PADI getting sued over Insurance Program

[PuMpUi]

If the plaintiff wins on the first claim for relief, PADI will have to refund the premiums it received to each and every shop that is a member of the class of plaintiffs in the class action. That will mean a big hit to PADI. It will mean that each shop gets its premium payment back. It will mean that the lawyers get a huge sum of money for having gotten the premiums back..

It is my understanding that the Class Action Attorneys CANNOT touch the settlement money !!!

Any pay that they might receive for their time and efforts, et cetera, will be awarded SEPERATELY by the Judge.

PADI attaches policies that it says shows the argument about the $300,000 deductible makes PADI an insurer is “bogus.” It says that the policies themselves show there is no SIR or deductible in any of the liability policies. It says that the policies themselves show that the PD deductible of $300,000 is an aggregate, not a “per occurrence” deductible. It further says there is no deductible at all for the 2010 - 2011 policies. .

If it was Legit why would anyone consider changing it?

Word for word from the policy " Each Claim for a loss or damage Seperately occurring shall be adjusted seperately and from each adjusted claim, the amount of $300,000 shall be deducted"

I dont see the words aggregate in there. I do see Per occurence however.

Once again, if it was legit why would it be changed for 2010 - 2011 ??? It seems to have worked well (for some) for a long, long time.

 

[PuMpUi]

The example is of a crime and of several distinct torts. Restitution is a remedy that a plaintiff can seek with respect to a contract. The defendant has no choice in it. You cannot get orange juice out of an apple.

I guess we will have to wait and see how the Insurance Commissioners of the various States weigh-in on this one.

Once again, we agree that ...

1. Pretending to be an insurance company when not is a crime (I'm pretty sure that we are agreeing on this one) ...

2. Restitution is a rememdy for the plaintiff ... and

3. I cannot get orange juice out of an apple.



Thanks.

 

[ItsBruce]

Can I assume that those shops will have a legitimate loss and damages due to actions by PADI, and this will open a new can of worms that might devastate PADI?

My reaction is to say "no." First, if the policies are rescinded, then it is as if they never existed and a shop would have no basis for complaining. (It would be as if PADI had offered the insurance program to a shop, the shop declined, and the shop then had a loss.) Second, the law will not let a shop rescind the policy and then complain that it rescinded.

For some reason I think PADI is being maneuvered and set up for a future case.

I don't quite see how that could be. I'm more apt to think it is being shaken down. I'm pretty sure that there has never been a class action in which any class member ever received even a small percentage of what the attorneys received. [My guess is that if the court does not dismiss entirely, the case will settle; each class member will get $5.00 and a gift certificate for PADI merchandise or free PADI membership for a year; and the attorneys will get in excess of $1M.] (I seem to recall being a member of a class action in which the class attorneys received millions of dollars and I received a coupon for a $500 off the sticker price if I bought a new car.)

BTW: I just realized how STUPID I am for not doing class actions!!!

 

[ItsBruce]

It is my understanding that the Class Action Attorneys CANNOT touch the settlement money !!!

Any pay that they might receive for their time and efforts, et cetera, will be awarded SEPERATELY by the Judge.

The Judge will determine how much the attorneys will receive. But it will come out of the total settlement. Where else do you think it will come from if there is a settlement? (If it goes to trial and there is a judgment, that is different. However, I do not recall any class actions that have actually gone to judgment.)

If it was Legit why would anyone consider changing it?

Good question. You may even be right. However, right off hand, I can think of two good reasons:

First, the price structure on the master policy may have changed and as a result, the savings is not worth the deductible that PADI pays.

Second, to avoid further lawsuits.

BTW: The fact that the policy was changed is probably (95% likely) not admissible in evidence. [Don't argue with me, I didn't make the rules.]

 

[SC_Hoaty]

(I seem to recall being a member of a class action in which the class attorneys received millions of dollars and I received a coupon for a $500 off the sticker price if I bought a new car.)

