PADI getting sued over Insurance Program

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As a PADI instructor i don't understand what is going on. We all buy insurance or if you meet certain financial requirements you can operate with out insurance if you are that stupid. The insurance is not that expensive and the insurance company is responsible for the losses, sound like a gold digger
 
If the particular lawyers are not expecting to be paid, I'd be surprised beyond words.


Bruce (since you like to be on a "first-name basis"), aren't you and several other attorneys offering "pro bono" advice and opinions here on SB ... for the general good of the dive industry? What makes you think that others wouldn't have the same interests at heart?

PADI is not getting taken advantage of by any stretch of the imagination, except to the extent the whole thing is a shake down. If PADI wins, the shops get nothing. If PADI loses, then it is only fair that shops that want to rescind can rescind and those that don't don't.


I think you yourself said that the policy was a "hack job".


The coverage the shops may have gotten may not have been as good as what they would have gotten under a policy under which they were the only insured and under which there was no deductible.

I am under the impression that the dive shops DO have a deductible that they must pay first.

However, a shop would have to prove that that it would have done so had it known the truth and that what it paid was not commensurate with what it got. (How do prices on non-PADI policies compare?)


They typically are less expensive.

A couple of other thoughts:

1. For any shop that got a copy of the actual policy, the game is probably over. The policy discloses exactly what it is providing and would prevent anyone from relying on oral statements to the contrary. (Did I mention that to establish fraud or misrepresentation or concealment, a plaintiff must prove it justifiably relied on a false statement and would not have done what it did in the absence of it?)

And the redacted Master Policy that was presented in court?


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PADI is not getting taken advantage of by any stretch of the imagination, except to the extent the whole thing is a shake down. If PADI wins, the shops get nothing. If PADI loses, then it is only fair that shops that want to rescind can rescind and those that don't don't.

Except that hindsight is 20/20. So if PADI loses and the policies get rescinded, any shop that did not make a claim can just stay in the suit and receive their premiums back. They already know that they didn't use the insurance, so why not? But I understand that is the nature of PADI losing and the shops winning.

BTW, when I said that PADI might be taken advantage of, I was joking...
 
1. I am not offering advice. I am providing commentary. The commentary costs me nothing and takes relatively little time. Prosecuting a class action costs tens or hundreds of thousands of dollars in attorney time and hard costs. I could see a firm taking on a death penalty case on a pro bono basis. Let the firm representing the plaintiff here publicly waive any right to fees and I will shut up.

1a. Let me mention something about class actions and how mercenary they get: If the case settles, the class members have the right to object to the settlement. They can say that its terms are not fair to the unnamed members of the class, etc. If the trial court rejects their objections (as is often the case), they can appeal. By objecting and appealing, these members can hold up the settlement for years. Often what will happen is that the attorneys for the named plaintiff will pay these objectors off to get them to shut up and go away. They do so because until the settlement is approved and the time to appeal has run out, they don’t get their piece of the action. The objectors are often paid hundreds of thousands of dollars just to drop their appeals and claims. (This can be very lucrative to the individual members who object - and to their lawyers.)

2. The policy is a “hack job.” It should have been a manuscript policy whose actual terms address the concept of a master policy with other insureds added to it. And, if Lexington felt that using a standard form with endorsements was the way to go, then it should have put more care into the endorsements to ensure they were well crafted and written. Incidentally, the poor craftsmanship benefits those insured under it because the mistakes seem to expand coverage rather than reduce it.

3. I see no deductible in the liability policy. There is a deductible on the property policy. However, it is an annual aggregate for $300,000 and everyone keeps saying that PADI pays that. Now, there may be some agreement between the shops and PADI that each shop absorbs a portion of the deductible for each loss, but I don’t know anything about it.

