The Supreme Court affirmed the Appellate Court’s reversal of the trial commissioner in Dinuzzo v. Dan Perkins Chevrolet Geo, Inc.

The Supreme Court affirmed the Appellate Court’s reversal of the trial commissioner in Dinuzzo v. Dan Perkins Chevrolet Geo, Inc., et al released November 10, 2009. The case should serve as a strong statement that the claimant must establish all underlying facts necessary to support a medical opinion on causation of injury. A doctor’s conclusionary opinion will not suffice.

In Dinuzzo the claimant was alleged to have died due to a heart attack brought on by inactivity following a back injury. The evidentiary record failed to reveal a diagnosis of atherosclerotic heart disease or witnesses to describe heart attack symptoms. To further confound the expert there was evidence that the claimant’s symptoms could have been consistent with interferon usage. There was no evidence that the inability to exercise was as a result of the back injury.

The Court noted that no proper inference of a causal relationship could be drawn from the facts produced and that the claimant therefore had failed to meet his burden of proof.

AIG Further Cuts Debt Owed U.S.; Readies Global Life Units for Sale

American International Group, Inc. (AIG) today said that it has closed two previously announced transactions with the Federal Reserve Bank of New York (FRBNY) that have reduced the debt AIG owes the FRBNY by $25 billion in exchange for the FRBNY’s acquisition of preferred equity interests in certain newly formed subsidiaries.

As of today, including the $25 billion debt reduction, AIG’s outstanding principal balance under the FRBNY credit facility is approximately $17 billion, down from approximately $42 billion, excluding interest and fees. As a result of these transactions, the total amount available under the facility has been reduced from $60 billion to $35 billion.

AIG said the transactions advance AIG’s goal of positioning two of the company’s international life insurance franchises, American International Assurance Company, Limited (AIA) and American Life Insurance Co. (ALICO), for initial public offerings or third party sale, depending on market conditions and subject to customary regulatory approvals.

“Today’s announcement that we have reduced our debt to the Federal Reserve Bank of New York by $25 billion sends a clear message to taxpayers: AIG continues to make good on its commitment to pay the American people back,” said Bob Benmosche, AIG chief executive officer. “Moreover, these transactions position AIA and ALICO, two terrific, unique international life insurance businesses, for the future.”

Benmosche said that AIG would take an incremental charge related to its prepaid commitment asset in the fourth quarter in connection with the reduction in the total amount available under the FRBNY credit facility resulting from the closing of the AIA and ALICO transactions. The prepaid commitment asset was established at the inception of the FRBNY credit facility on Sept. 16, 2008, in an amount of $23 billion and represented the value to AIG of the initial $85 billion of credit provided by the FRBNY. Since the inception of the FRBNY credit facility and through Sept. 30, 2009, AIG has recognized a total of $11.7 billion of amortization expense, and expects to recognize in the fourth quarter an additional amount of $5.7 billion, including $5.2 billion of accelerated amortization related to these transactions. These cumulative charges reflect the reduction of the facility from the initial amount of $85 billion to $35 billion as well as periodic amortization.

Benmosche further noted that after the FRBNY facility is fully repaid, the AIG Credit Facility Trust will continue to hold a preferred voting interest in AIG, currently approximately 79.8 percent, through the ownership of the Series C Preferred Stock.

“We continue to focus on stabilizing and strengthening our businesses, but expect continued volatility in reported results in the coming quarters, due in part to charges related to ongoing restructuring activities, such as the previously announced loss that we expect to recognize in the upcoming quarter related to our announced agreement to sell our Taiwan-based life insurer Nan Shan,” Benmosche said.

The AIA and ALICO transactions involve AIG contributing the equity of each of AIA and ALICO to separate special purpose vehicles (SPVs) in exchange for interests in the SPVs. Under the terms of the transactions, the FRBNY receives preferred interests with a liquidation preference in the AIA SPV of $16 billion and with a liquidation preference in the ALICO SPV of $9 billion.

The liquidation preference of the preferred interests represents a percentage of the estimated fair market value of AIA and ALICO. AIG holds all of the common interests in the AIA and ALICO SPVs and will benefit from the fair market value of AIA and ALICO in excess of the value of the preferred interests as the SPVs monetize their stakes in these companies in the future.

Until AIG divests a majority of its common interests in AIA and ALICO, AIA and ALICO will continue to be consolidated in AIG’s financial statements.

Regarding repositioning ALICO, Rodney O. Martin, Jr., ALICO chairman and CEO said that securing the value of this insurer is in the "best interests ofpolicyholders, distribution partners, and the American taxpayer."

ALICO sells life insurance, accident and health insurance, retirement planning, and wealth management services through 40,000 agents, brokers and financial institutions and 11,000 employees across 54 countries, ALICO serves 19 million customers worldwide. ALICO has branch offices and affiliates in Europe, Asia, the Middle East, Africa and Latin America. ALICO is domiciled in Wilmington, Delaware and has regional headquarters in Tokyo, London, Paris, Athens, Dubai, and Santiago, Chile.

Deep-Frying Turkey Sparks House Fire in New York Suburb

Fire officials say oil from a deep-fried Thanksgiving Day turkey sparked a house fire in suburban New York.

There were no injuries reported in Wednesday's fire at the North Babylon home. Firefighters were there for about two hours.

The North Babylon fire chief says the family put the turkey in too fast and the oil boiled over, sparking flames. The home's exterior and rear deck were damaged.

The fire started to spread inside but firefighters stopped it. The home is habitable.

Fire officials say the family is headed to a relative's for holiday dinner. The family was not identified.

