Archives: D & O Insurance

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Guest Post: Notice-Prejudice Requirements in D&O Policies: Diverse Trends in Contract Language and Case Law

Among the perennial coverage issues arising under D&O and E&O policies are questions involving timely notice of claim. Recently, the notice provisions many professional liability insurance policies relating to notice timeliness have been revised to lengthen the time period within which notice must be given and even specifying that if in order to assert late … Continue Reading

Guest Post: Ten Mistakes Companies Make When Buying D&O Insurance –A Securities Litigator’s Perspective

Just about every publicly traded company and most private companies carry D&O insurance. It is just common sense in the current litigious environment. But while most companies recognize the need for D&O insurance, not every company maximizes its investment when purchasing the insurance. In the following guest post, Michael J. Biles, a partner in the … Continue Reading

D&O Insurance: Contractual Liability Exclusion Applied to Preclude Coverage for Negligence Claim

In an unpublished October 5, 2015 opinion (here), the Eleventh Circuit, applying Florida law, held that a D&O insurance policy’s contractual liability exclusion precluded coverage for negligence claims asserted against persons insured under the policy. The contract exclusion was written with a broad “based upon, arising out of” preamble wording. As discussed below, the decision … Continue Reading

D&O Insurance: Two Federal Appellate Courts Issue Rulings Confirming Carriers’ Coverage Denials

When I started out as a law firm associate doing D&O insurance coverage work more than three decades ago, there was virtually no interpretive case law available. Legal research in connection with D&O insurance tended to be a meagre, frustrating process. Things have changed so much in the interim that now we can have two … Continue Reading

D&O Insurance: HIPAA Supoenas, Interrelatedness, and Regulatory Claim Sublimits

In an interesting September 30, 2015 opinion, Southern District of California Cynthia Bashant, applying California law, held that a series of HIPAA-related subpoenas that the U.S. Department of Justice served on Millennium Laboratories were not interrelated with prior qui tam lawsuits that had been filed against the company, and held further that coverage under Millennium’s … Continue Reading

D&O Insurance: Insured vs. Insured Exclusion Applies Even When Claimants Include Both Insureds and Non-Insureds?

The Insured vs. Insured Exclusion is a standard D&O insurance policy provision. The exclusion precludes coverage for clams brought by one “Insured Person” against another “Insured Person.” But what happens when the claimants suing an Insured Person include both individuals who are Insured Persons and other individuals who are not? In a September 22, 2015 … Continue Reading

D&O Insurance: The Question of Coverage for TCPA Claims

The Telephone Consumer Protection Act (TCPA) has proven to be a fruitful source of consumer class action litigation. Plaintiffs’ lawyers are attracted by the potentially lucrative recoveries under the statue, and indeed several recent settlements in TCPA class action lawsuits have run into the millions of dollars. The volume of litigation under the statute and … Continue Reading

Ninth Circuit: Professional Services Exclusion Precludes Coverage Under Payroll Services Firm’s Management Liability Insurance Policy

The problems that can arise from the wording of the professional services exclusion in the D&O insurance policy of a service company are perennial issues and a recurring topic on this blog (see most recently here). In an unpublished August 18, 2015 opinion (here), the Ninth Circuit affirmed the district court’s conclusion that coverage for … Continue Reading

Cal. Supreme Court: Insurer May Seek to Recover Directly From Independent Counsel Allegedly Excessive or Unreasonable Fees

On August 10, 2015, in an opinion that has already garnered a great deal of attention and commentary, the California Supreme Court ruled that an insurer that funded the payment for its insured of independent counsel (or “Cumis” counsel as independent counsel are known in California) in defense of a claim may seek to recover … Continue Reading

The Problem with a Broadly Worded Professional Service Exclusion in a Service Firm’s D&O Insurance Policy

In a recent post (here), I discussed a recent federal district court ruling in which the court broadly interpreted the professional services exclusion in a bank’s D&O insurance policy in order to preclude coverage under the policy for a claim that had been made against the bank and certain of its directors and officers in … Continue Reading

Guest Post: Maximizing the Return on Your D&O Insurance for Merger Objection Lawsuit

One of the most distinctive corporate and securities litigation phenomena over the last several years has been the rise in merger objection lawsuits. We are now to the point that virtually every M&A transaction attracts at least one lawsuit. These suits present a number of challenges, including, among other things, questions arising in connection with … Continue Reading