4. If a non-PADI policy is actually less expensive, I’d want an expert to carefully compare the coverages and limits available. For example, with car insurance, most individual insurance policies exclude coverage for losses that occur while carrying passengers or goods for hire. Some insurance companies have an exclusion for losses that occur when a car is being used for business, and then interpret that as meaning if you are driving to or from work. The companies in this second group offer much cheaper policies than those in the first group, and no one ever notices the exclusion until hey are in an accident on the way to work.

5. The redacted master policy that I saw was the one filed as an attachment to the declaration in support o the motion to dismiss. Now, there are special rules for the filing of redacted documents where a redacted document is filed electronically and the real one is physically filed under seal, so that may have happened here.
 
Excerpts from a Lexington Insurance pleading in support of Motion to dismiss. If you haven't suffered a loss, don't sue us. I will be surprised if the court doesn't dismiss this.

"In this ill-conceived putative class action complaint, Plaintiff Kauai Scuba Center, Inc. has not and cannot assert a legally cognizable claim against Defendant Lexington Insurance Company (“Lexington”). The fundamental and incurable problem with this suit is that neither Plaintiff nor the putative class it seeks to represent suffered any injury. Although Plaintiff makes conclusory statements that the insurance being afforded was “illusory,” Plaintiff never once alleges that either it or any other policyholders failed to receive the insurance coverage they purchased. Similarly, Plaintiff never alleges that it or any other policyholder did not have its claims paid under that insurance coverage. Plaintiff does not make any such allegations because, simply, it has no basis to do so. The omission of any claimed damages is obvious and requires dismissal of all three causes of action asserted against Lexington--intentional misrepresentation, negligent misrepresentation and RICO.”
 
“Furthermore, although Plaintiff purports to bring this suit on behalf of a national class of policyholders, Plaintiff's fatally flawed claims, make no sense on a class basis where neither plaintiff nor the class suffered any damages and where individualized issues with respect to fraud and RICO violations would predominate. Critically, Plaintiff's objective to rescind all policies contravenes the interests of the class. Among the major conflicts, putative class members would lose current insurance coverage and those that previously made claims and received benefits would be required to return those benefits in exchange for a premium refund.”
 
 
 
Excerpts from a Lexington Insurance pleading in support of Motion to dismiss. If you haven't suffered a loss, don't sue us. I will be surprised if the court doesn't dismiss this.

"In this ill-conceived putative class action complaint, Plaintiff Kauai Scuba Center, Inc. has not and cannot assert a legally cognizable claim against Defendant Lexington Insurance Company (“Lexington”). The fundamental and incurable problem with this suit is that neither Plaintiff nor the putative class it seeks to represent suffered any injury. Although Plaintiff makes conclusory statements that the insurance being afforded was “illusory,” Plaintiff never once alleges that either it or any other policyholders failed to receive the insurance coverage they purchased. Similarly, Plaintiff never alleges that it or any other policyholder did not have its claims paid under that insurance coverage. Plaintiff does not make any such allegations because, simply, it has no basis to do so. The omission of any claimed damages is obvious and requires dismissal of all three causes of action asserted against Lexington--intentional misrepresentation, negligent misrepresentation and RICO.”
 
“Furthermore, although Plaintiff purports to bring this suit on behalf of a national class of policyholders, Plaintiff's fatally flawed claims, make no sense on a class basis where neither plaintiff nor the class suffered any damages and where individualized issues with respect to fraud and RICO violations would predominate. Critically, Plaintiff's objective to rescind all policies contravenes the interests of the class. Among the major conflicts, putative class members would lose current insurance coverage and those that previously made claims and received benefits would be required to return those benefits in exchange for a premium refund.”
 
 


So ... if this is what Lexington has stated to the Court ... then why are they still involved in the Class Action Law Suit ??? The Plaintiff's attorneys and law firms (I think that I read that are/were two different firms involved here) must be "mis-informed" as to what it takes to make money in legal actions (like actually PREVAILING) to let something as "basic" as "damages" be left out in their filing and pleadings (which means that they are working "pro bono" or for OTJ experience???).

