The U.S. Court of Appeals for the Eighth Circuit issued an order dealing with indemnification for prior settlements, and it could have a hugely beneficial impact on potential indemnitors, including sellers of mortgage loans as well as insurers, reports Bilzin Sumberg in its Mortgage Crisis & Financial Services Watch.

The appellate court affirmed a lower court’s ruling that, when an insured seeks indemnification for settlements that encompassed both covered and non-covered claims, the insured must present sufficient evidence to establish with reasonable certainty the value that the settling parties attributed to the covered claims, explain Philip R. Stein and Shalia M. Sakona.

They discuss the background of the case, the limitations on using expert testimony to establish allocation, and the application of the holding to the mortgage industry.

Read the article.

A recent Indiana Court of Appeals decision illustrates the importance of having an overall risk allocation strategy in contracts where appropriate, and paying close attention to the language used to express that strategy, writes Christian Jones of Barnes & Thornburg.

In the post on the firm BT Policyholder Protection Blog, Jones writes that this is particularly when multiple contracts and parties are involved.

“This case illustrates the difficulty of coordinating risk allocation language across multiple contracts. [The insurer] might have attempted to pursue subrogation claims under any circumstances, but it seems possible that litigation might have been avoided if all of the contracts at issue had contained their own express waiver of subrogation clauses” Jones explains.

Read the article.

In an article in the Pillsbury Policyholder Pulse blog, Kimberly Buffington and Cara Adams discuss the question: Will insurance policies become the laboratory to test the thesis behind smart contracts?

“Whether there is room for smart contracts in the insurance context remains to be seen. Generally, the ‘if this occurs, then that’ nature of insurance policies lends itself to the conditional nature of smart contracts,” they write.

There are drawbacks, they explain, writing that it would be unrealistic to expect smart contracts to eliminate ambiguities and resulting disputes any more than such disputes are currently eliminated by traditionally written contracts.

Read the article.

The effective management of indemnification and related insurance obligations is an active agenda item for top-level business leaders, including any CFO, CEO and general counsel, points out James Buldas in an article on the website of Business Insurance.

“It is, therefore, imperative, whether you are a Fortune 500 company or a small business, that your company’s risk management and legal departments strategically manage indemnification and insurance obligations to minimize the always increasing cost-of-business demands,” writes Buldas, a partner at Pietragallo Gordon Alfano Bosick & Raspanti L.L.P. in Pittsburgh.

His article covers the language of the indemnity agreeement, selecting the governing law, specificity in insurance obligations, requesting the appropriate additional insured endorsement, and communication between legal and risk management departments and brokers.

Read the article.

The New York Times is reporting that New York’s attorney general has subpoenaed TIAA, the giant insurance company and investment firm, seeking documents and information relating to its sales practices, according to people briefed on the inquiry.

Last month, the newspaper raised questions about the firm’s sales methods. TIAA oversees almost $1 trillion in client assets, for more than four million workers at thousands of nonprofits, according to reporter Gretchen Morgenson.

A related SEC complaint was filed by former TIAA employees who contend they were pressured to sell products that generated more revenue for the firm but were more costly to clients while adding little value.

Read the NYT article.

The International Association of Defense Counsel (IADC) has dedicated the October 2017 edition of its Defense Counsel Journal (DCJ) to the exploration of privacy issues.

The October issue is available for free and without a subscription via the IADC’s website. This current issue is the second part of the IADC’s “Privacy Project V” publication. The first part was published as the July 2017 issue of the DCJ. All past DCJ articles are accessible online.

“In a world where we seem to be moving away from an expectation of privacy because of security concerns arising from worldwide terrorism and rapid advances in technology, it is up to the courts, legislatures, and regulatory bodies to balance these realities with everyone’s prized civil liberty of privacy,” said Andrew Kopon Jr., IADC President and a founding member of Kopon Airdo, LLC in Chicago. “The rule of law requires that these entities safeguard and thoughtfully examine this balance in real time or we may completely lose the expectation of privacy.”

The October DCJ features articles by IADC members that address diverse privacy topics from a global perspective. Frequently and favorably cited by courts and other legal scholarship, the DCJ is a quarterly forum for topical and scholarly writings on the law, including its development and reform, as well as on the practice of law in general. The IADC is a 2,500-member, invitation-only, worldwide organization that serves its members and their clients, as well as the civil justice system and the legal profession.

