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Agents and Brokers
Defense of Administrative Actions
ERISA and Benefits Matters
Our attorneys have worked on coverage actions involving directors and officer’s liability and other professional liability policies. Unique coverage issues are presented by these types of policies. Insurers may seek policy rescission due to claimed misrepresentations and failures to disclose in D&O policy applications. These arguments often lead to issues about the imputation of acts and statements by certain officers and directors to other insureds, the severability of the policy and possible waiver and estoppel defenses. Even when a defense is afforded by the carrier, difficult issues remain in allocating settlements between covered and non-covered claims asserted in the underlying litigation.
Professional liability policies also present problems when trying to determine whether a policyholder's actions that led to the claim were part of the course and scope of their profession or employment or part of a separate business enterprise. Sexual harassment, misconduct and alleged criminal activity can also complicate the analysis of policy coverage. Professional liability policies also present distinctive policy provisions regarding control of defense, consent to settlement and cooperation and notice provisions that lead to disputes.
Agents and Brokers
Our attorneys have litigated or otherwise handled a variety of disputes involving insurance agents and brokers. Our experience includes dealing with disputes between agents and brokers and insurers over such things as commissions and premiums, disputes between producers and managing general agents over such ideas as commissions and ownership of expirations, and professional liability claims against agents and brokers for alleged failure to secure pertinent insurance coverage. As a result of our work with agents and brokers, we have developed a thorough understanding of agency relationships and the legal and factual issues that affect agent and broker duties and liability.
In recent years Dinsmore has served by appointment of the Ohio Attorney General as Outside Counsel to the Ohio Department of Insurance, Division of Liquidations in connection with the statutory liquidation of certain failed Ohio property and casualty insurance companies.
Our work has mainly consisted of marshalling the assets of the failed insurance companies and the prosecution of litigation on behalf of the Superintendent of Insurance in her capacity as Liquidator against various debtors of the companies and parties responsible for the failure of the companies. The litigation we have handled has included suits against: directors and officers of the failed insurers, insurance liability carriers for the directors and officers, employee theft insurance carriers for the insurers, the insurers' parent and affiliated companies, financial auditors for the insurers, the insurers' actuary, various of the insurers' agents, and high deductible insureds of the insurers.
In addition to assisting the Liquidator in prosecuting claims against others, we have assisted the Liquidator in defending claims against the liquidation estates, including lawsuits filed in bankruptcy court in Delaware by the Bankruptcy Trustee of the parent company of one of the insurers and assessments made by the IRS against insurers. We also have helped negotiate a tax refund from the IRS.
We also have assisted the Liquidator in running out the affairs of the failed insurers, such as terminating the insurers' pension plans, and in administering the liquidation proceeding, such as developing the statutorily required early distribution plan for state insurance guaranty funds.
Our attorneys regularly defend carriers against common law and statutory bad faith cases in states with challenging legal issues, including those that recognize third party bad faith and where there is no bifurcation between compensatory and punitive damages. Examples from recent years include:
- Establishing that an insurance company does not act in bad faith despite a nearly three year "delay" in paying a third party bodily injury claimant or in sending a customer pledge to a third party claimant which stated that they would be treated like a customer during the claim process. Naugle v. Large National Insurance Company, 2003 WL 21774012 (6th Cir. 2003), affirming summary judgment in favor of our client.
- Defeating a motion for statewide class certification of third party claimants who had had their claim handled under a large national insurance company's soft tissue injury claim procedures, which received widespread national, regional and local news coverage. We subsequently won a unanimous defense verdict after a seven-day jury trial in the individual case brought by the proposed class representative alleging that the large national insurance company had acted in bad faith. Hager v. Large National Insurance Company (Fayette County, Kentucky 2007).
- Obtaining a writ of prohibition from the Kentucky Supreme Court directing the trial court to dismiss a bad faith action against a workers’ compensation carrier. In Kentucky Employers Mutual Insurance Company v. Coleman, 236 S.W.3d 9 (Ky. 2007), the plaintiff commenced a civil claim for bad faith action against a workers’ compensation carrier after the plaintiff prevailed over the carrier in a disputed workers’ compensation claim. A motion to dismiss was denied, as was a motion for writ of prohibition in the intermediate appellate court. The Kentucky Supreme Court reversed, and clarified that a workers’ compensation carrier is immune from suit in a civil court relating to the handling of a workers’ compensation claim regardless of whether that claim is couched as "bad faith" or an intentional tort.
