COVID-19 Coverage Litigation Update: Will Your Claim Be Batched with Others for Resolution?

Robert N. Lane* and Linda Kornfeld

Part 1

So far, traditional first-party property insurers have taken hardline “no coverage” positions for COVID-19 business interruption claims. As a result, policyholders nationwide (and even around the world) have been left to contemplate whether to press their coverage claims through litigation, or stay on the sidelines and watch as others develop the issues. Those policyholders already in coverage litigation or considering filing suit should be aware of the debate between policyholders and their insurers regarding how to manage the coverage suits that have been filed in many different courts in many different states around the country. To be sure, there are currently nearly 700 lawsuits pending in federal and state courts nationwide (most of which thus far involve small businesses) seeking rulings regarding whether business interruption losses associated with COVID19 are covered by traditional first-party property policies. Of those 700 cases, almost 200 of them are identified as putative class actions. Continue reading “COVID-19 Coverage Litigation Update: Will Your Claim Be Batched with Others for Resolution?”

Wildfire and Hurricane Resources

Linda KornfeldJohn E. Heintz, and Alan Rubin







As the 2020 severe weather season continues unabated, our thoughts are with those dealing with multiple historic wildfires in the western states and on the West Coast, as well as with those awaiting the landfall of Hurricane Sally in the Gulf Coast tomorrow. The long-duration hurricane is expected to cause historic flooding and extremely dangerous storm surge. In addition, the National Hurricane Center has issued advisories on five tropical cyclones over the Atlantic basin; this ties the record for the greatest number of tropical cyclones in that basin at one time.

These unprecedented events are forcing evacuations, and may cause widespread damage, business interruption, and travel disruption for a large part of the country for days and weeks to come.

Blank Rome’s interdisciplinary Severe Weather Emergency Recovery Team (“SWERT”) has developed the following resources for those in the path of the wildfires and the storms, or with business interests in the affected regions, which we encourage you to share with your contacts via e-mail and/or social media:

Written by attorneys in our national Insurance Recovery practice who work with policyholder clients in the wake of property damage and business interruption losses.

Developed by Alan Rubin of Blank Rome Government Relations, who has years of experience working with FEMA in the aftermath of disasters.

Please share this information with anyone who has been impacted by the fires. These resources and many more can be found at our website at blankrome.com/SWERT. Our team stands ready to provide assistance on FEMA and insurance issues to individuals and businesses who are preparing for, or are impacted by, these events.

For additional information, please contact:

Linda Kornfeld, Partner and Vice Chair, Insurance Recovery Practice
John E. Heintz, Partner, Insurance Recovery Practice
Alan Rubin, Principal, Blank Rome Government Relations

Don’t Let Jury Trials Vanish Further Amidst the Coronavirus Pandemic

Jared Zola

A trial team and I were asked recently whether we would prefer to postpone an in-person jury trial several months or conduct the trial now via Zoom. We responded with a resounding, “in person.”

Not a single one of us is immune to the coronavirus COVID-19 pandemic. We’ve all suffered loss. Some much more tragic and permanent than others, but no one can honestly say that her or his life is unchanged. Some things that seemed normal earlier this year and before then may never go back to the way they were. Will we fly cross-country to conduct a four-hour deposition in person, even when it is safe to do so? Maybe; depends on the witness. Will we for an in-person meeting with colleagues? Maybe not.

While attorneys are proving every day that many parts of our profession can be performed remotely, we must closely guard the sanctity of jury trials from the coronavirus pandemic. Criminal and civil jury trials are the backbone of the American system of justice; our ultimate safeguard of civil liberties. The American jury trial is a constitutional right. I’m all for adapting to the present situation. But the thought of a “virtual” trial by jury is a bridge too far—and presents a serious risk of eroding one of the most fundamental American rights. Continue reading “Don’t Let Jury Trials Vanish Further Amidst the Coronavirus Pandemic”

Is There a Glitch in Insurance Coverage for Social Engineering Scams?

James S. Carter

Social engineering scams seeking to deceive companies into making wire transfers to fraudulent bank accounts continue to plague companies. According to the FBI, social engineering fraud costs businesses billions of dollars each year. On top of the lost funds, social engineering scams can lead to substantial investigation costs and even litigation.

