Cornwell & Sample Blog

HOA Insurance v. Condominium Owner Insurance

Posted on Oct 17, 2013 in Articles by Rene' Turner Sample

HOA Insurance v. Condominium Owner Insurance. How CC&Rs can Affect Coverage Decisions and How a HOA can Help

By Rene’ Turner Sample, Esq.

Condominium Owner Insurance (COI) policies are designed to insure everything inside the condo, while recognizing the Home Owners’ Association (HOAs) are going to insure the common areas. Although the concept sounds simple, insurance companies are known for making things complicated and since HOAs are usually caught in the middle of the disputes between the COI company and the unit owner, this article will attempt to arm the HOA with the information they need to avoid the dispute, and if unavoidable, arm their unit owner with the information they need to fight their insurance company.

Coverage for the Unit Owner usually depends on the wording of the CC&Rs. COI policies typically rely on the language of the CC&Rs for determining what is being insured.  For example the standard Allstate COI Policy provides “We will cover items of real property pertaining directly to your residence premises which are your insurance responsibility as expressed or implied under the governing rules of the condominium.” This type of insuring language is purportedly intended to ensure the unit owner isn’t forced by the HOA to pay twice for the same coverage, once with the HOA dues and then again when they purchase their own policy. Whatever the intent, this language puts the COI claims adjuster in the position of reviewing the CC&Rs for each claim to determine whether he/she interprets those particular CC&Rs as making the claimed loss the unit owner’s “insurance responsibility as expressed or implied under the governing rules of the condominium.”  With every set of CC&Rs and governing documents being different, and every claims adjuster having different training, workloads and intent, this type of insuring language leads to many inappropriately delayed and/or denied claims, with the COI claims adjuster often instructing the unit owner to seek reimbursement from the HOA.  It should be noted it is uncommon for insurance companies selling such COI policies to review the CC&Rs and/or “governing documents” prior to selling the coverage to the unit owner, and therefore the unit owner typically has no idea what their COI company interprets as being covered until the unit owner makes a claim.

The easiest way to understand how to best assist your unit owners with these type of disputes is by tracking the handling of an exemplar claim by a condominium unit owner.

Smith is a unit owner at condominium complex managed by HOA. The CC&Rs provide the HOA shall purchase insurance to cover the common areas. The CC&R’s then provide the HOA  “may, but shall not be required to, purchase a blanket policy of insurance covering the residential improvements,” and notes “if the Board carries a policy of insurance on the residential improvements owned by the Owners, such policy shall not prejudice the right of an Owner to insure his or her property for his or her own benefits.”

The HOA also provided unit owners with an Insurance Disclosure Statement which set forth the blanket insurance they chose to purchase had a $5,000 deductible, but noted “even if a loss is covered, you many nevertheless be responsible for paying all or a portion of any deductible that applies depending on your governing documents. Association members should consult with their individual insurance broker or agent for appropriate additional coverage.”

Accordingly, Smith purchased her own COI policy with a $500 deductible, which on her limited income was the highest deductible she could risk. When Smith had $15,000 in water damage from a leak in a hot water valve coming out of the wall in her unit connecting to her washing machine, she made a claim to both the HOA’s blanket policy and her own COI policy.  The HOA blanket policy paid for the loss, less the $5,000 deductible. The claim adjuster for Smith’s COI company requested copies of the CC&R’s and “governing documents.” The claims adjuster reviewed the CC&Rs and determined since the CC&Rs did not specify who was to pay the deductible when the HOA policy covered a loss, then the HOA was responsible for paying the deductible. Smith’s COI company refused to pay the water restoration company the $5,000 balance owing, and told Smith to have the HOA pay it. The HOA refused to pay the deductible, and Smith afraid of being sent to collections and not knowing how to fight her insurance company, emptied her savings and paid the $5,000 bill.

Most HOA deductibles are in the $5,000-$10,000 range, which although may be financially devastating to a unit owner, is not enough in dispute to typically justify the expense of a lawyer.  Using the fact pattern above, here are some things a HOA should know to help avoid these disputes, and how to respond when the disputes comes to their Board meetings.

