The battle between whether reinsurance disputes should litigated or arbitrated (or mediated) continues even though most reinsurance disputes are subject to arbitration provisions in the reinsurance contracts. There are arguments on both sides, of course, and no one can argue that arbitration has not become more like litigation. While I favor arbitration and mediation (for … [Read more...] about Why Reinsurance Arbitration or Mediation Is More Efficient Than Litigation
Legal
Arbitration in the Courts
Functus Officio gets a new exception: Second Circuit holds that district courts remand of unreasoned award to arbitrator does not violate the functus officio doctrine. Smarter Tools, Inc. v. Chongqing SENCI Import & Export Trade Co., Ltd., No. 21-724, (2d Cir. January 17, 2023). The functus officio doctrine – Latin for having “completed one’s office” – dictates … [Read more...] about Arbitration in the Courts
Third Circuit Dismisses Chapter 11 Filing by Johnson & Johnson Subsidiary Formed to Segregate Talc Liabilities
In a closely watched decision, the Court of Appeals for the Third Circuit ordered the dismissal of the Chapter 11 petition of LTL Management, LLC, the entity created by Johnson & Johnson to hold J&J’s talc-related liabilities in a divisional merger process under Texas law. Reversing the Bankruptcy Court for the District of New Jersey, the Third Circuit held that … [Read more...] about Third Circuit Dismisses Chapter 11 Filing by Johnson & Johnson Subsidiary Formed to Segregate Talc Liabilities
Recent Judicial Interpretations of Facultative Certificates
I. Introduction Most reinsurance disputes are resolved in private before panels of industry experts, who are experienced in the unique practices, nomenclature, and statutory accounting that comprise the business of insurance and reinsurance. These disputes often embrace financial and other obligations arising under many different insurance policies, with losses that may … [Read more...] about Recent Judicial Interpretations of Facultative Certificates
Just Decided – New Jersey Supreme Court: Insurers Can Look to Extrinsic Evidence to Deny a Defense
Last week, the New Jersey Supreme Court decided Norman International, Inc. v. Admiral Insurance Company, No. 086155 (N.J. Aug. 11, 2022). At issue was coverage for a work-site injury and the interpretation of a policy exclusion for operations or activities performed by an insured in certain counties in New York. The case is significant in terms of addressing causation for … [Read more...] about Just Decided – New Jersey Supreme Court: Insurers Can Look to Extrinsic Evidence to Deny a Defense
Follow-the-Fortunes Rejected By 11th Circuit
Follow-the-fortunes is a reinsurance concept that often is misconstrued. Some wish to impose it on every reinsurance contract regardless of whether a follow-the-fortunes clause exists. Cedents invoke it to compel payment from their reinsurers. In a recent case, the Eleventh Circuit had an opportunity to weigh in on whether the follow-the-fortunes doctrine should be inferred … [Read more...] about Follow-the-Fortunes Rejected By 11th Circuit
QuickStudy: Dobbs and the Future of Health Plan Abortion Coverage
The Supreme Court’s June 24 ruling in Dobbs v. Jackson Women’s Health eliminating the constitutional right to an abortion, and leaving states to regulate or restrict the procedure, has created a complex and tangled web of federal and state laws surrounding abortion. The challenge is particularly fraught for health plans that wish to provide coverage of medically necessary … [Read more...] about QuickStudy: Dobbs and the Future of Health Plan Abortion Coverage
The Real Issue In The Sex In A Car Case That Everyone Is Talking About
And Now for Something Completely Different…Auto Insurer Covers Insured’s Dashboard Dalliance?? In M.O. v. GEICO General Ins. Co. No. WD84722 (Mo. Ct. App. June 7, 2022), a Missouri appellate court has confirmed a $5.2M arbitration award against GEICO in favor of petitioner M.O. who alleged that having unprotected sex with GEICO’s insured in his 2014 Hyundai Genesis caused her … [Read more...] about The Real Issue In The Sex In A Car Case That Everyone Is Talking About
Arbitration in the Courts
Absent diversity of citizenship, federal courts lack jurisdiction over petitions to confirm or vacate domestic arbitration awards, even where the underlying claims arise under federal law. U.S. Federal courts are courts of limited jurisdiction, which Congress and the Constitution have defined to include two main categories: “diversity” jurisdiction (suits between citizens of … [Read more...] about Arbitration in the Courts
Massachusetts Federal Court Rejects Adria Towers, Finds Construction Defects Not an “Occurrence”
In an important ruling for insurers, U.S. District Court Judge Patti Saris found that Massachusetts does not follow the position taken in Cypress Point Condo Association v. Adria Towers, LLC, 226 N.J. 403, 418 (2016), i.e., it does not hold that "faulty workmanship claims [should be recognized] as ... an 'occurrence,' thus triggering coverage, 'so long as the allegedly … [Read more...] about Massachusetts Federal Court Rejects Adria Towers, Finds Construction Defects Not an “Occurrence”
