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Editor's Corner 3/23/2009 12:35:18 PM EST INSURANCE LAW CENTER PERSON OF THE YEAR HONOREES FOR 2008 The LexisNexis Insurance Law Center Advisory Board has concluded its deliberations and selected the recipients of ILC’s Person of the Year awards for 2008. The sheer number of comments and emails we have received over the past month and the strength and spirit of the words that clients, colleagues and others submitted are a testament not only to the nominees’ various individual accomplishments but to the extent of this group’s collective expertise. After conducting an in-depth review of each nomination and all supporting materials and engaging in lively debate, the Board is pleased to announce the 2008 Person of the Year honorees:
Policyholder Attorney of the Year
Bob Horkovich and Roger Simpson jointly represented the State of California in its long-running insurance coverage dispute over the estimated $700 million cleanup of the Stringfellow waste site. Their major impact on the insurance law landscape in the past year includes a pair of decisions in State of California v. Continental Insurance. The first, handed down on Jan. 5, 2009 by the Fourth District of the California Court of Appeals, see State of California v. Continental Insurance Company, 169 Cal.App.4th 1114, makes clear that liability insurance policyholders can recover the limits of each policy in effect during the course of continuous environmental damage in order to pay for the necessary cleanup. The second, issued on March 9, 2009 by the California Supreme Court, see State of California v. Allstate Insurance Company, 209 Cal. LEXIS 1640, holds that if a loss is caused by covered and uncovered events, and the policyholder can’t prove exactly how much is covered, the insurance company has to pay for the whole loss up to its policy limits. Both decisions clarify issues of major importance to policyholders in California and nationwide and will continue to have an impact on the insurance industry as a whole.
On the strength of their joint representation of the State of California in the Stringfellow matters, the Board expresses the unanimous view that Bob Horkovich and Roger Simpson are the attorneys who did the most in 2008 to effectively advance policyholder positions and improve insurance law from the perspective of policyholders.
Although the litigation spawned by Hurricane Katrina tells a tale that overwhelmingly favors insurers, Chip Merlin’s fine representation of many policyholders in Katrina litigation merits an honorable mention in this award category. The legal arguments raised on behalf of policyholders in the various Katrina cases did not for the most part prevail, but the recognition afforded to members of the insurance bar isn’t always about winning. In the Board’s view, Chip Merlin’s dedicated and ethical work on behalf of policyholders is a true measure of success that merits an honorable mention in this Policyholder Attorney category.
Insurer Attorney of the Year
Leo J. Jordan was the Committee Chair presiding over the Task Force on Disaster Insurance Coverage promulgated by the Tort Trial & Insurance Practice Section (TIPS) of the American Bar Association. He guided the committee through a labyrinth of conflicting interests to find the common ground necessary to develop a mainstream position. Because his influence and leadership had a profound impact on the disaster task force’s efforts to create recommendations for the post-Katrina world, the Board concludes that Leo Jordan is the attorney who did the most in 2008 to effectively advance insurer positions and improve insurance law from the perspective of insurers.
For his relentless efforts in the battle against insurance fraud, and the noteworthy impact on the insurance center’s online community resulting from the watershed number of comments received on his behalf, the board extends an honorable mention in this Insurer Attorney category to Rick Hammond.
Regulator of the Year
Florida Insurance Commissioner Kevin McCarty’s impact on Florida and the nation’s insurance marketplace is undeniable. He has proven himself as a force to be reckoned with. In his steadfast role as “agitator in chief” of the property and casualty marketplace in the Sunshine State, he has irritated homeowners’ insurance companies for the benefit of consumers to the point where large carriers have threatened to exit the marketplace. McCarty’s “take no prisoners” attitude has earned him a reputation as a tough, unyielding, intelligent and politically capable regulator. If you represent an insurance company, you may not like him. If you are a Florida insurance consumer, he may be your hero.
McCarty has also defined himself on the national stage. He has been a tireless advocate in Congress and at the National Association of Insurance Commissioners for a national catastrophe insurance plan. He understands the uphill battle that stands in the way of creating such a plan, and whether you agree with him or not he remains firm in his belief that such a plan is imperative for the country, and for the survival of the insurance industry in his catastrophe prone state.