“The pace of technology is amazing and overwhelming at the same time,” said Michael Franklin Smith, editor and chair of the DCJ Board of Editors and a shareholder at McAfee & Taft in Tulsa, Okla. “Hopefully this issue of the Defense Counsel Journal provides practitioners with added insights to help them navigate their clients’ privacy in today’s rapidly changing world.”

The IADC’s Privacy Project is dedicated to the memory of Joan Fullam Irick, the IADC’s first female president, who made the issue of corporate and personal privacy a key theme for her administration. The project was spearheaded by IADC Privacy Project V Editorial Board co-chairs Eve B. Masinter, a partner with Breazeale, Sachse & Wilson, L.L.P., in New Orleans, and S. Gordon McKee, a partner with Blake, Cassels & Graydon, LLP, in Toronto.

The October 2017 “Privacy Project V” issue of the DCJ includes the following articles:

–“A Look at Canadian Privacy and Anti-Spam Laws” – Promotes compliance with Canada’s comprehensive federal and provincial privacy laws – and specifically the obligations imposed by Canada’s anti-spam legislation – that outline the framework and rules for the collection, use and disclosure of personal information by federally regulated, private-sector organizations operating across Canada.

–“Discovery of the Insurer’s Claims File: Exploring the Limits of Plaintiff’s Fishing License” – Analyzes the objections to a plaintiff’s broad request for the insurer’s claims file and the majority rules governing successful objections by defense counsel to discovery of the materials in that file.

–“Drones: A New Front in the Fight Between Government Interests and Privacy Concerns” – Addresses expansion of the warrant requirement to regulate when drones may be used, as well as legislation on how they may be used, which would allow for incorporating this new technology while also separating the benefits from the dangers it presents.

–“Data Privacy Protection of Personal Information Versus Usage of Big Data: Introduction of the Recent Amendment to the Act on the Protection of Personal Information (Japan)” – Provides practitioners with an understanding of three important changes made by Japan’s recently amended Act on the Protection of Personal Information (PPIA) and how these changes are likely to play out in practice.

–“Global Positioning Systems and Social Media – Anathemas to Privacy” – Focuses on the recent surge in the use of global positioning systems in the automotive industry and the unique set of related privacy and liability concerns.

Silicon Valley software startup Zenefits and its co-founder Parker Conrad have been fined nearly $1 million by the U.S. Securities and Exchange Commission as part of a settlement over charges that they had misled investors, reports Reuters.

Zenefits will pay a $430,000 penalty and Conrad, who resigned as chief executive from the company in early 2016, has been fined more than $533,000, according to Reuters reporter Heather Somerville.

“The SEC found that Zenefits made ‘false and misleading statements and omissions’ to company investors by failing to disclose that it was not compliant with state insurance regulations,” Somerville reports. “Zenefits employees had sold health insurance without proper licensing, the company said, a violation that led to fines from several states.”

Read the Reuters article.

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The Walt Disney Company is going to battle with its insurer, AIG, as it seeks coverage for a massive settlement in the “pink slime” defamation case, Variety is reporting.

Disney is trying to force AIG to submit to arbitration on the coverage dispute. While the underlying litigation is not identified, the dates line up with Disney’s court battle with Beef Products Inc. in South Dakota, according to reporter Gene Maddaus.

BPI sued Disney, alleging that ABC News had damaged its business with a series of reports on “pink slime.” Disney settled the case partway through trial in June.

“In August, Disney disclosed that it had incurred legal costs of $177 million, the bulk of which was believed to be due to the BPI settlement,” Maddaus writes. “The total settlement was believed to be significantly larger, once insurance claims were factored in.”

Read the Variety article.

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Blank Rome LLP announced that Linda Kornfeld, David Thomas and Julia Holt have joined the firm’s Los Angeles office in the Insurance Recovery group.

Kornfeld joins as partner and vice chair of the group, Thomas joins as partner, and Holt joins as of counsel. The team comes to Blank Rome from Kasowitz Benson Torres LLP, where Kornfeld was the Los Angeles office’s managing partner. The move to Blank Rome also reunites Kornfeld with Jim Murray, Chair of Blank Rome’s Insurance Recovery practice, and a number of her colleagues who joined Blank Rome from Dickstein Shapiro in February 2016.

