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Insurance companies fail to show they were harmed by untimely notice

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The 7th Circuit Court of Appeals ruled a District Court judge from Evansville should not have excused two insurance companies from covering a $13.5 million award solely because the companies were notified of the award after the trial.

In National Union Fire Insurance Company of Pittsburgh, Pa. and Lexington Insurance Company v. Mead Johnson & Company LLC, et al., Nos. 12-3478 and 13-1526, the 7th Circuit Court of Appeals reversed a summary judgment in favor of the insurers and remanded for further proceedings.

The case originated from the U.S. District Court for the Southern District of Indiana, Evansville Division.

The 7th Circuit ruled that although Mead Johnson did not tell the insurance companies of the false advertisement lawsuit until after it lost at trial, the insurers have to show they were harmed in order to disclaim coverage.

National Union, the court held, did not explain how it could have garnered a better outcome if it has been notified earlier of the suit. The insurer would have employed the same law firm and attorneys that Mead chose.

Lexington could have presented evidence or argued that with earlier notification it could have convinced the jury to award the plaintiff, PBM Products LLC, less. However, the court noted, the insurers’ joint brief makes almost no mention of Lexington and, instead, assumes that, like National Union, it would have enlisted the same law firm and used the same litigation tactics that resulted in the $13.5 million judgment.  

The 7th Circuit asserted District Judge Richard Young, in finding the insurances companies were harmed, was misled by two decisions from the Indiana Court of Appeals. However, the Circuit Court noted the Indiana Supreme Court has held that if the insured has inflicted no cost on the insurance company by untimely notice, then the insurance company cannot reject the claim.

“To be consistent with Indiana law, the district judge should have said that the later the notice the harder it is for the insured to rebut the presumption that the insurer was harmed by being deprived of the opportunity to control the defense,” Judge Richard Posner wrote. “It’s because that’s a rough row for the insured to hoe that a trial is necessary to determine whether the lateness of the notice in this case was indeed harmless, as it appears to have been on the present, limited record.”

 

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  1. Well, maybe it's because they are unelected, and, they have a tendency to strike down laws by elected officials from all over the country. When you have been taught that "Democracy" is something almost sacred, then, you will have a tendency to frown on such imperious conduct. Lawyers get acculturated in law school into thinking that this is the very essence of high minded government, but to people who are more heavily than King George ever did, they may not like it. Thanks for the information.

  2. I pd for a bankruptcy years ago with Mr Stiles and just this week received a garnishment from my pay! He never filed it even though he told me he would! Don't let this guy practice law ever again!!!

  3. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  4. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

  5. Pass Legislation to require guilty defendants to pay for the costs of lab work, etc as part of court costs...

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