We have frequently been called upon to defend our insurance company clients in matters commenced by or which in some way relate to the relationship they have with their agents, adjusters, managers and other employees or independent contractors. Some recent cases include:
- Won a summary judgment for an insurer against wrongful discharge and other allegations made by a former adjuster, who later became an expert witness for plaintiffs against the insurer and whose allegations were featured on an ABC network news program. The adjuster claimed in the lawsuit that she was terminated from employment because of her complaints that the insurer's use of a computer tool (Colossus) in the claim adjustment process was in bad faith, as well as in retaliation for filing a workers’ compensation claim or because of a disability. A subsequent appeal of this summary judgment in Brown v. Large National Insurance Company (Fayette County, Kentucky, 2002) was dismissed by the Kentucky Court of Appeals.
ADMINISTRATIVE, REGULATORY, AND LEGISLATIVE MATTERS
Defense of Administrative Actions
We have successfully defended our clients before administrative agencies and other such groups. As an example, our attorneys successfully defended a large national insurance company in a complaint filed against it by the Cincinnati Bar Association alleging that the insurance company was engaging in the unauthorized practice of law through its use of staff counsel to defend its insureds in litigation. In October 2003, after a hearing, the Board of Commissioners on the Unauthorized Practice of Law of the Supreme Court of Ohio dismissed the CBA's complaint against the large national insurance company. The bar association’s subsequent request for review by the Ohio Supreme Court was denied. The decision was a significant victory not only for this insurance company but also for insurance companies throughout Ohio.
ERISA and Benefits Matters
Combining our expertise in employee benefits, labor and employment, and insurance coverage, we have assisted a variety of employers, benefit plans, and plan administrators in handling state and federal litigation involving ERISA plans. These disputes have involved employees' health insurance, disability and life insurance, and retirement benefits, including Qualified Domestic Relations Orders (QDRO's).
We successfully represented an ERISA plan and plan administrator in a suit where a participant's spouse sought a share of the participant's retirement benefits via a qualified domestic relations order (QDRO). The spouse sued in federal court to force a particular apportionment of the retirement benefits. Invoking the discretion conferred upon administrators, and highlighting some related procedural shortcomings in the spouse's efforts, we were able to obtain a dismissal of the suit.
We successfully assisted an employer and plan administrator in resolving litigation involving a former employee, the employer's self-insured health insurance plan, the plan's excess insurance carrier, and a third party administrator (TPA). The dispute arose because the employee and his spouse had been denied any coverage for cancer treatment by the excess insurer. The question was whether the employee had timely requested and paid for COBRA insurance coverage upon leaving employment. Gathering the facts pertinent under ERISA and other law, we assisted the employer and plan in resolving the dispute through mediation.
We successfully defended an insurer from claims for breach of contract and bad faith arising out of a disability insurance benefit provided subject to ERISA. The claimant alleged that Prudential had wrongfully denied him disability benefits. We removed the matter to the federal District Court for the Western District of Kentucky, thus effectively dismissing the extra-contractual claims. Plaintiff claimed he was entitled to approximately $80,000 in annual benefits for 20 years. The matter involved multiple volumes of medical records and hinged on the application of the treating physician rule. After extensive briefing, we obtained a favorable ruling in the District Court upholding the decision of the plan administrator. We subsequently secured an affirmance in the 6th Circuit Court of Appeals.
We offer the insurance industry a full range of Legislative and Regulatory Government Relations services, including representing insurers in administrative proceedings before regulators; lobbying and advocacy; drafting bills, amendments, position papers and rulemaking comments; strategy and planning; directing and participating in coalitions and grassroots campaigns; legal analysis; monitoring and reporting; and securing access to decision makers.
The firm's lawyers also serve as the voice of the insurance industry in West Virginia specifically. They develop a cohesive legislative agenda and industry strategy for each legislative session; serve as the liaison between the Insurance Commissioner, state government and the industry; and provide testimony to legislative committees on issues affecting insurers. The West Virginia Insurance Commissioner, state officials, other regulators and business groups routinely consult with Dinsmore lawyers to review and comment on proposed administrative rules or statutory proposals affecting insurers and file briefs amicus curiae on industry issues.
Notably, in 2005, our lawyers played a key role in the passage of West Virginia's comprehensive insurance and civil justice reform legislation, including the repeal of the Third Party Bad Faith law. Our work was not limited to lobbying alone but extended to drafting key components of the legislation and sponsoring a significant public relations and grassroots campaign to support passage.