A release from the firm continues:

“We are thrilled to welcome Linda, David, and Julia to Blank Rome,” said Alan J. Hoffman, Chairman and Managing Partner. “With more than 25 years of experience, Linda is one of the top insurance recovery litigators—both on the West Coast and nationally. She and her team are highly regarded and respected in the industry, and have achieved unmatched results on behalf of their corporate policyholder clients. Our Insurance Recovery group and our Los Angeles office have experienced impressive growth over the past several years, and we’re confident that Linda, David, and Julia will be excellent additions to the team.”

“I have known Linda for 15 years, and am so happy that she, David, and Julia – who is also a Dickstein Shapiro alum – are joining us at such an exciting time,” said Jim Murray, Chair of Blank Rome’s Insurance Recovery practice. “In less than two years at Blank Rome, our insurance recovery team has had the opportunity to solidify our position as one of the leading practices in big law in terms of size, experience, and capabilities. Having Linda back on the team, along with her top-notch colleagues, enhances our national practice in unparalleled ways.”

“Joining Blank Rome is such an incredible opportunity for me and my team,” said Ms. Kornfeld. “Personally, I could not pass up the chance to rejoin my former colleagues from Dickstein Shapiro, for whom I have so much respect. David, Julia, and I are impressed with what Blank Rome’s insurance recovery team has accomplished in a short period of time, making it the go-to practice that it is today. I am excited to lead the charge of building the practice on the West Coast, while providing our clients with the benefit of this expanded national bench of leading insurance recovery lawyers. Equally as important, I am looking forward to continuing my career-long focus on women’s leadership and advancement efforts with my new colleagues throughout Blank Rome, who have a shared passion for and commitment to these important issues.”

Linda D. Kornfeld, Partner and Vice Chair, Insurance Recovery Practice Group
Ms. Kornfeld has dedicated her trial and appellate practice to representing companies in high-stakes insurance coverage litigation for over 25 years. She has focused extensively on claims involving property and weather-related business interruption issues, data breach and privacy issues, and professional liability, asbestos, and environmental liabilities. Her clients include telecommunications companies, universities, real estate developers, manufacturers, and nonprofit organizations. She also provides strategic counseling to senior executives and in-house counsel on how to mitigate risk and maximize their insurance recoveries.

Ms. Kornfeld is considered one of the nation’s leading insurance recovery litigators by Chambers USA, which describes her as “valued by clients as a ‘very thorough and prepared lawyer’ with a deep level of insurance expertise across a broad range of coverage areas. She is praised for the quality and practical applications of her advice, as well as her oral advocacy, which one client describes as ‘professional, economical, very direct and matter-of-fact.’”

Ms. Kornfeld is named one of California’s “Top 100 Women Lawyers” by the Daily Journal, a “Litigation Star” and one of the “Top 250 Women in Litigation” by Benchmark Litigation, and a 2016 “Woman Worth Watching” by Diversity Journal, a recognition highlighting women based on their trailblazing strategies that make a difference in their workplace, the marketplace, and the world at large. Focused throughout her career on women’s leadership and advancement in the legal industry and other professions, she also serves as a West Coast leader of the Women’s Leadership and Mentoring Alliance and frequently speaks and writes on women’s issues.

Admitted to practice in California, Ms. Kornfeld received her J.D., with honors, from George Washington University Law School, and her B.A. from the University of California at Los Angeles.

David A. Thomas, Partner
Mr. Thomas has an insurance recovery, complex commercial litigation, and consumer litigation practice that includes contract disputes, unfair competition and trade practices claims, and insurance recovery litigation. He has particular experience representing and counseling policyholders in both litigation and non-litigation matters relating to a broad array of commercial insurance lines, including cybersecurity and privacy, commercial general liability, umbrella, D&O, bankers professional liability, employment practices liability, and first-party property and business interruption. Mr. Thomas’ practice extends to representing and counseling consumers and individual policyholders harmed by fraudulent and unfair practices in the sale of life and health insurance products and insurance-related transactions.

Mr. Thomas serves as a member of the American Bar Association’s Section of Litigation Insurance Coverage Litigation Committee.

Admitted to practice in California, Mr. Thomas received his J.D. from Harvard Law School and his A.B., with departmental honors and distinction, from Stanford University.