I wonder if there are any "Malpractice Attorneys" here on SB that might want to chime in here and help the Plaintiff? I mean ... good grief .... something as obvious as "missing damages" in the complaint ... one might think that this was their first dance ??? After all ... far beit for an Insurance company to fib to the court to avoid paying out ... and just because a response is quoted doesn't mean that it is valid ... but then again, attorneys make their living from the insurance companies ... some by SUEING and others by DEFENDING ... and GUESS WHO pays the premiums ???) :idk:
 
I appreciate your histrionics. However ...

As far as why the case still exists or Lexington is still a party, that is largely because the hearing on the motion to dismiss is not until May 23, I believe. We will see what is left of it after that. Keep in mind that Lexington employees are not alleged to have made any misrepresentations. Nor is it alleged that Lexington is not a licensed insurance company.

Also, remeber, one of the Court's problems with the first amended complaint was that there were no allegations that amounted to actual damages. And, that is something I've said all along. (Recall the discussion about the drunk driver who didn't actually hit anyone? No harm; no foul.)

As far as plaintiff's counsel goes, I find it hard to believe that plaintiff's counsel doesn't recognize the problem relative to the allegations of damages. However, counsel only has so much to work with. If no claims went unpaid because of deductibles or limits, then that's that. Its not counsel's I don't want to think what a District Judge might do if a lawyer alleged unpaid claims when there were none.

I do not have enough information to opine on whether there has been malpractice. BTW, malpractice can take many forms, including failing to keep a client informed or to let the client participate in certain kinds of decisions. I do not know what counsel and plaintiff have actually discussed or agreed upon as far as how this thing will go.
 
If PADI did not receive any premiums or proceeds from this insurance program, did they pay the plaintiff $88k out of the kindness of their hearts? Why would PADI accept $300k of liability per year without any compensation? As an insured, where would I find the terms of a claim submitted under PADI's $300k liability? If Lexington defers to PADI and PADI denies a claim, what are my rights?
 
If PADI did not receive any premiums or proceeds from this insurance program, did they pay the plaintiff $88k out of the kindness of their hearts? Why would PADI accept $300k of liability per year without any compensation?

According to what I read in the insurance policies, if one enters into a written agreement with PADI for which PADI will provide a "certificate," Lexington will treat one as an insured under the policy it issued to PADI. I expect that the written agreement with PADI calls for some sort of payment of money. Whether that amounts to an "insurance premium" is for the Court to decide. I expect that the written agreement requires more than just the payment of money to PADI and gives something more than the certificate. Moreover, PADI is not actually agreeing to indemnify anyone even if the net effect is that Lexington is. Therefore, I don't think the court will call it a "premium."

In any event, the payments made in conjunction with the written agreement provide PADI with the funds with which to pay the $300,000 deductible. The insurance policy that Lexington issued to PADI calls for PADI to pay up to $300,000 per year toward the payment of property damage claims. So, presumably that is why PADI paid...to use up that $300,000.

As an insured, where would I find the terms of a claim submitted under PADI's $300k liability?

Your question is not clear. If you mean where would you find the terms of the policy, the answer is you could ask PADI or Lexington.

If Lexington defers to PADI and PADI denies a claim, what are my rights?

I do not know whether Lexington defers to PADI or not. Lexington could be liable for the mishandling of a claim, e.g. improper investigation, undue delay, etc. As a result, I would be surprised if Lexington farmed the task of handling claims out to PADI. Now, if PADI refused to pay the deductible, and as a result, Lexington did not pay an insured's claim (or if it was a big enough loss, paid for the damage less the $300,000 deductible), the insured would have a pretty good case against PADI for breach of contract.

Of course, the Court could look at the entire program and say that it has the effect of PADI issuing insurance, in which case it might issue an injunction to stop PADI from doing so. However, if it did, it could throw the entire construction industry into turmoil because so much of the insurance that covers construction work is the result of certificates issued by general contractors to owners and subcontractors to general contractors, and all as part of contracts for which consideration is being paid.
 
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