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A medical facility is time-barred from charging an insurer with breach of contract over a water damage claim, a federal appeals court ruled upholding a lower court ruling.
Metairie, Louisiana-based NAZ LLC’s medical facility sustained water damage during a thunderstorm, in January 2015, and filed an insurance claim with Bala Cynwyd, Pennsylvania-based United National Insurance Co. in December 2015, according to Tuesday’s ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in NAZ LLC v. United National Insurance Co.
In February 2016, the insurer sent the first of several reservation of rights letters to NAZ requesting complete records of the damage and repairs. In June 2016, four months after the insurer’s first letter, and again in August 2016, the facility’s owner sent some photos of the damage, according to the ruling.
In December 2016, the insurer sent a final reservation of rights letter rejecting NAZ’s proof of loss, stating the owner had not provided documentation to support the damages, and because the investigation was ongoing.
NAZ filed suit against United in U.S. District Court in New Orleans in April 2017, charging the insurer had breached its insurance contract and its duty of good faith and fair dealing.
The District Court granted the insurer summary judgment dismissing the case, which was upheld by a unanimous three-judge panel of the 5th Circuit.
United’s insurance policy calls for filing legal action within two years after the date of damage, said the ruling. “The property damage occurred on Jan. 15, 2015, but NAZ did not file suit until April 20, 2017, so NAZ’s claim is facially prescribed.”
United “did not waive the limitation period” for filing litigation “and it was not reasonable for NAZ to believe (United) would not require compliance with the policy limitations,” said the ruling, in upholding dismissal of NAXZ’s breach of contract claim as well as its bad faith charge.
Attorneys in the case could not be reached for comment.
A federal appeals court last week upheld a lower court ruling against United National, stating a construction contract’s subrogation waiver is enforceable.
A construction contract’s subrogation waiver is enforceable, said a federal appeals court, in affirming a lower court ruling against an insurer.