[00:00:00] Speaker 02: Mr. Cantor, right? [00:00:01] Speaker 02: Yes, Your Honor. [00:00:02] Speaker 02: Please proceed. [00:00:03] Speaker 02: May it please the Court. [00:00:04] Speaker 02: My name is Glenn Cantor. [00:00:05] Speaker 02: I do represent the appellates, and I'd like to reserve three minutes for rebuttal. [00:00:10] Speaker 02: As the Court is aware, this matter centers on the issue of waiver. [00:00:16] Speaker 02: We know that waiver is a factually driven argument, and it's not favored or motion dismissed if properly alleged. [00:00:24] Speaker 02: While there are exceptions, we don't think this case met those exceptions. [00:00:27] Speaker 03: Council, let's assume, arguendo, that waiver has been established. [00:00:33] Speaker 03: Don't you still have to show that damages were sustained? [00:00:39] Speaker 03: Yes. [00:00:40] Speaker 03: In order to be successful, and in what way did that occur here? [00:00:45] Speaker 03: Okay. [00:00:46] Speaker 02: It's policies purchased in 2002. [00:00:49] Speaker 02: It's purchased, as alleged in the complaint, for the express purpose that [00:00:55] Speaker 02: These people were in their 60s when they bought this policy. [00:00:59] Speaker 02: Now they're in their 90s. [00:01:00] Speaker 02: They don't want, and this is a dual policy, it covers both Mr. and Mrs. Potosky, they don't want the situation where one of them is infirmed, severely infirmed, and in need of care. [00:01:16] Speaker 02: They want to have care provided. [00:01:18] Speaker 02: And they didn't want the other spouse who's going to be [00:01:25] Speaker 02: an advanced age to have to perform that care. [00:01:28] Speaker 02: They're paying premiums for 20 years so that somebody else will perform that care. [00:01:32] Speaker 03: And I, believe me, on a personal level I feel great empathy for your clients. [00:01:39] Speaker 03: The issue here though is we're dealing with an insurance policy that excludes the ability of Mr. Vitovsky to provide the services involved. [00:01:48] Speaker 03: It's just expressed, there's no question about it. [00:01:51] Speaker 03: And your clients [00:01:52] Speaker 03: have not shown that they incurred any expenses at all. [00:01:56] Speaker 03: And therefore, under the policy, there are no damages, right? [00:01:59] Speaker 03: No, that's not right. [00:02:01] Speaker 02: Tell us why that's not right. [00:02:02] Speaker 02: I would very respectfully disagree. [00:02:05] Speaker 02: OK. [00:02:05] Speaker 02: OK. [00:02:06] Speaker 02: This is a two-track application. [00:02:10] Speaker 02: One is to get medical approval. [00:02:12] Speaker 02: The second is to get approval for the caregivers. [00:02:17] Speaker 02: Lincoln advised my clients early on they needed approval for the caregivers. [00:02:23] Speaker 02: Lincoln knew from the start they hadn't incurred expenses. [00:02:31] Speaker 02: Mr. Potosky writes to them and says, in essence to shortcut it, we believe it makes sense to wait for approval from Lincoln before using our policy, approval for the caregivers. [00:02:45] Speaker 02: It never happens. [00:02:47] Speaker 02: Mr. Patofsky says, I don't want to incur my very limited resources. [00:02:51] Speaker 02: In spending money on caregivers, you're never going to approve. [00:02:56] Speaker 04: Does the policy say you need to get advance approval of the caregiver, or does the policy say you hire a caregiver, and then when you incur expenses, submit a claim? [00:03:08] Speaker 02: The policy's ambiguous. [00:03:09] Speaker 04: I thought it was the latter, but correct me if I'm wrong. [00:03:12] Speaker 02: The policy is very ambiguous on [00:03:14] Speaker 02: the insurance company's need or ability to approve caregivers. [00:03:20] Speaker 02: But Lincoln wrote to them and said, we need to approve them in advance. [00:03:25] Speaker 02: So the Potofskys say, OK, we don't want to incur these expenses if you're not going to approve the caregivers. [00:03:32] Speaker 02: We're going to wait for you to do it. [00:03:34] Speaker 02: Now, moving down the line, Lincoln writes back and says, well, still waiting for information about your caregivers. [00:03:42] Speaker 02: Then what happens is Lincoln tells the Patofskis in writing, we have everything we need to decide your claim. [00:03:51] Speaker 02: It doesn't say except we need evidence that you've incurred the expenses. [00:03:55] Speaker 02: It says we have everything we need. [00:04:00] Speaker 02: And Mr. Patofsky writes back and says, I'm confirming you have everything you need. [00:04:04] Speaker 03: Excuse me. [00:04:05] Speaker 03: Perhaps I'm recalling this