Julia K. Holt, Of Counsel
Ms. Holt focuses her practice on representing insureds in complex insurance coverage and other disputes. Her experience includes both first-party and third-party insurance disputes involving claims for copyright infringement, misappropriation of likeness/right of publicity, trade disparagement, class action securities fraud, Department of Justice and grand jury investigations, actuarial malpractice, class action predatory lending, class action right-of-way/trespass, class action property and environmental damage, class action toxic tort, personal injury/class action mass tort, insurance broker-agent liability, and reinsurance. She also has significant experience in patent infringement, unfair competition, and antitrust litigation. Ms. Holt’s clients include Fortune 500 companies, technology corporations, healthcare corporations, entertainment studios, film and television production companies, and individual talent in the entertainment and sports industries.

Ms. Holt is actively involved in pro bono work and has completed numerous adoptions for foster children in Los Angeles County. In addition, she has represented foster parents in administrative hearings to obtain the state benefits to which they are entitled.

Admitted to practice in California, Ms. Holt received her J.D. from Georgetown University Law Center and her B.A. from the University of California at Los Angeles.

Jared Butcher, writing in the Steptoe Blockchain Blog, suggest three tools to address smart contract risks: (1) cybersecurity insurance policies, (2) indemnification agreements with outside vendors, and (3) “make whole” agreements among the smart contract parties themselves.

He writes that insurers, vendors, and other contract parties can provide the best source of indemnification, assuming that the proper contractual arrangements are put in place.

Under the heading of cybersecurity insurance policies, he writes:

“One issue worthy of particular attention is the employee exclusion. These exclusions in the policy language should be scrutinized to determine the level of coverage for losses caused by employee errors, which are likely to be a significant source of risk in a smart contract system.”

Read the article.

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Meloney Perry, founder of the Dallas-based insurance defense law firm Perry Law P.C., has been elected the 2017-18 chair of the Insurance Law Section of the State Bar of Texas.

“I am honored to be elected by my peers to lead the Insurance Law Section,” said Perry. “Insurance law touches upon and plays a role in almost every area of the law. The Insurance Law Section includes many great legal minds and resources, which make us all better lawyers.”

The State Bar of Texas includes legal sections in specialized fields, allowing lawyers with shared interests and professional experiences to build a closer association. The Insurance Law Section enables attorneys to address areas of Texas insurance law in a bipartisan manner through both policyholder and insurance company attorneys. This section focuses on both substantive, procedural insurance law and litigation with a goal of educating and serving the legal profession and public, according to a news release from Perry Law.

In her role as the chair of the Insurance Law section, Perry will also oversee the Journal of Texas Insurance Law, which is written and edited by section members and published three to four times a year to provide continuing education on insurance law.

Perry is an insurance defense attorney in the Dallas area. A Women’s Business Enterprise National Counsel-certified business, the firm serves as the primary regional counsel for a major national insurance firm. Perry Law also represents business owners across the country involved in insurance and business disputes.

As an author and frequent presenter on insurance coverage and the law, Perry often conducts Continuing Legal Education seminars for clients.

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Anderson Kill’s 15th Annual D&O Conference, “D&O Insurance in the Era of Technological and Enforcement Uncertainty,” will be presented Thursday, June 8, 2017, 3-5 p.m. EDT.

The event will be in the upper story of the D&D Building, 979 Third Ave., 14th Fl., New York 10022.

Directors and officers face an era of technological and enforcement uncertainty, the firm said in a news release.

Anderson Kill’s annual D&O conference will feature a review of 2016 and a look ahead to 2017 for D&O liability and insurance. The conference also will feature a hypothetical D&O claim arbitration to explore key D&O insurance coverage issues in the context of a cyber claim, and will include a panel of policyholder attorneys, an arbitrator and an insurance company attorney.

Every organization faces data breach risk, whether through inadvertent data disclosure, computer system malfunction, or computer hacking. Data breaches cause real and severe peril.

The session will address the interplay of D&O insurance with other insurance policies in cyber claims, including crime insurance, property insurance, GL coverage, and cyber specialty insurance policies.

In addition, a panel of D&O insurance brokers will review major emerging D&O risks and provide a state of the market, highlighting key coverage terms to seek and avoid.

A cocktail reception follows the event (5:00-6:30 p.m.).

