News Archives - Page 24 of 37 - McKennon Law Group

MCKENNON LAW GROUP PC OBTAINS $3.93 MILLION DAMAGE AWARD FOR CLIENTS IN BUSINESS DISPUTE OVER INTELLECTUAL PROPERTY AND LICENSING RIGHTS

In January 2010, McKennon Law Group PC was approached by weight loss supplement company TriPharma, LLC, about a dispute involving its exclusive rights to advertise, market and sell a revolutionary patented and clinically studied weight loss product that was manufactured by San Diego based company Imagenetix, Inc. TriPharma discovered Imagenetix’s multiple breaches of its exclusive license agreement with Imagenetix which had all but destroyed its ability to sell its weight loss product, destroyed much of the goodwill built up for the product, and was threatening to destroy the years of hard work put in developing TriPharma’s one-of-a-kind weight loss beverage, which was due to hit the stores in a few short months. Shortly thereafter, Imagenetix wrongfully terminated TriPharma’s exclusive license and began to sell product directly to TriPharma’s customers.

The attorneys at McKennon Law Group PC LLP took immediate action and filed lawsuits in federal court against the companies which were infringing on TriPharma’s exclusive license through product sales of their own, and filed claims in JAMS arbitration against Imagenetix for, among other things, fraud, breach of contract, and injunctive relief, seeking damages as well as reinstatement of the exclusive license agreement

After aggressive discovery and motion practice in the JAMS arbitration for over a year-and-a-half, and after a fourteen (14) day arbitration hearing, TriPharma prevailed and was awarded $2.1 million in compensatory damages, pre and post-judgment interest, and its attorneys’ fees and costs in both prosecuting TriPharma’s claims as well as successfully defending frivolous claims asserted against its CEO. The McKennon Law Group PC LLP attorneys were also able to prove TriPharma’s claim of promissory fraud and obtained punitive damages in the amount of $250,000, as well as personal, and joint and several liability against Imagenetix CEO William Spencer. The total monetary award amounted to over $3.93 million.

Even more significantly, the McKennon Law Group PC LLP attorneys were able to obtain the injunctive relief they fought for so vigorously on behalf of TriPharma. The arbitrator reinstated TriPharma’s exclusive license agreement, extended the term of the agreement, provided a six month abeyance of minimum obligations so that TriPharma could get its business back up and running, and enjoined Imagenetix from selling its weight loss product, or any other weight loss product based on the patent or clinical studies, to any other company. The award effectively won back the rights that TriPharma had bargained for and which had been stolen by Imagenetix through its various activities relating to the sales and distribution of the product.

The victory for TriPharma and the McKennon Law Group PC LLP law firm was a complete success. Not only did TriPharma recoup the ability to conduct business, but TriPharma and its CEO were vindicated and awarded significant monetary compensation for the fraud perpetrated on him and his company. In issuing the award, the arbitrator gave particular mention to McKennon Law Group PC partner Robert J. McKennon:

McKennon l Schindler achieved substantial success in this litigation and its chief trial attorney Robert McKennon demonstrated exceptional skill in cross-examining [Imagenetix’s CEO and other employees]. Indeed, those examinations exposed the lack of credibility of those witnesses, which was a decisive factor in the Arbitrator’s findings and rulings.

Robert J. McKennon and Reid A. Winthrop tried the case on behalf of TriPharma.

MCKENNON LAW GROUP PC WINS DEFENSE VERDICT AGAINST $2 MILLION SUCCESSOR LIABLITY CLAIM

On October 12, 2011, the McKennon Law Group PC law firm won a complete defense verdict on a $2 million successor liability claim against their client, Elephant Talk Communications Corp., in a case called Chong Hing Bank Limited v. Elephant Talk Communications, Inc., Orange County Superior Court Case No. 30-2009-00328467.

