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Fireman’s Fund Insurance Company v. Care Management, Inc. (2010 WL 744994 (Ark.))

Fireman’s Fund Insurance Company

Articles: Arkansas

Fireman’s Fund Insurance Company v. Care Management, Inc. (2010 WL 744994 (Ark.))

Fireman’s Fund Insurance Company v. Care Management, Inc. (2010 WL 744994 (Ark.))
Plaintiff (Appellee) – Fireman’s Fund Insurance Company
Defendant (Appellant) – Care Management, Inc.
Supreme Court of Arkansas (2010)
On June 15, 2006, Carol Henson, individually and as special administratrix of the estate of Mamie Denton on behalf of its beneficiaries, commenced a wrongful- death action against Care Management, Inc. The complaint alleged that Denton sustained multiple injuries, including wrongful death, as a result of medical malpractice, negligence, outrage, violations of the Arkansas Resident’s Rights Act, violations of the Arkansas Deceptive Trade Practices Act, and violations of numerous federal regulations and state statutes constituting a “violation of consumer protection laws, and victimizing of the elderly and disabled.” On September 26, 2008, the attorney for Care Management, Inc.wrotea letter to the claims representative for Fireman’s Fund inquiring about the possibility of insurance coverage. Though the lawsuit had been filed by the estate of Denton more than two years before, this communication was the first time that Care Management, Inc.informedFireman’s Fund about the lawsuit or the claim of the Denton estate. On September 26, 2008, the attorney for Fireman’s Fund informed the circuit judge presiding over the case that he did not know whether any coverage existed, and that he thought the insurance company would have an absolute defense to payment based on lack of notice and non- cooperation. The circuit court filed a certified question of law to the United States District Court for the Eastern District of Arkansas on June 15, 2009. It was accepted by the Supreme Court of Arkansas on June 25, 2009.
Care Management, Inc. did in fact have a policy of insurance with Fireman’s Fund. However, relevant provisions of the policy provide that:

“In the event a claim is made against any insured, or you have knowledge of a potential claim, you must see to it that the following duties are performed: Immediately record the details of the claim (or potential claim), and the date the claim was received by the insured; Notify us in writing as soon as practicable at the following address…; Immediately send us copies of the any demands, notice, summonses, or legal papers received in connection with the claim; Provide us with information at our request and cooperate with us in the handling of the claim; Assist us, at our request, in enforcing every right of recovery against any person or organization which may be liable to the insured; and Do nothing to prejudice any rights of recovery that may exist…”


When an insurance policy requires the insured to give notice of a claim as soon as practicable and the insured fails to give the insurer notice of the claim as soon as practicable, must the insurer prove that it was prejudiced by the by the failure to give timely notice in order to avoid coverage?
No. The Court held that an insured must strictly comply with an insurance provision requiring timely notice where that provision is a condition precedent to recovery. Failure to do so constitutes a forfeiture of the right to recover from the insurance company, regardless of whether the insurance company was prejudiced by the failure. On the other hand, if notice is not a condition precedent, the insurance company must show it was prejudiced by any delay in notice in order to be relieved of liability.
The Court relied on their finding in Teutonia Insurance Co. v. Johnson, 72 Ark. 484, 82 S.W. 840 (1903) where they first considered notice as a condition precedent in insurance policies.
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