The End of ‘Bellefonte’: ‘Global Re’ and the Proper Reading of Facultative Reinsurance Contracts
In late December 2021, the U.S. Court of Appeals for the Second Circuit issued a blockbuster decision grappling with the Erie doctrine, stare decisis, and overturning a decades-old precedent. It was the fourth appellate decision in a lengthy litigation reminiscent of Dickens’ Bleak House. This was not litigation about constitutional rights or environmental justice, but a case … [Read more...] about The End of ‘Bellefonte’: ‘Global Re’ and the Proper Reading of Facultative Reinsurance Contracts
Florida and Punitive Damages
Have you noticed an influx of hearings in Florida to add punitive damages to complaints lately? Here's why: Asserting a punitive damages claim is a strategy often utilized by plaintiffs to obtain financial discovery from commercial defendants to which they would otherwise not be entitled. The Florida Supreme Court amended Florida Rule of Appellate Procedure 9.130 regarding … [Read more...] about Florida and Punitive Damages
2 High Court Cases That Can Alter Arbitration Playing Field
Each year, the U.S. Supreme Court faces a large number of certiorari petitions seeking review of a wide variety of civil disputes. The court in recent years has consistently found room on its docket to address disputes regarding the Federal Arbitration Act, which sets out the statutory scheme for the judicial facilitation of dispute resolution through arbitration. Two … [Read more...] about 2 High Court Cases That Can Alter Arbitration Playing Field
Buying English Law When You Place London Market Reinsurance?
Cedents based in the United States should be aware that they may be buying (or, indeed, have already bought years ago) English law to govern interpretation of their reinsurance contracts placed in the London market. In a US court presiding over a lawsuit involving reinsurance placed in London, English law can apply despite the American forum. In any given case, whether the … [Read more...] about Buying English Law When You Place London Market Reinsurance?
New York Now Requires Defendants To Provide Automatic Early Disclosure of Insurance Information
Defendants in New York are now required to automatically disclose expansive insurance information at the beginning of a lawsuit. Beyond just providing evidence of an insurance policy, the new version of the discovery rule CPLR 3101(f) now requires disclosures such as the contact information of an insurer’s claim adjuster and information about whether attorney’s fees have eroded … [Read more...] about New York Now Requires Defendants To Provide Automatic Early Disclosure of Insurance Information
What Goes Around Comes Around
In 1990, the Second Circuit in Bellefonte Reinsurance Co. v. Aetna Casualty & Surety Co., 903 F.2d 910 (2d Cir. 1990), affirmed a District Court judgment that reinsurers were not obligated to pay additional sums for defense costs over and above the limits of liability specified in a facultative reinsurance certificate. Since then, the Bellefonte rule acted as a de … [Read more...] about What Goes Around Comes Around
Arizona Eliminates Peremptory Challenges
New Trend Poses Threat In Subrogation Trials. Effective January 1, 2022, Arizona will become the first state to eliminate the use of peremptory challenges in jury selection in both criminal and civil trials—including the trial of subrogation cases. It isn’t news to the insurance industry that many (if not most) people harbor certain resentments against insurance companies. If … [Read more...] about Arizona Eliminates Peremptory Challenges
New York’s Second Department Splits from First Department
DOES AN INSURER HAVE AN ENTITLEMENT TO RECOUP DEFENSE COSTS WHEN NO DUTY TO INDEMNIFY EXISTS? In a case of first impression for the New York Supreme Court, Appellate Division, Second Department, the court chose not to follow prior decisions of its sister court and federal courts applying New York law. The Second Department held that an insurer could not recover defense costs … [Read more...] about New York’s Second Department Splits from First Department
Party-Appointed Arbitrators on the Precipice
Concerns about bias and prejudice from multiple repeat appointments have plagued party-appointed arbitrators for years. This is true of international arbitration, commercial arbitration and, of course, insurance and reinsurance arbitration. Recently, there have been several cases in the United States and the United Kingdom addressing implicit bias, repeat players and the need … [Read more...] about Party-Appointed Arbitrators on the Precipice
The Second Circuit Decision in Utica Mutual v. Munich Re: Some Clarity on Three Fronts
On July 29, 2021, the United States Court of Appeals for the Second Circuit issued its ruling on the appeal of Utica Mutual Insurance Company (“Utica”) from the decision of the United States District Court for the Northern District of New York in the dispute between Utica and Munich Reinsurance America, Inc. (“MRAm”). The court affirmed the decision of the court below that MRAm … [Read more...] about The Second Circuit Decision in Utica Mutual v. Munich Re: Some Clarity on Three Fronts