incorrectly. [00:04:07] Speaker 03: But I thought they said they had all of the information they needed to make a decision. [00:04:11] Speaker 03: They didn't say they hadn't made a decision. [00:04:13] Speaker 02: Oh, I'm sorry. [00:04:14] Speaker 02: We have everything we need to consider your claim. [00:04:17] Speaker 02: Right, yes. [00:04:18] Speaker 02: I didn't, I misspoke. [00:04:19] Speaker 03: Basically, you got all the paperwork we need. [00:04:20] Speaker 03: You didn't say they decided. [00:04:22] Speaker 03: You didn't say what they decided. [00:04:23] Speaker 03: They just said they had what they needed to decide. [00:04:25] Speaker 03: Correct. [00:04:26] Speaker 03: I'm sorry if I misspoke. [00:04:27] Speaker 03: I thought you said they decided. [00:04:28] Speaker 02: No, no. [00:04:29] Speaker 02: And they did decide. [00:04:31] Speaker 02: They decided on medical grounds that she didn't meet the criteria. [00:04:38] Speaker 02: They've never [00:04:41] Speaker 02: said to the Potofskys, and by the way, also your caregivers are not approved, or that they were approved. [00:04:48] Speaker 02: They've never answered that. [00:04:50] Speaker 02: So my point to the court as far as damages is by failing to tell the Potofskys that their caregivers were approved, as Lincoln said, we need to approve them, they, in essence, forced Mr. Potofsky to continue to be the caregiver for his wife. [00:05:08] Speaker 02: Now, we can see the policy says he as the husband is not an eligible caregiver. [00:05:13] Speaker 02: Our point is that by having breached that contract, by not telling them that the caregivers were approved or were not approved, they have put him in the position of having to provide that care. [00:05:28] Speaker 02: And having breached it, we don't think they're permitted to then fall back on the defense of, well, he was the [00:05:35] Speaker 02: the spouse, so he can't be eligible. [00:05:39] Speaker 02: We can see he was not eligible under the terms of the policy, but we think they've waived that argument as well. [00:05:45] Speaker 02: I'd like to point out Lincoln- Your argument is that they waived damages? [00:05:49] Speaker 02: Not that they waived damages, that they waived the provision that Mr. Patofsky, as a spouse, couldn't provide the care. [00:06:00] Speaker 02: If they had said to him, [00:06:02] Speaker 02: Yes, these caregivers were approved as you've requested. [00:06:04] Speaker 02: He could have gone out and hired them, but they never did that. [00:06:09] Speaker 04: I'd like to point out that- So Mr. Patofsky could have submitted basically a monetary claim based on his role as the in-home caregiver? [00:06:21] Speaker 02: I think if they had approved the claim, given the circumstances, yes. [00:06:27] Speaker 03: You're claiming, I think for the first time that I've seen in the record, that the insurance company waived the limitation of Mr. Potosky to be the caregiver. [00:06:39] Speaker 03: Did you make that argument before the district court? [00:06:41] Speaker 03: Yes, Your Honor, we did. [00:06:46] Speaker 02: I'd also point out. [00:06:47] Speaker 03: Did you expressly waive that provision of the policy? [00:06:52] Speaker 02: I don't know if it was argued that clearly, but we made it as part of our damage argument. [00:06:57] Speaker 02: I can specifically recall making that argument to Judge Orrick, who said to me, you're making an argument to belong in front of a jury. [00:07:04] Speaker 02: Well, I don't think that's accurate, and I'd also say that this is a motion to dismiss. [00:07:10] Speaker 02: We should have the right to discovery. [00:07:12] Speaker 02: But, you know, Lincoln could have fixed this by saying to these people, we're not going to approve your caregivers. [00:07:18] Speaker 02: We're not going to decide the claim until you've expended the money. [00:07:21] Speaker 02: You need to know that. [00:07:25] Speaker 02: Let's not forget what kind of insurance this is. [00:07:28] Speaker 02: This is long-term care. [00:07:30] Speaker 02: This is not your regular run-of-the-mill insurance. [00:07:33] Speaker 02: People buy this when they're in their 60s, in their 50s, they're healthy, and the carriers know that when these claims are coming in, these people are going to be infirmed. [00:07:43] Speaker 02: They're going to be at a very advanced age. [00:07:45] Speaker 02: They have a duty to help these people. [00:07:47] Speaker 02: In this case, [00:07:49] Speaker 02: What do you mean by that? [00:07:52] Speaker 02: I think there is a higher duty for a long-term care carrier. [00:07:57] Speaker 02: It's like a religious duty or