Make the CC&Rs and/or governing documents clear about who has insuring responsibility. All CC&R’s deal with the insuring responsibilities of the HOA, but few specify what the unit owner is to insure.  COI policies which define their coverage based on the CC&R’s and other “governing documents” can use that lack of specificity to delay or deny coverage. Smith’s CC&R’s certainly anticipated the unit owner would purchase insurance for the interior of her unit and therefore had “implied insurance responsibilities” for the interior of her unit, but the lack of a specific statement regarding insuring responsibilities, created either real or feigned confusion on the part of the COI claims adjuster allowing him to deny Smith’s claim.  A HOA can assist their unit owners by a Board resolution which refers to the CC&R’s section setting for the HOA’s mandatory insuring obligations and clarifying everything else is the unit owner’s insuring obligation.

Make the CC&Rs and/or governing documents clear about who is to pay the deductible.  The vast majority of CC&Rs do not specify who is to pay the deductible on an HOA policy claim, but it is commonly understood in the industry that if a loss originates in a common area, the HOA will pay the deductible, but if the loss originates in the unit and is confined to the unit, the deductible is paid by the unit owner. Whether or not the CC&R’s specify who is to pay the deductible is not a legitimate basis for denying Smith’s claim in that the sole issue should be “insuring responsibility,” but unit owners seldom are skilled in interpreting insurance contracts.  A HOA can assist their unit owners in preventing these types of baseless denials by a Board resolution which refers to the CC&R’s section setting for the HOA’s mandatory insuring obligations and setting forth the responsibility for deductibles in the different type of HOA policy claims.

“Other Insurance.” Address potential double coverage issues with unit owners when claims are made on an HOA policy. Smith’s COI policy did limit its coverage to the unit owner’s “insurance responsibility as expressed or implied under the governing rules of the condominium,” but it also contained a standard “Other Insurance” provision which provided “If at the time of the loss there is other insurance in the name of the condominium covering the same property which is covered by this policy, the insurance afforded by this policy will be excess over the amount recoverable under such other insurance.”  Often times just telling your unit owner to look for the “Other Insurance” provision can arm them with the words they need to get their deductible paid.

Recognize the limited training, experience and motivation of a claims adjuster to assist a unit owner in resolving a claim.   Even when a claims adjuster intends to do the right thing, they can make mistakes. Most mistakes are found in these smaller claims. Larger claims end up being litigated and court rulings change policies, procedures and training. In smaller claims, insureds often do not have the resources to litigate, so the same mistake can be repeated for years, even decades before something changes. An HOA can assist a unit owner who has been denied coverage sometimes by just encouraging them to question a denial and to speak to an adjuster’s supervisor. Often times just doing a simple computer search can arm the unit owner with information to dispute a denial.   For example on the Smith fact pattern above, googling “coverage for deductible of homeowners association policy for condominium unit owner” revealed a helpful site which explained the basics of this type of coverage. http://www.bankrate.com/finance/mortgages/6-condo-insurance-questions-1.aspx. The google search also bought up attorney websites, which although the amount of the deductible may not justify the expense of a lawyer, the attorney websites often provide free articles which can be useful for the insured in understanding their rights.

Bad Faith litigation is a last resort. California recognizes an implied covenant of good faith and fair dealing in every insurance contract.  The covenant requires that neither party to the contract do anything deliberately to deprive the other of the benefits of the agreement.  Pasadena Live, LLC v. City of Pasadena (2004) 114 Cal.App. 4th 1089, 1092-1094.  Where the small amount of an unpaid deductible may not justify hiring of an attorney to force the COI claims adjuster to pay, once the denial has harmed an insured, an attorney specializing in “insurance bad faith” litigation can be consulted. Injured unit owners can be referred to the Consumer Attorneys of Calfornia for attorneys in their area specializing in this type of litigation. www.CAOC.com.

Rene’ Turner Sample is a trial attorney specializing in representing people who have been injured as a result of wrongful conduct. She is a partner at Cornwell & Sample LLP in Fresno, California.  She is an advocate for the jury trial system and consumer rights active as a Board Member for both the San Joaquin Valley Chapter of the American Board of Trial Advocates and the Consumer Attorneys of California. www.CornwellSample.com

Why is it so hard to find a lawyer to take a Medical Malpractice case?

Posted on Sep 10, 2013 in Articles by Rene' Turner Sample

Why is it so hard in California to find a lawyer to take a medical malpractice case? By Rene’ Turner Sample

This article is intended to provide insight into the nature and obstacles in medical malpractice litigation so you can improve your chances of finding a lawyer to take your case or at the very least understand the limitations of justice here in California.

