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Berkshire TPA unit must face payment delay lawsuit

Posted On: Feb. 9, 2018 12:39 PM CST

Berkshire TPA unit must face payment delay lawsuit

A New York state court has refused to dismiss a case filed against a Berkshire Hathaway Inc.-owned third-party claims administrator that is accused of delaying payment of a $7.2 million judgment in order to generate more income.

Ruby Konstantin, the executor of the estate of David J. Konstantin, a victim of mesothelioma resulting from exposure to asbestos, had sued New York-based Tishman Realty & Construction Co. and its related entities, which resulted in the $7.2 million jury verdict in November 2012, according to the ruling by the New York State Supreme Court in Manhattan in Ruby Konstantin v. Certain Underwriters at Lloyd’s London et al. The ruling was issued Jan. 24 but released Wednesday.

Ms. Konstantin filed suit in August 2013 to recover the trial judgment damages against 13 insurers that allegedly issued policies to Tishman, according to the ruling.

Ms. Konstantin has claimed the insurers have continued to refuse to pay any portion of the judgment. She has charged TPA Resolute Management, a Boston-based Berkshire unit whose clients include several of the insurers in the case, with tortious interference, which is the focus of the ruling.

Ms. Konstantin charges that Resolute has directed its insurer clients to refuse to pay the judgment “as part of a business plan designed and intended to maximize the ‘float’ resulting from the delay between the policyholder’s payment of premiums and the date of payment of covered claims,” said the ruling, quoting the complaint.

To support her claims, Ms. Konstantin has submitted letters written by Berkshire Hathaway chairman Warren Buffet to shareholders discussing the company’s growth in float, arguing this shows Resolute’s motive to deal or withhold payments of the Tishman judgment.

Resolute has said the allegations lack any factual support.

The court refused to dismiss the charge, stating that while it is does not need to resolve the issue as matter of law at this point, “the plaintiff has at least pleaded a viable cause of action.”

“Although Resolute admits to being responsible for paying settlement expenses on the insurer defendants’ behalf, Resolute has not given the court a persuasive explanation about why the Tishman judgment has not yet been paid,” said the ruling.

“The primary insurers already have an obligation to pay for this judgment and have failed to do so,” the ruling said. “Plaintiff has sufficiently pleaded that but for Resolute’s delay in paying out to its insurer clients, plaintiff would have the money from the Tishman judgment.”