what? [00:07:59] Speaker 02: No, no, no. [00:08:00] Speaker 02: What are you saying? [00:08:00] Speaker 02: No. [00:08:02] Speaker 02: Any insurance company is a quasi-fiduciary and has claims handling and investigative duties. [00:08:07] Speaker 02: I would just argue that in this particular area of insurance, there should be just a higher duty. [00:08:13] Speaker 02: as a insurer, as a quasi-producer to be assisting these people. [00:08:17] Speaker 03: Do you have any California case law that would substantiate that position? [00:08:22] Speaker 03: No. [00:08:22] Speaker 03: I think it's an issue of first impression. [00:08:25] Speaker 03: It's an interesting argument, but I don't know of any case law that backs you up. [00:08:29] Speaker 03: And I don't either. [00:08:30] Speaker 02: I think this court I know is not supposed to make California law, but it certainly has the right if it chooses to send that issue if it thinks it needs to. [00:08:40] Speaker 02: to the California Supreme Court. [00:08:42] Speaker 02: I think the California Supreme Court would absolutely agree that there's a higher duty when handling a long-term care case. [00:08:48] Speaker 04: Under California law, the waiver is an intentional relinquishment of a known right, correct? [00:08:55] Speaker 02: Excuse me, Your Honor. [00:08:58] Speaker 02: No, it's not. [00:09:00] Speaker 02: The California Supreme Court in Waller specifically said intent is not required if the [00:09:08] Speaker 02: conduct of the insurance company would lead a reasonable insured to believe that there's been waiver. [00:09:15] Speaker 02: And here, if we look at that, Lincoln says, we need to approve your caregivers. [00:09:23] Speaker 02: They never approve them. [00:09:26] Speaker 02: They don't disapprove them either. [00:09:27] Speaker 02: When the denial letter finally comes in, it discusses one thing. [00:09:32] Speaker 02: But who is the caregiver that was offered? [00:09:35] Speaker 02: There were several. [00:09:36] Speaker 02: One was a grandchild. [00:09:37] Speaker 02: who is eligible. [00:09:38] Speaker 02: Another was a woman who was going to provide care. [00:09:42] Speaker 02: And they gave them the information. [00:09:44] Speaker 02: And they said, these are our proposed caregivers. [00:09:47] Speaker 02: We can't get a schedule until you've approved them. [00:09:51] Speaker 02: So Lincoln knew they were not approved. [00:09:54] Speaker 02: But Judge Chimnitz, you asked about intent versus the conduct which leads to reasonable insured. [00:10:01] Speaker 02: Once again, here, everything Lincoln did [00:10:06] Speaker 02: led the insureds down a garden path. [00:10:10] Speaker 02: They never said to them, they could have said, we're not deciding your claim or the medical aspects of your claim. [00:10:17] Speaker 02: They could have said, and we're not going to approve any caregivers. [00:10:20] Speaker 02: You need to go out and spend the money and then we'll approve it. [00:10:25] Speaker 02: If they had done that, fine. [00:10:27] Speaker 02: They would have done exactly that, but they didn't know they needed to. [00:10:30] Speaker 01: I'm looking at that letter that you're saying is waiver. [00:10:32] Speaker 01: It says, it just, um, I have everything needed to send the claim to my supervisor for approval review. [00:10:38] Speaker 01: Is that, that's the same? [00:10:40] Speaker 01: That's the claim that you think waives everything? [00:10:43] Speaker 01: The statement. [00:10:44] Speaker 02: at that statement and the fact. [00:10:47] Speaker 01: But I mean, it says approval review. [00:10:49] Speaker 01: It just means that they could start looking at it. [00:10:51] Speaker 01: It doesn't mean that all the elements are meant. [00:10:54] Speaker 02: Well, fine, Your Honor. [00:10:56] Speaker 02: Then what happens is they deny it. [00:10:59] Speaker 02: And they use one reason. [00:11:00] Speaker 02: They don't say you didn't incur expenses. [00:11:04] Speaker 02: They don't say we're not approving your caregivers. [00:11:06] Speaker 02: They say you don't meet the medical criteria to be approved. [00:11:11] Speaker 02: So at this point, what are the Potoskeys supposed to do? [00:11:13] Speaker 02: They've been told, even if you make a claim, we've already effectively denied it, and we're not even telling you about the approval of your caregivers. [00:11:24] Speaker 02: They've left them between a rock and a hard place. [00:11:26] Speaker 02: Their only reasonable avenue at that point is to file a delegation. [00:11:32] Speaker 02: And the first time this is ever brought up [00:11:36] Speaker 02: about needing to incur