LJN Newsletters

In the insurance arena, allocations of claims amounts are frequently the subject of litigation among policyholders and insurers. Courts seek to fashion allocation formulas based upon a number of factors including policy language, legal principles and equitable considerations. In the reinsurance context, allocation questions are generally resolved in arbitration. A number of courts, however, have recently addressed the allocation of claims settlements in the reinsurance context. The issue in reinsurance is whether the reinsurer is bound by the cedents' allocation of a loss or settlement amount to the cedents' policies at issue in the underlying claim. Reinsurers are generally bound to "follow-the-fortunes" or "follow-the-settlements" of a cedent provided the cedent has acted reasonably and in good faith and in accordance with the terms of the reinsurance contracts. Aetna Cas. & Sur. Co. v. Home Ins. Co., 882 F. Supp. 1328, 1346 (S.D.N.Y. 1995). This article surveys recent case law that has addressed the question of whether the "follow-the-settlements" or "follow-the-fortunes" doctrine applies to allocation of claims payments or settlements to reinsured policies.

Highlights of the latest insurance cases from around the country.

Brokers long have had certain duties toward policyholders, including the duty to use reasonable skill and care in procuring insurance. Procuring appropriate coverage can be a daunting task for applicants unfamiliar with the intricacies of insurance. The myriad types of policies available and the differing coverages they contain present numerous pitfalls for the unwary. Many companies, even those with risk managers, rely upon brokers to select policy types and carriers, and to notify carriers of losses. Given policyholders' reliance on brokers, there is a standard of care brokers must meet.

Highlights of the latest product liability cases from around the country.

If you require information about toxic chemicals, visit the National Toxicology Program (NTP) at http://ntp-server.niehs.nih.gov. The NTP was established in 1978 by the Department of Health and Human Services (DHHS) to coordinate toxicological testing programs within the department; strengthen the science base in toxicology; develop and validate improved testing methods; and provide information about potentially toxic chemicals to health regulatory and research agencies, the scientific and medical communities, and the public.

For the fifth time in 12 years, the Supreme Court agreed to hear a case involving the imposition of punitive damages and, once again, the Court articulated criteria and principles against which lower courts and litigants can measure the type of conduct that should support an award of punitive damages. State Farm Mut. Auto Ins. v. Campbell, 123 S.Ct. 1513 (April 7, 2003).

When suing a foreign manufacturer, the plaintiff's attorney must take into account jurisdictional rules set by the Supreme Court as well as the long arm statute of his/her forum state.

The Supreme Court's March 10th ruling in Norfolk & Western Railway Co. v. Ayers, No. 01-963, marks the Court's third recent foray into the federal tort law that is the Federal Employers' Liability Act (FELA) and provides ammunition for plaintiffs in product liability cases who are seeking to recover damages for mental anguish. In Ayers, the Court, by a 5-4 majority, held that mental anguish damages resulting from fear of cancer may be recovered under FELA by a railroad worker suffering from asbestosis caused by asbestos workplace exposure.