NEWSLETTER ARCHIVE
Morris, Manning & Martin's quarterly Insurance, Reinsurance and Managed Healthcare newsletter includes Player's Point, Letter from Washington, Hassett's Objections, and more. (Read)ARTICLES
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Reinsurer Setoffs and Policyholder Cut-Throughs / Hassett, Lewis E. and Pardi, Jessica F.
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A Global Definition of Terrorism / Paper submitted to the 2002 Annual Conference of the Asia-Pacific Risk and Insurance Association (APRIA) Player, Thomas A.
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Alabama Eviscerates Absolute Pollution Exclusion / The Alabama Supreme Court recently addressed the applicability of pollution-exclusion provisions in a commercial general liability insurance policy, and the news is not good for insurers. See Porterfield v. Audubon Indemnity Co., Case No. 856 So. 2d 789 (Ala. 2003). The decision is significant because the Alabama court is one of the first to conduct an in-depth review of the history of pollution-exclusion clauses, as well as the legal decisions rendered interpreting such clauses. Mattson, Seslee S.
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An Uncertain Outlook for TRIA Extension / The year 2004 is drawing to a close, and Congress has not extended the Terrorism Risk Insurance Act (“TRIA”). What is the outlook for terrorism risk insurance in 2005?
Without further Congressional action, the federal reinsurance program for terrorism risks established... Holahan, Joseph T.
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Brokergate: The Fallout / Player, Thomas A.
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California Regulates Internet Policy / California has enacted the Online Privacy Protection Act of 2003. It goes into effect on July 1, 2004. This legislation involves privacy policies on Web sites.
Until now, privacy policies were regulated mostly by the Federal Trade Commission ("FTC"). Basically, the FTC has brought actions against companies when their privacy policies as set forth on their Web sites have been different from their actual privacy practices. The argument is that using personal data differently from the privacy policies as disclosed is a form of unfair and deceptive trade practice... Arne, Paul H.
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Clarifying TRIA / Article posted with permission by Captive Review www.captivereview.com. Myers Jr., Robert H.
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Cut-Through Endorsements and Insolvencies: Does Double Indemnity Equal Double Liability? / Hassett, Lewis E.
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Disadvantages To American Litigants In International Reinsurance Disputes / Hassett, Lewis E.
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Eleventh Circuit Limits Scope of Broad Arbitration Clauses / Because arbitration clauses, even broad ones, cannot be extended to compel parties to arbitrate disputes they have not agreed to arbitrate, the Eleventh Circuit Court of Appeals ruled this month that a group of HMOs could not force the doctors and medical associations suing them to arbitrate their claims and/or stay all nonarbitrable claims pending litigation. In Klay v. Pacificare Health Systems, Inc.,... Pardi, Jessica F.
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English Court Addresses Issue Preclusion / The American legal system has long recognized issue preclusion, also known as collateral estoppel, wherein issues may not be relitigated because they must accord with prior judicial decisions. This principle has been applied by courts to the findings of arbitrators when (a) the issue before a court is identical to that heard by an arbitrator (or a panel of arbitrators); (b) the issue was actually litigated in the arbitration proceeding; (c) the party(ies) had a full and fair opportunity to be heard on the issue; and (d) the determination made was a critical and necessary part of the arbitrator’s judgment. See generally Greenblatt v. Drexel Burnham Lambert, Inc., 763 F.2d 1352 (11th Cir. 1985); Nobles v. Rural Community Ins. Serv., 303 F. Supp. 2d 1292 (M.D. Ala. 2004); and Ganguly v. Charles Schwab & Co., Inc., 2004 WL 213016 (S.D.N.Y. Feb. 4, 2004). Recently, however, the English Commercial Court, Queen’s Bench Division, dispensed with the fourth requirement of collateral estoppel, namely that the prior finding of an arbitrator was a critical and necessary part of the judgment. See The Lincoln National Life Insurance Company v. Sun Life Assurance Company of Canada, 26 February 2004, English Commercial Court, Queen’s Bench Division... Pardi, Jessica F.