Chong Hing Bank Limited (Bank), a Hong Kong financial services company, began making loans to Elephant Talk Limited (ETL), a Hong Kong telecommunications company, beginning in 1996. In 2002 ETL reverse acquired a California public shell company called Staruni Corp. in a stock-for-stock exchange in which Staruni became the parent company and ETL became its wholly-owned subsidiary. Staruni changed its name to “Elephant Talk Communications, Inc.” (Elephant Talk) in connection with the reverse acquisition.

By 2004 ETL was in default on all of the loans. In 2005 a European investment group acquired control of Elephant Talk. In 2009 the Bank called the loans and filed suit against Elephant Talk (the parent company of the entity that took out the loans) in Orange County Superior Court on a theory of successor liability. The Bank did not proceed directly against ETL. The Bank contended that the reverse acquisition was a statutory merger, a de facto merger or an asset purchase resulting in Elephant Talk’s assumption of liability for the loans to ETL. Elephant Talk contended that the reverse acquisition was merely a stock exchange acquisition in which ETL became Elephant Talk’s wholly-owned foreign subsidiary, and maintained its separate existence as a Hong Kong company in order to do continue doing business in China. Elephant Talk denied any successor liability, denied otherwise assuming liability for the loans, and contended that California’s four-year statute of limitations had already run on the Bank’s claims.

Elephant Talk and the Bank stipulated to a bench trial on all issues. After a five-day bench trial, the court issued a decision in favor of Elephant Talk on the issue of successor liability, on the first cause of action for breach of contract, on the second cause of action for open book account, and on the Bank’s proposed amendments to add causes of action for intentional misrepresentation and negligent misrepresentation. The court entered judgment in favor of Elephant Talk on November 2, 2011.

Eric J. Schindler and Scott E. Calvert tried the case on behalf of Elephant Talk.

California Bans the Inclusion of Policy Provisions Giving Insurance Companies Discretionary Authority to Decide Claims

In a major victory for consumers, Governor Jerry Brown signed a bill that makes discretionary clauses – typically contained in ERISA-governed life, health and disability insurance policies/ERISA plans void and unenforceable in new or renewed policies. SB 621 was authored by Senate Insurance Committee Chair Ron Calderon (D-Montebello) and sponsored by Insurance Commissioner Dave Jones, and was similar to AB 1686 vetoed by Governor Schwarzenengger in 2010. Discretionary clauses are provisions typically found in group life, health and disability plans that give the administrator/insurer the sole discretion to interpret the policy and to decide if a plan participant or beneficiary is entitled to plan benefits. In ERISA cases, federal courts have interpreted these clauses to give administrators/insurers a higher standard of review when courts review their decisions. This meant that the federal courts were required to give greater deference to decisions denying plan benefits under life, health or disability coverages, rather than weighing all the evidence under a “de novo” standard of review and making their own determination as to whether the insured was entitled to benefits under the policy or employee welfare benefit plan. Insurance companies and plan administrators often rely on these clauses when they deny claims, knowing that the insured must demonstrate that the insurance company acted arbitrarily/abused their discretion – typically a burden – in order to prevail in a lawsuit against them. With the passage of this new law, insurance companies and plan administrators will no longer be able to rely on discretionary clauses in an attempt to insulate their decisions from critical judicial scrutiny. Accordingly, in the future, judges will no longer be required to defer to the decision of the insurance company and plan administrator, lessening the burden placed on ERISA plan participants and beneficiaries in seeking to overturn insurance claim denials. In voicing his support for the bill, Commissioner Jones explained:

“Discretionary clauses have been increasingly relied upon by insurers to reject legitimate claims for disability insurance when a consumer becomes disabled – insurers know that many consumers will give up their claim and that those who challenge the claim denial face a very high legal burden to overcome the denial since the discretionary clause vests sole discretion in the insurer to decide if the consumer is disabled. SB 621 levels the playing field and gives consumers an even chance to prove that they are entitled to disability and other insurance, by eliminating the ‘discretionary clauses’ that insurers have been putting into their insurance policies.”

