Companion Property and Casualty Insurance Company v. Wood et al

Filing 361

OPINION and ORDER granting in part, denying in part, and finding as moot in part 287 MOTION in Limine to Exclude Opinion Testimony Regarding Companion's Claims Handling and Reserves Process. Signed by Honorable Cameron McGowan Currie on 4/19/2017. (cbru, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
COMPANION PROPERTY AND CASUALTY
INSURANCE COMPANY,

C/A No. 3:14-cv-03719-CMC

Plaintiff,
v.
CHARLES DAVID WOOD, JR.; AMS STAFF
LEASING, INC., d/b/a/ AMS Staff Leasing
Corporation; BRECKENRIDGE ENTERPRISES,
INC., d/b/a/ AMS Staff Leasing II; AMS Staff
Leasing II, Inc.; HIGHPOINT RISK SERVICES,
LLC; and ASPEN ADMINISTRATORS, INC.,

OPINION AND ORDER
ON MOTION IN LIMINE
(Claims Handling and Reserves)
ECF No. 287

Defendants.

This matter is before the court on motion of Companion Property and Casualty Insurance
Company (“Companion”) to exclude testimony from defense witnesses William Spiegel
(“Spiegel”) and Andrew Price (“Price”). ECF No. 287. The testimony at issue relates to
Companion’s handling of claims and setting of claims reserves. For reasons set forth below, the
motion is moot as to some issues and denied in part and granted in part as to others.
STANDARD
Rule 702 of the Federal Rules of Evidence provides as follows:
A witness who is qualified by knowledge, skill, experience, training, or education
may testify in the form of an opinion or otherwise if:
(a) the expert’s scientific, technical, or other specialized knowledge will help the
trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the
case.
Fed. R. Evid. 702. The court serves a gatekeeping role to determine whether opinion testimony
satisfies these requirements. See, e.g., Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993).
DISCUSSION
I.

Testimony of William Spiegel
Companion’s Arguments. Companion challenges two aspects of Spiegel’s anticipated

testimony. First, it seeks to exclude Spiegel’s testimony that Companion made errors in adjusting
Florida claims. Companion argues Spiegel is not qualified to offer an opinion on this topic because
he is not licensed in Florida and lacks Florida-specific experience.

ECF No. 287 at 3-4.

Companion also argues the opinion offered is not based on valid methodology because Spiegel
reviewed only “16 claims files out of over 1,450” claims processed by Companion. Id. at 4, 5.
Companion argues the process by which the files were selected was not a valid sampling method,
a point Spiegel conceded. Id. at 5, 6 (quoting Spiegel’s testimony that he was “not trained in
statistical validity”).
Companion also seeks to exclude Spiegel’s opinion Companion overstated needed
reserves. Id. at 8-10. Companion argues Spiegel is not qualified to offer such an opinion both
because he is not qualified as an adjuster in Florida and his methodology is flawed because he did
not review all claims adjusted or use a statistically valid sampling technique. Id.
Defendants’ Arguments. Defendants respond that Spiegel need not be licensed in Florida
to offer an expert opinion and has, in fact, previously reviewed and offered opinions as to
adjustment of Florida workers’ compensation claims. ECF No. 330 at 3, 4; see also id. at 5 (noting
testimony of Companion’s rebuttal expert, James Greer, that differences in claims-handling
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practices in different states are inconsequential). They also explain that Spiegel will not offer
expert opinions either on the ethical obligations of adjusters in Florida or based on any statistical
analysis of claims. 1
Ruling. In light of the narrowing of the issues for trial (see n.1 supra) and Defendants’
voluntary limitation of the scope of Spiegel’s testimony, the court finds Spiegel’s lack of
experience in statistical sampling and failure to conduct such a sampling do not support exclusion
of his testimony that Companion made errors in adjusting the fourteen claims of twelve claimants
that are specifically addressed in Spiegel’s report. This conclusion rests, in large part, on
Defendants’ assurance Spiegel will not extrapolate from his analysis of these particular claims to
support a broader opinion as to Companion’s handling of claims. Spiegel’s proffered opinion will,
instead, be offered to show the direct impact of any errors in handling these particular claims on
claims paid and, by extension, available collateral.
The court is not persuaded Spiegel lacks the necessary training and experience to offer
opinions as to whether specific claims were properly adjusted. Most critically, Companion has not
demonstrated that the laws, regulations and practices in Florida differ sufficiently from those in
other states such that licensing or substantial experience in adjusting Florida claims is necessary
for Spiegel’s opinion to be admissible. This is particularly true in light of Greer’s concession that
state-to-state differences are inconsequential. Spiegel is not, in any event, entirely lacking in
Florida-specific experience as explained in his Declaration. Thus, while Spiegel’s Florida-specific
experience, other qualifications, and methods may be appropriate topics for cross examination,

