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Deepwater Horizon Ruling Places $18b Bull's-Eye on BP

Barger & Wolen partner David McMahon was quoted in a Law360 article, Deepwater Horizon Ruling Places $18b Bull's-Eye on BP subscription required), on September 4, 2014, about U.S. District Judge Carl J. Barbier’s ruling which found BP’s actions in the Deepwater Horizon disaster grossly negligent. The ruling holds BP responsible for up to $18 billion in Clean Water Act penalties and leaves open the possibility of billions more in punitive damages.

The 153-page ruling issued September 4th thoroughly laid out why the negative pressure test botched by BP prior to the Macondo well blowout constituted gross negligence and even if it didn't, a series of negligent actions by BP added up to gross negligence.

While negligent acts were committed by individual BP employees, the court seemed to adopt a broader definition of a person under the CWA to include the company as well, said David McMahon, a Barger & Wolen LLP partner who worked on the early phases of the BP litigation.

Essentially, the [judge] suggested that corporate ratification was not required to have the enhanced level of penalties stick,” McMahon said. “That was an interesting analysis.”

While Judge Barbier found that BP and drilling partners Transocean Ltd. and Halliburton Co. were each liable under general maritime law for the blowout, explosion and oil spill, he also said Transocean and Halliburton’s indemnity and release clauses in their respective contracts with BP are valid and enforceable.

Barger & Wolen and Hinshaw & Culbertson Announce Merger

Combined Firms Create Powerhouse Insurance Practice with 120 Attorneys Dedicated to Serving the Insurance Industry

  

Chicago and Los Angeles — September 2, 2014 — Barger & Wolen and Hinshaw & Culberston, a national law firm with 460 lawyers in 22 offices around the country, announced today they will combine forces. The merger creates one of the largest insurance law practices in the United States with 120 full-time attorneys dedicated to providing legal counsel to insurance companies and financial services firms that shape the insurance industry.

The partner votes took place on August 28, 2014, and the merger will become effective on October 1, 2014. The combined firm will keep the name Hinshaw & Culbertson and have over 500 attorneys in 11 states as well as London.

Click here for the full press release. For more information, contact Heather Morse.  

 

California Insurers Asked to Submit Diversity Information About Boards of Directors

by Robert Hogeboom & Samuel Sorich

The California Department of Insurance (“CDI”) has issued a notification to insurers with 2013 written premiums of $100 million or more in California to complete and submit the CDI’s Governing Board Diversity Survey.

Among other questions, the Survey asks the insurers to report on the number of directors who identify themselves as a man or a woman, how many are comprised from seven different ethnic group categories, and how many are a disabled veteran, lesbian, gay, bisexual, and/or transgender.

Completed surveys, including an affidavit on the data, are to be submitted to the CDI by August 12, 2014. All surveys will be posted on the CDI website by October 1, 2014. The notification advises that survey results will be posted on the CDI’s website and that “[f]ailure to submit a complete report or submit a report by the due date will be noted,” which we presume will be noted on the CDI website.

The Survey stems from a recommendation put forward by the CDI’s Diversity Task Force which was created shortly after the Commissioner office.

Several existing statutes require insurers to submit reports or respond to data calls on other somewhat related topics:

Insurance Code section 926.2 requires each insurer admitted in California to provide information on all its community development investments and community development infrastructure investments in California.

Insurance Code section 926.3 requires each admitted insurer writing $100 million or more in annual premiums in California to file policy statements expressing goals for community development investments and community development infrastructure investments.

Insurance Code section 927.2 requires each admitted insurer writing $100 million or more in annual premiums in California to submit reports on minority, women, and disabled veteran-owned business procurement efforts.

In contrast, there is no statute which specifically states a requirement to report on the diversity of insurance companies’ boards of directors. The department’s notification to insurers does not cite the statutory authority for the Survey.

For copies of the report or questions, please contact Robert W. Hogeboom at rhogeboom@bargerwolen.com or (213) 614-7304.