SB 621 goes into effect on January 1, 2012

California Announces Investigation of MetLife for Failure to Pay Life Insurance Benefits

On April 25, 2011, California Insurance Commissioner Dave Jones and California State Controller John Chiang announced that they are investigating Metropolitan Life Insurance Company (“MetLife”) for a failure to pay out life insurance benefits after learning of an insured’s death. It appears that while MetLife learned of its insured’s deaths through a database prepared by the Social Security Administration called “Death Master,” which lists all Americans who die, MetLife failed to use this information to pay legitimate claims.

As noted in the California Department of Insurance’s Press Release:

The Commissioner and the Controller are responding to preliminary findings from an audit the Controller launched in 2008, indicating that for two decades, MetLife failed to pay life insurance policy benefits to named beneficiaries or the State even after learning that an insured had died. The company has a huge number of so-called Industrial Policies, valued at an estimated $1.2 billion, which were primarily sold in the 1940s and 1950s to working-class people. The payments, which were collected weekly, typically were higher than the final death benefit. The Controller’s unclaimed property audit indicates that MetLife did not take steps to determine whether policy owners of dormant accounts are still alive, and if not, pay the beneficiaries, or the State if they cannot be located.

In addition, the preliminary findings revealed that MetLife may have similarly failed to contact the owners of annuity contracts:

Simultaneously, the preliminary findings show, when MetLife knew that an owner of an annuity contract – which generates income for the policy owner at the time the annuity matures – had died, or the annuity had matured, the company did not contact the policy holder or beneficiary, even though it subscribed to the “Death Master” database. Furthermore, MetLife continued making premium payments from the policy holder’s account until the cash reserves were used up, and then cancelled the contract.

While Monday’s press release was limited to the State’s investigation of MetLife, both the “Commissioner and Controller believe that these practices are not isolated, but are systemic in the insurance industry.”

If you believe you have a life insurance policy or annuity issued by MetLife, or any other insurer, for which you have failed to properly receive life insurance benefits, contact McKennon Law Group PC for a free consultation.

Fighting An Insurance Claim Denial Will Often Pay Off

It will not be surprising to many readers of this blog that insurance companies often deny life insurance, health insurance and disability insurance claims. Many times, insurance companies are wrong in their decisions. And, sometimes they acknowledge their mistakes. The question becomes: what are the odds of an insurance company changing its mind and reversing the decision? Our firm knows firsthand that the odds are extremely good when a reputable and respected law firm is involved in representing the policyholder’s interests. But that is just our experience. What is the overall experience when a health insurance claim is denied and a subsequent appeal is filed? We now have our answer.

In his article entitled “Don’t take a health insurer’s rejection as the final word on your medical claim,” Tom Murphy of the Associated Press cites a recent report from the Government Accountability Office which found that overall, appeals have an approximately 50% success rate. The article lists a number of actions policyholders can take to increase the likelihood of success on appeal. Murphy mentions obtaining and submitting copies of the entire medical file, enlisting a treating doctor to write letters explaining the policyholder’s relevant medical history, understanding policy language, writing a detailed letter with supporting records and information and complying with all deadlines.

The article does not mention that the Employee Retirement Income Security Act (“ERISA”) covers most health insurance appeals. ERISA requires that a plan participant meet certain deadlines in order to qualify for benefits, and also requires that a plan participant appeal a claim denial before he or she may sue. Often times, a plan participant will want to “pad” the administrative record with records and information in support of the appeal and which will be helpful in a later lawsuit, should one be filed. It is often critical that a plan participant hire an attorney to help with this process, as knowing and citing to pertinent federal ERISA law can be the difference between winning and losing an appeal.

Here is Murphy’s article verbatim:

FIGHTING AN INSURANCE CLAIM DENIAL CAN PAY OFF

By Tom Murphy, The Associated Press
Published Friday, April 8, 2011

INDIANAPOLIS — Don’t take a health insurer’s rejection as the final word on your medical claim.

