(USA Herald) – Kaiser Gypsum Co. Inc. and Hanson Permanente Cement Inc. have been the subjects of over 38,000 asbestos-related lawsuits since 1978. To manage the financial obligations of these claims, the companies filed for Chapter 11 protection in 2016. In response, they created a trust to handle future and present asbestos claims, thereby allowing those with valid claims to sue the companies and collect on available insurance.
Those with uncovered claims were required to submit their claims to the trust. The primary insurer for Kaiser Gypsum, Truck Insurance Exchange, has objected to the plan and claims that it lacks standing to object to the plan, but the Fourth Circuit Court of Appeals has dismissed this claim. The court ruled that the insurer is not a “party in interest” to the company’s Chapter 11 reorganization plan and lacks standing to object to the plan, according to Section 1109(b) of the Bankruptcy Code.
Additionally, the court found that the insurer does not have Article III standing to press its objections as Kaiser Gypsum’s creditor. The insurer also claimed that the plan appeared to be collusive and violated the policies’ assistance-and-cooperation provision. However, the district court made the plan finding that the companies did not breach their assistance-and-cooperation obligations under the Truck policies or act in bad faith. The Fourth Circuit Court of Appeals upheld this decision, and the insurance company’s arguments were rejected.
Insurer’s bad faith is a prevalent issue that policyholders frequently encounter when dealing with insurance companies. Insurance companies have a responsibility to act in good faith and fair dealing with their policyholders. Bad faith actions can take many forms, including dishonest and deceitful actions that breach the insurer’s contractual duties to the policyholder, as in the case of Truck Insurance Exchange. In this instance, Truck Insurance Exchange failed to show that the plan impaired its contractual rights or increased its potential liability under the subject insurance policies.
Samuel Lopez, an investigative journalist for the USA Herald, has reported extensively on the issue of bad faith in the insurance industry. He notes that insurance companies often try to deny or delay policyholders’ claims, refuse to investigate claims in a timely and thorough manner, and fail to provide a reasonable explanation for their decisions. This behavior results in significant financial hardship for policyholders, as they may be unable to obtain compensation for losses or damages.
In this case, Truck Insurance Exchange’s objections to the reorganization plan were rejected because the company was deemed to be “insurance neutral.” This means that the plan did not affect the insurer’s rights or obligations under the policies. The court also ruled that the assistance-and-cooperation provision in the policies only required the companies to assist and cooperate with Truck in relation to the insurer’s defense efforts in individual suits. The provision did not require the companies to help Truck secure the fraud-prevention measures it sought in the bankruptcy proceeding.
In conclusion, the Fourth Circuit Court of Appeals’ ruling serves as a reminder that insurance companies must act in good faith and fair dealing with their policyholders. Insurance companies cannot use their power and influence to deny or delay policyholders’ claims or avoid their contractual obligations. The ruling in this case upholds the legal principles that protect policyholders from bad faith conduct by their insurers. Policyholders should be aware of their rights and hold their insurers accountable for any bad faith actions.
