Friday, February 24, 2006

Insurance Policies

If there is one type of business that does not deserve the profits it has, much less increased ones, it is health insurance companies. Even though I live in Connecticut, home to many insurance companies, I would reserve the lowest of Dante's rungs of hell for them. The banality of corporate evil has never been more evil or banal.

It may come as a surprise, therefore, for me to be praising a recent opinion upholding copyright in particular insurance policies, American Family Life Insurance Company of Columbus v. Assurant Inc. Plaintiff is better known as "Aflac," and adopted a very successful cute duck PR face on a very uncute industry. Plaintiff's niche is supplemental insurance policies; four were at issue in this case: a cancer indemnity policy, and accident-only policy, a hospital confinement indemnity policy, and a hospital confinement sickness indemnity policy. Supplemental insurance policies differ from traditional insurance policies in being risk specific. Aflac is a market leader in such policies.

The policies took several months of drafting work, and went through numerous iterations. A principal, and salutary objective of the drafting was to achieve a narrative style that would be easier for laypersons to understand, as opposed to the legalistic, hide-the-ball style usually employed. Plaintiff claimed that defendants, competitors of Aflac, lifted entire passages verbatim. Defendants attacked plaintiff's originality, and no doubt there was much in the policies that were not original to plaintiff (e.g., having been copied from other policies, from third party-definitions, and the like). Yet, relying on previous insurance company opinions, such as Continental Casualty Co. v. Beardsley, 253 F.2d 702 (2d Cir. 1958), Miner v. Employers Mutual Liability Insurance Co., 229 F.2d 35 (D.C. Cir. 1938), and Dorsey v. Old Surety Life Insurance Co., 98 F.2d 872 (10th Cir. 1936), Judge Beverly Martin of the Northern District of Georgia rightly held that there was a sufficient degree of originality to support protection, at least against verbatim copying.

Certainly from a "policy" standpoint, it is desirable to have clarity in insurance documents, if only to learn clearly how you are being shafted.


Anonymous said...

If insurance policies were negotiable documents or even documents produced as a result of negotiated terms, then a copyright claim would likely involve joint authorship and muck up the corporate greed behind this lawsuit.

How can a consumer ever ask another competing company for the same coverage if the definitions of that coverage cannot be transposed to another document? These companies were so busy fighting among themselves, that argument seemed to have been lost. Shouldn't state insurance commissions as a regulatory matter prevent these companies from claiming copyright in these circumstances, particualrly when so much of the policy is dictated by those regulators and subject to their editorial review?

We should all resent the court time taken up by this duck and the time taken from a Federal District Judge with better things to do for the world than to spend 45 pages parsing out what language in an insurance policy is original quacking instead of old bleats.

William Patry said...

Dear Goat, George Orwell couldn't have put it better.

Anonymous said...

This again raises the question regarding whether a statutory monopoly is necessary to create adequate incentives for the production of this "creative" work. After all, presumably insurance companies have plenty of incentive to pay people to clearly describe their policies, both in order to compete and to prevent subsequent suits over scope of coverage.

Seems like another case where a court was motivated by an ill-placed distaste for "free riding," rather than by sound copyright policy.

Was there a fair use defense asserted?

Anonymous said...

Having gotten my start in insurance defense, I'm not prepared to disagree with your opening paragraph. But, I can imagine a claims adjuster somewhere writing something like this on his blog:

"If there is one type of [professional] does not deserve the profits [they have], much less increased ones, it is [lawyers]."

We're not terribly popular with insurance companies either.

William Patry said...


I haven't seen the answer, but there was no discussion of it in the opinion. On the health insurance company versus lawyer issue, it was insurance company lawyers who did the drafting.

Anonymous said...

there was a fair use defense asserted, though it seems pretty meritless to me.

Alexie said...

>>The banality of corporate evil has never been more evil or banal.<<
Here with this expression I completely agree and I support your opinion.
William, Thanks for posting this.
My site insurance