The D&O conference is complimentary for general counsel and risk managers: Use CODE AK005

Speakers:

William G. Passannante, Esq.
Shareholder
Anderson Kill
Conference Moderator

Joshua Gold, Esq.
Shareholder
Anderson Kill
Chair, AK’s Cyberinsurance Group

Raymond A. Mascia, Jr., Esq.
Attorney
Anderson Kill

Vivian Costandy Michael, Esq.
Attorney
Anderson Kill

Jonathan E. Meer
Attorney at Law
Wilson Elser Moskowitz Edelman & Dicker LLP

Roger M. Moak
Arbitrator-Umpire-Mediator

R. Damian Brew
Managing Director, FINPRO
Marsh USA, Inc.

James McCue
U.S. Financial Institutions Practice Leader
Aon’s Financial Services Group

Register for the event.

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The 11th Circuit ruled in Liberty Surplus Ins. Corp. v. Norfolk Southern Railway Co. that the unambiguous language of Liberty’s “Completed Work” exclusion did not bar coverage for injuries sustained by a motorist injured at a railroad crossing who later sued Norfolk Southern, reports Hunton Williams.

“Before the Court is, once again, the classic case of the insurer requesting relief from the consequences of the inartfully drafted, yet plain, terms of its insurance policy,” the opinion reads.

Andrew A. Stulce writes in the firm’s Insurance Recovery Blog that the decision makes some important points:

First, courts continue to construe exclusionary provisions narrowly and against the insurer, even where the provision utilizes plain and unambiguous wording.  Second, in the context of contracts and agreements to supply services, work or operations over time, exclusions designed to bar coverage for completed work or operations must be explicit as to when the services, work or operations are deemed to be “complete.”

Read the article.

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A small Rhode Island law firm has filed a lawsuit against its insurance company after the insurer refused to pay $700,000 in lost billings following a ransomware attack on the firm that locked down the firm’s computer files for three months, reports CloudNine’s eDiscovery Daily Blog.

Doug Austin‘s report, based on a story in the Providence Journal, explains that Moses Afonso Ryan Ltd. is suing its insurer, Sentinel Insurance Co., for breach of contract and bad faith. The insurer denied the plaintiff’s claim for lost billings over a three-month period when the documents were frozen by a hacker’s ransomware attack. The hacker encrypted the law firm’s computer files, offering to unlock them if a ransom were paid.

The suit says the infection disabled the firm’s computer network, meaning lawyers and staffers “were rendered essentially unproductive.”

Read the eDiscovery Daily Blog article.

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By Stephen F. Pinson
Scott & Scott LLP

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One of the most overlooked sections in a technology-related contract is the insurance section. Whether that contract involves IT services, development, Software as a Service or Cloud Services, the insurance section is just as important as the other risk-allocating provisions contained in the contract. Yet, in most of the contracts in the industry, the original contract is silent on insurance and there is no insurance provision drafted. This leaves a business customer vulnerable to risks that are not covered by insurance. This discussion will help identify what provisions are actually needed in a contract to properly allocate the risks.

The following is a brief list of insurance provisions that parties should include in technology contracts for the different types of claims scenarios between contracting parties. This list describes how each provision works within the contract and what should be negotiated (this is not an exhaustive list). Parties should negotiate individual and aggregate limits for the types of risks involved.

1. Commercial General Liability – This type of insurance, commonly known as GL, is the most basic form of business liability insurance. This type of insurance protects a business against claims due to injuries, accidents, and negligence. It can protect a business from costs related to bodily injury, property damage, medical expenses, legal costs, judgments, and personal injury claims such as libel and slander. GL is a staple requirement for both the service provider and the business customer, but it will not protect against all risks or threats. To protect a service provider or business customer from more specific types of emerging threats, each party may need to purchase additional liability policies.

2. Professional Liability Insurance, Errors and Omissions – This is also known as E&O insurance and will cover a service provider if it fails to perform according to the requirements in the contract. This coverage will help offset the costs associated with customer claims when the provider’s mistake causes a customer loss. Customers may want to insist on E&O coverage to help bridge the gap between coverage offered by GL or other policies.

3. Automobile Liability – If a service provider will use an automobile in any phase of the work performed for the business, the business should require evidence of automobile insurance. In some cases, the service provider will own no automobiles and therefore may not purchase automobile liability coverage; however, the business customer should require evidence of coverage for exposure related to non-owned and hired automobiles. This coverage protects the service provider and business customer in claims arising from the use of personal or rented vehicles by the service provider’s employees or principals. If dealing with a sole proprietor, proof of personal auto coverage should be required.