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Fair Credit Reporting Act Amendments Force Companies To Rethink Privacy Programs / Recent amendments to the federal Fair Credit Reporting Act (“FCRA”) not only add additional burdens on companies, including insurers, but they also potentially alter the way companies are allowed to use customer information. The amendments, which were signed into law on December 2, 2003, are included in the Fair and Accurate Credit Transactions Act of 2003 (“FACT”)... Petersen, L. Chris
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Fee-Shifting And The Mighty Midgets Exception In The Reinsurance Context / Under the “American Rule,” attorneys’ fees are not ordinarily recoverable in the absence of a statute or a contract providing for such recovery. In Mighty Midgets Inc. v. Centennial Ins. Co., 47 N.Y.2d 12, 21, 416 N.Y.S.2d 559, 564 (1979), the Court held that while “it is the rule in New York that such a recovery [of attorneys’ fees] may not be had in an affirmative action brought by an assured to settle its rights, an exception exists when [an insured] has been cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations.” Thus, an insured prevailing in a declaratory action brought by an insurance company seeking... Pardi, Jessica F.
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Fiduciary Obligations & Mutual Holding Companies / Player, Thomas A.
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Financial Reform: Are We Approaching the End of the War or Is This Just Another Battle? / Myers Jr., Robert H.
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Georgia Affordable Housing Tax Credit Program Available to Surplus Lines Brokers / Article posted with permission by Georgia Affordable Housing Coalition. industryid: 6 Roehl, Anthony
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Georgia Sales and Use Tax / The determination of sales and use tax liability generally turns on whether the transaction in question is a sales transaction versus a service transaction or whether the property involved is tangible personal property versus intangible personal property. Even if the transaction in question involves the retail sale of tangible personal property, liability from sales and use tax may still be avoided if one (1) of the seventy-two (72) statutory exemptions contained in the Code applies. Beaudrot, Jr., Charles R.
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Global Legal Update / Changes in Georgia in the last year include legislative responses to the Y2K problem, continuing legislative movement in the healthcare and insurance regulatory environments, substantial securities legislation and the adoption of revised UCC Article 8, and important developments affecting the validity of poison pills under Georgia law. Beaudrot, Jr., Charles R.
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Hassett's Objections - Business Courts: Trend or Diversion / For the last decade, businesses have become more reliant upon arbitration to settle their disputes. Arbitration carries the advantages of industry-savvy decision makers, a quicker resolution and less expense. That’s the theory, anyway. Parties increasingly have learned that arbitration often is not quicker or less expensive, and some question whether industry expertise is overrated... Hassett, Lewis E.
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Hassett's Objections - But We Don't Want All or Nothing / One of the reasons some businesses are hostile to arbitration clauses is the deference accorded to the arbitrators’ decision under the Federal Arbitration Act (“FAA”). Under that Act, the decision of an arbitration panel may be vacated or modified only in limited circumstances. 9 U.S.C. §§ 10, 11. Generally, a court may vacate or modify an arbitration award only when (a) the award was procured by fraud or corruption, (b) an arbitrator was evidently partial or corrupt, (c) the arbitrators were guilty of misconduct in rejecting a continuance or evidence, (d) the arbitrators exceeded their powers, or (e) the arbitrators “manifestly disregarded the law...” Hassett, Lewis E.
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Hassett's Objections - Justice Versus Sovereignty / The insurance industry rails daily against runaway jury verdicts. All of us know of cases where actual damages in the thousands have been accompanied by punitive awards in the hundreds of thousands or millions. Meaningful review sometimes is limited because of onerous appeal bond requirements. Further, appeals often are unsuccessful. Elected state court judges hesitate to overrule local verdicts and judgments, and federal judges hesitate to engraft federal limitations onto state punitive awards. The problem presents a “wedge” issue for Republicans, given that their party includes both pro-business constituents and state’s rights constituents... Hassett, Lewis E.