expenses is a motion of dismiss filed after the lawsuit. [00:11:43] Speaker 01: Obviously Alzheimer's is a progressive disease. [00:11:46] Speaker 01: What has happened now? [00:11:47] Speaker 01: Has she received care now? [00:11:51] Speaker 02: She is receiving care and receiving benefits. [00:11:55] Speaker 01: She now meets the criteria under Lincoln? [00:11:57] Speaker 02: She always met the criteria. [00:12:01] Speaker 02: After the court granted the motion to dismiss, I told these people, you go get care. [00:12:07] Speaker 02: I'm going to guarantee you, to the best of my ability, I will get these claims paid. [00:12:12] Speaker 02: So as soon as we had them submit to expend the money, the claim was approved, with no real new evidence. [00:12:22] Speaker 01: Got it. [00:12:23] Speaker 01: So the damages would only just be a few months of care, essentially? [00:12:28] Speaker 02: It's more than a few months. [00:12:29] Speaker 02: It's probably over a year, but yes. [00:12:31] Speaker 02: And to be clear, we would not seek that Mr. Patofsky be compensated of the daily amount for the elimination period. [00:12:42] Speaker 02: Somebody has to incur that, and he did that work for free. [00:12:47] Speaker 02: But after that, he was doing this when he shouldn't have had to. [00:12:54] Speaker 02: made it clear to him, you've got to do it, or at least, well, they shouldn't have denied the way they did without letting him know what was going on. [00:13:05] Speaker 03: So it sounds like what you're saying is, because of the elderly status of your clients, that the insurance company had a quasi-fiduciary duty, like you said, or a religious duty to take care of them, get out there and be sure they filed everything properly. [00:13:23] Speaker 02: No, Your Honor. [00:13:24] Speaker 02: I'm saying that in this case, there might be a little bit of a higher quasi-fiduciary than any insurance. [00:13:31] Speaker 03: What is that? [00:13:32] Speaker 03: What are they supposed to do? [00:13:33] Speaker 03: Are they supposed to send somebody out with a caller and say they were here to help? [00:13:37] Speaker 02: No, Your Honor. [00:13:39] Speaker 02: When Lincoln says to them, we need to approve their caregivers, [00:13:44] Speaker 02: They tell them that. [00:13:46] Speaker 02: They submit names. [00:13:47] Speaker 02: Lincoln never approves them or disapproves them. [00:13:51] Speaker 03: You want to say it any time? [00:13:52] Speaker 02: Yes. [00:13:52] Speaker 03: Thank you, Your Honor. [00:13:53] Speaker 03: Very well. [00:13:55] Speaker 03: All right. [00:13:55] Speaker 03: Let's hear from counsel for the insurance company. [00:13:59] Speaker 03: Say, Kojima, is that the correct pronunciation? [00:14:03] Speaker 00: Yes, Your Honor. [00:14:04] Speaker 03: Please proceed. [00:14:05] Speaker 00: May it please the court? [00:14:06] Speaker 00: My name is Keiko Kojima, representing Lincoln Benefit Life Company, the appellee in this matter. [00:14:14] Speaker 00: This is an appeal about performance and damages under a reimbursement policy. [00:14:20] Speaker 00: Bringing the case back to fundamentals, we look to the tenants, the basic tenants of contract law. [00:14:26] Speaker 00: In order for there to be a breach of contract, you need performance and you need damages. [00:14:32] Speaker 00: Those two are very separate ideas, performance and damages. [00:14:37] Speaker 00: And here, the Petoskey's alleged neither. [00:14:41] Speaker 00: They fail to allege performance because [00:14:43] Speaker 00: They didn't receive the care or they allege they didn't receive the care by an eligible caregiver. [00:14:50] Speaker 00: The spouse cannot be a caregiver. [00:14:52] Speaker 00: They also fail to allege that they paid for care. [00:14:56] Speaker 00: Again, they fail to allege that they paid for care. [00:14:59] Speaker 04: Does the policy require advance notice by Lincoln of a proposed caregiver? [00:15:05] Speaker 00: It requires proof. [00:15:07] Speaker 00: It requires notice and proof of loss. [00:15:09] Speaker 00: So in that sense, when the plaintiff, when the appellants now say that, [00:15:13] Speaker 00: somehow Lincoln breached the contract by not letting them know that Mr. Protosky, who was authorized as a caregiver, that's not only a new argument, but that's not a breach of contract under the policy. [00:15:26] Speaker 00: So the answer is no. [00:15:27] Speaker 04: No. [00:15:27] Speaker 04: They do not need advance approval to hire a caregiver. [00:15:31] Speaker 00: It's part of the claim process. [00:15:34] Speaker 00: If we're looking for a specific item in the policy as to specifying