Cyberattacks Push Companies to Specialty Insurance Policies

Travis Wall’s article Cyberattacks Push Companies to Specialty Insurance Policies says the window is closing for obtaining coverage for cyber attacks under traditional policies.

The article, published in The Recorder on May 23 says as insures refine coverage defenses and expand exclusions for cyber events, business will have to turn to specialty cyber policies for protection against data theft or loss.

Commercial general liability (CGL) policies have two basic coverage types. Coverage A addresses "property damage" and "bodily injury." Coverage B applies to "personal injury" offenses, such as publications that invade rights of privacy. Because data breaches typically do not involve property damage or bodily injury, policyholders rely primarily on the personal injury prong.

Among other requirements, personal injury coverage applies only to claims arising from a "publication" of information. Data theft through hacking does not appear to involve a "publication" as that term is commonly understood.

Courts will not presume a publication simply because a data loss occurred. In a recent case, tapes containing confidential employee information fell out of a delivery truck. An unknown person then retrieved them but there was no evidence that employee information was publicly disclosed or improperly used.

A Connecticut appellate court rejected the argument that the data loss, in and of itself, constituted a "publication." The mere potential for disclosure was not enough—there had to be evidence that confidential information on the tapes was actually published. See Recall Total Information Management Inc. v. Federal Ins. Co., 147 Conn. App. 450 (2014).

Read the full article at The Recorder.

Read more on this topic, please visit The Recorder (subscription required).

Use of cyberinsurance continues to grow

Travis Wall was extensively quoted in an article recently published in Dell’s Tech Page One about the growing use of cyberinsurance among companies. According to an August 2013 Ponemon Institute report, 76 percent of companies believed cyberthreats represented the biggest danger to their sustainability.  

According to Wall, few companies appreciate the actual time and costs involved in responding to a data breach.

Without a cyberpolicy, companies have no protection against damages related to these risks,” says Travis R. Wall, a partner at Barger & Wolen LLP, a San Francisco-based insurance law firm and the founder of the firm’s Cyber Risk and Technology Group. “The costs can be significant for both large and small companies.”

The article goes on to discuss misconceptions small and large companies have with regard to cybersecurity issues as well as the varying cost of cyberinsurance.

Companies should weigh their needs carefully before deciding on the appropriate coverage. Insurers offer a variety of [coverage options], but not all are relevant to all companies,” Wall says.

Companies should ensure they can address their “minimum” requirements, Wall says. “All companies should have data security insurance covering the loss or theft of employees’ or consumers’ personal information,” he says. “In general, cyberpolicies exclude coverage for losses arising from an insured’s fraudulent or dishonest acts or from willful violations of laws or statutes.

For more information on Barger & Wolen's Cyber Risk & Technology practice, please contact Travis Wall.

Insurers Will Take Lead On Oil Rail Transport Safety Push

David McMahon was quoted in a Jan. 23, 2014, Law360 article, Insurers Will Take Lead On Oil Rail Transport Safety Push, about how a series of fiery derailments of trains carrying crude oil have not only led lawmakers to consider new rules, but also could push insurers to take action, forcing the oil and rail industry to improve safety to cut down on underwriting costs.

According to the article, rail transport of crude oil has grown significantly in recent years with the U.S. energy boom. Three recent crashes have highlighted safety problems: a Dec. 30, 2013, collision near Casselton, N.D.; a November derailment in rural Alabama; and a derailment in Lac-Megantic, Quebec in July. That accident set off massive blasts, destroyed part of the town and killed 47 people.

There was a real concern about the condition of the railroad’s assets in [the] Alabama [crash]. You might see carriers put inspection requirements on their own assets before writing the coverage,” McMahon said. “The carrier doesn’t want to write coverage where the assets of the railroad are dilapidated and haven’t been maintained.”

McMahon told the publication that the crashes and the resulting push for tougher rules governing the transport of oil by rail could lead insurers to limit what they are willing to underwrite.

You can see them saying, 'We’re not going to give you a blank check and allow you to carry 100 tanker cars with oil. We’re going to limit it to 40 to 50 cars,’” he said. “Or there could be outright exclusions of some particular activities.”