When wrongful conduct of someone other than a health care provider injures a member of our community, pursuant to California law the wrong doer is required to fully compensate the injured person for all of the harms and losses they caused. In order to provide a justice system whereby injured people who cannot afford to pay a lawyer by the hourly, California law provides for contingency fee arrangements, whereby an injured person does not have to pay the attorney unless they make a recovery. With a contingency fee agreement, the attorney advances the costs of the lawsuit and works on the case, only recovering their advanced costs and earning a fee (usually 1/3 or 40%) if there is recovery for the loss.

When someone is injured by the wrongful conduct of a health care provider in California, there are caps on the amount of recovery the injured person can receive and there are caps as low as 15% on the allowable contingency fee. The caps on the recovery and contingency fee, along with the high cost of litigating a medical malpractice case leads most lawyers to not accept any of these cases. Of the small percentage of lawyers who will consider taking such a case, they only accept those which seem to them to have the potential to result in a large enough recovery to justify the inescapable cost and time associated with a medical malpractice case. And even when an injured person can find a lawyer to accept their case, it is estimated that 60% of medical malpractice cases are lost at trial here in California. It is also estimated that more than 75% of people who believe they have been injured by the wrongful conduct of a medical malpractice lawyer, cannot find a lawyer to take their case, and many of those cannot even find a lawyer to tell them why the case is not being accepted. Understanding the intake process for a lawyer’s office and the basic limitations of medical malpractice litigation may not guarantee you will find a lawyer, but may make the process less frustrating.

Understanding the intake process for most personal injury law firms.

Most offices have an assistant take down the basic facts and then the lawyer will decide whether to follow up and talk with the potential client or to just send a rejection letter. If the lawyer has not talked to the potential client, most lawyers will send a rejection letter, not commenting on the facts of the case, but simply setting forth a general discussion of the potential statute of limitations, or the deadlines by which certain things must be done in the case or the right to pursue it may forever be lost.

Medical Malpractice cases have short time deadlines.

Most personal injury cases in California have a two year statute of limitations, meaning you have to formally file a legal document in the proper court within 2 years of the wrongful event. Medical Malpractice cases are only 1 year and if the facility was a government owned facility, then it is only 6 months. There are some rules regarding delayed discovery which can extend the deadline up to 3 years, but those cases require a close look at the facts of the case.

If you are contacting a lawyer 6 months after the wrongful conduct when a government entity was involved or more than 1 year after if it was not a governmental entity, many lawyers will not consider the case unless an exception to the strict deadlines jump out from the facts. If you are close to, but not having gone past those deadlines, many lawyers will still not consider the case because they will then not have enough time to thoroughly investigate before the deadline approaches.

Once a lawyer reviews your records they usually feel compelled to provide an opinion regarding the applicable statute of limitations, which means if there is a delay between when the harm occurred and when you are calling the lawyer, many lawyers will not even look at your records because unless they are interested in taking the case they do not want to have to determine the applicable statute of limitations or comment upon whether or not they think you have a case. That is why so many lawyers just send out a standard letter saying they are not accepting your case, but specifically note they are not commenting on the merits of the case and then providing a brief explanation of the statute of limitations.

Medical Malpractice Cases are determined by the applicable “standard of care,” which usually requires an evaluation by a medical professional.

In California, most wrongful conduct is evaluated by what a reasonable person would do under similar circumstances. In medical malpractice cases, such an evaluation requires a medical professional of similar training as the professional you are considering suing to review the records and provide an opinion as to whether the standard of care was violated. The vast majority of medical professionals are unwilling to formally provide an opinion as to the standard of care of another medical professional. In my experience it is common for doctors providing second opinions to a patient to criticize the work of the previous doctor, thereby sending many potential medical malpractice plaintiffs seeking representation. In my experience, those second opinion doctors who so freely criticized the prior doctor when they were seeing the patient, are seldom willing to get involved and go on the record to formally criticize another medical professional.

If you do not have a treating doctor who is willing to go on the record to confirm the standard of care has been violated, you will have to find an attorney who either through experience or instinct believes it has been violated and is willing to spend the money to hire their own expert to review the records. The other alternative is for you to pay an expert to review the file at your own expense. Although it may be difficult to find the right expert to review the case, if you can, the expert’s report may provide a potential lawyer the information which they need to take your case. Even if the expert does not find the standard of care was violated, that report may provide the family with the answers it needs to find some closure.