Commissioner McCarty’s work and advocacy on numerous issues, ranging from holding life insurance companies accountable for their potential discrimination against consumers who travel abroad, to his advocacy against insurers’ use of credit scores when underwriting and pricing policies, has attracted the attention of his colleagues, insurers and consumers. McCarty was recently elected as Secretary Treasurer of the NAIC, and will move through the chairs for the next 4 years.
ILC received a large number of comments received from community participants in support of Commissioner McCarty’s nomination and he also received strong support for his candidacy from throughout the regulatory community.
Opinions about whether Kevin McCarty’s accomplishments as Insurance Commissioner in the State of Florida may heavily depend on which side of the bar an individual occupies, but his impact on the insurance industry—for good or for ill---is undeniable. For all of the foregoing reasons, the Board therefore concludes that Florida Insurance Commissioner Kevin McCarty is the international, federal, state or local regulator who had the most impact on the insurance industry during 2008.
Insurance Jurist of the Year
Although the LexisNexis “Insurance Law Persons of the Year” designations are generally intended to be awarded to individuals, 2008 was a year appropriate for an exception. Proving that the whole is more than the sum of its parts, the Texas Supreme Court stood out as an entity, even more than its individual Justices, or more than any single judge, justice, or other court. In an amazing example of placing insurance coverage issues at the forefront of its docket, the Court in more than a dozen insurance-related opinions addressed and answered a number of questions that had long remained open in the Lone Star state and that remain unsettled in many states. Undoubtedly, the decisions (and accompanying dissenting opinions) will be influential throughout the country for years to come.
The Court’s decisions are noteworthy not only for tackling important issues and providing useful answers, but doing so in a constructive, clear, reflective, moderate manner. Both policyholders and insurers will find things to like and dislike in the opinions but all would probably agree as to their quality and timeliness. As LexisNexis contributor Randy Maniloff has observed, the Court’s decisions are “thorough, frequently review the national landscape on an issue as part of its decision making process and are often accompanied by concurring and dissenting opinions. Agree or disagree with its results, there is no denying that the Supreme Court of Texas is not afraid of hard work.” See Randy J. Maniloff & Jennifer Wojciechowski, 8th Annual Insurance Coverage Best in Show: The Ten Most Significant Decisions of 2008, 23 Mealey’s Litigation Report: Insurance, No. 8 (Dec. 18, 2008) p. 1, 3.
Many of these decisions had been in the pipeline for some time, making 2008 in some ways the culmination of years of Court consideration of insurance issues. Without doubt, 2008 was a year in which the Texas Supreme Court stood out despite the many important insurance decisions of other state and federal courts. Congratulations to the Texas Supreme Court and its members:
Following, in chronological order, is a list briefly summarizing the Court’s 2008 insurance-related decisions.
PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630 (Tex. Jan. 11, 2008) – The Court addressed late notice and the prejudice requirement and adopted the majority rule that late notice voids coverage only if the insurer can demonstrate that it was materially prejudiced by the late notice.
Score: Policyholders/Insureds 1; Insurers 0
Warwick Towers Council v. ParkWarwick Investments, 244 S.W.3d 838 (Tex. Jan. 25, 2008) – An insurer’s appeal seeking subrogation recovery taken in the name of the policyholder is not procedurally defective. Case remanded for consideration of the merits of the subrogation claim.
Score: Policyholders/Insureds 1; Insurers 1
Excess Underwriters at Lloyd’s London v. Frank’s Casing Crew & Rental Tools, Inc., 246 S.W.3d 42 (Tex. Feb. 1, 2008) -- In its second opinion in the case, the court addressed whether an excess insurer that settles a claim when coverage is in dispute may seek reimbursement from the insured if it is determined that coverage was not owed. The Court held the insurer could not unilaterally establish a right to reimbursement merely by so asserting in a letter when it settled the claim and that the policy itself did not provide the insurer with any right to seek reimbursement.
