In a recent New Jersey appellate decision entitled Somerset Med. Ctr. v. Exec. Risk Indem., Inc., 2010 N.J. Super. Unpub. LEXIS 605, A-6214-08T2 (App.Div. Mar. 22, 2010), the court was faced with the question of whether a bodily injury exclusion in Somerset Medical Center’s directors and officers liability insurance policy excluded coverage for the negligent hiring and supervision of a nurse who pled guilty to committing numerous murders while in the employ of Somerset. More specifically, nurse Charles Cullen pled guilty to approximately twenty-nine murders (and six attempted murders) of patients at various health care facilities, including the Somerset facility. Lawsuits against Somerset and its officers then followed, alleging “negligent hiring, negligent supervision and entrustment, negligent reporting, and negligent continuation of employment.” Id. at *2. Continue Reading…
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Tagged as:
D&O insurance,
insurance coverage,
insurance recovery,
negligent hiring,
new jersey,
Somerset Med. Ctr. v. Exec. Risk
Although beer pong has made a number of curious contributions to American jurisprudence (see, e.g., University of Kansas v. Sinks, 644 F.Supp. 2d 1287 (D.Kan. 2008), involving trademark issues over the sale of Kansas Co-Ed Naked Beer Pong t shirts; Crusselle v. State, 2010 Ga. App. 375 (Ga. Ct. App. 2010), in which beer pong resulted in defendant “driving like a fool”), beer pong has now also, at least indirectly, provided a favorable decision for policyholders. Continue Reading…
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Tagged as:
Copp v. Nationwide Insurance Company,
Crusselle v. State,
Duty to defend,
general liability,
insurance coverage,
insurance recovery,
policy interpretation,
University of Kansas v. Sinks,
Virginia Supreme Court
In Lagstein v. Certain Underwriters at Lloyd’s, London, __ F.3d __ (9th Cir. June 10, 2010), the Ninth Circuit ruled that a district court had erred when it vacated a $6 million arbitration award against Lloyd’s under a disability policy. In doing so, the Ninth Circuit reaffirmed the extreme deference to be shown arbitration awards and the difficulties that parties face in seeking to vacate such awards. In light of the lack of viable judicial review, insureds must be careful to take all the steps necessary to protect their interests throughout the actual arbitration process. This is especially true given the prevalence of arbitration provisions in insurance policies today. Insureds must be aggressive in defending their interests in such policy disputes because there likely will be little recourse once an arbitration award is handed down by an arbitration panel. Continue Reading…
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Tagged as:
Arbitration,
Disability,
FAA,
Federal Arbitration Act,
Lloyd's
Product and food recalls, such as the well-publicized car recalls earlier this year and the recent recall of 15 million pounds of SpaghettiOs, continue to plague large and small businesses across industries. For the month of May 2010 alone, the Consumer Products Safety Commission (“CPSC”) and the Food and Drug Administration (“FDA”) listed nearly 50 product and food recalls, including the recall of 1.8 million toy dart guns and 1.2 million water bottle spouts. The May 2010 recalls involved a broad range of products and industries, including electronics, machinery, pharmaceuticals, sporting goods, house wares, clothing, baby food and various types of produce. Because recalls and corresponding liabilities can be hugely expensive, insurance procurement and coverage issues should be considered in connection with any recall risk assessment or plan. Continue Reading…
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Tagged as:
food recall,
product recall,
sistership exclusion
The court in Fulton Boiler Works, Inc. v. American Motorists Ins. Co., 5:06-CV-1117, 2010 U.S. Dist. LEXIS 28756 (N.D.N.Y March 25, 2010), held that two CGL insurers were obligated to pay for the entire cost of defending thousands of underlying asbestos bodily injury claims, without any contribution from their mutual insured, because they could not prove that the underlying claims involved “‘occurrences’ solely during self-insured periods, and that there is thus no possible factual or legal basis for finding liability covered by the policy.” Id. at **22-23. Continue Reading…
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Tagged as:
allocation,
asbestos,
duty to advance defense costs,
Duty to defend,
long-tail,
New York Insurance Law,
potential for coverage,
potentiality standard,
pro rata
When policyholders are faced with litigation and discovery requests in that litigation, it is common for disputes as to the privileged nature of various communications to arise. Often, those disputes focus on an underlying plaintiff’s efforts to discover communications between the policyholder or its insurer(s) on matters of interest to the plaintiff and the development of its case.. On occasion, however, these disputes can also implicate other third parties with whom the policyholder has had communications, such as consultants, agents, or the policyholder’s brokers. Are communications involving policyholders and their brokers privileged? No single, clear cut answer to this question can be provided, with the outcome often depending upon the specific circumstances in which the communications arose, and the purpose for which the communications were made. Continue Reading…
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In Re Tetra Technologies Inc.,
insurance coverage,
insurance recovery,
policyholder communications
Policyholders should keep in mind that the rules have changed in New York regarding late notice issues over the past few years. In the Summer of 2008, the New York Legislature passed Section 3420(a)(5) of the New York Insurance Law codifying the “notice prejudice” rule. The statute represented the Legislature’s rejection of the New York courts’ rubber stamp approval of an insurer’s denial of coverage based on late notice of claim or occurrence as a matter of law. Applying to liability insurance policies sold within the state on or after January 19, 2009, Section 3420(a)(5) states in relevant part:
A provision that failure to give any notice required to be given by such policy within the time prescribed therein shall not invalidate any claim made by the insured, injured person or any other claimant, unless the failure to provide timely notice has prejudiced the insurer, except as provided in paragraph four of this subsection.
NY CLS § 3420(a)(5) (2009) (emphasis added). Continue Reading…
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Tagged as:
"as soon as practicable",
California notice-prejudice rule,
claims investigation,
Duty to defend,
late notice of claim,
New York Insurance Law,
prejudice to the insurer,
Section 3420(a)(5)
In these troubled economic times, settlement is an increasingly common outcome of underlying litigation. For this reason, it is important for California policyholders to bear in mind certain rules governing insurer-funded settlements. More specifically, when a liability insurer is defending its insured under a reservation of rights, that insurer may agree to fund a settlement within its policy limits, all the while believing that it can later recoup that settlement amount (or at least a significant portion of it) from its insured. However, California policyholders must remember that California law requires the insurer to meet several requirements before it can successfully pursue such recoupment, and if one of these requirements has not been fulfilled, the insurer’s recoupment effort fails under California law. Continue Reading…
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Tagged as:
recoupment,
reservation of rights,
settlement
With economic conditions nation-wide remaining bleak, and resulting corporate defaults and bankruptcy filings more likely, corporate directors and officers need to be sensitive about the protections available to them under both corporate indemnification agreements and comprehensive executive liability insurance purchased by their companies. In a setting where the company has sought bankruptcy protection, battles often arise as to whether proceeds of a company’s directors and officers (”D&O”) liability policies are available to pay claims and advance defense costs incurred by the D’s&O’s. Continue Reading…
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Tagged as:
D&O,
Directors & Officers,
In Re Downey Financial Corp.,
insurance coverage,
liability policy,
Order of Payments