Miami Condo Association Sues QBE Insurance Over Hurricane Claims

A Miami condominium association is suing its insurer, QBE Insurance Corp., and its Florida general managing agent, for more than $500 million in damages, claiming bad faith and deception in handling hurricane claims.

Daniel S. Rosenbaum, the managing partner of Katzman Garfinkel Rosenbaum, LLP, in West Palm Beach, said his firm obtained a judgment against QBE from a federal court jury trial in February, 2009 for approximately $25 million, plus another $1.75 million being awarded in attorneys' fees, for Buckley Towers Condominium in Miami.

Rosenbaum said he has now filed another lawsuit in Miami-Dade County Circuit Court. This second lawsuit for $500 million is against QBE and its managing general agent, Florida Intracoastal Underwriters Limited Co., a wholly-owned subsidiary of Brown and Brown, Inc. The new lawsuit accuses both companies of engaging in deceptive and fraudulent bad faith claims handling practices as a general business practice, and having a specific intent to injure Buckley Towers while it sought insurance coverage to repair the heavily damaged buildings.

According to the law firm, earlier this year, the Miami-Dade County Unsafe Structures Board condemned as unsafe the two 17-story towers, located at 1321 N.E. Miami Gardens Drive. The buildings were ordered to be demolished in late 2010 unless repaired, which Rosenbaum said cannot be done without the insurance money awarded to Buckley Towers. Buckley Towers has 564 units with more than 1,200 residents.

"QBE, as a business decision, decided to let the buildings be condemned and physically torn down, and the residents forced out of their homes," the lawsuit states. "These condemnation proceedings would have been avoided had QBE fairly and honestly adjusted the claim."

The lawsuit alleges that QBE, in concert with Florida Intracoastal Underwriters, intentionally delays and fails to settle valid claims because it can "take advantage of the socioeconomic conditions of residents," the lawsuit states, "and the inability of residents to raise the money to make the repairs."

Rosenbaum said QBE issued a hurricane insurance policy in May, 2005 to Buckley Towers. Hurricane Wilma struck the two Y-shaped, lakefront towers on October 24, 2005. The condominium association notified the insurer of extensive damage to roofs, windows, sliding glass doors, as well as extensive structural damage to the buildings. The association filed a federal lawsuit for its losses when QBE refused to pay any part of its claim, according to the attorney.

In the new lawsuit, Buckley Towers states that Florida Intracoastal Underwriters and QBE hired as its contact person an estimator whose Florida insurance adjustor's license was revoked for failing to disclose felonies, including one for insurance fraud. The company also retained engineers and inspectors "in an attempt to minimize the damages that Buckley Towers sustained," and has done this routinely, as a business practice, to communities all over Florida.

According to the lawsuit, "QBE continued to insist that the damages were simply wear and tear, pre-existing or non-existent conditions."

U.S. Finds Strong Link Between Chinese Drywall and Corrosion

Federal safety officials say they have discovered a strong link between drywall made in China and the home corrosion reported by thousands of U.S. property owners whose homes used the drywall.

The results are from an indoor air study of 51 homes and come just weeks after the Consumer Product Safety Commission stopped short of linking the air quality and corrosion complaints with the Chinese-made building material and promised further study.

"We now can show a strong association between homes with the problem drywall and the levels of hydrogen sulfide in those homes and corrosion of metals in those homes," the CPSC said in its announcement of the air quality results.

The agency said it can now move forward working with Congress and the White House to develop effective remediation methods for homeowners and further investigate the health effects.

"Ongoing studies will examine health and safety effects, but we are now ready to get to work fixing this problem," said U.S. Consumer Product Safety Commission Chairman Inez Tenenbaum.

In addition to releasing the air quality findings, CPSC also unveiled additional preliminary research findings on corrosion safety issues.

One study compared 41 "complaint" homes in five states with 10 noncomplaint homes built around the same time in the same area as the complaint homes. The findings showed that hydrogen sulfide gas is the essential component that causes copper and silver sulfide corrosion found in the complaint homes. Other factors, including air exchange rates, formaldehyde and other air contaminants contribute to the reported problems.

In ways still to be determined, according to the researchers, hydrogen sulfide gas is being created in homes built with Chinese drywall. Earlier studies found large amounts of elemental sulfur in the Chinese drywall. CPSC is investigating drywall from other sources that may mimic the problems found with Chinese drywall. CPSC is meeting with drywall manufacturers and others who are studying this issue to take their findings into consideration.

The study also found elevated formaldehyde readings in both the control and complaint homes. This is typical for new, more air-tight homes due to items such as cabinets and carpets which emit formaldehyde. Both formaldehyde and hydrogen sulfide are known irritants at sufficiently high levels. The concentrations measured in this study were below those levels. Investigators believe that the additive or synergistic effects of these and other compounds in the subject homes could cause irritant effects evident in the homes.

While drywall-related corrosion is clearly evident, CPSC said long term safety effects are still under investigation.

To date, CPSC has received more than 2,000 reports from consumers and homeowners concerned about problem drywall in their homes.

The complaints have raised concerns for politicans, insurers and contractors.

CPSC said it continues to search for homes exhibiting the corrosion and health effects under study. In addition to a direct call to consumers, CPSC is contacting all states to ensure that all homes with these problems have been reported to CPSC.

Officials said they are also working with U.S. Customs and Border Protection to monitor imports of possible Chinese drywall but they believe that no new Chinese drywall has entered the U.S. in 2009.

CPSC said it has secured the cooperation of the Chinese government to help identify the sources and causes of this problem.

The technical research reports from CPSC are available online.