McMahon said insurers will not doubt embrace whatever rules regulators and lawmakers enact to improve safety.

The tighter the regulations are ... it can result in a safer environment, which insurers like,” he said. “They like things they can effectively evaluate — the safer it is, it tends to be safer to insure.”

 

Homeowners and Related Policies

Barger & Wolen recently updated Chapter 36 of the California Insurance Law & Practice, Homeowners and Related Policies

The chapter revisions include:

  • Trigger of coverage rules;
  • Triggering first-party coverage vs. third-party coverage;
  • Continuing or progressive damage issues;
  • The known loss rule;
  • Recission of the policy;
  • The Residential Property Insurance Bill of Rights; and,
  • Personal property coverage and exclusions.

In addition, there are 28 new practice tips covering a wide range of issues attorneys may confront in regard to homeowners insurance and reports of several court decisions on point.

 

Claims Handling and the Duty of Good Faith

Barger & Wolen partners Gregory Eisenreich and John  Holmes recently updated Chapter 13 of the California Insurance Law & Practice, Claims Handling and the Duty of Good Faith

The chapter revisions include:

  • The nature and scope of the insured’s duty of good faith;
  • General principles of bad faith actions;
  • The duration of the implied covenant extending from the policy’s inception and remaining in force during litigation;
  • Insured may impact their rights under their policies if they do not comply with policy conditions;
  • The burden of proving in bad faith actions that policy benefits were wrongfully withheld;
  • The use of litigation conduct and settlement offers to prove that policy benefits were wrongfully withheld;
  • Standards for finding bad faith and awarding punitive damages contrasted;
  • Tort damages are not available for an insurer’s breach of an obligation unrelated to claim handing, and
  • An insurer found liable to its insured based on estoppel rather than the contract’s terms of coverage cannot be liable for tortuous bad faith.

 

Insurance Cases To Watch In 2014

Larry Golub was recently quoted in an article by Law360, Insurance Cases to Watch in 2014 (subscription required), detailing what is expects will be the biggest insurance cases decided in 2014.

Golub's comments pertained to Fluor Corp. v. Superior Court of Orange County. The California Supreme Court agreed to take up the case this year, reconsidering its 2003 ruling in Henkel Corp. v. Hartford.

The Henkel ruling limits the circumstances under which policyholders can transfer insurance rights without an insurer's permission, allowing transfers “only if a loss has already been reduced to a sum of money due under the policy as a result of a settlement or judgment.”

The Fluor case argues that when it ruled in Henkel, the court ignored an 1872 statute which allows companies to freely assign their rights under insurance policies following a loss.

Golub told Law360 that the court's ruling in Fluor could be key given that there have been an increasing number of mergers and acquisitions and that it would provide certainty for both insurers and policyholders.

“The supreme court will reconsider the issue in light of this 1872 statute and hopefully draw a bright line, so parties know which way to go,” he said.

 

Barger & Wolen Partners Author "Insurance Practices and Coverage in Liability Defense"

Barger & Wolen partners David McMahon, Robert Levy and John (Jack) Pierce authored the second edition of Insurance Practices and Coverage in Liability Defense (formerly Defending the Insured). 

Intended for legal practitioners, researchers, courts, and other insurance industry professionals, the book provides the first comprehensive and objective analysis of the various duties and potential pitfalls confronting each party in a three-way relationship between insurance carrier, insured, and the appointed counsel in insurance defense.

Through national study and state-specific analysis, the book offers a detailed discussion of topics engendered by the duty to defend and the consequent obligations of each of the parties. Reference tables and appendices then survey the law in each state on those topics.

Our approach to writing this book was to provide our unique perspectives from our day-to-day knowledge of the laws and our industry experiences through our firm’s insurance defense practice,” said David McMahon. “We are confident it will be a valuable resource to the legal and insurance industries.”

David McMahon, the Managing Partner in Barger & Wolen's San Francisco office, is a co-editor of the firm’s Litigation Management & Attorney Fee Analysis blog, and a California State Chair for the Council on Litigation Management.

