insurance-management

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.

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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