4. Workers’ Compensation – If an employee experiences a job-related illness or injury, this policy can help pay for medical expenses and lost income. If a service provider plans to do work onsite at the business customer’s location, the business customer should require evidence of worker’s compensation insurance. In some states, worker’s compensations can be waived by following certain statutory protocols. The agreement should contain a provision that ensures the business customer will have no liability for the service provider’s employees or independent contractors, even if the service provider opted out of workers’ compensation. Additionally, if a service provider has no employees, then Workers’ Compensation is not generally required by the State.

5. Employer’s Liability Insurance – Employer’s liability coverage, known as EPLI, is designed to cover claims like harassment, wrongful termination, and other claims that that are not covered by workers compensation or by a GL insurance policy. The primary goal for requiring this type of insurance is that a business customer will want likely claims the services provider may incur to be covered by insurance. Having uncovered risks may make the service provider less able to continuously provide services in the event of a claim by an employee.

6. Cyber Liability – Cyber liability includes numerous subsets of insurance coverage, and customers should carefully examine the particular coverage because it varies greatly among providers. Cyber Liability coverage should include both first-party liability coverage and third-party liability coverage.

• First-party liability coverage applies to direct costs for responding to a claim incident, such as: (1) notifying clients that their information was compromised or exposed, (2) purchasing credit monitoring services for customers affected by the breach or hacking incident, (3) launching a public relations campaign to restore the reputation of the company affected by the breach, (4) compensating the business for income that it isn’t able to earn while it deals with the fallout of the data breach, and (5) paying a cyber-extortionist who holds data hostage or threatens an attack.
• Third-party liability insurance covers the people and service provider responsible for the systems that allowed a data breach to occur. It offers protection for the service provider and independent contractors who were responsible for the safe storage of the data. The following is a list of coverage types that should be included in some form or another as coverage for a service provider or business customer when they are seeking coverage for the different types of claims scenarios.

Regardless of whether the coverage is first-party or third-party, the contracting parties should examine whether they require the following categories of coverage:

• Network Security and Privacy Liability – This coverage protects the service provider against losses for the failure to protect a customer’s personally identifiable information (SSN, credit card numbers, medical information, passwords, etc.) via theft, unauthorized access, viruses, or denial of service attack.
• Media Communications Liability / Reputation or Brand Protection – This coverage protects against allegations of defamation/libel/slander, invasion or violation of privacy, plagiarism/piracy, copyright/trademark infringement, and other wrongful media communication acts that can hurt a service provider or business customer that is associated with media communications in electronic, print, digital, or broadcast form.
• Data Breach – Data breaches come in many shapes and sizes, but many kinds of cyber incidents, including: malware attacks, malfunctions, insider data breaches, data theft by employees, ransomware, or employee mistakes. Data Breach Insurance may cover these breaches as well as when a hacker targets your service provider or a business customer.
• Data Loss / Interruption of Computer Operations – This type of insurance covers incidents where there is data loss or interruption of computer operations from an inadequate backup or an insured loss, e.g., a disaster that destroys the computer system or virus. This type of coverage can also reimburse losses related to lost income that a service provider or business customer incurs ancillary to a data loss.
• Regulatory Response – Regulatory response insurance protects against fines and defense costs arising from proceedings brought by any regulatory body against either the service provider or those individuals performing regulatory functions within the business customer’s firm when an incident occurs.
• Regulator Defense/Penalties – This insurance covers defense expenses and regulatory fines and penalties imposed by a regulatory agency in connection with a data breach.
• Systems Damage – This insurance covers computer systems that are damaged in retrieving, restoring or replacing any computer programs or other data media.
• Threats or Extortion – This insurance covers incidents where threats or extortion from a hacking attack or virus on a computer system.

