The Delaware Superior Court recently held, in Conduent State Healthcare, LLC v. AIG Specialty Insurance Company, et al., that a government-conducted civil investigation constitutes a “Claim” sufficient to trigger coverage under a professional liability insurance policy. Conduent State Healthcare, LLC (“Conduent”) alleged that Defendant AIG Specialty Insurance Company (“AIG”) breached its obligations by refusing to defend and indemnify Conduent for costs incurred in connection with a Medicaid fraud investigation.

Continue Reading Governmental Civil Investigations Trigger Insurer’s Duties to Defend and Indemnify

In two cases decided June 28, 2019, the Texas Supreme Court held that an insurer’s invocation of a contractual appraisal provision after denying a claim does not as a matter of law insulate it from liability under the Texas Prompt Payment of Claims Act (“TPPCA”). But, on the other hand, the court also held that the insurer’s payment of the appraisal award does not as a matter of law establish its liability under the policy for purposes of TPPCA damages.

Continue Reading Texas Supreme Court Holds that Invoking Appraisal Provision and Paying Appraisal Amount Does Not Insulate an Insurer from Damages Under the Texas Prompt Payment of Claims Act

Hunton Andrews Kurth’s insurance coverage practice is proud to congratulate Cary D. Steklof for being selected by his peers to Florida Trend’s Legal Elite Up & Comers list for 2019.  A total of 131 attorneys under the age of 40 throughout the state of Florida were recognized for their leadership in the law and their communities.  Cary was one of only seven attorneys selected for their skill and counsel in the area of insurance.  We congratulate Cary and all of the recipients of this award who have distinguished themselves for their superior advocacy, knowledge, and accomplishments as young professionals.

Insurance companies can become insolvent. This is an ongoing issue in Puerto Rico following hurricanes Irma and Maria. In addition to Real Legacy Assurance Company’s insolvency, Puerto Rico’s Insurance Commissioner reportedly fined various insurers for delays in handling claims. Even if your insurance company is insolvent, it may have purchased reinsurance. While the general rule is that a policyholder cannot make a claim directly against the reinsurer, there are exceptions to the rule. One such exception is when the reinsurance contract contains a “cut-through” provision. Cut-through provisions generally allow policyholders to make claims directly against the reinsurer if the original insurance company is insolvent. For a detailed discussion on this issue, we repost the article by Syed Ahmad, Patrick McDermott, and Yaniel Abreu of Hunton Andrews Kurth LLP. The article is titled “My Insurance Company Is Bankrupt, But Is Reinsured. Can I Make A Claim Directly Against The Reinsurer?” and was published on Law.com’s Eye on the Experts column. The article addresses the enforceability of cut-through provisions under the laws of multiple jurisdictions.

As discussed in the article, cut-through clauses in reinsurance contracts are generally enforceable. Indeed, they are an important tool that policyholders can use to recover insurance proceeds even if their insurance company is insolvent. Policyholders, however, must carefully evaluate the enforceability of these provisions if they are considering a direct action against the reinsurer. The article discusses those issues and case law on this topic.

In a June 18, 2019 article published in Law360, Hunton insurance team partner Syed Ahmad analyzed some of the most important insurance cases from 2019 so far.

Mr. Ahmad first touched on a pair of rulings from the Montana Supreme Court. In each, that court refused to find coverage for consent judgments negotiated by policyholders. The court in Abbey/Land v. Glacier Construction Partners rejected an underlying consent judgment because it was unreasonable and flowed from collusion between the underlying parties. Then, in Draggin’ Y Cattle Co. v. JCCS, the court reversed a trial court’s holding that an underlying consent judgment was presumptively reasonable, holding that the judgment did not deserve a “presumption of reasonableness,” because the insurer had not breached its duty to defend. Continue Reading Hunton Insurance Partner Syed Ahmad Talks About Hot-Topic Insurance Cases From 2019

Phishing has been around for decades.  But now, the long-lost ancestor claiming to be a foreign prince is stealing more than your grandmother’s savings.  Phishers are targeting corporations—small and big, private and public—stealing sensitive data and money.  When Policyholders take the bait, they had better have a tailored insurance policy to keep their insurers on the hook as well.

Continue Reading Go Phish: Texas Lawsuit Highlights Need for Tailored Cyber Policies

On June 17, 2019, the First Circuit held that an insurer’s duty to defend was triggered because the underlying complaint set forth claims that required a showing of intent as well as claims that sought recovery for conduct that “fits comfortably within the definition of an ‘accident.’” In Zurich American Ins. Co v. Electricity Maine, LLC, Zurich sought declaratory judgment that, under a D&O policy, it had no duty to defend the insured, Electricity Maine, an electrical utility company being sued in the underlying class action. Zurich argued it had no duty to defend because the underlying complaint failed to allege that Electricity Maine engaged in conduct that qualified as an “occurrence” or that caused “bodily injury” under the terms of the policy. The First Circuit disagreed.

Continue Reading Claims for Negligence? Duty to Defend Triggered

A coverage dispute arising as a result of property damage from Hurricane Frances, which occurred in 2004, will continue following a Florida appellate court decision in an action brought against Citizens Property Insurance Corp.

Continue Reading Florida’s Citizens Property Insurance May Be Immune From Bad Faith, But Is Not Immune From Consequential Damages

A state-appointed panel advised last week that California should change the standard for determining whether utilities are liable for wildfires.  Under the current system, California’s Public Utilities Code § 2106 provides a private right of action by any person or entity that has suffered loss, damages, or injury caused by prohibited or unlawful acts of a public utility.  Relying on this statute, property owners have asserted wildfire-related claims directly against allegedly culpable electric utility companies.  Public utilities in California also face inverse condemnation claims arising out of wildfires.  Under inverse condemnation, where private property is taken for public use and later damaged by the state or its agency, the state or agency is strictly liable to the property owner.

Continue Reading California Commission Recommends Switching To Fault-Based Wildfire Liability Standard for Public Utilities

The City of Baltimore is the latest victim of increasingly common ransomware attacks. On May 7, 2019, unidentified hackers infiltrated Baltimore’s computer system using a cyber-tool named EternalBlue, developed originally by the United States National Security Agency to identify vulnerabilities in computer systems. However, the NSA lost control of EternalBlue, and since 2017, cybercriminals have used it to infiltrate computer systems and demand payment in exchange for relinquishing control. For instance, in Baltimore, the hackers have frozen the City’s e-mail system and disrupted real estate transactions and utility billing systems, among many other things. The hackers reportedly demanded roughly $100,000 in Bitcoin to restore Baltimore’s system. The city has refused to pay.

Continue Reading Will Insurers Declare “War”? The War Exclusion, the Ransomware Attack on Baltimore, and the NSA Cyber-Tool?