Social Inflation: Is it Here to Stay?
Panel: Mia Finsness – Managing Director, Global Casualty Underwriting and Claims, Markel; Jane Mandigo – Sr. Vice President, Senior Claims Expert, Swiss Re; and Robert G. Devine – Chair, Litigation Department, White and Williams LLP
Moderator: Michael S. Olsan – Chair, Commercial Litigation Department, White and Williams LLP
- Social inflation is here to stay. Plaintiff’s efforts to capitalize on the public’s expanded perception of damages value can be checked. Defense strategy must include awareness of plaintiff’s efforts to employ reptilian theory. Aggressive motion in limine practice to preclude/limit plaintiff attempts to appeal to the base instinct of jurors – essentially requiring the fact-finder to adhere to jury instructions such as reasonable care, as opposed to a plaintiff articulation of all reasonable efforts can and should be brought to bear.
- Aggressive, yet respectful, defense advocacy will allow for the check on social inflation impact. Mock jury sessions considering joinder of certain parties, considering defense themes, as well as in regard witness preparation can minimize the impact of social inflation. Skilled defense counsel collaboration with jury consultants with respect to jury selection as well as shadow jury usage can also serve to limit the impact of social inflation items such as bias.
- The changing public perceptions of corporate entities and authority figures must be recognized and addressed head on. This requires careful preparation of the case through the discovery phase, including written discovery as well as testimony, particularly from corporate representatives with record preservation.
- The defense bar and insurance industry must continue to collaborate, share information, consistently educate the courts specific to the truly improper influence of social inflation attitudes on jury verdicts.
TRACK ONE PROGRAMS
A. Insurer Mediation in 2020: Strategies for Effectively Mediating Complex Coverage Disputes
Anthony L. Miscioscia, Konrad R. Krebs and Margo Meta
- Do your homework prior to mediation. To the extent possible, identify all insurance and any contractual defense/indemnity obligations that may apply, invite any possible financial contributor to the mediation, and communicate the limitations of your coverage to the insured and others who need to know – so that you can help set expectations going into mediation.
- Keep the negotiating momentum going – using back and forth demands/offers, brackets and even a mediator’s proposal to try to narrow the gap and achieve a reasonable settlement if possible.
- Try to reach a global settlement first, even if a first-come, first-served approach is recognized in your jurisdiction. Under the first-come, first-served approach, an insurer is not required to wait until all claimants have filed all potential claims against the insured to settle with a particular claimant. But first trying for a global settlement, even if not achieved, helps lessen possible breach of contract or bad faith claims.
- Defense and coverage counsel can coordinate to lessen plaintiff’s expectation of recovery. Defense counsel can explain why liability and damage issues are not as strong as plaintiff believes, and coverage counsel can stress the potential lack of or limitations to insurance availability for any judgment.
B. U.S. Privacy Law Under CCPA and BIPA: Knowing the Liability and Coverage Issues
Joshua A. Mooney and Andrew G. Lipton
- As consumer class actions under CCPA/BIPA or other similar future statutes become more prevalent, it will be important for insurers to keep an eye on defense spend, especially as niche defense practices at big law firms begin to market their expertise in this area, and insureds demand that those firms defend them in any privacy class actions.
- Insurers and insureds should be wary of the amount of cyber insurance limits they have available in a given policy year to handle privacy claims.
- Older cyber insurance forms tend to limit coverage for any amounts incurred in connection with a regulatory investigation to amounts incurred in connection with a data breach.
C. A Practical Discussion of EPLI Defense and Coverage Issues, Including Pandemic Based Concerns
James P. Anelli and R. Victoria Fuller
- While EPLI policies have become fairly uniform in recent years, there are still a number of coverage issues that are coming to the forefront and carriers are not yet at the point where EPLI policy language is uniform.
- Unexpected developments like COVID-19 can create new legal theories and hence raise novel coverage issues.
- U.S. commercial bankruptcies are up 33% year-to-date, primarily affecting small businesses. For many insolvent employers, the only asset remaining to cover employment claims may be an EPLI policy. Where permitted, plaintiffs may target individual owners, supervisors, etc. Expect this trend to accelerate into 2021.
- Another coverage issue that may arise out of the myriad claims asserted by employees stemming from the pandemic are issues over timing and scope of inter-related claims. There will likely be competing views between or among carriers on this topic as pandemic-related claims may “cross-over” into different policies.
D. Difficult Times Ahead: The Insurance Fraud Forecast for 2021 and Beyond
Jay Shapiro and Linda Perkins
- Insurance companies may be targets of increased fraud as a result of the difficult economic conditions.
- Assess and anticipate new fraud schemes and use technology effectively to assist with fraud detection and identifying new fraud schemes.
- Determine what is COVID-19-related and what is not as it relates to coverage – new terrain for insurers and claimants.
