PADI getting sued over Insurance Program

[PuMpUi]

Did the PADI employees have their "Insurance Broker" specialty card? If not, big trouble.

Is it possible that PADI and Steve Vicencia/V&B have a "Deep Pockets" Distinctive Specialty card ... something that they wrote up themselves ???

Or ... maybe they're trying to find their "Get Out of Jail Free" card?

 

[PhilEllis]

What do you and others mean by "bring PADI down"? Do you mean the insurance division of their business or their entire organization?

Are there actual damages that would amount to a financial crippling or would that depend on punitive damages?

If the plaintiff alleges that PADI is acting as an unlicensed insurer, does it seek an injunction against PADI providing insurance? Have state insurance departments and attorney generals been involved?

No one here has the ability to state what PADI can "afford" financially. PADI is a private company, is not required to publish its financial details, and that is fair. However, I can use just a little speculation to determine what COULD happen and how painful that might be to a small private company.

If the PLAINTIFFS only succeed in the first cause of action, Rescission of the Contracts, you could make a good educated guess at the cost. If 1000 dive centers have paid $3500 each in premiums each year for the past five years, the total money had and received would be $17.5 million dollars. You would need to add several additional million dollars for interest. Rescission of Contract awards are typically due and payable immediately upon judgment, so a Defendant would need cough up a pretty large sum of money. Coming up with $20 million cash would be hard for any small business. Of course, if they prevail on other causes of action, some could mandate treble damages and punitive damages to punish them for wrong doing. So, it is pretty easy to see how this could snowball and put them in a very bad position,

Just me using my imagination.

Phil Ellis
DiveSports.com

 

[PhilEllis]

Oh, and any PADI haters shouldn't gloat.........often times, various members of an industry "learn" from one another. IF what they are doing is illegal, who is to say that the SAME illegal practice is not done of several other training agencies. I expect that there is considerable profit to be made by "selling" additional insureds from a blanket policy (after all, that appears to be one thing that is happening from the complaint). Others may well be doing the same thing.

Phil Ellis
DiveSports.com

 

[Rhone Man]

I'll chip in a few more thoughts:

• I am not a US lawyer, but in the jurisdictions where I am admitted, it is quite difficult to bring rescission claims after a certain length of time. Particularly where one side (ie. PADI) has fully performed. I have no idea if the position is the same in the US, but I would have thought it a good possibility.
• Even I know enough about US law to know about punitive damages and treble damages claims. Those can bring down anyone, big or small.
• In the good old days (you know, the ones that led to the Wall Street meltdown), businesses could meet huge settlements or damages claims by securitising future revenues (ie. borrowing against future years' profits) and survive. That is what Big Tobacco did. Nowadays, that is much harder to do. Particularly if their man source of income (insurance kickbacks) gets cut off.
• I have always strongly suspected that PADI don't make nearly as much money as everyone thinks they do. Of course, if you are an instructor working on $28,000 a year, pretty much anything looks like a lot of money. PADI is a private company and so we can't see the accounts, so you don't know and I don't know. But I think there are a lot of subtle reasons for believing that its turnover and profitability is much more modest than is often assumed.

Might all be bollocks, but I thought I would add those to the discussion.

 

[Scubaman7596]

Here is the Link .... No need to PM anymore

Divenewswire

 

[KY_BOB]

As an insurance agent, I find this very interesting. I'm a personal lines property and casualty agent so this isn't my area of expertize but it seems as if PADI was acting as a self insured risk retention group with reinsurance. They fall under different laws than insurance companies but they still must provide proof of reserves to cover any arising claim if they are acting in that manor. I'm also pretty sure that they must disclose the fact that they are the risk retention group and not pretend that your fully insured by another carrier.



Again, this isn't the type of insurance that I handle but I want to see how it plays out.

 

[Thalassamania]

If anyone knows where Lesser might have published the response he gave here, complete with the attachments he referenced, please provide us with a link, Thanks.

Phil Ellis
DiveSports.com

Ricks stuff is up on Divenewswire

 

[Jim Lapenta]

Regarding the professional insurance. I was with V&B at the behest of the shop I went thru for DM. Only for a year though. Switched to Witherspoon and been happy as a clam. But when I was with V&B did PADI get a cut of that? I don't think I have my policy handy. It;s here somewhere I know. But if I;d had a claim against me who would have paid first?

 

[ReefHound]

If the PLAINTIFFS only succeed in the first cause of action, Rescission of the Contracts, you could make a good educated guess at the cost. If 1000 dive centers have paid $3500 each in premiums each year for the past five years, the total money had and received would be $17.5 million dollars. You would need to add several additional million dollars for interest. Rescission of Contract awards are typically due and payable immediately upon judgment, so a Defendant would need cough up a pretty large sum of money. Coming up with $20 million cash would be hard for any small business. Of course, if they prevail on other causes of action, some could mandate treble damages and punitive damages to punish them for wrong doing. So, it is pretty easy to see how this could snowball and put them in a very bad position,

What typically seems to happen is such judgments immediately get appealed. And if all is said and done and the judgments are debilitating, they file bankruptcy Chapter 11 and continue doing business.

Oftentimes, a business will defend such a suit by filing a counter suit, making the plaintiff play a little defense and bear the same burden of legal expenses since it's hard to find contingency representation as a defendant.

 

[Thalassamania]

All this comes about because PADI was slow to pay on an $88K fire damage claim to a Hawaii dive shop. We really must ask why were they slow to pay on this? Could it be that the downturn in the industry has them strapped for ready cash? If that is so, does that mean that they will be unable to pay the $300K per claim that they are responsible for, and thus no one who bought PADI insurance has any actual coverage? If I had such a policy, I'd be worried; especially if PADI has no insurance to fight this claim and is faced, when in a cash flow bind, with having to pay for their defense on an hourly basis.