BTW: I just realized how STUPID I am for not doing class actions!!!

1) That has been my experience as a passive participant in class actions - I never knew I was harmed, and my portion of the settlement was worthless.

2) Ness-Motley is about 40 miles away. They know how to put the "class" in class action.

 

[ItsBruce]

Word for word from the policy " Each Claim for a loss or damage Seperately occurring shall be adjusted seperately and from each adjusted claim, the amount of $300,000 shall be deducted"

I dont see the words aggregate in there. I do see Per occurence however.

Despite my many requests, no one has seen fit to provide me with a copy of the policy. So, I got a copy of the 2009 - 2010 CGL and PD policies that were attached to PADI's motion to dismiss from the Court's website. I'm reading them now.

HOWEVER, I WANTED TO WARN EVERYONE OF A PROVISION CONTAINED IN AN ENDORSEMENT THAT THEY MAY NOT HAVE NOTICED. IT SAYS:

"No coverage is provided under this policy, nor under the certificates of insurance issued under this policy for liability arising out of [¶] 1.) the rental, loaning, fitting, adjusting, installation or repair of any equipment, merchandise or other terms relating to snow skiing. ..."

I just thought everyone should know.

More once I've finished reading.

 

[ItsBruce]

I've just finished the CGL policy for 2009 - 2010.

1. This was attached to Al Hornsby's declaration in support of PADI's motion to dismiss. In that declaration, Mr. Hornsby swears under penalty of perjury that the document attached to his declaration as Exhibit B is a true and correct copy of the CGL policy for the policy year 2009 - 2010. That is, IMHO, untrue. The final page (page #128 of the declaration, identified as PADI000335) is the "Rate Renewal Endorsement." A portion of that is obliterated and labeled "Redacted." So, unless the policy in PADI's possession has the same obliteration and redaction, the copy is neither true nor correct.

2. I find nothing whatsoever about a deductible or SIR on the liability policy.

3. The policy is a "hack job." Someone has taken a somewhat standard CGL policy form and tried to force it into a mold whereby anyone can enter into a contract with PADI (presumably for a fee) to become a certificate holder and thus an insured under the policy. As a result of approaching the matter in this manner, carefully crafted terms of the form, which are designed to limit what Lexington does or does not cover, are torn asunder with endorsements to the policy which are just hacked together. The net result is that Lexington may end up paying for liabilities it never intended to pay.

4. The likelihood of any state's department of insurance having a problem with the CGL end of the PADI program is down around 10%. The likelihood of PADI being held liable with respect to the CGL end of the program is even lower. Here is why:

Under the basic policy form, PADI and some of its related entities are what is called "Named Insureds." Under the basic policy, certain other people and entities are also "Insureds." For example, if the Named Insured is a corporation, then its officers and directors are also Insureds while acting within the scope of their duties. If the Named Insured is a partnership, then the partners are also Insureds. That is all pretty standard. Then, by way of an endorsement, others can also become insureds. To become an Insured, these others must receive a certificate from PADI. Presumably, to receive a certificate, one must pay PADI money and agree to abide by certain rules and regulations established by PADI.

This is not a lot different that what would happen if my kid did not want to have his own insurance policy on his car and asked me if I would put him on my policy. Putting him on my policy would cause my premium to go up. So, I might tell him I will put him on my policy if he pays me a certain sum of money and promises to drive carefully, not to drink, etc.

I don't think anyone would call me an insurer or say I was selling insurance.

Nor is it a lot different from when a general contractor hires a subcontractor on a construction project and tells the subcontractor that a condition of being hired is that the subcontractor name the general contractor as an additional insured on its CGL policy. The subcontractor is receiving consideration for naming the general contractor as an additional insured, i.e. the subcontractor is getting the job. Yet, I don't think anyone would say the subcontractor was an insurer or was selling insurance.

I'll take a look at the PD policy in a bit.

