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Columbus, Ohio-based Nationwide Mutual Insurance Co. and a class of homeowner’s insurance policyholder have asked the Eastern District of Pennsylvania court to approve a settlement that could total more than $6 million. The stipulation of settlement agreed to on Sept. 7 could resolve the claims of a possible 80,000 plaintiffs who argue the insurer should have paid for the costs of accessing broken plumbing fixtures in their homes. The class includes Pennsylvania homeowners with policies from National Mutual Fire Insurance, or any of its subsidiaries, that went into effect after Dec. 10, 1992, who submitted claims that were denied for property damage caused by “water or steam originating from a system or appliance.” The initial complaint was filed by two sets of plaintiffs, Donald and Leona Roessler and Robert and Diane Donahue. Both sets of plaintiffs alleged damages occurred to their respective homes in December 1997. Philadelphia sole practitioner Jonathan Wheeler represents the Roesslers. Joseph Zenstein of Zenstein & Gallant in Jenkintown, Pa., represents the Donahues. Nationwide is represented by James C. Haggerty of Philadelphia-based Swartz Campbell & Detweiler and Robert T. Horst of Nelson Levine deLuca & Horst in Blue Bell, Pa. Both attorneys were stranded out of state Thursday and not available for comment. Wheeler said 80,000 class notices will be mailed out, with each claimant receiving the actual value of their denied claim. However, the class representatives — the Roesslers and Donahues — will receive $10,000 for each couple. The plaintiffs alleged that between December 1992 until the end of 1998, Nationwide started issuing an endorsement that said it would not pay for the cost of accessing broken plumbing fixtures. Wheeler said the theory behind the plaintiffs’ court action was that the endorsement was ambiguous and so any argument had to be resolved in favor of the policyholders. Nationwide changed its policy and began paying the access costs after the plaintiffs filed the action, Wheeler said. The plaintiffs filed their action in December 1998. He noted that Nationwide had also paid on such claims before December 1992. Before the settlement was reached, Nationwide conducted an investigation determining how many such claims were submitted and denied. The investigation also considered the cost of accessing water pipes and fixtures. Wheeler said Nationwide found that 68,000 claims were denied between 1992 and early 1999. The average cost of each claim was $2,200, he said. The case was still in the class certification phase and not slated for trial when the parties reached settlement, Wheeler said. Nationwide denied any allegation of wrongdoing and maintains that the settlement agreement is in no way an admission of wrongdoing. The agreement established a settlement fund in the amount of $6,150,000 to be created within 30 business days of court approval. That money will be deposited with an escrow agent in a collaterized savings account secured by U.S. Government Securities. According to the agreement, Nationwide acknowledged that the amount in escrow is greater than the estimated amount of the unpaid costs at issue. However, in case the amount needed to pay off the unpaid claims exceeds the amount in the fund, qualified claims will be paid on a pro rata basis. “If qualified claims exceed the amount available to pay these qualified claims by 25 percent, this settlement agreement may be voided at the option of either party and subject to re-negotiation at the parties’ discretion and upon such terms as may be mutually agreeable, and therefore approved by the court,” the agreement says. Nationwide will also be responsible for the first $50,000 of the cost of the notice of settlement and administrative expenses of the settlement. Any money needed above that amount will come from the settlement fund. The parties agreed that Swartz Campbell & Detweiler and Nelson Levine de Luca & Horst will act jointly as claim administrators. The agreement also asks the court to determine the amount of attorneys’ fees and reimbursement to be paid to the plaintiffs from the settlement fund.

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