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Hassett's Objections - Let The Sunshine In (But Not On My Case) / Court records generally are open to the public. To avoid the unlimited disclosure of private information or trade secrets, parties to litigation often seek court orders preserving the confidentiality of discovery materials and/or of court filings. Similarly, the parties may agree to, or seek a court order imposing, confidentiality in a settlement... Hassett, Lewis E.
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Hassett's Objections - The Ad Hoc Truth in Commercial Insurance Act / It appears that commercial insurance brokers are the latest target of the “victim industry.” Various state officials and class action attorneys have instituted proceedings claiming that commercial brokers failed to disclose incentive compensation from insurers . What?? Insurers provide brokers with incentives to sell their products? I’M SHOCKED! SHOCKED!!!! Hassett, Lewis E.
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Health Maintenance Organization Insolvency: Bankruptcy Jurisdiction or State Proceedings / Hassett, Lewis E.
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Health Maintenance Organization Insolvency: Bankruptcy Jurisdiction or State Proceedings / Pardi, Jessica F.
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Insuring Global Terrorism Risks / Player, Thomas A.
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Legal and Ethical Issues in Obtaining and Sharing Information / Myers Jr., Robert H.
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Legal Considerations Underlying a Liquidation Plan for a Managed Care Organization / Hassett, Lewis E.
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Letter From Washington - Evolution, not Revolution, in Insurance Regulation / The insurance community is aflutter as a result of the release of an initial draft of a proposal for insurance regulatory reform by the staff of the House Financial Services Committee. This draft has been long awaited, and it delves into almost every segment of the insurance business in the United States... Myers Jr., Robert H.
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Letter From Washington - Feds Already Having An Impact On Insurance / Washington is in a buzz, and it’s not just the cicadas! Even though the ugly little creatures have managed to overwhelm the Nation’s Capital, the real “buzz” concerns the role for the federal government in the regulation of insurance. Predictably, the players can be divided into three camps: those who support the status quo (state regulation only), those who are pushing for... Myers Jr., Robert H.
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Letter From Washington - House Hearings Will Show Insurance Regulation In Need Of Change / The Financial Services Committee of the U.S. House of Representatives will be scheduling hearings in March and April to provide oversight of the regulation of insurance. Rep. Richard Baker, chair of the relevant subcommittee, has publicly indicated his intention to work toward national uniformity for insurance... Myers Jr., Robert H.
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Letter From Washington: Pandora's Box / Letter From Washington: Pandora's Box Myers Jr., Robert H.
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Managing A Successful Offshore Software Development Project / Despite growing political pressures, outsourcing of software development projects is an economic fact of life for insurance companies. In these times of doing more with less, the price differential between software development in the U.S. and overseas is too great not to consider offshore development. As a part of developing a strategy for a successful outsourced development project, consider knowing the answers to the following questions. Other than the questions in Section I... Arne, Paul H.
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Modifications to the HIPAA Privacy Rule / A "red-lined" version of the August 9, 2002 Rule modifications for clients of Morris,Manning & Martin, LLP. Petersen, L. Chris
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NAIC Considers Expanding Reach of Sarbanes-Oxley / In the past decade the country, and the financial world, were rocked by financial scandals in publicly traded companies. In response to these scandals, Congress enacted the Sarbanes-Oxley Act of 2002 to place controls over, and to infuse some integrity into, publicly traded companies. The goal of the Sarbanes-Oxley Act was to establish standards for corporate governance to protect the investors in publicly-traded companies... Petersen, L. Chris
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Notice 2004-47: A Win For Health Insurance Coverage Providers / The IRS recently released Notice 2004-47, which provides welcome relief from certain reporting requirements that would otherwise be imposed upon health coverage providers accepting payments under the Health Coverage Tax Credit Program... Wynn, Bruce H.
