Madison - St. Clair Record

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State officials settle coal mine subsidence insurance class action

By The Madison County Record | Aug 25, 2015


State officials who insure properties at risk of subsiding into coal mines settled a class action over premiums after Darrell Cates, spouse of appellate judge Judy Cates, withdrew as lead plaintiff.

The Illinois Mine Insurance Subsidence Fund resolved the dispute in July, after Cates’s lawyers found substitute plaintiffs.

Settlement documents gave credit to former St. Clair County circuit judge Lloyd Cueto for successful mediation. Cueto retired in 2012 and works in private practice and as a mediator for Aequitas Alternative Dispute Resolution in St. Louis.

The documents didn’t disclose the amount the Fund will pay, but a provision awarding $43,300 in legal fees and costs signaled a slender recovery.

Proceedings will continue against Fireman’s Fund, which retained 20 percent of premiums on policies it sold to property owners eligible for the state fund.

Lawyer David Cates, son of Judy and Darrell Cates, filed the suit in 2013.

He claimed his father paid worthless premiums, because a subsidence event in progress at his home disqualified him from receiving further insurance proceeds.

David Cates withdrew from the action last year, turning it over to Eric Holland and Seth Crompton of St. Louis.

Joseph Martineau of St. Louis, representing the Fund, reported a settlement to associate judge Randall Kelley in June.

Holland and Crompton amended the complaint in July, replacing Cates with Connie and Donald Bergmann of Fairview Heights.

Holland and Crompton wrote, “Plaintiffs were unaware that they could avoid paying the mine subsidence insurance premiums until they heard about this lawsuit and a similar lawsuit involving mine subsidence insurance premiums and began to investigate their rights.”

The lawyers wrote that the Illinois Mine Subsidence Act requires insurers to offer subsidence coverage in 34 counties.

The Act created the fund to reinsure policies of primary carriers; a board of six insurance industry representatives, four public members and one provider run the fund.

“Thus, the insurance industry representatives control the day to day management and operations of the IMSIF, including the establishment of rates, premiums, deductibles, and retentions,” Holland and Crompton wrote.

They wrote that under the Act, all damage caused by an event or continuous events is treated as one occurrence.

“Only once the mine subsidence has completely stopped is there insurance again available,” they wrote.

They wrote that no one told the Bergmanns they didn’t need to pay premiums.

They further wrote that annual policy renewals contained the subsidence coverage.

A day later the Bergmanns and the Fund jointly submitted a settlement agreement and asked Kelley for preliminary approval.

It would provide $366 for those who paid premiums during subsidence events from 2003 to 2008, and $155 for those who paid from 2008 to 2014.

Policyholders who receive notice and file claims would need no proof of loss, unless they exercise an option to claim greater damage.

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Organizations in this Story

Aequitas Alternative Dispute ResolutionThe Holland Law Firm - St Louis