Regulatory Issues and Compliance
8/1/2009 1:27:24 PM EST
Tobias J. Cushing of Saxe Doernberger & Vita, P.C. on “Regulatory Estoppel 15 Years After Morton: A Fifty State Survey & Discussion of Arguments Regarding Regulatory Estoppel”
Associate, Saxe Doernberger & Vita, P.C.
An article appearing in the March/April issue of Coverage, “Regulatory Estoppel 15 Years After Morton: A Fifty State Survey & Discussion of Arguments Regarding Regulatory Estoppel” is by Tobias J. Cushing of Saxe Doernberger & Vita, P.C. He points out that courts are increasingly estopping insurance companies from interpreting policies and adjusting claims in ways that differ from what they told insurance regulators. Currently, the state courts are divided as to the extent such “regulatory estoppel” will be applied or limited.
The seminal insurance coverage case on regulatory estoppel is Morton Int’l, Inc. v. Gen. Accident Ins. Co. of Am., 629 A.2d 831 (N.J. 1993). In that case, the court held that the insurance industry’s representations to regulators that a pollution exclusion would not apply to unintentional and gradual pollution estopped insurers from taking a contrary position as to the plaintiff’s claims for insurance coverage. The article analyzes that court decision as well as others that adopted regulatory estoppel. It also analyzes selected cases rejecting regulatory estoppel. It further provides a 50-state survey of court decisions on the issue. The author notes that thus far regulatory estoppel has only been applied to the pollution exclusion in CGL policies. Questions as to the future include:
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Will the doctrine be applied to other policy provisions?
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Will the doctrine be applied to other types of insurance?
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Whether there are arguments that can be made to limit or defeat its application?
The article explores each of these questions.
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