Many businesses trust their crime or fidelity insurance policies to protect them from social engineering losses. Insurers, however, take the position that such policies do not cover all social engineering scams. Depending on the type of social engineering scam or how it happens to play out, insurers may deny coverage, depriving the policyholder of valuable insurance protection. Continue reading “Is There a Glitch in Insurance Coverage for Social Engineering Scams?”

Blank Rome Attys Talk COVID-19 Insurance Coverage Battles

Blank Rome LLP insurance recovery partners Jim Murray and Linda Kornfeld recently spoke with Law360 about how their practice group has been tackling clients’ claims for business loss coverage amid the COVID-19 crisis, while adjusting to the new normal of working from home.

How has your practice group adapted to the pandemic?

Murray: Our group consists of 32 of us now in several offices, including New York, Washington, D.C., and Los Angeles. We collaborate and pitch work as a group. We are not limited by offices. I have not had a single case at Blank Rome that has not included at least one lawyer from one of the other offices.

Our group would typically have a monthly meeting of 45 minutes to an hour, where we discuss key cases and developments. We had always done that by video in our offices. When the pandemic hit and we finally ended up closing, we went from 14 offices to 1,000 home offices. For the insurance group, though, it was in some respects business as usual, as we continued with those meetings, bumping them up to every Friday instead of every month. We limit the meetings now to 30 minutes, and every week we have a speaker talk about one of their cases. We have had a lot of discussion about coronavirus cases, what we will and will not be doing in this area.

Kornfeld: It has really been a great thing to have such a close group in this pandemic situation. In my career, I have never been involved in any situation of this scope, where everyone in the group is thinking about the same issues at the same time. 9/11, Hurricane Katrina, Hurricane Sandy and other large-scale events in the past were geographically specific, where this event is impacting most everyone everywhere.

We are all reading insurance policies on a daily basis and analyzing those policies. We have such strong friendships that we are on the phone with each other all the time, trading ideas about policy language and potential arguments. Since we are such a tightly knit group, we have been able to use that fact to bring sophistication of analysis and thought to bear. We are putting all these smart coverage brains together and focusing at the same time on this specific issue, coverage for the pandemic. The level of intellectual discussion has been a silver lining of this situation.

For the firm as a whole, across all practice areas, we have been in much closer contact. Most everyone’s clients have had some issue relating to the pandemic.

In their full interview with Law360, Jim and Linda further discuss:

  • What pandemic-related work has the group been doing?
  • What do you think of efforts to centralize COVID-19 coverage cases?
  • How have you been spending time outside work?

To read the full article, please click here.

“Blank Rome Attys Talk COVID-19 Insurance Coverage Battles,” by Jeff Sistrunk was published in Law360 on June 17, 2020.

 

Credit Insurance: Insurance for Late Payments or Nonpayments

John A. Gibbons and James S. Carter

Recent events and the decline of the global economy have brought a raft of notices of late payments or no payments for creditors, lenders, landlords, and trade counterparties. In many instances there may be no notice at all, but rather just silence and a nonpayment. With the downturn and record number of layoffs and closures also comes the specter of further prolonged defaults and bankruptcies.

Is there insurance to protect against a nonpayment? Yes. Beyond Business Interruption / Business Income and other insurance policies that cover losses from recent events and business suspension losses, there is specific insurance designed to protect against the risk of nonpayment of a debt: Credit Insurance / Trade Credit Insurance.

What Is Credit Insurance?

Credit insurance protects those that purchase the insurance against the risk of nonpayment of an insured debt. Purchasers of credit insurance can fall within a wide array of businesses—lenders, exporters, commodity traders, product suppliers. Credit Insurance is typically used to protect a company’s own account receivables (“AR”) against the risk of nonpayment. Continue reading “Credit Insurance: Insurance for Late Payments or Nonpayments”

CANCELED: Guidance for Policyholders on Event Cancellation Insurance in the Wake of COVID-19

Dominique A. Meyer

Across the globe, governments and public health officials are banning large gatherings and imploring citizens to practice “social distancing” in order to slow and prevent the spread of the coronavirus outbreak, or “COVID-19.” As a result, festivals, sporting events, conferences, and community celebrations are being canceled or postponed, leaving event organizers of all sizes—from major production companies, to would-be newly-weds—wondering how to recoup their substantial losses.