that [00:15:43] Speaker 00: the very minute steps along the way for a claim to be approved. [00:15:48] Speaker 04: What if they hire somebody and then the company comes along and says, well, that's, you know, it's a teenager, you know, he's unqualified to be a professional caregiver and denies the claim. [00:15:59] Speaker 04: It seems like a prudent senior citizen might want to confirm before they incur expenses that they're not going to have a denial problem. [00:16:08] Speaker 04: And isn't that what was going on here? [00:16:11] Speaker 04: The company seemed to hide the ball from the Potofskys, and they were stuck in the middle, and they didn't know what to do. [00:16:21] Speaker 00: That's a good question, Your Honor. [00:16:22] Speaker 00: But that's really not the situation here. [00:16:24] Speaker 00: This is not an estoppel case. [00:16:25] Speaker 00: This is purely on waiver. [00:16:27] Speaker 00: Appellants here now make the argument and try to hinge it on, you failed to approve caregiver argument. [00:16:33] Speaker 00: But that's really not what's at issue. [00:16:36] Speaker 00: The policy is a reimbursement policy. [00:16:38] Speaker 00: It requires eligible care, number one, [00:16:40] Speaker 00: Two, that the insured receive care from an eligible caregiver. [00:16:45] Speaker 00: And three, that payment is made for services. [00:16:49] Speaker 00: And in this lawsuit, the Petoskeys are trying to eradicate those last two requirements, completely eradicate them under an untenable waiver theory. [00:17:02] Speaker 01: Who asked for the pre-approval? [00:17:04] Speaker 01: Did they do, or did Lincoln say you should have pre-approval? [00:17:08] Speaker 00: Correct. [00:17:09] Speaker 00: It's part of the claim process. [00:17:11] Speaker 00: But again, I think it's misdirection in terms of the approval. [00:17:15] Speaker 00: This is not an estoppel case. [00:17:17] Speaker 01: You're saying it requires reimbursement, but if you require pre-approval, then how can you require reimbursement? [00:17:27] Speaker 00: For example, the Petoskeys asked the company for a medical decision, for an eligibility decision, first and foremost. [00:17:34] Speaker 00: And so the company, reasonably and understandably, [00:17:37] Speaker 00: perform that claim review for eligibility. [00:17:40] Speaker 00: So the second part. [00:17:42] Speaker 01: So I guess my question is, if they've hired a caregiver right away, could they then submit it after the fact and say, we're entitled reimbursement then? [00:17:51] Speaker 01: Yes. [00:17:51] Speaker 01: They don't need pre-approval, is my point. [00:17:54] Speaker 00: No, no. [00:17:55] Speaker 00: OK. [00:17:55] Speaker 00: No, it's more of getting to the point quickly of the grand. [00:18:01] Speaker 00: Racing the doubt, yeah. [00:18:02] Speaker 00: Right, right. [00:18:03] Speaker 00: I have all the information. [00:18:04] Speaker 00: Yes, your granddaughter is approved. [00:18:06] Speaker 00: go ahead and start the care. [00:18:08] Speaker 00: And if she had already performed the care, that's something the company wanted to know as well. [00:18:14] Speaker 03: So from your perspective, the insurance company's perspective, this appeal is entirely about waiver. [00:18:19] Speaker 03: Is that correct? [00:18:20] Speaker 00: No, Your Honor. [00:18:21] Speaker 00: It's about damages as well. [00:18:22] Speaker 00: The two concepts are different. [00:18:25] Speaker 00: And this is something that we've advocated for in the briefing below. [00:18:28] Speaker 00: And Judge Oreck understood that. [00:18:30] Speaker 00: There's a difference between performance for a contract and damages. [00:18:36] Speaker 00: One waiver only goes to performance. [00:18:38] Speaker 00: It does not go to damages. [00:18:39] Speaker 00: And here, the damages are speculative. [00:18:42] Speaker 00: And I would also want to also emphasize that this appeal, this lawsuit, is not about the right to sue. [00:18:52] Speaker 00: It's about eradicating those two requirements of receiving care by an eligible caregiver, not Mr. Patosky, and paying for care. [00:19:03] Speaker 00: In terms of waiver, waiver is a very limited doctrine. [00:19:07] Speaker 00: There's two components in insurance matters. [00:19:10] Speaker 00: One is an intentional relinquishment, which the appellants are not advocating. [00:19:15] Speaker 00: And the second, and I want to quote from the Waller case, it has to do, the second requirement under Waller versus truck insurance exchange is that the insurer's acts are so inconsistent [00:19:33] Speaker 00: with an intent to enforce the right as to induce