1

The issues for trial were narrowed after this motion was fully briefed. Most critically, the parties
agreed determination of the amount of reserves needed for future claims would be resolved by a
separate actuarial review.
3

Companion has not established grounds for exclusion of Spiegel’s testimony to the extent he
opines as to whether past claims have been properly adjusted.
Spiegel will, however, be limited to testifying as to the fourteen claims for twelve claimants
addressed in his expert report. See ECF No. 287-1 at 5-12 (Report pp. 3-10, Nos. 1-10, 12, 16
(Claimants Brent Emanuelson, Lloyd Gordon, John Gentry, Keith Destromp, Daniel Bigtree,
Lewis Fritsche, Jose Pardo-Zamarron, Mack Young, Harvey Kusherman, Andrew Clark, Brett
Stout, and Wayne Riley). Spiegel’s testimony as to these claims will be limited to the particular
concerns noted with each of these claims in his report.
The court reaches a different conclusion as to Spiegel’s proffered opinion as to the reserves
needed on specific claims. Reserves are a prediction of future needs rather than a determination
of whether completed aspects of a claim were properly handled. Because of this predictive quality,
reserves for some claims will likely overestimate actual needs while reserves for other claims may
underestimate needs. Presumably, on average, properly set reserves on individual claims will
equal if not exceed actual needs for all claims. 2
Given the nature of reserves, an opinion that reserves were set too high on specific claims
is of little or no assistance to the trier of fact unless it is offered as part of an opinion that considers
the overall reserves set on a representative body of claims. That body of claims would need to be
selected based on a valid sampling. It is undisputed that Spiegel did not conduct such a sampling.
The court, therefore, grants the motion to exclude Spiegel’s opinion as to needed reserves.

2

In the context of this case, the reserves set for individual claims are factored into setting collateral
requirements. Ultimately, unneeded collateral will be returned to Defendants. Thus, any error in
overstating needed reserves (and collateral) results only in a temporary deprivation of funds.
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II.

Testimony of Andrew Price
Companion seeks to exclude opinion testimony it believes Defendants may offer through

Price, specifically, testimony adopting Spiegel’s opinion as his own. ECF No. 287 at 11, 12.
Defendants disavow any intent to offer opinion testimony through Price, noting he will, instead,
offer fact testimony based on his first-hand observations. ECF No. 330 at 7, 8. In light of
Defendants’ response, Companion’s motion is moot as it relates to Price. Defendants are,
however, bound by their voluntary limitation of the scope of Price’s testimony.
CONCLUSION
For reasons set forth above, Companion’s motion to exclude testimony is mooted as to
Price based on Defendants’ assurance he will not offer opinion testimony. The motion is denied
to the extent it seeks to preclude Spiegel from offering opinion testimony that claims he
specifically identified in his report (listed above) were improperly adjusted in the particular ways
addressed in his report resulting in excess claims payments or other losses to Defendants (e.g., as
a result of failure to pursue subrogation). Defendants are, however, bound by their voluntary
limitation that Spiegel will not offer any broader opinion as to Companion’s handling of claims.
The motion is granted as to any opinion on propriety of reserves set for the same or other claims.
IT IS SO ORDERED.
s/ Cameron McGowan Currie
CAMERON MCGOWAN CURRIE
Senior United States District Judge
Columbia, South Carolina
April 19, 2017

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