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Player's Point - The Impact of the 9/11 Report on Terrorism Insurance / In his recent Wall Street Journal Op Ed piece,2 Holman Jenkins rails against extending the Terrorism Risk Insurance Act of 2002 (“TRIA”) because he believes we have truly gotten a handle on this “terrorism thing” and, I quote now, “by now, Americans should recognize that terrorism poses less of a threat to them personally than does a bar of soap on the bathroom floor... Player, Thomas A.
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Player's Point - A TRIA A Survivor? / Since that fateful day of September 11th, most of us have been holding our collective breath in anticipation of another U.S. terrorist attack. For example, I had a bad feeling about the Super Bowl. You remember, all that ominous secret internet traffi c just prior to kickoff. How could we have known it was only the planners of the half-time show... Player, Thomas A.
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Player's Point - Brokergate: The Fallout / As I began this column, Marsh and the property & casualty industry were under fire from Attorney General Spitzer and a growing number of state insurance regulators. As I submit it to my editor, the scope has widened to a joint investigation by Spitzer and the SEC into the appropriateness of finite reinsurance coverage, and Spitzer has brought suit against Universal Life Resources alleging the steering of employee benefit business in return for contingent commissions. Moreover, California Commissioner Garamendi has brought actions \not only against ULR, but also companies with which ULR did business. The investigation’s focus now includes life, health and employee benefits... Player, Thomas A.
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Player's Point - The Safety Act And Stealth Tort Reform / A fully developed tort reform law buried in the 500 pages of the Homeland Security Act of 2002 flew under the radar of the plaintiff’s bar. As part of the Homeland Security Act, Congress passed the Support Antiterrorism by Fostering Effective Technologies Act of 2002 (the “SAFETY Act”)... Player, Thomas A.
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Player's Point - The Yin and the Yang of Arbitration / Last month I attended the ARIAS meeting in New York. Although I have served on more than a few panels as an arbitrator or umpire, the program proved the point that you can teach an old dog new tricks. It was entitled “Bringing Reinsurance Arbitration to the Next Level: The Voices of Experience.” The presenters were experienced, candid and refreshing. Remarks by highly experienced arbitrators were particularly useful. It was like having the Eleventh Circuit Court of Appeals sitting en banc and telling the audience the reasons for their decisions and the inside scoop on their deliberations... Player, Thomas A.
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Providence Health Plan V. McDowell: ERISA Does Not Preempt State Law Subrogation Claims / The United States Supreme Court case of Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002), is often mistakenly cited for the proposition that employee benefit plans cannot enforce subrogation clauses against their participants and beneficiaries. But a close examination of Great-West Life indicates differently. The respondent, Mrs. Knudson, was seriously injured in an automobile accident, and later brought suit against her car manufacturer. While her employee benefit plan paid about $411,000 for medical expenses Mrs. Knudson incurred (of which all but $75,000 was paid for by the petitioner, Great-West, as stop loss insurer of the employee benefit plan), a settlement of her tort case was going to allocate only about $13,000 for her medical expenses. Great-West sued Mrs. Knudson in federal court based on the fact that under the employee benefit plan, Great-West was entitled to more than the $13,000 afforded under the settlement pursuant to the plan’s subrogation rights... Wynn, Bruce H.
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Public Access v. Arbitration Confidentiality: A Balancing Act That Tilts Towards Access / By Lewis E. Hassett and Cindy Chang
One of the benefits of arbitration is the confidentiality of the submissions, discovery and evidence. Global Reinsurance Corp.-U.S. Branch v. Argonaut Insurance Co., No. 07CV8196, 2008 U.S. Dist. LEXIS 32419 (S.D.N.Y. Apr. 18, 2008) ("The federal policy in favor of arbitration is promoted by permitting one of the principle advantages of arbitration - confidentiality - to be achieved."). See also Lederman v. Prudential Life Ins. Co. of Am., 897 A.2d 362, 370-71 (N.J. Super. Ct. App. Div. 2006); Laurie Kratky Dore, Public Courts Versus Private Justice: It's Time to Let Some Sun Shine in on Alternative Dispute Resolution, 81 CHI.-KENT. L. REV. 463, 465-66 (2006); 4 Am. Jur. 2d Alternative Dispute Resolution ? 67 (2007). Confidentiality may be imposed by language in the arbitration clause or by an agreement or order in the arbitration. industryid: 6 Hassett, Lewis E.