 

[PuMpUi]

Despite my many requests, no one has seen fit to provide me with a copy of the policy. So, I got a copy of the 2009 - 2010 CGL and PD policies that were attached to PADI's motion to dismiss from the Court's website. I'm reading them now.

HOWEVER, I WANTED TO WARN EVERYONE OF A PROVISION CONTAINED IN AN ENDORSEMENT THAT THEY MAY NOT HAVE NOTICED. IT SAYS:

"No coverage is provided under this policy, nor under the certificates of insurance issued under this policy for liability arising out of [¶] 1.) the rental, loaning, fitting, adjusting, installation or repair of any equipment, merchandise or other terms relating to snow skiing. ..."

I just thought everyone should know.

More once I've finished reading.

Hmmmm ....

maybe we really DO agree on things ????


Problem seems to be in the fine print ... which apparently has been VERY DIFFICULT to get from PADI or V&B.

I'm very excited to see that you were able to do a "work-around" ....

 

[PuMpUi]

I've just finished the CGL policy for 2009 - 2010.

1. This was attached to Al Hornsby's declaration in support of PADI's motion to dismiss. In that declaration, Mr. Hornsby swears under penalty of perjury that the document attached to his declaration as Exhibit B is a true and correct copy of the CGL policy for the policy year 2009 - 2010. That is, IMHO, untrue.


Can't a person go to jail for perjury?

The final page (page #128 of the declaration, identified as PADI000335) is the "Rate Renewal Endorsement." A portion of that is obliterated and labeled "Redacted." So, unless the policy in PADI's possession has the same obliteration and redaction, the copy is neither true nor correct.


Anybody got Rick's number? Oh, that's right, he was an employee of PADI so he can't talk about this ... but those other class-action guys can.

BTW ... doesn't "redacted" mean "blacked out and you cannot read the details" ... NOT usually done by an insurance company, but often done by a litigant who does not want anyone seeing the comission schedule or other "awkward" details.

And let's see ... "who" was the President and Registered Agent for PADI's RRG ? Oh yeah ... their insurance Broker. ANY doubt that PADI has an exact copy of the REDACTED policy in their files?

How about the ORIGINAL ???

2. I find nothing whatsoever about a deductible or SIR on the liability policy.

I think it was in PADI's testimony. Maybe it's in the REDACTED VERSION filed with the Court ???

3. The policy is a "hack job."

That's a good start. Keep up the good investigatory skills.

Someone has taken a somewhat standard CGL policy form and tried to force it into a mold whereby anyone can enter into a contract with PADI (presumably for a fee) to become a certificate holder and thus an insured under the policy.

Let's see ... "who" was the Broker in this deal?

As a result of approaching the matter in this manner, carefully crafted terms of the form, which are designed to limit what Lexington does or does not cover, are torn asunder with endorsements to the policy which are just hacked together. The net result is that Lexington may end up paying for liabilities it never intended to pay.

Ahh ... ANOTHER likely set of lawsuit. Did we ever figure out "Who" was the Broker in this deal?

I seem to remember that a few years ago that PADI sent out a "revised" list of "you are not covered if you do the following ..." which seemed to come on the heels of their paying out a LOT of money on a diver death in Hawaii somewhere ...

I thought it was "peculiar" that PADI would be the one sending out the "exclusions" and not an actual insurance company. Perhaps my memory fails me.

4. The likelihood of any state's department of insurance having a problem with the CGL end of the PADI program is down around 10%. The likelihood of PADI being held liable with respect to the CGL end of the program is even lower. Here is why:

Under the basic policy form, PADI and some of its related entities are what is called "Named Insureds." Under the basic policy, certain other people and entities are also "Insureds." For example, if the Named Insured is a corporation, then its officers and directors are also Insureds while acting within the scope of their duties. If the Named Insured is a partnership, then the partners are also Insureds. That is all pretty standard. Then, by way of an endorsement, others can also become insureds. To become an Insured, these others must receive a certificate from PADI. Presumably, to receive a certificate, one must pay PADI money and agree to abide by certain rules and regulations established by PADI.