a reasonable belief that the right has been relinquished. [00:19:42] Speaker 00: So in effect, the waiver act has to induce a right in the Patosky. [00:19:48] Speaker 00: The Patoskys have to believe that the insurance company no longer [00:19:53] Speaker 00: wanted to ask for reimbursement, for care to be provided. [00:19:58] Speaker 01: Well, Counsel, Lincoln now provides the benefits, right? [00:20:00] Speaker 01: Is that correct? [00:20:01] Speaker 00: I'm sorry. [00:20:01] Speaker 01: Lincoln now provides the benefits? [00:20:03] Speaker 00: Yes. [00:20:04] Speaker 00: The claim has been approved. [00:20:06] Speaker 00: And just for clarity. [00:20:07] Speaker 01: So what changed? [00:20:09] Speaker 00: Well, the plaintiffs, they submitted additional information medically. [00:20:13] Speaker 00: They also submitted information that they received care, not just after the judgment. [00:20:20] Speaker 00: before the judgment. [00:20:23] Speaker 01: They hired an eligible caregiver before? [00:20:27] Speaker 00: Correct. [00:20:28] Speaker 00: And that information was not in front of Judge Oreck. [00:20:31] Speaker 01: Yeah, none of this is in our record, right? [00:20:33] Speaker 00: None of it's in the record. [00:20:34] Speaker 00: This was not briefed by either party. [00:20:36] Speaker 00: It's outside the record. [00:20:38] Speaker 00: The plaintiffs believe that whether they had the opportunity to submit another claim is irrelevant. [00:20:46] Speaker 00: I don't think it's irrelevant. [00:20:48] Speaker 00: I think it goes right to the point of why this lawsuit is continuing. [00:20:53] Speaker 00: But Judge Oreck was correct. [00:20:54] Speaker 00: He made the decision that he had to make based on the confines of the pleadings. [00:20:59] Speaker 00: The plaintiffs always had the opportunity to plead the way they wanted to plead. [00:21:04] Speaker 00: We can go back in time. [00:21:06] Speaker 00: They could have pleaded a different way. [00:21:07] Speaker 00: They could have asked for leave to amend. [00:21:09] Speaker 00: They had the information that they had. [00:21:12] Speaker 00: But right now we're at the point in the juncture where they didn't ask for leave to amend to try to perfect their claim. [00:21:19] Speaker 00: They wanted to seek benefits without obtaining care by an eligible caregiver and to pay for the services. [00:21:31] Speaker 03: So basically, in the first instance, they didn't do that. [00:21:38] Speaker 03: Now they have. [00:21:39] Speaker 03: You provided them. [00:21:40] Speaker 03: So we're really talking about this gap period. [00:21:43] Speaker 03: Is that right? [00:21:44] Speaker 00: There's no gap period. [00:21:45] Speaker 03: Well, what I mean is- If you lose. [00:21:47] Speaker 03: Yeah. [00:21:49] Speaker 03: They didn't get paid the first time. [00:21:52] Speaker 03: That's what this suit's about, right? [00:21:54] Speaker 03: They want to get paid for his services. [00:22:00] Speaker 03: The insurance company says that's not enough. [00:22:04] Speaker 03: But in that setting, they didn't qualify. [00:22:06] Speaker 03: Now, Lincoln's providing it, presumably because she's medically eligible and they have provided the information about the caregiver. [00:22:15] Speaker 03: Is that right? [00:22:17] Speaker 00: It wouldn't term it exactly as such because the plaintiff had multiple opportunities to plead. [00:22:22] Speaker 00: The judge let them replede and replede. [00:22:25] Speaker 00: And so now we're at the stage where the pleadings are closed, judgment is entered, the plaintiff submitted a new claim after judgment was entered. [00:22:34] Speaker 00: And so, for example, there was previously an anticipatory breach of contract claim. [00:22:42] Speaker 00: And part of the defense of that was Lincoln said, there is no repudiation. [00:22:46] Speaker 00: You could always submit a new claim. [00:22:48] Speaker 00: You could always submit new information. [00:22:50] Speaker 00: You could always submit reimbursable expenses. [00:22:53] Speaker 00: And yet, the plaintiffs here now, they understand that because there's no anticipatory breach of contract claim. [00:22:59] Speaker 00: And I would submit that at this point, at this juncture, Judge Oreck's decision, the judgment should be affirmed because the plaintiffs had the opportunity to plead how they did a year ago. [00:23:15] Speaker 03: Your opponent suggests that the insurance company has what I think he said was a quasi-fiduciary obligation to, I'm not sure to what, with respect to these policyholders because of their age and infirmity. [00:23:29] Speaker 03: Do you know of any