Case Briefs
August 31, 2006
Highlights of the latest insurance cases from around the country.
The Prudent Investor Rule
August 31, 2006
The Prudent Investor Rule sets forth the basic rules governing the conduct of fiduciaries in the management of trust assets. While the legal standards for investment fiduciaries can be traced as far back as an 1830 Massachusetts court case creating the redecessor 'Prudent Man' standard, the Prudent Investor Rule is of much more recent origin.
Claims for Breach of Implied Covenant of Good Faith and Fair Dealing: Viability Typically Depends on Success of Breach of Contract Claim
August 31, 2006
In many insurance coverage disputes, an insured that brings a claim for breach of the insurance contract also claims breach of the implied covenant of good faith and fair dealing. The carrier then must determine how to successfully defend both claims. The strategy employed in defending those claims must take into consideration the nuances of a claim for breach of the implied covenant of good faith and fair dealing. In most jurisdictions, the best strategy may be to focus on defeating the contract claim, because the dismissal of the contract claim typically extinguishes any claim of breach of the implied covenant of good faith and fair dealing.
The Scope of Absolute and Total Pollution Exclusions
August 31, 2006
Insurance carriers and policyholders continue to engage in an ongoing debate with respect to the meaning and application of 'absolute' or 'total' pollution exclusions ' clauses that are contained in most general liability insurance policies sold since 1986. Absolute and total pollution exclusions generally preclude coverage for bodily injury or property damage 'arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants,' and define 'pollutant' to mean 'any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.'
The July 2006 IOM Report on Medication Errors
August 31, 2006
For the second time in less than a decade, a report by the Institute of Medicine (IOM) was released in July. The previous IOM report on the subject, released in 1999 and titled, 'To Err Is Human,' rocked the medical community when it estimated that 44,000-98,000 Americans die each year as a result of medical errors. Similarly, the report released in July documents significant shortcomings in the provision of medical services in this country and startlingly points out that medication errors continue to harm at least 1.5 million people every year. According to the new report, the problem is so serious that, on the average, a hospital patient is subject to at least one medication error per day. The IOM estimates that the additional costs of treating medication-related injuries ' those occurring in hospitals alone ' can conservatively be estimated at $3.5 billion per year. At least one quarter of all such injuries are apparently preventable.
Focus Groups
August 31, 2006
You have a big trial looming; let's say an infant death or quadriplegia case. You think the medicine is sound, your experts are comfortable with their positions and the client wants to go forward. At the same time, the injuries to the plaintiff are substantial. Do you 'roll the dice' with a jury, or do you settle for a 'reasonable amount'? This is the dilemma faced by medical malpractice lawyers every day, and the decisions required here are not easily made.
Excess or Primary Insurance?
August 31, 2006
When a doctor obtains insurance from more than one carrier and both policies contain language along these lines ' 'Insurance under this coverage is excess of and payable only after all other valid insurance limits of coverage have been exhausted' ' which will be deemed the primary policy and which the excess policy? Or will they each cancel the other out? The answer will depend on myriad criteria, including the specific language of the policies, the amount the insured paid for coverage and whether one policy identifies the other insurer as the primary insurer.
Supreme Court Denies Priority Status for Unpaid Workers' Compensation Premiums
August 31, 2006
In a recent decision, the U.S. Supreme Court clarified an issue important to workers' compensation insurers and held that pre-petition unpaid workers' compensation premiums are not entitled to priority status under the Bankruptcy Code. <i>Howard Delivery Service, Inc., et. al. v. Zurich American Insurance Co.</i>, 126 S. Ct. 2105 (2006). This decision forecloses any disagreement among the Circuit Courts that unpaid workers' compensation premiums are entitled to priority status in a bankruptcy proceeding. In light of <i>Howard</i>, such claims are now considered merely general unsecured claims. Had the Supreme Court afforded priority status to such claims, they would have been paid prior to the claims of general unsecured creditors. Generally, priority expense claims receive a significant, if not 100% distribution, as opposed to general unsecured claims, which, in many circumstances, receive only pennies on the dollar. In a decision delivered by Justice Ruth Bader Ginsberg, joined by five other justices (Chief Justice John Roberts, Jr. and Justices John Paul Stevens, Antonin Scalia, Clarence Thomas, and Stephen Breyer), the Supreme Court's ruling not only brings consistency to this issue, but also provides opportunities for workers' compensation insurers to avoid forfeiture of payment of their premiums by financially troubled insureds.
Case Notes
August 31, 2006
Highlights of the latest product liability cases from around the country.
