Category: Prescription

Bad Faith Action Brought Against an Insurer Less than Ten Years after the Date of Loss Dismissed As Prescribed

The Louisiana Supreme Court recently ruled a plaintiff’s bad faith insurance claim was prescribed where the policy at issue required actions to be brought within two years after the date of loss.

In Phyllis Wilson v. Louisiana Citizens Property Insurance Corporation, the plaintiff asserted a bad faith claim against an insurer. The applicable policy of insurance provided “[n]o action can be brought unless the policy provisions have been complied with and the action is started within two years after the date of loss.” The plaintiff alleged that the insurer failed to timely tender payments for losses that occurred on August 27, 2020 and October 20, 2020. However, the plaintiff did not file her suit unit January 9, 2023.

Prior to the Wilson decision, courts frequently relied on the Louisiana Supreme Court’s decision in Smith v. Citadel Ins. Co., which held that actions against insurers under Louisiana’s bad faith statutes are subject to a ten-year prescriptive period. In Smith, the Supreme Court addressed the issue of whether a bad faith action against an insurer was a delictual or tort action subject to a one-year prescriptive period, or a contractual action, which is subject to a ten-year prescriptive period under Louisiana law. The Smith court concluded that the duty of good faith owed by the insurer to the insured “emanates from the contract between the parties” such that the “insured’s cause of action is personal and subject to a ten-year prescriptive period.”

In Wilson, the Louisiana Supreme Court examined whether Smith required the Court to uphold a ten-year prescriptive period for bad faith actions even though the insurance policy at issue prohibited actions brought more than two years after the date of loss. The Wilson court ultimately concluded that an action against an insurer brought more than two years after the date of loss is prescribed where the applicable insurance policy set a term of two years for filing a claim against the insurer.

To reach this conclusion, the Wilson court cited Taranto v. Louisiana citizens Prop. Ins. Corp., which held “in the absence a statutory prohibition, a clause in an insurance policy fixing a reasonable time to institute suit is valid.” The Wilson court then turned to the applicable statute and noted that La. R.S. 22:868(B) “expressly provides that no policy ‘shall contain any condition, stipulation, or agreement limiting right of action against the insurer to a period of less than twenty-four months next after the inception of the loss when the claim is a first-party claim…’” The Wilson court noted the two-year limitation in the applicable policy was consistent with La. R.S. 22:868(B).

The court’s ruling supports the argument that policy provisions requiring actions to be filed within two years of the date of loss are enforceable. However, the Court did not disturb its holding in Smith, noting the Smith case was factually distinguishable because it did not involve a policy that contained a contractual limitation on the insured’s institution of suits. 

References:

Phyllis Wilson v. Louisiana Citizens Property Insurance Corporation, No. 2023-CC-01320 (La. 1/10/2024) (per curiam), 2024 WL 108714.

Smith v. Citadel Ins. Co., 2019-00052 (La. 10/22/19), 285 So.3d 1062.

Taranto v. Louisiana citizens Prop. Ins. Corp., 2010-0105 (La. 3/15/11), 62 So.3d 721, 728.

When Filing A Lawsuit By Fax, FedEx Is Your Friend

The Louisiana Supreme Court in Petit- Blanc vs. Charles and State Farm, 2021-CC-00094 (La. 4/20/21), ____ So. 3d ______ reaffirmed a strict reading of La. R.S. 13:850. This statute allows the filing of pleadings with a Clerk of Court by facsimile transmission.  As currently drafted, the statute provides that the parties shall “deliver” the original document to the clerk within 7 days of the facsimile transmission. In Petit-Blanc, the Supreme Court considered what happens when the original pleading is sent through the mail but not received by the clerk within the 7-day period. Under the facts of the case, the plaintiff’s suit would be prescribed if the act of mailing was insufficient delivery.

Citing Black’s Law Dictionary, the Court found that “delivery” is defined as “the act by which the res or substance thereof is placed within the actual or constructive possession or control of another.”  The Court concluded that “merely transmitting an original document within the deadline is insufficient; rather, a litigant must establish the document was delivered to the clerk within the deadline.” 

