A recent column by Ron Lieber in the New York Times, “After the Storm: Your Homeowner’s Claim,” predicts that it will take years to settle many insurance claims arising from Superstorm Sandy.  But does it have to be that way?  I was heavily involved in the litigation arising from Katrina, and see some important lessons from the Katrina experience which could be applied to Sandy.

Lieber writes:

There is a sort of honeymoon period that occurs after a big storm like Hurricane Sandy, when insurance executives appear on the local news offering reassuring words. Their brightly painted vans pull into residential neighborhoods amid the standing water and debris. Everyone is hopeful. Handshakes and back-patting all around.

That period is about to end. Prices for roofers and construction materials will rise, disadvantageous parsing of policy language will commence and gangs of class-action lawyers will round up aggrieved clients who still have months of homelessness ahead of them. Many claims will take years to settle.

It happens every time, and so it will with this storm. That’s not to say that a majority of people with insurance claims won’t be satisfied with the check they receive or won’t get one quickly. 

What lessons can be learned from Katrina to try to achieve more efficient resolution of disputes?  Here are a few:

  1. Mediations can help avoid lawsuits or resolve them early:  For any readers who are unfamiliar with mediation, it is a process whereby a neutral person, typically a lawyer, judge, or former judge, meets with the parties (and their lawyers if they have hired lawyers) and tries to help them resolve their dispute.  The mediation can offer the parties an opportunity to air their views in a confidential setting, receive a neutral opinion on the strengths and weaknesses of their position from a disinterested, neutral mediator, and attempt to resolve the dispute.  The Louisiana Department of Insurance established a mediation program for Katrina and Rita claims.  Florida has a similar program for mediations to resolve property insurance claims, as provided for by statute and rule (also see the brochure used by the Florida Department of Financial Services, which regulates insurance companies).  It does not appear that either New York or New Jersey currently have this type of program specific to insurance claims, but they might establish them, or courts can provide for early mediation once lawsuits are filed.  Insurers also can implement mediation programs on their own and sometimes did that in the Katrina and Rita context.    
  2. Appraisal potentially can achieve faster resolution of disputes over valuation.  Homeowners’ policies generally contain an appraisal provision under which, if there is a dispute over how much it costs to repair covered damage, this kind of dispute can be resolved informally at either party’s request.  The party requesting appraisal appoints an appraiser, the other party also appoints an appraiser, and the two appraisers attempt to reach agreement.  They choose an umpire to resolve any issues they cannot agree upon (and if they cannot agree on an umpire, a court can appoint one).  This process, however, cannot be used (except by special agreement of the parties) to decide disputes over coverage, such as the interpretation of the insurance policy.  Courts have taken different approaches on the question of whether appraisers can decide whether particular items of damage were caused by a covered cause of loss (such as flood) or an excluded cause of loss (such as wind), or whether that is an issue that must be resolved in court.    
  3. Class action suits are likely to waste time and money on both sides.  I say this as a lawyer who is paid to defend these suits, but the reality is that almost none of the Katrina and Rita insurance class actions were certified, so they did not achieve any efficiency.  This is because courts concluded that these claims have to be resolved on a case-by-case, claim-by-claim basis.  So the class action device is unlikely to achieve efficiency in resolving these disputes, but that does not mean plaintiffs’ lawyers will not file them.     
  4. Resolving the key issues in court early, and in a consolidated fashion, can speed up dispute resolution.  In the Katrina litigation, there were two major issues which required resolution:  (1) whether the word “flood,” as used in flood exclusions, was limited to purely natural events (the insureds’ argument being that the inundation of New Orleans was “man made” due to the failure of levees and floodwalls); and (2) whether a Louisiana statute known as the valued policy law required an insurer to pay the total policy limit where a structure was a total loss as a result of a combination of covered wind damage and excluded flood damage.  Both of these issues were resolved in a consolidated fashion, and relatively early in the litigation, in the U.S. District Court for the Eastern District of Louisiana and then the U.S. Court of Appeals for the Fifth Circuit.  The early resolution of these issues helped speed up the settlement of individual cases.  By consolidating cases implicating these two critical issues, the Eastern District of Louisiana was able to avoid the possibility of various judges having to decide the same issue and potentially reaching conflicting results.  Neither of these particular issues will be implicated by Sandy, but a similar process potentially could be used to resolve key issues that arise. 
Tags: Sandy
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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and most of the class actions I’ve defended have been brought against insurance companies. I’ve also handled some involving products liability, managed care, health care, utilities, financial services, higher education and environmental issues.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at work, you might find me running lines or watching a musical with my teenage daughter who hopes to be a Broadway star (or taking her to voice or dance lessons) or reading a good book.

Read more about Wystan Ackerman
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