case law that would substantiate that? [00:23:31] Speaker 00: No, there's no quasi fiduciary duty. [00:23:34] Speaker 00: There's no duty to inform. [00:23:36] Speaker 00: And notice, I would submit that notice is actually a red herring in this lawsuit. [00:23:41] Speaker 00: And this is what comes back to waiver. [00:23:43] Speaker 00: Waiver can't just be argued in a vacuum. [00:23:46] Speaker 00: Fervor and passion, they don't constitute waiver. [00:23:50] Speaker 00: Waiver is very limited. [00:23:51] Speaker 00: And we have to look at what exactly was waived. [00:23:55] Speaker 00: The plaintiffs are now arguing that Lincoln waives a right to have an eligible caregiver perform the services. [00:24:01] Speaker 00: They're saying that Lincoln waived the right to have the Patoskis pay for services. [00:24:08] Speaker 00: But neither of that is true. [00:24:09] Speaker 00: The Patoskis knew all along, after each letter was sent, they knew that they had to get care from an eligible caregiver, and they knew that they had to pay for services. [00:24:23] Speaker 00: Repeatedly, this is on pages excerpts of records 86, 88, 90. [00:24:28] Speaker 00: These are all affirmations by the plaintiffs that they knew, they knew that they needed to submit reimbursement, that this was a reimbursement policy. [00:24:38] Speaker 00: So on that very basic ground alone, there's no waiver. [00:24:41] Speaker 04: Mr. Cantor suggested that under California law, the waiver's a little different. [00:24:46] Speaker 04: It's what a reasonable policyholder would think. [00:24:51] Speaker 04: was happening based on the information given to him or her from the insurance companies. [00:24:59] Speaker 04: Is that a correct interpretation of California waiver law in the insurance context? [00:25:04] Speaker 00: Yes, that would be under the implied waiver theory. [00:25:07] Speaker 00: Was that argued below? [00:25:12] Speaker 04: Implied waiver? [00:25:13] Speaker 00: Yes, because there's no intentional relinquish. [00:25:16] Speaker 00: They never argued intentional relinquishment. [00:25:17] Speaker 00: But again, implied waiver and the inducement factor has to go to what exactly they thought was being waived. [00:25:25] Speaker 00: And the Potoskeys never thought that care and payment for services was being waived. [00:25:31] Speaker 00: And just to hit back on that point that somehow the Potoskeys should have [00:25:37] Speaker 00: were in a lurch because they didn't know who was an approved caregiver. [00:25:41] Speaker 00: The fact remains that it was a stepped approach, and Judge Orrick understood that. [00:25:45] Speaker 00: The Patoskes asked for an eligibility decision before they even moved on to the next step. [00:25:53] Speaker 00: This is not a situation, this is not an estoppel situation where the plaintiffs are not claiming, I was confused. [00:25:59] Speaker 00: I didn't know who was going to be an approved caregiver. [00:26:02] Speaker 00: There's different [00:26:04] Speaker 00: methods and there's different, I guess, concepts to how this would have been pled. [00:26:10] Speaker 00: This is not pled the way it was. [00:26:11] Speaker 04: Can you explain to me how the process then is supposed to work under this policy? [00:26:18] Speaker 04: Do you, the claimant would submit a medical eligibility request for that determination and then [00:26:26] Speaker 04: insurance company needs to make that approve that in fact you know mrs. P needed in-home care care so they there's that step one and then step two would be the customer the policyholder would go out and find a a caregiver and bring bring them in and then [00:26:44] Speaker 04: submit a claim, step two, and then step three would be to submit a claim for reimbursement. [00:26:49] Speaker 00: Exactly. [00:26:49] Speaker 00: Is that the way it works? [00:26:50] Speaker 00: Yes, exactly. [00:26:51] Speaker 00: It can work in a conjunction of ways. [00:26:53] Speaker 00: It could be because the Petoskeys or an insured already has the caregiver set up, they already are receiving care because they need it, and so they're submitting bills, they're submitting information. [00:27:04] Speaker 04: What happened at step one here? [00:27:05] Speaker 04: Did she get a medical approval? [00:27:09] Speaker 00: The decision was made based on the medical evidence, correct. [00:27:13] Speaker 04: She was approved? [00:27:14] Speaker 00: No, she was not approved. [00:27:16] Speaker 04: And what was the basis for that denial? [00:27:19] Speaker 00: The basis of the denial is that there was a difference between mild cognitive impairment. [00:27:22] Speaker 00: Under the