The Supreme Court almost never takes up insurance related cases. Even so, President Obama’s recent nominee brings a long record of decisions favoring insurers, a possible plus for the insurance industry, said Philadelphia based insurance attorney Randy J. Maniloff.
Maniloff, who is a partner in the commercial litigation department of White and Williams LLP, said that in his review of Sonia Sotomayor’s insurance-related opinions, he discovered that she ruled “consistently, across the board in favor of insurers.”
Maniloff, who concentrates his practice in the representation of insurers, said that while he set out to review Sotomayor’s insurance decisions mostly for “fun,” he was surprised by what he found. He reviewed many insurance-related cases by Sotomayor and found that the overwhelming majority of the cases resulted in opinions considered to be favorable to insurers.
Given her lengthy time on the bench, including on the District Court and Court of Appeals, Sotomayor has a long list of insurance coverage cases on her resume, Maniloff explained. “But what I discovered in the course of looking at Judge Sotomayor’s overall body of opinions on coverage issues was far more interesting than any one case. Judge Sotomayor has been very, very insurer-friendly during her time on the bench.”
In general, courts are not sympathetic to insurers, according to Maniloff. So how is it that she found in favor of insurers in case after case after case? Maniloff asked himself. “That’s what made me take it (the review of the cases) more seriously,” he said.
While insurance coverage cases rarely, if ever, make it to the Supreme Court — generally because insurance is not considered a federal issue — Sotomayor’s insurance opinions could make the case that she’s not as “liberal” as everyone thinks, Maniloff said. “The stereotypical view of a liberal would probably not have them being sympathetic to the insurance industry.”
There are numerous doctrines in the law of insurance coverage which, according to Maniloff, make an insurer a seven-point underdog in every case because those doctrines typically favor policyholders. “That’s why insurers are always swimming against the tide in insurance coverage cases, because of these various rules on how you determine coverage that all favor the policyholder,” he said.
In Maniloff’s experience, many courts find against insurers because it’s so easy to point to one of the doctrines.
In Maniloff’s review of Sotomayor’s insurance opinions, he found she was not willing to “jump to the conclusion that one of these doctrines applied and therefore coverage was owed.” Sotomayor was “extremely thorough in going through the decision to determine whether or not coverage was owed and didn’t have that sort of knee-jerk reaction that coverage was owed because of these doctrines that favor insureds.”
One such cased Maniloff reviewed is Greenidge v. Allstate Ins. Co., 446 F.3d 356, 364 (2d. Cir.) (Sotomayor, J.). In the opinion she wrote:
“Unfortunately, it was the Greenidges’ own actions, and not Allstate’s, that put them at risk of a large adverse judgment. The law of bad faith is not intended to reduce the incentives of insured parties to protect their own interests in situations where they are empowered to do so. In the instant case, the Greenidges had ample opportunity to protect their own interests. Allstate was aware of the options available to the Greenidges, and it was also aware that the Greenidges were represented by private counsel. Allstate was therefore entitled to assume that the Greenidges would take steps to protect their own interests. The Greenidges’ failure to do so does not convert Allstate’s refusal to accept the Seay plaintiffs’ settlement offer into a display ‘of recklessness on the part of the
This case in particular illustrates Sotomayor’s willingness to be extremely thorough in the analysis when finding in favor of the insurer, Maniloff said.
The case involved a dispute as to whether or not there was going to be $300,000 or $600,000 available under the policy. “Allstate was adamant that there was only $300,000 available — it went to trial and the verdict came in at $2 million,” Maniloff explained.
The question surrounded Allstate’s responsibility for anything more than $300,000. “The plaintiffs had tried to get Allstate to agree to litigate the additional $300,000 they said was owed,” Maniloff said.
“It’s easy for a plaintiff to make the argument that an insurer didn’t do enough to protect the insured’s interest,” he said. “There was an opportunity according to the plaintiffs to protect the plaintiffs because they could have settled the case and then litigated the dispute and the insured would have had no personal exposure. The court ultimately said that Allstate did not breach any duties and if anybody should have protected the interests, it’s the insureds that should have protected their own interest.”
Maniloff said the case involved coverage for a child that had been exposed to lead paint, which always adds a sympathetic factor, but ultimately the court ruled in favor of Allstate.
“She didn’t jump to the conclusion as so many courts do that the insurance company didn’t do enough to protect the insured’s interest,” Maniloff added.
In all the insurance cases Maniloff reviewed, Sotomayor was careful to examine the policy wording closely. “She goes through them, she analyses, she parses the policy wording and she decides that the policy language is ambiguous (or not) in a much more detailed manner than just jumping to that conclusion or having a knee-jerk reaction,” Maniloff said. “She takes that standard very seriously. That’s what I saw in a lot of these cases.”
Maniloff’s full review of Judge Sotomayor’s insurance-related opinions can be seen in his newsletter titled, “Binding Authority.”
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