have additional time to submit claims and appeal denied claims. These deadlines do not run during the period from March 1, 2020, until 60 days after the federal government announces the end of the current COVID-19 national emergency. That means an appeal that would normally be due next week might not be due until 60 days after the federal government announces the end of the national pandemic emergency.
  • Group health plans have additional time to comply with COBRA continuation coverage deadlines. This is critical for employees recently laid off and looking for answers about continued health insurance coverage.
  • Group health plans also have extra time to determine benefit claims; and
  • ERISA plans have extra time to provide disclosures and notices required by ERISA, provided the plan acts in good faith and furnishes the disclosure or notice as soon as practicable under the circumstances, including through electronic means.

The Department of Labor has FAQs for ERISA claimants and participants regarding the deadline extensions.

These extensions will help employees and plan participants effectively safeguard their rights during the pandemic.

COVID-19 Insurance Updates

Here are some updates in the fast-evolving COVID-19 insurance world:

  • Washington State’s insurance commissioner extended the deadline for insurers to file certain kinds of lawsuits over property insurance coverage. Most homeowners’ insurance policies require any lawsuit against the insurer be filed within a certain length of time from the loss (often one year). Missing the deadline can deprive the policyholder of their right to sue the insurer for any misconduct. The insurance commissioner’s order requires insurers to extend this deadline for certain claims where the policyholder is in the process of completing repairs. Since the residential construction industry has been shut down due to emergency “stay at home” orders, many folks have been unable to complete repairs on time. Extending this deadline will help these policyholders protect their rights.
  • Washington’s insurance commissioner also warns against Medicare coronavirus scams. Scammers are targeting Medicare enrollees with bogus vaccines for the virus.
  • Many states, mostly in the northeast for now, are considering legislation requiring insurers to provide coverage for businesses losing money because they cannot operate during the pandemic. For example, Pennsylvania’s proposed legislation requires commercial insurers providing so-called “business interruption coverage” to cover COVID-19 related losses. Many insurance policies are believed to exclude such losses unless such legislation becomes effective.

Stay healthy!

Replacement Cost Coverage Under Homeowners Insurance Can Be Broader Than You Might Think

Most homeowners insurance provides what’s known as “replacement cost” coverage. Replacement cost coverage varies from policy to policy, but generally provides that the insurance company will pay to repair or replace damaged portions of the home with materials of the same or similar quality that existed before the loss. This coverage basically provides the insurer will pay to repair your home after a loss, so it’s an important component of a homeowners insurance policy.

It’s critical to keep in mind that insurance policies can use many different definitions of replacement cost coverage. The only way to know what a particular insurance policy covers is to have a qualified attorney review the entire policy and all the facts related to the loss. With that in mind, a replacement cost provision typically looks something like this:

The insurance company will pay the cost to repair or replace the damaged part of property insured with material of like construction for similar use on the same premises.

In most insurance policies, this language comes with exclusions, limitations, loss settlement provisions, and other policy language that can change how the replacement coverage applies. It’s critical to have a lawyer review the entire policy to determine how replacement cost coverage works in a particular situation.

Replacement cost coverage can involve several important issues that sometimes cause disputes between the policyholder and the insurer. The first is that the policyholder generally gets to choose the contractor who performs the repairs or replacement. In general, whatever a qualified contractor charges is the cost to repair or replace the damaged property and, therefore, what the insurer should pay under the policy. Unless the insurer hires the contractor and pays for the repairs directly, the insurer should, absent special circumstances, pay the policyholder whatever the contractor charges to repair or replace the damaged property.

Second, replacement cost typically means the cost to replace the materials that were there. If high quality materials were damaged, the insurer should pay for high quality replacements. If damaged materials cannot be repaired to the same condition they were in before the loss, the materials need to be replaced with new materials. Again, this depends on the insurance policy fine print– the devil is in the details.

Third, replacement cost generally includes all the costs to repair or replace the damaged property. These costs often go beyond the mere costs of the new building materials. For instance, replacing a leaky pipe might require removing sections of the drywall and other fixtures to get access to the pipe. In that scenario, the costs to tear out the drywall and fixtures, and to restore them to their pre-loss condition, would exceed the mere cost of the replacement pipe.

Fourth, most policies would require the policyholder to commit to actually performing the repairs or replacement before paying replacement cost benefits. If the policyholder doesn’t plan to actually perform the repair or replacement, many policies would pay only the “actual cash value” of the damaged property. Actual cash value is typically the dollar value the property had immediately before the loss. Replacement cost value is often much higher than actual cash value.

It is important to be mindful that, as with any insurance law question, replacement cost coverage and other benefits vary from case to case. Tiny nuances in the insurance policy fine print of the facts of the specific loss can make a huge difference. In some cases, removing a single word could alter the policyholder’s rights. The only way to know what a particular insurance policy covers, and what benefits the policy holder is entitled to, is to consult a qualified attorney.

Lawsuit Over Neighbors’ Target Shooting Triggers Homeowners’ Insurance Coverage Says Court of Appeals

Most homeowner’s insurance policies include coverage protecting the policyholders from certain kinds of lawsuits. For example, many policies provide that, if the policyholder gets sued for “personal injury” claims, the insurance company will pay for lawyers to defend the policyholder in court. This liability coverage is an important part of most homeowners insurance policies. Determining whether the policy provides coverage for a particular lawsuit often turns on the specific definition of “personal injury” in the policy.

