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Court Approved the Highest Billing Rate for ERISA Insurance Matters

The United States District Court for the Central District of California has approved the highest billing rate ever allowed by a California Court for ERISA insurance matters for McKennon Law Group’s founding partner, Robert McKennon. The court approved Mr. McKennon’s billing rate based on his strong experience and expertise in litigating ERISA and bad faith insurance matters, stating: “[G]iven Mr. McKennon’s extensive experience in ERISA matters, it seems reasonable that he would command fees on the high end for attorneys practicing in this area of law.” The court made the following findings in allowing the billing rate:

  • Mr. McKennon has been practicing law in California for 27 years.
  • He has spent the majority of that time litigating insurance cases, including ERISA-regulated group disability claims.
  • Mr. McKennon has litigated ERISA disability cases on behalf of claimants as well as ERISA plan and claim administrators and fiduciaries.
  • He has handled hundreds of ERISA insurance litigation matters, most of which involved claims for disability insurance benefits.
  • Mr. McKennon [is] an expert in ERISA and bad faith disability insurance litigation cases.
  • He has served as a speaker at local and national conferences concerning ERISA issues, and has authored several ERISA insurance articles.
  • He has also been recognized as a Southern California Super Lawyer in insurance coverage matters from 2010 through 2013.

FAQs: What Kinds of Actions by an Insurer Constitute Bad Faith?

The McKennon Law Group PC periodically publishes articles on its California Insurance Litigation Blog that deals with frequently asked questions in the insurance bad faith and ERISA area of the law.  This is another such article in that series.

Generally, to establish a bad faith claim in first party cases (such as those involving life, health, disability, property and casualty, auto liability, and homeowner’s insurance), an insured must demonstrate that an insurer’s delay or withholding of benefits under the policy was unreasonable or without proper cause. The courts have determined that many types of conduct may constitute insurance bad faith, such as:

  • Failure to accept an insured’s reasonable settlement offer.
  • Biased investigation or factual determination, including:
    • Misrepresenting the nature of the investigatory proceedings and the insurer’s employees/agents lied during the depositions or to the insured.
    • Focusing on facts justifying denial, ignoring evidence that supported the claim, and failure to utilize objective standards in making its claims decisions.
    • Retention of biased doctor to conduct an independent medical exam and to prepare a report that falsely minimized insured’s injuries.
    • An insurance provider’s act in conducting a “pure paper” review, rather than an independent medical examination, constitutes “an indicator of bias.”
  • Failure to conduct a thorough investigation, including:
    • Failure to interview necessary witnesses.
    • Failure to investigate beyond facts and coverage theories asserted by insured.
    • Failure to consult with medical experts in appropriate cases.
  • Unduly restrictive interpretation of claim form.
  • Denial of a claim based on improper standards.
  • Unreasonable delay in payment of claim.
  • Deceptive, abusive or coercive practices to avoid payment of claim, including:
    • Misrepresenting coverage.
    • Intimidating prospective witnesses.
    • Threats to close file without payment to pressure settlement.
    • Groundless accusations against insured to pressure settlement.
    • Arbitrary termination of benefits.
  • Inadequate communication with insured.
  • Failure to notify insured of certain policy rights.
  • Unreasonably incorrect accountings.
  • Unreasonable litigation conduct.

Insurance bad faith claims can be potent weapons for insureds or beneficiaries who have been mistreated by insurance companies in the handling of their insurance claims.  Knowing what kinds of actions by an insurer constitute bad faith is therefore critical to understand if you are considering an insurance bad faith lawsuit.  If you have a dispute with an insurance company and would like to discuss your matter with an attorney, please contact us for a free consultation.

In MLG Case, the San Francisco Superior Court Rules that Plaintiff Therabotanics May Pursue Claims Against Sephora and Solazyme For Interference With Contract and Unfair Competition

McKennon Law Group recently filed a case on behalf of Therabotanics, LLC, a subsidiary of Ideal Living, for breach of contract, unfair competition, misappropriation of trade secrets, harmful interference with contract, and conversion of assets against Sephora, USA, Inc. and Solazyme, Inc.  Therabotanics and Solazyme had entered into an exclusive agreement for a joint venture to sell a line of algae-based skin care products through a television infomercial.  The exclusive agreement contained a carve-out that allowed Solazyme to sell a “premium” product with other distributors, but at a higher price and under a specific name.

The complaint alleges that Sephora and Solazyme entered into a separate joint venture to sell the same or similar skin-care products in violation of the agreement between Therabotanics and Solazyme, and they did this knowingly and with the intent to frustrate the agreement between Therabotanics and Solazyme.  The complaint alleges that Therabotanics shared trade secrets and other assets with Solazyme to develop the skin-care product, and that Solazyme used those trade secrets and assets to develop a competing product with Sephora in violation of the agreement between Therabotanics and Solazyme.  The product sold by Sephora was not a “premium” product being sold at a higher price, but instead the same or similar product that was to be sold by Therabotanics, and was marketed at the same price point.  Solazyme thereafter backed out of the agreement with Therabotanics and continued its sales with Sephora.

Solazyme and Sephora challenged the complaint filed by Therabotanics on the grounds that their conduct did not amount to unfair competition or harmful interference, and asserted that there was no wrongdoing on the part of either party.  The court found that Therabotanics sufficiently alleged that Sephora had wrongfully interfered with the agreement between Therabotanics and Solazyme, and overruled many of Sephora’s and Solazyme’s objections to Therabotanics claim for unfair competition, allowing Therabotanics the opportunity to state with more specificity the wrongdoing that is alleged to have occurred.  The court also overruled Sephora and Solazyme’s objections to Therabotanics claim for conversion of assets.  Thus, Sephora and Solazyme will be forced to defend themselves against these claims in court.  A further synopsis of the court’s ruling was published on Law360.com at the following link:  http://www.law360.com/articles/416708/sephora-can-t-dodge-competition-claims-over-skin-care-deal.  Commenting on the court’s ruling, Robert McKennon of the McKennon Law Group told Law360:

We are very pleased that the Court has substantially overruled Defendants Solazyme, Inc.’s and Sephora, USA, Inc.’s attempt to have my clients’ claims dismissed at the demurrer stage of this litigation.  We are equally pleased that the Court has allowed us to amend our causes of action for fraud and unfair competition to add the requisite specificity to pursue those claims against Solazyme and Sephora, as well as against Solazyme’s Senior Vice President and General Manager, Frederick Stoeckel. We are confident that our clients will prevail in their claims against the defendants in this litigation.

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