The Court noted that, while the plaintiff established she sent her original petition to the clerk’s office well within the 7-day deadline, “she cannot establish the petition was placed in the actual or constructive possession of the clerk’s office” in a timely manner. As such, the Court found that the “facsimile filing is without force and effect and could not serve to interrupt the prescriptive period.”   Accordingly, the Supreme Court granted the writ filed by the defendants, maintained their peremptory exception of prescription, and dismissed the plaintiff’s lawsuit with prejudice.

Worker’s Comp Death Benefits Claim Survives Dismissal

In Rowland v. BASF, 20- 278 (La. App. 1 Cir. 3/29/21), 2021 WL 1170326, the Louisiana First Circuit Court of Appeal ruled that a claim for death benefits filed by a widow whose husband died from an occupational disease was not prescribed, even though her deceased husband’s claim for workers’ compensation benefits would have been time-barred.

The claimant’s husband was exposed to asbestos from 1969 to 1989 while working for BASF. He was diagnosed with occupationally-related asbestos in 2001 and passed away on July 27, 2018. A claim for Workers’ compensation death benefits against BASF was filed on December 26, 2018.

BASF filed an “Exception of Prescription &/or Motion for Summary Judgment” and argued the widow’s claim was derivative of her husband’s cause of action. BASF contended that, because the employee’s claim would have been prescribed, her claim for death benefits also prescribed. In response, the claimant argued suit was timely because it was filed within one year of the employee’s death as required by La. R.S. 23:1031.1(F). The Worker’s compensation trial judge granted the exception of prescription.

The First Circuit reversed, accepting the claimant’s argument that the claim was timely because it was filed within one year of death. The court rejected BASF’s argument that the death benefit claim could be pursued only if the deceased husband had filed a Worker’s comp claim prior to his death.

In support of dismissal, BASF also cited La. R.S. 23:1231(A), which provides there is no right of action to pursue death benefits if the claim is not filed within two years of the employee’s last treatment. However, the Rowland court did not address this issue because BASF had not filed an Exception of No Right of Action and did not factually establish when the deceased employee last received treatment for asbestos. Moving forward, the viability of the claim will depend upon whether her husband died within two years of the last treatment related to the occupational disease.

An Update on Prescription – The Most Important Issue

“Prescription” is the time period in which a litigant must file suit, or the action is barred.  One of the first lessons a Louisiana law student learns is the importance of determining the prescriptive period of a cause of action.  Filing a cause of action too late is fatal.  A recent decision from the Louisiana Fifth Circuit Court of Appeal reads like a law school exam and illustrates that determining which prescriptive period applies is sometimes the key to the case.

In DeFelice v. Federated Nat’l Ins. Co., 18-374 (La. App. 5 Cir. 7/9/19), mold was discovered in plaintiff’s home on June 10, 2016.  Plaintiffs notified their insurance company, who hired a mold remediation company to inspect the home.  When the home was inspected on June 22, 2016, the inspector verbally informed plaintiffs that the home was safe.   On the same day, a separate mold inspector collected samples. The second mold inspector issued a report on June 23, 2016 advising that mold remediation may be necessary.  This report specifically stated that “certain mold and mold spores in buildings and housing can result in mild to severe health effects in humans and can deteriorate the structure of the dwelling resulting in content or structure damage.”  The second report was provided to the plaintiffs.   

Plaintiffs continued to live in the home.  In August of 2016, plaintiffs’ infant son was born.  Shortly thereafter, the infant began to experience breathing issues and was diagnosed with a lung condition by December of 2016.  Plaintiffs vacated the premises in January of 2017.

More than one year after receipt of the second mold report, plaintiffs filed suit on July 24, 2017 against their insurer and the inspector who advised that the home had no mold problems.  Plaintiffs raised claims for property damage, damage to the health of the parents, damage to the health of the minor child, and consortium claims on behalf of the parents for the damage to the minor child.