Jack Pierce is a nationally recognized author and an expert witness in the areas of legal fee disputes, fee and cost allocation, legal ethics, and issues related to legal and ethical responsibilities of lawyers that arise from the tripartite relationship between insurers, insureds and defense counsel.

Robert Levy is a frequent author and has more than 33 years of experience encompassing coverage and defense litigation on behalf of major commercial general liability and professional liability insurers throughout the United States

Insurance Practices and Coverage in Liability Defense, Second Edition, published by Wolters Kluwer Law & Business is available for purchase through Wolters Kluwer website here.

Older Entries

December 9, 2013 — Genuine Dispute Doctrine Precludes Bad Faith Claim Reaffirmed by District Court

November 25, 2013 — Companies Increasingly Look To Captive Insurance

October 23, 2013 — California Court Releases Insurers From Strict Duty To Settle

October 14, 2013 — Accrual of Statute of Limitations for ERISA Disability Claim to be heard by SCOTUS

October 8, 2013 — Reasoning Behind Punitive Damages Calculations Provided By California Appellate Court

August 16, 2013 — Health Insurer Again Evades TCPA Suit Over Jobs Calls

August 8, 2013 — Fingers Point to Different Defendants in Asiana Airlines Plane Crash

August 6, 2013 — Zhang Ruling Yanks Insurer Shield Against UCL Claims

August 6, 2013 — Barger & Wolen partner skeptical that Zhang will increase suits against insurers

August 6, 2013 — Asiana Flight 214 Victims' Lawsuit Amounts Will Vary Widely

August 5, 2013 — Could Medpay Be The Latest Target In California Bad Faith Claims?

June 28, 2013 — Proposed Regulations list 20 standards to determine if insurer is operating in hazardous financial conditions

June 10, 2013 — Oppression and Surprise Render Arbitration Provision Unenforceable

June 4, 2013 — 5 Tips for Attorneys Turned Claims Investigators

May 31, 2013 — Insurer Has No Duty To Verify Accuracy of Insurance Application Representations

May 28, 2013 — HP Inkjet Printer Litigation: Fee Award Fails to Comply With Provisions of the Class Action Fairness Act

May 23, 2013 — Cigna Agrees to Re-evaluate and to Compensate Disability Insureds in the Amount of $77 million

May 6, 2013 — Liability Insurers May Have Duty to Defend Against Federal Prosecutions, California Court of Appeal Holds

April 19, 2013 — Barger & Wolen Insurance Regulatory Attorneys Guide Insurer Through Demutualization, Acquisition

April 4, 2013 — Barger & Wolen Completes First California Demutualization Since 1997

April 1, 2013 — David McMahon to Present at ACI 2013 Bad Faith Conference`

March 1, 2013 — When a Cruise Goes Off Course

February 26, 2013 — Recovery From Dissolved Corporation's Liability Insurer Barred By Foreign Survival Statute

February 20, 2013 — Sewage Cruise Suits Least of Carnival's Coverage Worries

February 14, 2013 — Winning Insurers Gain Clarity on Defense Duty During Appeals

January 28, 2013 — Canon Ruling May Spur Unfair Competition Claims In Calif.

January 2, 2013 — Insurance Cases to Watch in 2013

December 18, 2012 — California Supreme Court's Reconsideration of Henkel Decision Will Re-Assess Consent-to-Assignment Clauses

November 27, 2012 — Speaker at 2012 ACI Bad Faith Litigation Conference

November 26, 2012 — NCOIL Insurance Certificate Law May Aid Carriers In Court

October 25, 2012 — Barger & Wolen Launches Disability Insurance Industry Conference

October 24, 2012 — Musicians Lawyer Up Over Insurance "Exclusion"

October 24, 2012 — Equitable Principles Guide Court In Self-Insured Retention Case

October 16, 2012 — 9th Circuit Ruling Won't Stop Push For Proactive Insurance Deals