Appeals can have a surprising success rate if patients shape a good argument with help from their doctor, some research and a healthy dose of persistence. Insurers always offer at least one chance to appeal when they deny a claim. Here’s how to make your case.

For starters, what are the odds of success?

A recent report from the Government Accountability Office found a 50 percent success rate of appeals to insurers in some states.

Insurance companies often make the initial decision to deny a claim based limited information like a diagnosis or procedure code from a claim form the doctor submits. They rarely see a patient’s file for that first decision, said Jennifer Jaff, executive director of Advocacy for Patients with Chronic Illness Inc., a non-profit that helps patients with claim denials.

“When you provide them with additional clinical information … it may turn out to be a very easy decision for them,” she said.

What are the first steps to take after receiving a rejection?

Learn as much as you can about the reason. Get the policy language and any information the insurer used to make its decision. Patients are entitled to this, so persist if the insurer moves slowly.

It’s also important to know the insurer’s appeal process. This should be laid out in the letter you receive telling you about the rejection. Understand the deadlines for appealing.

“These deadlines are serious,” Jaff said. “I’ve never seen an insurance company grant an extension.”

How do you build your case?

Write a detailed argument with records backing up your claims. Enlist your doctor’s help.

If the insurer says it doesn’t have to pay because your condition existed before your coverage began, a doctor may be able to argue otherwise.

The insurer may say the treatment isn’t medically necessary. Your doctor can illustrate how all alternatives were exhausted before you started receiving the treatment in question.

Rely on more than just a doctor’s statement.

“Insurance companies do not assume everything a doctor says in a letter is 100 percent true and accurate,” Jaff said. “What they really want to see are the medical records.”

Patients should be prepared to send their insurer any of those confidential records that would support their case.

If the insurer deems a treatment experimental, some additional research may be needed, and your doctor can help there as well. Medical journal articles can show an insurer that your treatment is a widely accepted practice.

If the doctor is unwilling or unavailable for help, Jaff recommends for research the National Institutes of Health website www.pubmed.gov . Patients can use it to search medical journals around the world for articles on their treatment.

Abstracts, summaries and some articles are free. Those that are not can be pricey, costing between $30 and $50 to buy online. But patients also can check with a medical library near them for copies.

Asking for a compassionate allowance can be another strategy for patients. Some insurance policies will make exceptions to cover something if it could be lifesaving.

An employer that offers a self-funded plan also might be persuaded to overrule the insurer and permit coverage, but Jaff said this is rare. Self-funded plans are generally used by big employers. In those cases, they provide the actual insurance and the managed care company just administers the plan.

Ask your human resources department if your company plan is self-funded.

What are the keys to a successful appeal?

Keep your emotions out of the argument and give the insurer something new to consider. Avoid rehashing information the company already has.

“It’s a business decision, it’s not personal on the insurer’s side,” said Pat Jolley of the Patient Advocate Foundation, another non-profit that helps people handle payment problems.

Know your insurer’s appeal process. Some may offer a couple rounds of internal reviews and provide a specialist to examine your claim. That means you can have an oncologist review your claim for cancer treatment.

Keep detailed notes of your contact with the insurer, including which representative you spoke to and when.

Send appeals by certified mail to document when an insurer receives them in case the company later claims you missed a deadline.

Communicate in writing whenever possible. This keeps you from having multiple phone conversations with different insurance representatives who provide different answers.

California Insurance Commissioner Jones Announces New Regulations On Annuities For Seniors

In recent years there have been many cases of insurance agents selling unsuitable annuities to members of the public, especially seniors. These annuities typically involve large premiums and very large cash surrender charges. The large cash surrender charges are often in place for at least the first five years of the annuity and usually exist because of the very large commissions that are paid to the insurance agents selling them. Also, the rates of return in the annuities are often misrepresented. Insurers and their agents also often sell unsuitable annuities as part of 412(i) plans (named by the IRS Code section which applies to them), and sometimes the IRS disallows deductions, classifying them as abusive tax shelters. In order for these annuities to be financially viable for persons or businesses buying them, the purchasers must keep them in force for many years. Because many individuals and some businesses are not in a position to keep them in force for many years, and because they do not provide flexibility, they are often grossly unsuitable for the individuals or businesses purchasing them.