The DeFelice court found that prescription began to run on June 23, 2016 with regard to the parents’ individual and property damage claims.  Because suit was not filed within a year of the second mold report advising of possible health and property damages, the parents’ individual health claims and the claims for property damage were prescribed under the one-year period set by Civil Code article 3492.

The minor child was not born when the report was issued on June 23, 2016.  Plaintiffs argued that those claims were brought within a year of the child’s birth, and were therefore timely. The DeFelice court agreed and held that prescription could not began to run until the child was born. While Louisiana law provides that a child is a “person” upon conception, this “legal fiction” applies only to protect the interests of the child. The court reasoned that a finding that prescription commenced prior to birth would not “protect the interests” of the child.  While the parent’s claims were prescribed, the claim filed on behalf of the infant, and any claims that the parents had related to their infant’s health condition, were timely.

The court’s analysis in DeFelice reminds that determining which prescriptive period applies to which claim is often the most important issue.

Interrupted by Silence: Medical Malpractice Prescription

By C. Reynolds LeBlanc

La. R.S. 9:5628 provides that a patient/medical malpractice plaintiff must assert his or her claim within one year of the alleged negligent act or from when that act is discovered. If a claim is not raised within this time frame, it is “prescribed,” i.e., untimely. The statute also declares that all claims must be asserted within three years of the alleged negligent act, even if the patient was unaware of the malpractice. However, there are exceptions.

Under the doctrine of contra non valentem, prescription does not run if the defendant has done something to prevent the plaintiff from filing within the prescriptive period. In In re Medical Review Panel of Gerard Lindquist, 18-444 (La. App. 5 Cir. 5/23/19), 274 So.3d 750, the Louisiana Fifth Circuit considered whether a decision not to tell a patient about malpractice exempted from prescription a claim which was not filed within three years of the alleged malpractice.

In the case, Lindquist had spinal surgery on August 22, 2013. He returned on August 24, 2013 with complaints of pain. Although an x-ray showed a metal artifact in the operative site of his back, he was not informed and was discharged. He returned the next day with continued complaints of pain and an MRI was ordered. Like the x-ray, the MRI showed the metal artifact. Again, the plaintiff was not informed.

Lindquist continued to experience pain for years. When another MRI was performed on May 25, 2017, Lindquist was first informed of the metal object in his back. Within months,  he filed a claim against the doctor who performed the 2013 surgery. In response, the doctor argued that the claim was prescribed under La. R.S. 9:5628 because it was filed more than three years after the surgery.

Contra non valentem applies where a plaintiff has been lulled into inaction because of concealment or fraudulent conduct by the defendant. The doctor argued that this standard was not met simply because the doctor was silent about the patient’s condition. However, the Lindquist court held that a doctor possesses an affirmative duty to advise a patient of pertinent medical information such as the presence of a metal artifact near the spine.  Therefore, if the doctor, as alleged in Lindquist, failed to disclose a metal foreign object, this would constitute a fraudulent act which prevented the plaintiff from filing his claim timely.  In Lindquist, prescription was interrupted by silence and the plaintiff/patient was allowed to pursue his claim.

Reynolds LeBlanc is a partner at Keogh Cox. His practice areas include commercial litigation, personal injury claims, appeals, and other matters. Reynolds is a former teacher, who in his free time plays music and perpetually talks himself into training for his next marathon.

Fourth Circuit Brings Clarity to Peremption Statute in Suit Against Design Professional

The question addressed in MR Pittman Group, LLC versus Plaquemines Parish Government, 2015-0396 (La.App. 4 Cir. 12/2/15) was whether the five-year peremptive period set by La. R.S. 9:5607 displaces Louisiana’s general one-year prescriptive period set by La. C.C. art. 3492, when applied to tort claims against design professionals. Finding a contractor’s claim against the project engineers prescribed, the MR Pittman court held that the one-year prescriptive period governs tort claims against design professionals.