A recent Court of Appeals decision emphasizes the importance of the technical definitions of “personal injury” and other liability coverage terms of art under homeowners insurance policies.

Mr. and Mrs. Webb were sued by a neighbor who alleged that, while the Webbs were target shooting on their own property, they fired bullets that ricocheted on to the neighbors’ property. The neighbors asserted claims including trespass and assault.

The Webbs made a claim under the liability coverage contained in their USAA homeowners insurance policy, asking USAA to cover the defense of the neighbors’ lawsuit. The Webbs’ USAA insurance policy provided liability coverage for lawsuits against the Webbs for “bodily injury,” “property damage,” or “personal injury.” The policy excluded coverage for any suits against the Webbs arising from the Webbs’ alleged “intentional acts.”

USAA refused to defend the Webbs against the neighbors’ lawsuit. USAA claimed that “some of the allegations” in the neighbors’ lawsuit did not meet the definitions for “bodily injury,” “property damage,” or “personal injury.” USAA provided no further details. After the Webbs threatened legal action, USAA changed its denial. USAA continued to deny coverage but removed the “some of the allegations” language from the denial letter. The Webbs filed suit against USAA seeking coverage.

The trial court sided with USAA and dismissed the lawsuit. The court concluded all the claims against the Webbs arose from the Webbs “intentional acts” and were therefore excluded from coverage. The Webbs appealed.

The Court of Appeals agreed with the Webbs and reversed the trial court. The Court of Appeals concluded USAA’s insurance policy covered the Webbs by parsing the policy definitions of “personal injury” and “intentional acts.” Prior cases indicated the definition of “personal injury” included claims relating to trespassing on another’s property, which fit the allegations that the Webbs had fired bullets on to the neighbors’ property. The Court of Appeals also determined that because at least some of the neighbors’ allegations triggered coverage under the policy, USAA had to defend the lawsuit. In making that determination, the court relied on the general principle that ambiguous insurance policy language must be interpreted in favor of the insured.

Having determined the policy covered the lawsuit under the definition of “personal injury”, the Court of Appeals also concluded the policy’s exclusion for intentional acts did not apply. The court noted that the appropriate question was whether the Webbs were sued for conduct that the Webbs “expected or intended.” The neighbors’ lawsuit did not allege the Webbs intentionally fired on to the neighbors’ property. Rather, the neighbors alleged the Webbs fired at targets on the Webbs’ property but carelessly and recklessly allowed bullets to ricochet on to the neighbors’ property. Those allegations did not allege the Webbs intentionally trespassed on to the neighbors’ property. Just because the Webbs intended to fire guns did not mean the Webbs intended the bullets would ricochet on to the neighbors’ property.

This decision is an important reminder that the technical terms in insurance policies are critical to understanding the rights and obligations under the policy.  These terms can often have meanings defined in caselaw, as occurred in the Webb so an experienced attorney’s input is essential.

 

 

 

 

 

Coronavirus Insurance Issues

The COVID-19 pandemic is causing many types of insurance questions. Below is an FAQ on some insurance issues people may be dealing with during the pandemic. As always, it’s important to keep in mind that the specific facts and insurance policy language will vary from case to case. An FAQ can’t take the place of legal advice from consulting with an attorney directly. But hopefully this will help point you in the right direction.

Health Insurance

Typical health insurance covers COVID-19 treatment just the same as any other illness. Washington’s Affordable Care Act (a/k/a Obamacare) exchange platform is allowing a special open enrollment period for qualified uninsured individuals to buy insurance on the state Exchange through April 8, 2020. This is an exception to the normal rule that you can only buy Exchange coverage during special periods.

There are also special rules for COVID-19 testing. The federal government designated COVID-19 testing as an essential health benefit, meaning that Medicaid and Medicare plans should cover testing. Washington’s Office of the Insurance Commissioner has ordered health insurers to cover COVID-19 testing without deductibles or cost-sharing. Also, insurers have to allow patients to refill necessary prescriptions regardless of the normal waiting periods.

Disability Insurance

Employees unable to work due to COVID-19 might have recourse under disability insurance policies.  Disability coverage should provide benefits for folks who can’t work because they are sick. But, as always, the fine print matters. Many policies have waiting periods or other detailed rules for paying benefits. The specific rules will also depend on how you obtained coverage. Most folks get disability insurance from their employer, and will have to navigate the special claims procedures under ERISA. For folks who bought their policies themselves, claims will be governed by Washington State law which is generally more policyholder-friendly.

Business Loss Insurance

Businesses who close or lose revenue because of the pandemic or the state-ordered lockdown might have claims for business interruption coverage. This coverage is often provided by standard commercial insurance policies. These claims depend heavily on the specific policy language and facts. For example, some policies require actual physical damage to property before paying business interruption benefits. Other policies might require the business be closed by the authorities. It is also important to be able to document the specific losses incurred under business interruption coverage.

Know Your Rights

Anyone who thinks they have insurance coverage related to COVID-19 should be on top of their rights. In disasters like this pandemic, insurers often cut corners or underpay claims. Washington State insurance policyholders have important rights, including the right to a full, fair, and prompt investigation of their claim at the insurer’s expense. Insurers also have a duty to fully disclose all the potential coverage that you might have.

Finally, here are some resources for non-insurance issues relating to the pandemic: