The question that arises from a discussion of maintenance of certification is whether or not the claims set forth in the lawsuit have any value in the overall context of the lawsuit. Assuming for the sake of discussion that the claims are viable, the question becomes, does the attorney to bring the case to an end with the granting of the complaint and setting aside the verdict? The answer to this important question is “no,” unless the attorney can prove that there was an obvious mistake by the jury at the time it awarded the verdict against the insured.
Maintenance of Certification lawsuits fall under the category of “non-action” claims. This means that the attorney is not attempting to recover anything on the underlying claim. Generally, if the insurance company or the defendant does not deny the claim within a reasonable amount of time after the issuance of the complaint and before a trial date, the claims will be deemed unenforceable. The Court’s assignment is then to dismiss the complaint with prejudice (remove the claims from the courts). If the Court decides to uphold the claims, the insurance company will then be forced to reimburse the costs it expended in defending the action.
It is often the case that an attorney will file a certification lawsuit once the lawsuit has been allowed to advance to a discovery phase (where a deposition will be conducted to obtain evidence against the defendant). In doing so, the attorney will argue that there is a legal claim against the defendant and that the insurance company must stand behind its decision to settle the case. At this point, the case becomes a fact-finding dispute between the insurance company and the attorney. Assuming for the moment that the claims are valid, both sides are legally obligated to settle the case; otherwise, a motion to dismiss can be made.
As previously stated, a claim must be supported by a legal claim. What this means to an attorney is that the claim must be supported by a copy of an order appointing a receiver, an account showing how much was owed to the beneficiaries, certified reports that explain the claim and what must be done with the property during the pendency of the case, a certified check signed by a notary public and a statement of claim. This last part is extremely important. The claim must be “supported” by a “factual record.” This means that the claim must be documented in a way where it can be proven that it is valid.
It must also be demonstrated that there is a connection between the insurance company’s decision to settle and whether or not the plaintiff will recover any damages from the company. For example, if the claim focuses on the wrong insurance company, the attorney may argue that the decision to settle was based on bad business decisions. Conversely, if the claim focuses on an important benefit the company provides to customers, an attorney may argue that the company must be effective at preventing claims from occurring in the first place.
Finally, an attorney must also show that the claim is likely to be successful. How? The attorney should conduct a “cost-benefits analysis,” i.e., calculate how much money the settlement will cost and consider the likely results if the case goes to trial or appeals. Factors that will be considered include the strength of the case for negligence and any other damages that must be awarded in order to make the settlement acceptable to the insurance company. If a successful claim is won, the insurance carrier will be ordered to pay the settlement costs.