- Your role is to investigate the claim and, if there is evidence of insurance fraud, report it as required by state regulators. This may include a report of suspected insurance fraud to law enforcement authorities.
- Healthcare-related fraud may increase exponentially due to increasing unemployment and lifting of protocols put into place to reduce insurance during the pandemic.
- Directors and Officers liability suits by shareholders claiming an inadequate or negligent pandemic response as the reason for lost corporate value.
TRACK TWO PROGRAMS
A. Functus In-Officio: Exploring Exceptions to the Finality of Arbitral Awards
Thomas B. Fiddler, Justin K. Fortescue and Marianne Bradley
- Key to fitting within an exception to functus officio is that arbitrator(s) are “clarifying” the award: the final award must be ambiguous; the clarification must merely clarify the award rather than substantively modifying it; and the clarification must comport with the parties’ intent as set forth in the agreement that gave rise to arbitration.
- Where the arbitrator(s) clarify an award, a party may have an argument that the time to vacate the award starts to run from the date the clarified award was issued rather than the date of the original award.
- Exceptions to Functus Officio: where the arbitrator can correct a mistake which is apparent on the face of the award; where the award does not adjudicate an issue which has been submitted, then as to the issue the arbitrator has not exhausted his function and it remains open to him for subsequent determination; where the award, although seemingly complete, leaves doubt whether the submission has been fully executed, an ambiguity arises which the arbitrator is entitled to clarify; and where the award fails to address a contingency that later arises or when the award is susceptible to more than one interpretation.
B. How Are Insurers Faring in COVID-19 Business Interruption Litigation?
Edward M. Koch, Marc L. Penchansky, Elizabeth C. Dolce and Felix S. Yelin
- Insureds face an uphill battle in demonstrating coverage, but some insureds have defeated early dispositive motions by alleging such things as “probable” contamination through community spread and that the “probable” presence of COVID-19 leads to a physical loss by rendering property unusable or uninhabitable.
- Insurers have numerous defenses to coverage, including the lack of physical loss or damage, the absence of civil authority coverage due to the insured’s continued access to the premises, and virus and related exclusions. The insurers have overwhelmingly won the dispositive motions thus far based on these defenses.
- It appears unlikely that state or federal governments will enact legislation to force insurers to pay such claims, and even if they do, such legislation would face immediate constitutional challenges.
C. “because of … sex” – the Implications of Bostock on Gender Claims Under Title VII
Nancy Conrad, Tanya Salgado and Katie Eyer, Professor of Law, Rutgers Law School
- Bostock came up to the Supreme Court after years of litigation in the lower courts by LGBTQ employees under Title VII. The ultimate decision ruled on three cases. In all three cases, the employees at issue argued that anti-LGBTQ discrimination was necessarily “because of sex.”
- The relevant statutory language: “It shall be an unlawful employment practice for an employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s… sex.”
- Two Dissents: By Justice Alito (Joined by Justice Thomas) and Justice Gorsuch say that Title VII requires “motivating factor” and Defendants weren’t “motivated” by sex, but by sexual orientation/gender identity. Ordinary people at the time that Title VII was enacted wouldn’t have thought that anti-LGBT discrimination was covered.
D. PFAs are Here to Stay: An Overview of the Most Significant Environmental Concern Today
Gregory S. Capps, Robert F. Walsh and R. Victoria Fuller
- “PFAs” refers to per- and poly-fluoroalkyl substances, a class of synthetic chemicals that numbers in the thousands. The chemical structure of PFAs features a strong carbon-fluorine bond that makes them a significant environmental concern. PFAs present a risk of significant bodily injury and property damage claims.
- Although not definitive, studies have linked PFAs to, among other diseases, kidney cancer, testicular cancer, thyroid disease and pregnancy-induced hypertension.
- Congress, the EPA and state agencies are focused on PFAs contamination in local water supplies and at manufacturing facilities and military installations.
- Hundreds of lawsuits claiming bodily injury from exposure to, or property damage caused by, contamination from PFAs have been filed over the last few years. For example, MDL docket 2873, which was formed in 2018s is comprised of approximately 500 cases arising out of the use of aqueous film-forming foams (AFFFs) containing perfluorooctanoic acid (PFOA) and/or perfluorooctane sulfonate (PFOS), which allegedly contaminated groundwater near various military bases, airports and other industrial sites. Other suits have been recently filed near facilities that used PFAs in their manufacturing processes. We anticipate the number of lawsuits to grow significantly in the coming years.
- Coverage issues involving PFAs claims and litigation are arising under commercial general liability, pollution liability, first-party property and D&O policies.
This information should not be construed as legal advice or legal opinion on any specific facts or circumstances. Prior results do not guarantee a similar outcome. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation with any specific legal question you may have.
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