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.

About Drew M. Capuder

Publisher of Drew Capuder's Employment Law Blog. Lawyer with more than 25 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
Pending legislation, Race discrimination, Retaliation claims, WV Human Rights Act, WV LegislationPermalink
  • http://CompuderFantasiaBlog Dana Moffa

    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.

    • http://www.capuderfantasia.com/blog Drew Capuder

      Dana: Thanks very much. I appre­ci­ate your comments.