Score: Policyholders/Insureds 2; Insurers 1
Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653 (Tex. Feb. 15, 2008) – The Court addressed whether the public policy of Texas prohibited insurance coverage of exemplary damages for gross negligence in the workers’ compensation context. The Court found both that the policy did not exclude punitive damages coverage and that no state public policy barred such coverage.
Score: Policyholders/Insureds 3; Insurers 1
National Union Fire Insurance Company v. Crocker, 246 S.W.3d 603 (Tex. Feb. 15, 2008) – Court addressed notice issues for additional insureds, finding that an additional insured failing to give prompt notice could not conclusively prove lack of prejudice even though the insurer had actual knowledge of the suit in question.
Score: Policyholders/Insureds 3: Insurers 2
Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc., 256 S.W. 3d 660 (Tex. Feb. 15, 2008) and Evanston Ins. Co. v. Atofina Petrochemicals, 2008 Tex. LEXIS 575 (Tex. June 13, 2008) – The Court addressed the inter-play between additional insured and contractual indemnity issues, finding generally broad entitlement to coverage for additional insureds, even in cases where the additional insured is the sole negligent tortfeasor rather than merely vicariously liable for the active negligence of a named insured. However, the Court denied counsel fees to Atofina pursuant to Tex. Ins. Code Ann. Art. 21.55 because the matter involved third-party insurance rather than first-party coverage.
Score: Policyholders/Insureds 4 ; Insurers 3
Unauthorized Practice of Law Comm. v. Am. Home Assur. Co., 261 S.W.3d 24 (Tex. March 28, 2008) –Court addressed whether liability insurers may use “staff counsel” to defend claims against their insureds, approving the use of insurer in-house lawyers provided the policyholder was adequately informed about the nature of the lawyer’s relationship to the insurer (e.g., staff counsel doing business as “Joe Jones and Associates” must clarify their status to insureds being defended).
Score: Policyholders/Insureds 4; Insurers 4
Nationwide Insurance Co. v. Elchehimi, 249 S.W.3d 430 (Tex. Mar. 28, 2008). The Court found no uninsured motorist coverage under the policyholder’s automobile policy where the policyholder’s car collided with an axle-wheel assembly separated from an unidentified semi-trailer truck that crossed a highway median. The axle-wheel assembly was not a “motor vehicle” within the meaning of Tex. Ins. Code. Ann. §1952.104(3).
Score: Policyholders/Insureds 4; Insurers 5
Entergy Gulf States, Inc. v. Summers, 2008 Tex. LEXIS 301 (Tex. April 4, 2008)-- Court agreed to re-hear its 2007 decision (2007 Tex. LEXIS 799 (Tex. Aug. 31, 2007)) addressing the workers compensation exclusive remedy protection for a premises owner that is sued by a subcontractor’s employee. Impact as yet unclear, but this is probably a good sign for claimants, who in the previous opinion were precluded from recovering more than workers compensation benefits in most circumstances. Entergy presents a number of complexities because of the particular characteristics and history of Texas workers compensation law. For a more detailed discussion of Entergy and the workers compensation issues it addressed, see Thomas A. Robinson on Premises Owners' Immunity From Tort Actions Filed by Injured Employees of Subcontractors: Entergy Gulf States v. Summers. Additional information is also available in blog posts authored by Texas attorney Stuart D. Colburn, entitled Entergy Analysis and Debate, and Premises Owner is General Contractor and Qualfies for Exclusive Remedy Defense, which originally appeared on the LexisNexis Workers' Compensation Law Center.
Score: Policyholders/Insureds 4; Insurers 5; Undecided 1*
[Editor's Note: The Texas Supreme Court has since issued its opinion upon rehearing in Entergy, leaving its initial judgment unchanged. A copy of the court's opinion is available here.]
*Revised Score: Policyholders/Insureds 5; Insurers 5.
Texas Mutual Insurance Co. v. Ledbetter, 251 S.W.3d 31 (Tex. April 4, 2008). In this case, the Court reinstated a workers’ compensation carrier’s petition for intervention to seek reimbursement from an insured’s tort recovery, requiring on remand that the carrier’s be adequately reimbursed from the settlement prior to judicial approval.