Did the wrongful conduct cause additional harms and losses?

We are at our weakest and usually most vulnerable when seeking care from a health care professional, so usually most medical malpractice litigation focuses on whether the harms were caused by the provider’s mistake or whether it was just a risk of the condition or procedure. The issue is whether the provider’s conduct was wrongful and whether or not injuries occurred because of that wrongful conduct which wouldn’t have otherwise occurred.

Whether or not injuries were caused by the wrongful conduct is another area where expert testimony is required. Your treating physicians are often a bit more willing to offer opinions on what caused an injury, but again are not often willing to comment on whether that cause amounted to medical malpractice.

Understanding the costs of litigation.

We all understand that we are not going to file a small claims action when a mechanic cheats us out of $20. We are not willing to take a ½ day off of work to go to small claims court. If the mechanic cheated us out of $200 we may be willing, but if in order to win we need to pay another mechanic $200 to write us a report, it isn’t worth it. It is these same considerations which apply to medical malpractice cases. The lawyer will usually make less than 25% on a medical malpractice case, and often be required to spend in excess of $25,000 on experts and depositions. A lawyer will not take a case unless they believe they will be able to recover their costs, earn a decent fee and be able to make a difference in the client’s life. If the potential value of a case, if won, is worth $50,000, but will take $25,000 just to do the investigation, it may not be worth the risk to pursue.

What makes some cases more expensive to litigate than others?

Experts and investigation are expensive. Medical records seldom on their face explain the wrongdoing. Often you have to sue many doctors and facilities to protect your right to sue the correct provider. It takes experts to review the records and then a significant amount of time to take the depositions of all involved. The more complicated the facts, usually the more expensive the litigation. If you have seen many doctors in the past or since the injury, that usually results in many depositions, which again increase the costs of pursuing the claim.

What are the out of pocket losses?

In California the emotional pain and suffering caused by the wrongful conduct of a health care provider is capped at $250,000, and are otherwise limited to recovery for your out of pocket losses such as medical bills not covered by insurance, lost wages and lost household services.

Why does the $250,000 cap make it so hard to find a lawyer?

The $250,000 caps the insurance company’s exposure. In non medical malpractice cases, both sides want to avoid the risk of trial, so most of those cases reach an informal settlement agreement. With the cap, the insurance company has little risk. Doctor’s also often have a clause in their insurance contract requiring the insurance company to obtain the doctor’s consent before settlement. The insurance company pays for the doctor’s lawyers and all the costs associated with the litigation, so it is not uncommon for doctors to insist on a trial. Doctors are all obviously well educated and they want their chance to explain to the jury how they did the best they could and again as many as 60% of medical malpractice cases are lost at trial.

How does the cap on the contingency fee make it hard to find a lawyer?

Lawyers are in a business. A business which helps people obtain justice, but a business nonetheless. Lawyers risk their capital and time on cases, and they only take a case where they believe the potential compensation outweighs the risks associated with the case. Most every other type of injury case in California has a contingency fee of 1/3-40%, so few lawyers are willing to incur the time and risk associated with medical malpractice cases for ½ that fee.

How to lessen the stress of finding a medical malpractice lawyer?

There are many ways to find a lawyer, including internet searches and contacting attorney associations, but here are a few tips to make the process easier.

1. Act Fast. As soon as you suspect a medical provider did something wrong which caused you harm, contact a lawyer. Most Bar Associations have referral systems that will arrange for a free ½ hour consult, if for nothing else, so you can make sure you understand the applicable statute of limitations.
2. Gather your records. Ask your providers for complete copies of your medical records. Make sure to ask for “all of the records” in writing, otherwise you will just be given a partial set. If you were hospitalized, the records may be more extensive and you may want to be more selective in your request.
3. Gather your witnesses. If a medical provider has told you they believe it was medical malpractice, see if they would be willing to talk to a lawyer.
4. Prepare a brief written summary of what happened and why you think wrongful conduct was the reason for your harm. Include the following:
a. Dates of all visits or medical procedures involved.
b. Identity of all medical providers involved.
c. Date you suspected something was wrong. If it has been longer than 4 months since you first suspected something was wrong, why you have waited to try contacting a lawyer.
d. Why do you suspect something was wrong. If someone told you, particularly another doctor, what did they say and when did they say it.
e. What injuries do you believe were caused by the wrongful conduct. Briefly provide basis for amount. For example “I earned $35,000 per year and cannot go back to work.” “I have to have two more surgeries to repair.”
f. If you have had any other lawyers review the case, who you contacted and what did they say about why they did not accept the case.
g. Whether you have copies of records, and if so which records.
h. Whether any doctors have agreed to talk to a lawyer for you.
5. Ask friends for a referral to a lawyer. A lawyer is more willing to get on the phone with someone who has been referred to them by someone they know. Even if the lawyer doesn’t handle medical malpractice cases they may be able to point you in the right direction.
6. Don’t give up. Remember it is the lawyer who, based on their experience and/or instinct, believes you may have a case which will take your case or at least take your call. I have at times picked up the phone simply because it was a case similar to one I just handled. So keep trying. This is one of the reasons I think brief written summaries are useful. Summaries can be sent to multiple lawyers, and lawyers can forward them to lawyers they know, all of which increases the likelihood of you finding the lawyer who has had an experience which makes he or she believe they can help.
7. File a claim with the Medical Board. As long as you have your records and summary, file a claim with the Medical Board. Even if you do not find a lawyer, you will know that your observations and concerns were reviewed and potentially investigated.