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Reinsurer Setoffs and Policyholder Cut-Throughs in Insurer Insolvency Proceedings / Hassett, Lewis E.
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Removal To Federal Court After the One Year Period Has Expired / Corporate defendants, who have been sued by individual plaintiffs, often are at a significant disadvantage when they are forced to litigate high stakes cases in a state court. They may face state court judges who are predisposed to rule against them because of, among other reasons, relationships with local plaintiffs’ lawyers (who contribute heavily to judicial reelection campaigns). These judges often are less likely to grant motions to dismiss or motions for summary judgment, choosing instead to allow most cases to go to the jury. Alpert, Bob
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Seventh Circuit Revisits Punitive Damages / In State Farm Mutual Automobile Insurance Company v. Campbell, 123 S. Ct. 1513 (2003), the United States Supreme Court articulated constitutional limits on the imposition of punitive damages. As reported in Hassett’s Objections in the Summer 2003 issue of the MMM Insurance, Reinsurance, Managed Healthcare Review, the Supreme Court announced that “few awards exceeding a single digit ratio between punitive and compensatory damages . . . will satisfy due process.” The Supreme Court further noted, “four times the amount of compensatory damages might be close to the line of constitutional impropriety.” State Farm, 123 S. Ct. at 1524. Patrick, Marguerite "Becky"
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Synopsis of Title Insurance and Escrow Litigation in Georgia / Hassett, Lewis E.
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Terrorism Insurance Act Explained / MMMs Insurance Practice Examines New Law
ATLANTA (December 12, 2002) – The new Terrorism Risk Insurance Act of 2002 will benefit both business and the insurance industry, say attorneys at Morris Manning & Martin, LLP. The law firm, which has a national insurance practice, is actively educating clients about what the new law will do. Player, Thomas A.
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The Insurance Industry Takes Another Swing at Efficient Dispute Resolution / The widespread use of arbitration in insurance and reinsurance disputes was intended to allow parties to resolve complex disputes quickly and efficiently by having persons with knowledge of the specialized terminology, standards and practices of the insurance industry act as decision makers. This aspiration has been superseded by protracted and voluminous discovery, continual delays and postponements, extensive briefing and lengthy hearings. In essence, all of the foibles of litigation have crept into the world of arbitration, leaving the insurance industry once again in search of an efficient method to resolve disputes. industryid: 6 Pardi, Jessica F.
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Till Termination Do Us Part: A Primer on Effectively Managing Today’s Workforce / Hassett, Lewis E.
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Tread Carefully With Unsolicited Faxes / “Lose 30 lbs. in 30 Days!,” “Caribbean Property for Pennies per Acre!.” Unsolicited advertisements that arrive on the office fax machinefax spam,” if you will are usually regarded as little more than an annoyance. But they are also illegal under a federal law that has been in place since 1991... Holahan, Joseph T.
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U.S. Terrorism Risk Insurance Act: An Initial Critical / Article posted with permission by Journal of Reinsurance. Player, Thomas A.
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Where's The Next Stop On the Financial Services Company Train? / Myers Jr., Robert H.
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World Trade Center Issue May Go to Jury / A federal appeals court ruled in September that a jury should decide whether, under the wording of a Travelers insurance policy, the September 11, 2001 attacks on the World Trade Center constitute a single occurrence or two separate occurrences... Player, Thomas A.
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