Score: Policyholders/Insureds 5; Insurers 6;
Perry Homes v. Cull, 258 S.W.3d 580 (Tex. May 2, 2008). An arbitration award in favor of a homeowners and against a builder and two home warranty insurers was reversed due to the homeowners’ constructive waiver of its right to arbitrate. The homeowners had engaged in “extensive discovery” in litigation for more than a year before seeking to compel arbitration, conduct the Court found to have waived any rights the homeowners had to arbitration.
Score: Policyholders/Insureds 5; Insurers 7;
First American Title Insurance Co. v. Combs, 2008 Tex. LEXIS 827 (Tex. May 16, 2008). In a 5-4 decision, the Court affirmed imposition of Texas imposing a “retaliatory” tax on two insurers challenging the Texas Comptroller’s relatively recent revised interpretation of state law on this point, a reinterpretation that “sharply increased the tax liability of certain non-Texas title insurers.
Score: Policyholders/Insureds 6; Insurers 7;
Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487 (Tex. Aug. 29, 2008). Here, the Court addressed the duty to defend cell phone radio frequency biological injury actions, finding a duty to defend in the instant case. The insurer had contended that allegation of biological harm on the cellular level were insufficient to constitute bodily injury under the CGL policy, a contention the Court rejected. The Court also found the duty to defend applied to the entire action and could not be avoided except for as to one of the underlying claims where the plaintiffs had expressly sought only equitable relief rather than monetary damages, thus taking that claims outside any potential for indemnity coverage.
Score: Policyholders/Insureds 7; Insurers 7;
Don’s Building Supply, Inc. v. OneBeacon Insurance Company, 257 S.W.3d 20 (Tex. Aug. 29, 2008). The Court addressed trigger of coverage for construction defects, finding trigger when defective work began to do tangible physical damage to property other than the work itself (even if the damage was yet to be noticed). The Court adopted an actual injury or injury-in-fact trigger, that will probably operate in practice like the continuous trigger found in long-tail asbestos and pollution cases. cases.
Score: Policyholders/Insureds 8; Insurers 7;
Ulico Casualty Company v. Allied Pilots Association, 262 S.W.3d 773 (Tex. Aug. 29, 2008). Finally, the Court addressed the creation of coverage by waiver or estoppel, generally setting a high bar for policyholders seeking coverage on these doctrinal grounds. The Court concluded that neither waiver nor estoppel could increase the coverage available under Ulico’s policy with APA. While the Texas Supreme Court concluded that coverage not expressed in the policy can nonetheless still be owed, if the insurer makes a separate agreement to provide coverage, the insured must prove that it was actually prejudiced by the insurer’s actions in order to obtain relief. Other states have concluded that prejudice is deemed to exist by the mere act of the insurer defending without a reservation of rights. Further, the Court found no enforceable agreement against the insurer in this case.
Score: Policyholders/Insureds 8; Insurers 8.
Final Comments
The Insurance Law Center is a part of the LexisNexis communities (http://lexisnexis.com/communities), a group of online Web 2.0 hubs designed to bring together legal practitioners in 16 practice areas worldwide. Members visit the communities to receive news, download relevant resources offered by LexisNexis, participate as guest speakers on legal podcasts, create or comment on blog posts, and remain current on the trends and emerging issues engaging their circle of professional peers. These online communities offer legal practitioners the opportunity to expand their professional knowledge, establish themselves as experts in their field, and interact with their industry colleagues on their own time.
Since launching its first annual Insurance Person of the Year Award in early 2009, the ILC has experienced an unprecedented amount of activity, including the receipt of almost 50 nominations from professionals throughout the insurance industry. The community came out in force to share their views on the list of nominated finalists and posted in excess of 100 comments in a 3-day period. We heard from all segments of the industry—attorneys, regulators, lawmakers, academics, underwriters and claims professionals, brokers and agents, insurers and policyholders, colleagues and clients.
Your participation truly reflects the voice of a growing community and has contributed a great deal to the Board’s effort to set an industry-wide standard of professionalism with the launch of this annual award event. The Board thanks everyone for their nominations and comments and encourages former and new community members to visit the Insurance Law Center throughout 2009 for commentary, podcasts and other contributions from our selected Persons of the Year. Create an account or login to post comments.
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