The COVID-19 pandemic temporarily slowed or halted the claims process in many situations as courtrooms closed their doors to comply with social distancing requirements. However, CRC continued to assist partners across the country and came to the aid of a medical imaging center that found itself named as a defendant in a 2020 EPL lawsuit.
In this situation, a physician filed a complaint alleging breach of contract, breach of the covenant of good faith and fair dealing, and multiple Labor Code violations based on misclassification as an independent contractor rather than a salaried employee. The complaint also asserted several wage and hour code violations, indicating that the center failed to timely pay wages as of the date employment ended and failed to reimburse the plaintiff for business-related expenses.
The carrier initially denied coverage and their duty to defend stating that the wage and hour code violations did not constitute “employment practices wrongful acts” under the policy. The insurer also argued that the plaintiff’s allegations of breach of contract and breach of good faith and fair dealing were only covered if other employment practices wrongful acts had been alleged.
The Claims Advocacy Team reached out to the carrier on behalf of the insured to ask that the insurer rescind the denial and defend the claim. CRC’s Claims Advocacy Team argued that based on the policy language and complaint allegations, the carrier had a duty to defend if any of the complaint allegations could even potentially trigger coverage. In such a scenario, the carrier must defend against the entire action unless able to prove through conclusive evidence that the complaint could not raise a single issue that would possibly be covered. CRC’s Claims Advocacy Team also argued that the carrier fully understood the insured’s business model and the kind of employment claims that might arise at the time the policy was written. In fact, the policy’s wage and hour sub-limit endorsement specifically contemplated claims that alleged violation of any wage and hour law or regulation.
Just over a week after receiving CRC’s request, the carrier agreed to amend their prior decision. Ultimately, the Claims Advocacy Team’s effort resulted in a revision of the carrier’s complete denial and their agreement to defend the insured under the policy’s Wage and Hour Sublimit endorsement. In today’s environment of rising claim activity, leaning on the expertise and benefits of our claims advocacy professionals - an offering unmatched by our wholesale competitors - is just one more way CRC strives to show our partners that we’re dedicated to putting them first.
To learn more about CRC Group's Claims Advocacy Team, contact your CRC Group producer.