7. Umbrella Liability Insurance – Umbrella coverage provides extra liability protection to help protect a service provider or business customer in the event that a loss exceeds the limits of the other policies. There are three basic reasons to maintain an umbrella policy: (1) professional liability insurance can be quickly exhausted by legal defense fees, (2) there are significant business assets to protect, and (3) there are risks of legal claims due to the nature of the products or services provided. This type of insurance is used in situations where “excess liability” kicks in after your commercial general liability coverage has been exhausted. Without this policy in place, a service provider or business customer would be responsible for the additional out of pocket amounts (which can reach into the millions of dollars). Unless that money has been stashed away for such an incident, a lawsuit would have major financial repercussions, without the extra protection of a business umbrella policy.

8. Self-Insured – Some service providers are so well established that they elect to provide self-insurance against many of the risks identified above and to the extent they have third-party insurance, they do not make the third-party coverage available to the customers. In a situation where a service provider will not include insurance language because it is self-insured, the business customer should include language adjusting the limitations of liability sections and indemnification provisions to adequately provide protection in the event of a loss.

Parties to a technology contract should include a provision requiring the other party to provide evidence of the insurance contained in the contract.

Given the regulatory and privacy risks, it is increasingly important to seek advice from experienced counsel when negotiating a technology contract to make sure the risks are adequately assessed and each party’s interests are protected.

The U.S. Justice Department has accused UnitedHealth Group Inc. of obtaining inflated payments from the government based on inaccurate information about the health status of patients enrolled in its largest Medicare Advantage Plan, Reuters is reporting.

The accusation against the company is the latest, following separate lawsuits in two separate whistleblower lawsuits against the country’s largest health insurer.

“Medicare Advantage, an alternative to the standard fee-for-service Medicare in which private insurers manage health benefits, is the fastest growing form of government healthcare, with enrollment of 18 million people last year,” writes reporter Nate Raymond.

A UnitedHealth spokesman said the company rejects the claims and will contest them vigorously.

Read the Reuters article.

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The purpose of a settlement and release agreement is to fully and finally dispose of a disputed matter, explains Stacy L. La Scala, a neutral writing for JAMS.

“However, more and more often, a dispute cannot be fully resolved where non­parties to the dispute have contributed defense and indemnity amounts on behalf of one or more of the parties and have reserved the right to seek recovery of those amounts in subsequent litigation,” he cautions.

In the article, published on JDSupra.com, he writes:

In particular, where insurance carriers have actually provided a defense and/or indemnity in an action, those carriers in a number of jurisdictions have potential rights against their insureds, pursuant to reservation of rights for uncovered claims; potential rights against those entities who are principally responsible for the loss; and potential rights against contractually obligated indemnitors of their insureds. The carriers are typically not part of the action and are not signatories to the settlement agreement.

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In his Commonsense Construction Law blog, Stan Martin asks the question “How do additional insured obligations work with subcontract flow-down clauses.” And he answers it with one word: “They don’t.”

“Unless the subcontract is carefully drafted, that is. So where the prime contract required the owner to be named as an additional insured, and the subcontract flow-down clause passed along the GC’s obligations to the owner, as the sub’s obligations to the GC, this did not by itself result in a requirement that the sub name the owner as an additional insured. That is one lesson from a New York court decision,” Martin explains.

He discusses Navigators Ins. Co. v Merchants Mut. Ins. Co. at length and concludes with two lessons to be learned.

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Whether a mixed insurance contract (i.e., an insurance contract with maritime and non-maritime elements) permits the exercise of admiralty jurisdiction is a complicated question for parties and for the courts, writes Eric Chang in an alert for Montgomery McCracken Walker & Rhoads LLP.

He writes that admiralty jurisdiction can be the basis for subject matter jurisdiction for the federal courts.

“Historically, admiralty jurisdiction was limited to contracts that were purely maritime – involving rights and duties pertaining to ships, vessels, and the navigation thereof on the ocean or elsewhere,” he explains.

That changed, however, when the U.S. Supreme Court exercised admiralty jurisdiction in a “maritime case about a train wreck.”

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A federal judge blocked the $54 billion merger between health insurance giants Anthem and Cigna, saying the deal would increase prices and reduce competition, according to a report by The Washington Post.

Carolyn Y. Johnson reports that this ruling is the second recent court decision to uphold the Justice Department’s opposition to deals that would have consolidated the five largest insurers in the United States into three companies.

“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market,” U.S. District Judge Amy Berman Jackson wrote in a 12-page order.

In the merger agreement, Anthem had agreed to pay Cigna a $1.85 billion termination fee if the deal is blocked because of regulatory interference.

Read the Washington Post article.

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