Suit alleging failure to assign a 'fair amount' of claims to female-owned adjusting firm tossed

A recent court ruling found that there is a difference between an insurer’s commitment to provide maximum opportunities for minority- and women-owned businesses to compete fairly for business and a perceived promise to assign a specific number of insurance claims for investigation.

The U.S. Court of Appeals for the Sixth Circuit has thrown out a claims adjuster business’ suit that had asserted Nationwide Mutual Insurance Co. wrongly failed to assign it a “fair amount” of claims after the smaller business was certified as “women-owned” by Nationwide.

According to the Sixth Circuit’s April 27 opinion, the claims-adjuster business, in its lawsuit, was attempting to have the courts enforce “merely its own gloss” on a services agreement that was plain on its face and that didn’t promise it would dole out a “fair amount” of insurance claims for the adjuster business to handle.

The business, called CenterPoint Claims Service, is owned and operated by a woman, according to the decision, and a Nationwide employee had encouraged CenterPoint to obtain a Nationwide certification stating that it was a “women-owned business enterprise.”

CenterPoint got the certification. And, subsequently, Nationwide entered into a “Master Services Agreement” with CenterPoint that stated, according to the appellate opinion: “It is [Nationwide’s] policy to provide the maximum practical opportunity to minority-owned and women-owned business enterprises … to compete fairly as suppliers, contractors and subcontractors in [Nationwide’s] business activities, taking into account both price and quality.”

In dismissing CenterPoint’s later breach-of-contract lawsuit that it lodged against Nationwide in an Ohio federal trial court after “Nationwide assigned CenterPoint fewer claims than CenterPoint had hoped—between 200 and 1,500 claims per year,” a three-justice Sixth Circuit panel said that the key services agreement provision cited by CenterPoint was “nearly if not actually hortatory,” meaning that it was urging or encouraging conduct by CenterPoint, but that it didn’t place a claims-assignment requirement on Nationwide.

“CenterPoint argues that the Agreement imposed upon Nationwide a duty to assign CenterPoint a ‘fair amount’ of claims to adjust,” wrote Judge Raymond Kethledge, who penned the opinion, and who was joined by Judges Jane Branstetter Stranch and John Nalbandian.

“What the Agreement actually said, however,” continued Kethledge, “is that Nationwide would provide CenterPoint the ‘maximum practical opportunity … to compete fairly’ as a contractor in Nationwide’s business, “taking into account both price and quality.

“That provision did not require Nationwide to assign CenterPoint the ‘maximum possible’ or a ‘fair amount’ of claims,” Kethledge further wrote. “Indeed, Nationwide said it would consider price and quality when it assigned claims and reserved the right to use other firms. The provision that CenterPoint cites here is nearly if not actually hortatory; what CenterPoint would have the courts enforce is merely its own gloss.”

The panel’s opinion affirmed the decision of the U.S. District Court for the Southern District of Ohio to dismiss CenterPoint’s lawsuit against Nationwide.

And Kethledge wrote that CenterPoint “failed to state a breach of contract claim” in its suit.

The appellate panel also noted in its opinion that Nationwide had designated CenterPoint as a “’tier-one’ independent claims adjuster, which made CenterPoint the only ‘women-owned’ firm in that category.”

The panel also pointed out that “elsewhere in the Agreement, Nationwide reserved the right to ‘purchase the same or similar work from third parties.’”

Nationwide is based in Columbus, Ohio, and CenterPoint is a “Florida-based independent claims adjuster” that “works with insurers to assess policyholders’ claims, typically when natural disasters leave insurers short-staffed.”

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