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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. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  2. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  3. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

  4. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  5. This article proved very enlightening. Right ahead of sitting the LSAT for the first time, I felt a sense of relief that a score of 141 was admitted to an Indiana Law School and did well under unique circumstances. While my GPA is currently 3.91 I fear standardized testing and hope that I too will get a good enough grade for acceptance here at home. Thanks so much for this informative post.

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