Off to a Fast Start

In addition to the near-daily reports of more breaches, new laws and controversial workplace privacy issues, there have been 3 significant developments involving cyber and privacy already in 2013.

1. On January 17, 2013 the Department of Health and Human Services released its final “omnibus” rule in relation to HIPAA, effective March 26, 2013. The sweeping rule implements privacy regulations, increases penalties for HITECH violations, modifies breach notification rules, restricts disclosure of genetic information and expands the definition and responsibilities of business associates. Continue reading

WWM Case Alert: MN Supreme Court Restricts Scope Of AI Coverage

Joyce F. Noyes

Engineering & Constructions Innovations v. L.H. Bolduc & Travelers Indem. Co. (Minn. Jan. 23, 2013)

CGL insurers will take interest in a recent decision by the Minnesota Supreme Court, in which the Court held that a contractor did not qualify for additional insured (AI) coverage under its subcontractor’s policy and the subcontract’s indemnity provisions were unenforceable. The decision is noteworthy for two holdings. First, the Court adopted a narrow reading of the scope of an AI endorsement making the contractor an AI for liability “caused by the acts or omissions” of its subcontractor by limiting the AI coverage to claims involving the subcontractor’s negligence. Second, the court held that the subcontract’s indemnity provision violated Minnesota Statute § 337.01, et seq., because it required the subcontractor to indemnify the contractor for damages not caused by the subcontractor’s negligence and, due to the inapplicability of the AI coverage, was not supported by a coextensive insurance agreement. Continue reading

Illinois Appellate Court Finds Malpractice Policy’s “No Admission of Liability” Clause Void as against Public Policy

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In Illinois State Bar Association Mutual Insurance Co. v. Frank M. Greenfield & Assocs., et al., 2012 IL App (1st) 110337 (Ill. Ct. App. Nov. 9, 2012), the Illinois Appellate Court (First District), Mary L. Mikva, P.J., upheld the trial court’s ruling finding that an insurer had a duty to defend a lawyer who had admitted making a mistake in drafting a will.  The lawyer had disclosed his error to his former client’s beneficiaries and then sought a defense from his insurer when the beneficiaries sued him.  The insurer denied coverage on the basis of a policy provision prohibiting the lawyer from admitting liability without the insurer’s consent, and sought a declaratory judgment that it had no duty to defend. In affirming the summary judgment for the lawyer, the Illinois Appellate Court found the provision unenforceable and against public policy, as it interfered with the lawyer’s duties of disclosure under the ethics rules. Continue reading

N.D. of Ohio Holds Unsolicited Communications Exclusion Bars Coverage For TCPA Violations

By: Arthur J. McColgan

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MCD Acquisition Co., et al. v. The North River Ins. Co., et al., No. 5:10CV 2855, 2012 WL 4483411, (N.D. Ohio Sept. 27, 2012). On September 27, 2012, Judge David D. Dowd, Jr. granted Travelers Property Casualty Company of America’s (“Travelers”) Motion for Summary Judgment finding there was no duty to defend or indemnify the Insureds in an underlying junk fax class action suit filed by Universal Health Resources (“UHR”) based on an Unsolicited Communications exclusion. Continue reading

TX: Liability Insurers may have a Duty to Indemnify

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By: Kristine M. Sorenson and Stephen O. Venable

On February 25, 2011, the Texas Supreme Court held that a liability insurer may have a duty to indemnify its insured even if the duty to defend never arises. See The Burlington Northern and Santa Fe Railway Company v. National Union Fire Ins. Co., 334 S.W.3d 217 (Tex. 2011). This decision reaffirms its prior, and somewhat controversial, decision in D.R. Horton-Texas, Ltd. v. Markel International Ins. Co., wherein the Texas Supreme Court similarly held that liability insurer’s “duty to indemnify is not dependent on the duty to defend and that [it] may have a duty to indemnify its insured even if the duty to defend never arises.” 300 S.W.3d 740 (Tex. 2009). Continue reading

New SEC Rules: Whistling Through the D&O Graveyard

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By: William P. Bila, Eric D. Blanchard, and Kevin L. Morrow

On May 25, 2011, the Securities and Exchange Commission announced the adoption of new rules (the “Rules”) which will significantly increase claim activity on both the regulatory and civil litigation fronts. The Rules, enacted as part of the Dodd-Frank Act, create financial incentives for whistleblowers under Section 21F of the Securities Exchange Act of 1934. A key aspect of this new incentive-based scheme is that whistleblowers can report alleged wrongdoings directly to the SEC rather than internally within their organization. The Rules are set to go live on August 12, 2011. Continue reading

Client Alert: NY Appellate Court Rules on Unconstitutional “Taking”

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A recent ruling by the New York Appellate Division, Third Department, in Held v. State of New York Workers’ Compensation Board, 921 N.Y.S.2d 674 (N.Y. App. Div. 2011), upheld the New York State Workers’ Compensation Board’s authority to assess financially healthy group self-insured trusts to pay for the liabilities of defaulted groups.

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