Geez ... sounds like Lexington might want to release their dog into this fight at some time ??? I think that if I were Lexington and I had a Broker who "carefully crafted terms of the form, which are designed to limit what Lexington does or does not cover" without my permission ... I'd be more than pissed off.


This is not a lot different that what would happen if my kid did not want to have his own insurance policy on his car and asked me if I would put him on my policy. Putting him on my policy would cause my premium to go up. So, I might tell him I will put him on my policy if he pays me a certain sum of money and promises to drive carefully, not to drink, etc.

I don't think anyone would call me an insurer or say I was selling insurance.


Ahh .... come'on now ... your kid must have had a VERY GOOD reason for NOT wanting his own insurance policy (failure to disclose pertinent facts to the insurance company is a cause for rescention?) ...

and Dad would have KNOWN the REASONS for kid's inability to obtain insurance on his own (consipiracy to commit fraud?) ...

and Dad PROFITTING at providing insurance coverage for his kid? (illegal operations and possibly RICO?

What if the kid didn't have a license to operate a vehicle (or an insurance company)?

Problem here is that PADI has 4-5,000 "Kids" on their policy ... and they made a TON of BUX from it.

Nor is it a lot different from when a general contractor hires a subcontractor on a construction project and tells the subcontractor that a condition of being hired is that the subcontractor name the general contractor as an additional insured on its CGL policy. The subcontractor is receiving consideration for naming the general contractor as an additional insured, i.e. the subcontractor is getting the job. Yet, I don't think anyone would say the subcontractor was an insurer or was selling insurance.

I think that the policy would probably say something like ... "Additional Insured" ???


I'll take a look at the PD policy in a bit.

Hey ... you're not running different theories by us at Scuba Board to see what any "12" of us might think, are you?

That would really SUCK .. especially after you gave me a "thumbs up" from an earlier post

 

[ItsBruce]

Now, I've read the PD policy for policy year 2009 - 2010.

1. I'm miffed over lawyers who think they understand insurance coverage, but don't. (Except when they are on the other side of an insurance case from me.) I mention this because after reading the policy and reflecting on the theory in the various versions of the complaint, I do not think that plaintiff's counsel has a really good handle on what is really going wrong here. (However, given the problem with actual damages, it may not really matter.)

2. The $300,000 deductible or SIR is, IMHO, no longer an issue. The policy is pretty clear that it is a total for the year. In Endorsement 1 (page 430 of the Hornsby Declaration, identified as PADI000228), it states under the heading "Deductible": "SIR - There is a $300,000 Annual Aggregate Retention." This overcomes any prior language in the pre-printed form about a deductible applying to each loss.

3. While the deductible is not a problem, the limits are, and even then, I'm not so sure how great a problem. According to the policy, the policy limits are the most that Lexington will pay on any one occurrence, regardless of the number of properties that are damaged. Thus, if a fire destroys one shop, the full limits are available to compensate the owner. However, if 10 shops are destroyed by the fire, then the limits must be shared among them. The net result is that if there is a loss to more than one shop by a single event, the limits may be inadequate to cover all of the damage.

Now, the good news: There are not that many dive shops in any one area that anything but a natural disaster (earthquake or volcano) or war or terrorist attack would result in damage to more than one or two shops; and things like earthquake, tidal wave, war, terrorist attack, etc. are excluded anyway.

4. Reading the PD policy, I cannot quite see how individual shops are insureds under the policy.

5. Subject to the above comments, the policy is not a bad policy. It is not a great policy. But it is not a bad one. There are some things that are not covered and some things where there are special limitations on what will be paid. "Fancier" policies may cover those. However, "fancier" policies will be much more expensive than what I would guess a typical shop could afford to pay for the PADI program.

6. I am unwilling, at the present time, to opine on how the DOI will treat the PADI program for PD coverage.