The pandemic has led to an unprecedented number of high-profile event cancellations and the potential for billions of dollars in lost income and other damages to the entertainment and sports industries. Just last week, concert giants Live Nation and AEG Presents suspended all tour engagements in North America, and world-famous gatherings like the Coachella Valley Music Festival and Stagecoach Music Festival were postponed until October. The threat of the virus has also taken its toll on professional sports—both the National Basketball Association and the National Hockey League suspended the remainder of their 2019–2020 seasons, and the National Collegiate Athletic Association canceled its March Madness tournament altogether. Not even “America’s favorite pastime” has been immune from the effects of the virus—Major League Baseball postponed the start of its 2020 season indefinitely. The economic cost of these cancellations is certain to be substantial. Continue reading “CANCELED: Guidance for Policyholders on Event Cancellation Insurance in the Wake of COVID-19”

New York Courts Skeptical of Insurers Seeking to Hide Coverage Analysis as Privileged

Alexander H. Berman, Robyn L. Michaelson, and Justin F. Lavella

One of the most basic discovery requests in insurance coverage litigation is for the insurer’s claims-handling documents and coverage analysis. A policyholder suing for insurance coverage is entitled to understand the insurer’s pre-denial coverage analysis, which is after all one of the core business functions of an insurance company along with marketing and selling policies.

Simply put, an insured must be allowed access to all documents held by the insurer, including communications and claim files that might speak to why the insurer denied the claim. In recent years, however, insurers have begun to involve both in-house and outside counsel in these deliberations, and have consequently asserted the protections of the attorney-client privilege and the work product doctrine to shield these critical business documents from discovery.

Fortunately, New York courts are developing a body of case law that properly treats such communications as discoverable. When an insurer communicates with counsel to assist in determining whether a claim is covered in the first instance, such communications are made primarily in furtherance of the insurer’s business function, as opposed to legal advice, and therefore are not immune from discovery. Any resulting memoranda simply reflects the same work that claims handlers have been performing since the establishment of the insurance industry. That the analysis was undertaken by an attorney rather than a non-attorney has no significance in the nature and purpose of the work being performed and the discoverability of the resulting analysis and documents. Continue reading “New York Courts Skeptical of Insurers Seeking to Hide Coverage Analysis as Privileged”

California Corner: Resources for Those Impacted by California Wildfires

Linda Kornfeld, John E. Heintz, Alan Rubin

Communities and businesses throughout California are dealing with the serious, and for some, catastrophic effects of historic wildfires. The fires have devastated homes and businesses across a large swath of the state, and while their full impact is not yet known, they are sure to cause long-term disruption to individuals and families, residential areas, businesses and the economic health of the entire region. Our thoughts are with those affected by these events, and our interdisciplinary Severe Weather Emergency Recovery Team (“SWERT”) has prepared two resources that are immediately helpful to those in the affected areas: Continue reading “California Corner: Resources for Those Impacted by California Wildfires”

Case Review: Seventh Circuit Repudiates Insurer’s Attempt to Sell Illusory Coverage to Policyholder

Shareen Sarwar

Last week, the Seventh Circuit had occasion to consider the scope of a contractual liability exclusion in the context of professional liability coverage. In Crum & Forster Specialty Ins. Co. v. DVO, Inc., No. 18-2571, 2019 WL 4594229 (7th Cir. Sept. 23, 2019), an insurer insisted that its contractual liability exclusion did not render the professional liability coverage it sold illusory. The Court disagreed, however, holding that the exclusion was overbroad and would, if applied, defeat the fundamental purpose of the insurance. The Court further concluded that the policy must be reformed to meet the policyholder’s “reasonable expectations” of coverage.

The insurer had sold both primary and excess insurance policies to its policyholder, DVO, a company which designs and constructs anaerobic digesters. Pursuant to the coverage grant, the insurer agreed to pay DVO’s liabilities for, among other things, “damages or cleanup costs because of a wrongful act” arising out of “a failure to render professional services.” The Court opined that the essential purpose of this insurance was to provide coverage for professional malpractice. Continue reading “Case Review: Seventh Circuit Repudiates Insurer’s Attempt to Sell Illusory Coverage to Policyholder”