On March 7, 2011, Insurance Commissioner Dave Jones announced new regulations aimed at protecting seniors from financial abuse by those selling seniors an unsuitable annuity. Here is the press release:

“Seniors and their family members need to know that not all annuities are a good fit for their individual circumstance,” Commissioner Jones said. “While a new annuity may seem like a good idea, all too often, unsuitable annuities have cost some seniors their life savings.”

An annuity is an insurance contract that is created when an individual gives a life insurance company money which may grow on a tax-deferred basis and then can be distributed back to the owner, either immediately or over a period of time. These new regulations are an important step towards ensuring that seniors are not deceived into tying up their money in long term annuities when they cannot pay their living expenses, and are fully aware of the products they are purchasing.

The purpose of the new regulations is to require insurers to establish a system to supervise recommendations and to set forth standards and procedures for recommendations to consumers aged 65 and older that result in the sales of annuities so that the insurance needs and financial objectives of consumers at the time of the transaction are appropriately addressed. The proposed regulations are based on the National Association of Insurance Commissioners Suitability in Annuity Transactions Model Regulations of March 2010. The regulations require insurers to establish a system to supervise the recommendations made by the insurer or by the insurers’ agent to a consumer that result in the purchase of an annuity. The regulations exempt certain transactions — direct response solicitations where there is no recommendation made based on information collected from the consumer, for instance, as well as annuities used to fund certain other investments, such as ERISA plans.

The regulations set forth duties of insurers and insurance producers that in recommending to a consumer the purchase of an annuity, or the exchange of an annuity, the producer or insurer must have reasonable grounds for believing that the recommendation is suitable for the consumer based on information given by the consumer about her finances and investments. The regulations make it clear that insurers and insurance agents shall not sell an annuity unless there is a reasonable basis to believe that the annuity is suitable based on the consumer’s financial needs and objectives. The regulations require insurers to establish a supervision system designed to achieve the insurers’ and the producers’ compliance with suitability standards and allow insurers to contract out the supervision function. The regulations require that all insurance producers be adequately trained pursuant to California law prior to soliciting the sale of an annuity. The regulations give the Commissioner the authority, among other things, to order an insurer to take corrective action when he determines that a violation of the regulations has occurred. The regulations also specify record-keeping requirements for producers transacting annuities. The new regulations have been filed by Commissioner Jones with the Office of Administrative Law, where they are available for public comment and review before becoming law.

Purchasing insurance and other financial products such as annuities that meet an individual’s specific needs can be challenging. Since an individual’s financial situation may change over time, it is important to review and understand any insurance policy or contract to decide if it is still appropriate. Insurance Commissioner Jones offers the following tips to seniors who are considering purchasing a new or replacement annuity policy:

•    Obtain all proposals in writing.
•    Don’t be pressured into buying any insurance product. Take enough time to review the information before making any decisions.
•    Do not sign anything you do not understand.
•    Consider having a trusted family member, friend or advisor participate in discussions concerning the purchase of any insurance product.
•    Make sure the agent, broker and insurance company are properly licensed to sell the product you are considering purchasing.
•    Make sure you receive a full disclosure of all information relating to the benefits and possible negative consequences regarding the replacement of an existing annuity.
•    Obtain a full disclosure of all surrender charges and related time frames in connection with an annuity prior to purchase.

This information provided is not all inclusive and does not negate or preempt existing California law. If a senior or anyone has questions or wishes to discuss any insurance matter, the officers at the CDI Consumer Hotline are available to help. Please call 1-800-927-HELP (4357) or visit www.insurance.ca.gov. “

For additional information about annuities, visit http://www.insurance.ca.gov/0100-consumers/0060-information-guides/0020-life/life-insurance.cfm

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