Keeping our community safe one case at a time.

Posted on Jan 8, 2013 in Articles by Rene' Turner Sample

When a jury reaches a verdict, they speak as a community setting the value of the loss of life, liberty and/or the pursuit of happiness. We are more careful in a china shop than we are in a Dollar Store because we know the value of the merchandise. Jury verdicts speak for the community and tell companies, entities and persons working and playing in our community how careful they must be to protect all of us from injury and harm.

No one is allowed to needlessly endanger a member of our community. All of our laws and standards of conduct are designed to prevent all of us from needlessly endangering others. When a company, entity or person needlessly endangers others and as a result someone is harmed, the person harmed must be compensated for all of their harms and losses. If there is not fair compensation, the value of life, liberty and the pursuit of happiness are devalued resulting in the devaluing of safety, putting all of us at risk.

Imagine two neighborhoods. In both neighborhoods, the houses are close together filled with families of all ages. In both neighborhoods, there are groups of young boys playing baseball. They are too close to the houses. They have been warned not to play close to the houses. Not long after their game starts, one of the boys in each of the neighborhoods hits a foul ball breaking a neighbor’s window. Now imagine in the first neighborhood, the boys run to house with the broken window apologizing and offering to do chores until they can pay for the damages. By handling their mistake in such a straightforward manner, the boys keep harmony in their neighborhood. The homeowner is inconvenienced, but appreciates the boys’ attitude. The boys having spent a few weeks doing chores are much more careful, and other children seeing them doing chores also learn to be more careful.

Now imagine in the other neighborhood, the boys run and hide behind their mothers denying it was them. The homeowner has to track down the boys and only after much arguing do the boys admit it was them and then they only offer to pay to put cardboard on the window. When the homeowner asks for full compensation, the mother of the boys suggests the window was broken by something else. If the dispute cannot be resolved, the homeowner might have to contact the homeowner’s association to get the window fixed. If the homeowner’s association helps the homeowner get the window fixed, some harmony is restored, but if there is no homeowner’s association, everything in that neighborhood starts to deteriorate. The boys, knowing they can get away with breaking the rules, continue to be careless. Others in the neighborhood are careless.  The homeowner is not tolerant of any of the young children in the neighborhood. Without justice, harmony in the neighborhood is lost.

The civil tort system is our homeowner’s association. It is not designed to punish, but rather to balance the harms and restore our confidence in the safety of living in a community. Property damage, such as the value of a broken window, is usually fairly easy to determine. The harms and losses caused by an injury or death are difficult to evaluate, and so sometimes it takes a much effort and sometimes even a jury to evaluate. Using the analogy of the young boys playing baseball in the two neighborhoods, sometimes it takes a lawyer and even a jury to convince the boys to do what is right or to understand how to evaluate the harms and losses. The civil tort system provides a place where our most personal losses of health and family can be evaluated and compensated. We are at our weakest when we have lost so much, and our civil tort system provides a system and structure to protect those who are at their weakest and allow them full and fair compensation when they need it the most.

The use of the Internet for communications with the firm will not establish an attorney-client relationship and messages containing confidential or time-sensitive information should not be sent. For our complete policy, click here.
Cornwell and Sample, LLC
7045 N. Fruit Ave., Fresno, CA 93711
call us 559.431.3142