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Legislative Update: Insurance industry seeks amendment to West Virginia Human Rights Act

Insurance companies have been urging the West Virginia Legislature to pass legislation to overturn the West Virginia Supreme Court’s decision in Michael v. Appalachian Heating, LLC, 701 S.E.2d 116 (June 11, 2010). In Michael, the West Virginia Supreme Court held that the West Virginia Human Rights Act prohibited discrimination by an insurance company in settling claims covered by an insurance policy.

The Michael Decision

Generally, the Human Rights Act prohibits discrimination (1) in the workplace, (2) in places of public accommodation (like hotels, shopping centers), and (3) in connection with transactions involving housing and real estate (like renting apartments and buying houses).

But at issue in Michael was section 5-11-9(7) of the Human Rights Act, which was not limited to those three categories of activity. Here is the relevant language in section 5-11-9(7)(A);

It shall be an unlawful discriminatory practice [based on race, religion, color, national origin, ancestry, sex, age, and disability] . . .

(7) For any person, employer, employment agency, labor organization, owner, real estate broker, real estate salesman or financial institution to:

(A) Engage in [1] any form of threats or reprisal, or to [2] engage in, or hire, or conspire with others to commit acts or activities of any nature, the purpose of which is to harass, degrade, embarrass or cause physical harm or economic loss or [3] to aid, abet, incite, compel or coerce any person to engage in any of the unlawful discriminatory practices defined in this section . . . .

In subpart (7)(A) above I have bracketed the three specific causes of action (legal theories) which the Supreme Court said are discernible in subpart (7)(A). I have also bolded the second cause of action, which was the key cause of action at issue in the Michael case.

In subpart 7 above, I have also bolded “person” because section 5-11-3(a) defines “person” as “one or more individuals, partnerships, associations, organizations, corporations, labor organizations, cooperatives, etc.” In other words, “persons” under the Act means real human beings and just about any type of business or labor organization, including a corporation. The insurance company (State Auto Insurance Company) in issue in Michael was a corporation, so it was a “person” covered by the Act.

So, in light of the fact that in the Michael case race discrimination was being alleged, I will restate here the key language in section 5-11-9(7)(A), with some explanatory information in brackets:

It shall be an unlawful discriminatory practice [based on race] . . .  For any person [including corporations] . . . to engage in, or hire, or conspire with others to commit acts or activities of any nature, the purpose of which is to harass, degrade, embarrass or cause physical harm or economic loss. . . .

The key thing for understanding the Michael holding is that there is nothing in 5-11-9(7)(A) which limits the prohibited discrimination to the settings of employment, public accommodations, and real estate/housing.

And that is what the West Virginia Supreme Court held in Michael–that this provision is not limited to those three area, and that this provision prohibits discrimination in a broad array of settings, including where an insurance company is settling a property damage claim.

In Michael, the plaintiffs rented an apartment. The owners of the apartment complex hired Appalachian Heating to fix some “climate control units” in the apartments. A fire destroyed the plaintiffs’ belongings in the apartment, and made the apartment temporarily uninhabitable. The plaintiffs claimed Appalachian Heating had done a bad job and caused the fired, and made a claim to the insurance company for Appalachian Heating. The insurance company for Appalachian Heating, State Auto Insurance Company, settled the claim for property damage made by plaintiffs. The plaintiffs then filed suit against the insurance company, alleging the insurance company discriminated against the plaintiffs because of their race, resulting in an unreasonably small payment for the plaintiffs’ property damage (their belongings in the apartment).

As a result of the Michael decision, insurance companies may be sued in settling claims if they allegedly discriminate on the basis of race or the other protected characteristics in the Human Rights Act.

The Pending Bill to Overturn the Michael Decision

The insurance industry has therefore lobbied to overturn the Michael decision, and there is new legislative activity in that direction.

House Bill 3073 was introduced by Delegates Perry, Hall, Hartman, Morgan, R. Phillips, and Skaff on February 9, 2011, and it has been referred to the Judiciary Committee. You can keep track of the status by going to the Bill Status page and typing 3073 at the field “Enter Bill Number”.

House Bill 3073, if it becomes law, will overturn Michael v. Appalachian Heating, LLC, 701 S.E.2d 116 (June 11, 2010), and will limit section 5-11-9(7)(A) of the West Virginia Supreme Court to employment, public accommodations, and housing. In other words, the provision cannot be used to sue insurance companies in connection with claims settlement.

Here is how House Bill 3073 would change the law, and the added language appears in underlining, and that underlined language is what is intended to overrule the Michael decision (and I have again bracketed the three causes of action in subpart (A)):

It shall be is an unlawful discriminatory practice . . .

(7) For any person, employer, employment agency, labor organization, owner, real estate broker, real estate salesman or financial institution to:

(A) Engage in [1] any form of threats or reprisal, or to [2] engage in, or hire, or conspire with others to commit acts or activities of any nature that relate to equal opportunity for employment, equal access to places of public accommodations, and equal opportunity in the sale, purchase, lease, rental, and financing of housing accommodations or real property, the purpose of which is to harass, degrade, embarrass or cause physical harm or economic loss or [3] to aid, abet, incite, compel or coerce any person to engage in any of the unlawful discriminatory practices defined in this section;

So for the second cause of action in subpart (A) the bill adds the underlined language that makes it clear that the cause of action is limited to employment, public accommodations, and housing. The insurance industry in settling claims is excluded, so the race discrimination claim pressed in Michael would not be viable under the amended language.

The bill is not yet law. It has been referred to the Judiciary Committee, and will have to wind its way through the legislative process.

I will soon be posting a more detailed article here on the Michael decision and will add it to my chart of employment decisions from the West Virginia Supreme Court.

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Drew M. Capuder

Publisher of Drew Capuder's Employment Law Blog. Lawyer with more than 29 years experience, focusing on employment law, commercial litigation, and mediation. Extensive trial and appellate experience in state and federal courts. Call Drew at 304-333-5261
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2 thoughts on “Legislative Update: Insurance industry seeks amendment to West Virginia Human Rights Act”

  1. What an impressive blog you have developed. It is very easy to navigate and contains pertinent information about employment law as well as non-legal updates of interest to all. Take care and congratulations on your blog.

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