A former attorney in Texas has been sentenced to five years in prison after pleading guilty to insurance fraud and barratry, or litigation for profit, The Fort Worth Star-Telegram reported.

The Tarrant County district attorney said that Richard Kent Livesay schemed to bill insurers for fraudulent hailstorm damage to roofs without the knowledge or consent of homeowners.

The DA’s office said Livesay would have received more than $300,000 in fraudulent payments if his fraud hadn’t been discovered first by investigators from the Texas Department of Insurance.

Livesay also had to surrender his law license and to provide restitution to his victims, the report says.

Read the Star-Telegram article.

Berkshire Hathaway Inc.’s National Indemnity Co. has to pay more than $43 million of Montana’s asbestos-related settlement costs, a state judge has ruled. according to a MarketWatch report.

Reporter Nicole Friedman explains: “Montana had reached a $43 million settlement in 2009 with people injured by asbestos at a vermiculite mining operation in Libby, Mont. The victims claimed the state had knowledge of unsafe conditions at the mine for decades and failed to protect workers.”

National Indemnity  provided general liability insurance to the state at the time of the alleged exposure, but it had argued those insurance policies didn’t cover the asbestos-related claims.

Read the MarketWatch report.

Image by David Shankbone

Variety is reporting that Harvey Weinstein’s insurance company is refusing to defend him against 11 sexual harassment lawsuits, saying that his alleged misconduct is not covered under his personal liability policies.

Chubb Indemnity Insurance Co. sued on Wednesday, asking the New York Supreme Court for a declaration that it is not obliged to fund the disgraced producer’s legal defense, according to reporter Gene Maddaus.

The suit says that some of Weinstein’s policies cover damages he is obligated to pay “for personal injury or property damage.” The damages must arise from “an accident or offense” to be covered.

But Chubb’s position is that Weinstein’s alleged pattern of sexual assault and harassment does not qualify.

Read the Variety 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.

A federal judge has dismissed claims brought by a South Carolina insurance company against Texas-based insurance agency Highpoint Risk Services and its owner, Charles David Wood Jr. , according to a report published by Androvett Legal Media & Marketing.

That lawsuit sought more than $40 million in damages for an alleged shortfall in reinsurance collateral and claims relating to the issuance of various workers’ compensation policies. Last week, Senior U.S. District Judge Cameron McGowan Currie ruled that Companion Property and Casualty Insurance Co. was contractually barred from recovering any alleged shortfall from Wood, the report says.

In dismissing other claims against Highpoint and Wood for alleged breach of fiduciary duty and alleged violations of the South Carolina Unfair Trade Practices Act, the court found that “there is no evidence Highpoint (or Wood) owed or breached” a fiduciary duty to Companion in connection with the issuance of Companion’s workers’ compensation policies.

“The court has dismissed the core of the case brought by Companion,” said Michael Gardner, name partner at Dallas-based law firm Gardner Haas and counsel for Wood and the defendant companies. “An insurer cannot avoid the terms of its own policies and can’t complain when its agreements are given their clear and natural effect.”

Companion, purchased by Enstar Group in 2015, now operates as Sussex Insurance Company and remains headquartered in Columbia, S.C.

As the risk of cyber threats to all businesses grows, there is a corresponding interest in managing and shifting cyber risks by contract and through cyber insurance, write Branwen Buckley and Corby J. Baumann of Thompson Hine.

“Insurance requirements are common in commercial contracts, and many contracts now include a sub-clause regarding cyber insurance. Whether a company is asking for a contracting party to provide cyber insurance or is on the receiving end of such a request, there are some important background considerations to remember,” the authors explain in their article.

They list some issues to consider when evaluating contractual requirements for cyber coverage: cyber insurance can never be a substitute for proper preventive measures, keep cyber insurance provisions specific, consider asking to see the policy, and be realistic in your expectations.

Read the article.

The 6th U.S.  Circuit Court of Appeals has issued a sweeping decision that confirms that “ordinary principles of contract law” rarely will require a company to freeze outdated lifetime health coverage benefits in place, write Nancy G. Ross and Brian D. Netter, partners in Mayer Brown.

“Until recently, courts had a practice of interpreting benefits arrangements in collective-bargaining agreements (‘CBAs’) to ensure lifetime coverage—often defying the company’s expectations in the process,” they write. “But the legal environment has changed. Now is the time for companies to press ahead in reducing legacy costs on their balance sheets.”

They discuss the case of Gallo v. Moen Inc., in which a class of retirees who had worked at a shuttered Ohio factory alleged that they had been promised lifetime health benefits.

Read the article.

The typical reinsurance contract arbitration involves a tri-partite panel of arbitrators, with each party appointing an arbitrator and a separate process governing appointment of the third arbitrator (known as “the umpire”),” according to a white paper published by Sidley Austin LLP and available on Lexology.com.

Most arbitrations run smoothly, the paper says, but “arbitrators should be ready for the exceptional case, which can be occasioned by another arbitrator or counsel. The remedy for rogue behavior may rest within the panel, or it may require judicial intervention. Judicial relief can be hard to come by, given the procedural and substantive hurdles to be cleared; but the truly egregious case has a way of catching a court’s attention.”

The article examines some examples of panel breakdown and how they have been addressed.

Read the white paper.

In a new article on Lexology.com, Jonathan Reich of Womble Carlyle Sandridge & Rice LLP discusses the difference between an insurance policy with a deductible compared to one with a self insured retention (“SIR”) and how that impacts business contracts.

“Deductibles and SIRs are often conflated; the differences are poorly understood by those outside of the insurance industry as well as the practical implications,” he writes. “Two policies can have a $1 million limit, with the only difference between the two policies being that one has a $100,000 deductible and the other a $100,000 SIR.”

He explains the differences, but adds that these simple distinctions have stark real-world implications.

Read the article.

Good attorneys constantly evolve their contract provisions, but contract evolution hates to discard pieces that were once useful, writes J. Benjamin Patrick of Gordon & Rees LLP in an article published on Lexology.com. The tendency to keep these pieces can result in a contract having the equivalent of the human appendix: a piece no longer of any positive use and that harbors the potential for harm.

For example, outdated contract provisions linger in the “standard form” contracts used by many contractors and owners, he writes. “The presence of such a provision in your standard contract is a sign that some additional evolution is necessary in order to bring your contract up to current laws, standards, and industry practices.”

Read the article.

Insurers in the United States will face competing priorities for resources and time over the next 12 months, with cyber security preparedness challenging overall regulatory compliance readiness, argues Wolters Kluwer Financial Services and reported by Canadian Underwriter.

Wolters Kluwer Financial Services surveyed more than 300 insurance professionals in 2014 and 2015, tracking 10 factors across two consecutive 12-month periods to illustrate the overall level of regulatory and risk management pressures facing U.S. insurers.

“Overall, 60% of polled insurance professionals report that cyber security will receive escalated priority at their organization, followed by regulatory risk at 42%, notes a statement from the company, which offers risk management, compliance, finance and audit solutions and maintains operations in more than 170 countries,” reports Canadian Underwriter.

Read the report.