Chop House Update

Here's an update to our post from Saturday:

Daily Bulletin reporter Wes Woods II covered the Forks Chop House closure in today's paper. The article said the restaurant was unable to reopen following a December 2008 kitchen fire because its insurance company apparently denied the restaurant's business interruption claim, which would have reimbursed the owners for the business they otherwise would have transacted.

The Forks' landlord, Jeved Management, apparently wasn't able to hold the restaurant's space during the lengthy period the owners were trying to settle their insurance claim. Woods' article said:

The restaurant didn't have enough money to reopen because its insurance company refused to pay business interruption fees, co-owner Mark Bollinger said.

Restaurant officials didn't provide information about how much money is owed to them.

"In the meantime, the landlord came to us and said `I can't wait for an insurance settlement,"' Bollinger said. "`I'll have to pull the plug and get someone else.' "

Jeved Management, incidentally, is owned by the Tessier family, which also owns Arteco Partners, the developer that restored the Fox Theatre in Pomona, as well as the Padua Hills Theatre, and the Claremont Packing House where Forks was located. Jeved filed a lawsuit against Forks in Pomona Superior Court last year, possibly in connection with a lease dispute. It appeared to have resolved fairly quickly, according to the court's information:

Case Number: KC056128
JEVED MANAGEMENT INC. VS MICHAEL A. BOLLINGER

Filing Date: 06/25/2009
Case Type: ED/Commercial (not Drugs/Evict) (General Jurisdiction)
Status: Dismissed - Other 09/14/2009

-----------------------------------------
Future Hearings
None

-----------------------------------------
Parties

BOLLINGER MICHAEL A. - Defendant
JEVED MANAGEMENT INC. - Plaintiff
TESSIER VICTOR G. ESQ. - Attorney for Plaintiff
THREE FORKS STEAK HOUSE - Deft's DBA

-----------------------------------------
Documents Filed (Filing dates listed in descending order)

09/14/2009 Ord of Disml with prejudice
Filed by Attorney for Plaintiff

09/02/2009 OSC-Failure to File Proof of Serv
Filed by Clerk

06/26/2009 Notice-Case Management Conference
Filed by Clerk

06/25/2009 Complaint Filed


-----------------------------------------
Proceedings Held
None

Today's Bulletin article makes it sound as if Bollinger's claim now includes the entire value of the business, not just the income loss they suffered. Bollinger was also quoted as saying that the Forks' owners have retained an unnamed Claremont law firm to represent them.

We suspect that, if a bad faith suit with any merits is in the works, the law firm the Forks retained could be Shernoff Bidart Echeverria, which in 1979 was responsible for a landmark case called Egan v. Mutual of Omaha that allowed consumers to sue their insurance companies for wrongfully denied claims and to be compensated for emotional distress and punitive damages in addition to the value of the underlying claim. (Translation: mucho mas dinero.)

Shernoff's website explains that Egan created the whole practice area of bad faith litigation. If we were in the Forks' shoes, we'd sure want that firm representing us. SBE is not just the best in the business; they invented the business.

Annals of Healthcare

The front page of today's Los Angeles Times leads off with an article about a $9.37 million arbitration award to a plaintiff in a case represented by Claremont attorney William Shernoff.

Shernoff's client, Patsy Bates, had her medical insurance coverage cancelled in January, 2004, by her insurer, Health Net, while she was in the middle of a course of chemotherapy for breast cancer.

Health Net's actions left Bates stuck with $129,000 in medical expenses. The Times article reported that internal Health Net documents uncovered in the arbitration proceedings revealed that Health Net had established bonuses to employees for meeting policy cancellation quotas.

According to the Times piece, $8.4 million of the award was for punitive damages, and the amount award was apparently very unusual for an arbitration proceeding, which generally tends to favor the health insurer (that's why companies like Kaiser, for instance, make arbitration in the event of a dispute a condition of their policy as opposed to a civil trial).

The Times has posted a PDF of Bates' arbitration award on their website.

The article indicates that Health Net has placed a moratorium on cancellations and that other health insurers may be following suit:

When Health Net dropped her in January 2004, Bates was stuck with more than $129,000 in medical bills and was forced to stop chemotherapy for several months until she found a charity to pay for it.

Health Net Chief Executive Jay Gellert ordered an immediate halt to cancellations and told The Times that the company would be changing its coverage applications and retraining its sales force.

"I felt bad about what happened to her," he said. "I feel bad about the whole situation."

Gellert said he would move quickly to "give people the confidence that they can count on their policy." Specifically, he pledged to stop all cancellations until an external review process could be established to approve all cancellations.

Other insurers were considering changing their own practices. A spokeswoman for WellPoint Inc., which operates Blue Cross of California, the state's largest for-profit insurer, said the company was in favor of such an idea. Blue Shield of California declined to comment.

Until Friday, the companies had uniformly defended cancellations, saying they were necessary to hold down costs by weeding out people who may have failed to disclose pre-existing conditions on applications for coverage. They say cancellations happen infrequently.

The judge's strong denunciation of the way Health Net carried out Bates' cancellation and big money award stunned and pleased regulators and patient advocates.

The Times also noted that Shernoff has filed a proposed class action suit on behalf of 1,600 people whose health insurance was cancelled over the past four years. Shernoff is a partner with Shernoff Bidart Darras in Claremont, a firm that has successfully handled many high-profile bad faith lawsuits against insurance companies.