policy, you need severe cognitive impairment. [00:27:25] Speaker 00: And so from the medical perspective, the claim was not approved. [00:27:29] Speaker 04: Is the burden on the policyholder to show that, or is that something the company has its doctors that make that decision? [00:27:37] Speaker 00: Correct, correct. [00:27:39] Speaker 04: What's correct? [00:27:40] Speaker 00: That it's based on, it's burdens always on the insured to show benefits. [00:27:46] Speaker 04: So they would give the company a doctor's note about, you know, impairment under the policy? [00:27:54] Speaker 00: Yes, they did provide information in the company. [00:27:57] Speaker 04: And then if Lincoln denies that, disagrees, then what happens? [00:28:00] Speaker 04: Is there an appeal process? [00:28:02] Speaker 00: Yes, yes. [00:28:03] Speaker 04: Did that happen here? [00:28:05] Speaker 00: Yes. [00:28:06] Speaker 04: And ultimately, she was approved for care. [00:28:10] Speaker 00: This was after the judgment was entered and new information was obtained about her current status and also reimbursement. [00:28:18] Speaker 00: But that's not. [00:28:18] Speaker 04: So for purposes of this lawsuit, she was never approved for a medical caregiver at all? [00:28:25] Speaker 00: That's correct. [00:28:26] Speaker 04: OK. [00:28:27] Speaker 00: That's correct. [00:28:28] Speaker 00: But again, we're faced with the pleadings. [00:28:31] Speaker 00: And we're faced with the way that the plaintiff chose to plead the complaint. [00:28:35] Speaker 00: It's circumscribed by the pleadings and Judge Orrick's decision [00:28:38] Speaker 00: was correct and should be affirmed. [00:28:40] Speaker 00: There was no performance. [00:28:42] Speaker 00: And most importantly, there are no damages. [00:28:49] Speaker 00: Thank you. [00:28:50] Speaker 00: Very well. [00:28:50] Speaker 03: Thank you very much. [00:28:52] Speaker 03: All right. [00:28:53] Speaker 03: Mr. Cantor, you had a little rebuttal time. [00:28:55] Speaker 02: Yes, Shraner. [00:28:57] Speaker 02: Ms. [00:28:57] Speaker 02: Kojima and I are looking at this completely differently. [00:29:02] Speaker 02: Yes, the Petoskeys could have gone out and obtained care [00:29:08] Speaker 02: and submitted the claim for reimbursement, but they're told from the start, we need to approve this. [00:29:14] Speaker 02: The Patowskis have limited funds, so they say to the insurance company, please tell us if the people we're opposing are gonna be approved so we're not wasting our money. [00:29:25] Speaker 03: Let me back you up a little bit here. [00:29:27] Speaker 03: If I understand the facts correctly, Mrs. Patowsky at that point was not approved medically, which was basically step one. [00:29:36] Speaker 03: Do you agree with that? [00:29:36] Speaker 03: No. [00:29:37] Speaker 03: You do not? [00:29:38] Speaker 03: I do. [00:29:38] Speaker 02: So you thought she was approved? [00:29:39] Speaker 02: No, no. [00:29:40] Speaker 02: I agree that she wasn't approved six, seven months later. [00:29:44] Speaker 02: I don't think it's step one. [00:29:45] Speaker 02: Mr. Patofsky said, first of all, it was a simultaneous process. [00:29:51] Speaker 02: He submitted the medical, but he said to them, I don't want to pick out caregivers [00:29:57] Speaker 02: and have you retroactively tell me they're not approved. [00:30:00] Speaker 03: No, I understand that, but that's the second part. [00:30:02] Speaker 03: In other words, if she's not medically eligible, you don't even get to the second step. [00:30:07] Speaker 03: Of course not. [00:30:08] Speaker 02: Right. [00:30:08] Speaker 02: But we never know about the second step that the Patowskis didn't know. [00:30:14] Speaker 02: Because they said that she wasn't medically eligible. [00:30:16] Speaker 02: No, Your Honor. [00:30:18] Speaker 02: That happens eight months later. [00:30:20] Speaker 02: What he keeps saying to them is, if you tell me [00:30:25] Speaker 02: If they're approved, I will go out and spend the money for it. [00:30:29] Speaker 02: And then if she had done that and they deny the medical necessity, which would be eight months later, which we don't hear about until the motion is dismissed, we go forward with a lawsuit. [00:30:38] Speaker 02: Okay. [00:30:38] Speaker 03: Your time is up. [00:30:39] Speaker 03: Let me ask my colleagues whether either has additional questions. [00:30:42] Speaker 02: Thank you, Your Honor. [00:30:42] Speaker 03: Thank you both for your vigorous argument. [00:30:44] Speaker 03: We appreciate it. [00:30:45] Speaker 03: The case just argued of Patowski versus Lincoln benefit life is submitted.