September 19, 2012 — Podcast: Impact of Recent California Legislation

September 19, 2012 — Unfair Acts Ruling May Save California Insurers from Stiff Fines

September 13, 2012 — A Duty (to Settle) Too Far

August 20, 2012 — Stacking of Policy Limits - Podcast interview regarding State of California v. Continental Insurance

August 14, 2012 — California Court Says Insureds Can Stack Policies For Max Coverage

August 14, 2012 — State Supreme Court Rules Against Insurers in Stringfellow Acid Pits Case

July 23, 2012 — Insurance Regulatory Issues Up Front at ACIC Annual Conference

July 23, 2012 — Foreign Investments: Iran Investment Bill Well-Intentioned, But Unconstitutional

July 23, 2012 — Liberty Mutual Ruling Could Trigger California Classification Feuds

June 18, 2012 — Wheels Of Justice To Grind To Halt After Calif. Budget Cuts

June 1, 2012 — Auto Manufacturer and Insurer See In-Car Connectivity Systems as Win-Win in the Fight for Market Share - How Far Will Regulators Let Them Go?

May 31, 2012 — California Assembly OKs Bill to Curb Insurers' Iran Investments

May 18, 2012 — Action Against Workers' Comp Claims Administrator Not Covered by Insurer's Arbitration Provision, Court of Appeal Rules

May 3, 2012 — California Legislation Aims to Protect Personal Social Media Account Access by Employers

April 25, 2012 — Big Brother - Are Americans Ready for the Growth of Usage (Telematics) Based Insurance?

April 4, 2012 — "Do Not Track" and Telematics

March 28, 2012 — FTC Issues Best Practices Guide to Protecting Consumer Privacy

March 9, 2012 — Workshop held by California Department to Discuss Contemplated Changes to Life Settlement Regulations

March 2, 2012 — Legislation to Non-Admit Iran-Related Investments

February 24, 2012 — Agreement with California Attorney General May Set Floor for Privacy Protections for Users of Mobile Applications

February 21, 2012 — California's Reader Privacy Act: What Every Bookseller Must Know

February 14, 2012 — Dodd-Frank Does Not Preempt All California's § 1011(c) Reinsurance Approval Requirements Applicable to Foreign Insurers

November 18, 2011 — Potential Changes to Prior Approval Regulations for Property/Casualty Insurers Under Consideration by California Department of Insurance

November 14, 2011 — Barger & Wolen's Insurance Litigation & Regulatory Law Blog Named to The Insurance Law Community's Top Blogs for 2011

November 1, 2011 — U.S. News & World Report & Best Lawyers Names Barger & Wolen to Their Best Law Firms List

June 14, 2011 — Former President of Association of California Insurance Companies Joins Barger & Wolen

March 22, 2011 — Attorney Conflicts of Interest: Identifying and Resolving Ethical Pitfalls

March 21, 2011 — California Seeking Suitability Requirements Again

December 14, 2010 — Insurance Commissioner Removes Four Companies from List of Companies Doing Business with Iran

November 22, 2010 — Request for Increase in Workers' Comp Cost Benchmark Rejected by Commissioner Poizner

October 4, 2010 — 14th Annual Insurance Forum in Chicago Sponsored by Barger & Wolen

September 20, 2010 — California Court Determines No Coverage Based on Unambiguous Motor Vehicle Exclusion

September 17, 2010 — Barger & Wolen Receives First-Tier Ranking in the Inaugural "Best Law Firms" Survey by U.S.News and Best Lawyers®

August 19, 2010 — Barger & Wolen's Insurance Law Blogs Named to Top 50 Blogs by LexisNexis Insurance Law Community

August 19, 2010 — California Department of Insurance Corporate Application Filing Deadline Fast Approaching

May 18, 2010 — Barger & Wolen Updates the Book of Insurance Law

December 4, 2009 — 2009 California Legislative Update

July 28, 2009 — The Federal Fair Credit Reporting Act & State Regulation of Credit Scoring: Chartered & Unchartered Territory for Insurance Companies Post Safeco V. Burr