D&O Insurance: A Question of “Capacity”

In  a recent post in which I discussed the “basic value proposition” of D&O insurance, I noted that among the five indispensable elements required in order for coverage under a D&O insurance policy to exist is the requirement that a Claim for an alleged Wrongful Act against an Insured Person acting in an Insured Capacity. … Continue Reading

D&O Insurance: A “Final” Analysis

One of the standard features of D&O insurance policy is the fraud exclusion, which these days typically provides that the exclusion is triggered only after a “final” judicial determination that the precluded conduct has occurred. But what is it that makes a determination “final”?   On June 23, 2015, in a decision that has a … Continue Reading

D&O Insurance: Debtor-in-Possession Claims and the Insured vs. Insured Exclusion

The traditional Insured vs. Insured exclusion found in many D&O insurance policies is a frequent source of claims disputes, particularly in the bankruptcy context. As its name suggests, the Insured vs. Insured exclusion precludes coverage for claims brought by one Insured against another Insured. The typical Insured vs. Insured exclusion includes a provision (often referred … Continue Reading

D&O Insurance: Professional Liability Exclusion Precludes Coverage for D&O Claims against Ponzi Schemer’s Bank

In a coverage dispute arising out of the long-running Rothstein Ponzi scheme scandal, a Southern District of Florida judge, applying Florida law, has held that the professional services exclusion in the Rothstein bank’s D&O insurance policy precluded coverage for claims brought against the bank and certain of its directors and officers by the Rothstein law … Continue Reading

D&O Insurance: Regulatory Exclusion Precludes Coverage for Relator’s Qui Tam Action

As I have noted in prior posts, “qui tam actions” under the False Claims Act often fit uncomfortably with typical D&O insurance policy terms and provisions. For example, the procedure whereby qui tam actions are filed but not immediately served raise questions of the claims made date (as discussed here), and with respect to the … Continue Reading

D&O Insurance: The Major Shareholder Exclusion

An exclusion sometimes found in D&O insurance policies precludes coverage for claims made by shareholders who have a specified percentage of ownership in the insured company. This type of exclusion is called a Major Shareholder Exclusion (or, sometimes, the Principal Shareholder Exclusion). An interesting May 6, 2015 decision (here) by the Supreme Court of Victoria … Continue Reading

Thinking About Excess D&O Insurance

In many cases, companies’ D&O insurance programs are structured in several layers, with one or more policies of excess of insurance written over top of a primary layer. The excess insurance is often said to be written on a “follow form” basis, meaning that the primary policy’s terms govern the operation of the excess policies. … Continue Reading

U.S. Trade Sanctions and D&O Insurance

As part of its conduct of foreign affairs and of its national security program, the U.S. government has instituted a series of economic and trade sanctions against a number of countries and a long list of designated individuals. The various sanctions programs are administered by the Office of Foreign Asset Control (OFAC) within the U.S … Continue Reading

Indiana Supreme Court: E&O Insurers Must Pay Settlement of Suits Alleging Health Insurer Dodged Medical Claims

On April 22, 2015, in a sweeping win for health insurer Anthem Inc., the Indiana Supreme Court held that excess reinsurers on the company’s self-insured E&O insurance program must pay the company’s costs of defending and settling allegations that it had improperly failed to pay, underpaid, or delayed paying medical reimbursement claims. The Court rejected … Continue Reading

D&O Insurance: Insured That Settled Underlying Claim Without Insurer’s Consent Cannot Sue the Insurer for Breach of Contract or Bad Faith

The Georgia Supreme Court has held that where a policyholder settled an underlying claim without its D&O insurer’s consent, the policyholder cannot sue the carrier for breach of contract or for bad-faith failure to settle. The Court, applying Georgia law, entered its opinion in the case based on questions certified from the United States Court … Continue Reading

Management Liability Insurance: If a Qui Tam Action is a Claim, When is it “First Made”?

The federal False Claims Act imposes liability on those who defraud the government. The law also allows third-parties to bring so-called qui tam actions in the form liability claims under the Act; if the qui tam actions are successful, the third-party can receive a portion of the recovery. When a third-party files a qui tam … Continue Reading