Insurance & Risk Management
Insurance Litigation
Contact:
John
D. Aldock
Insurance & Annuity Products
Contact:
Christopher E. Palmer
Directors’ and Officers’ Insurance
and Risk Management
Contact:
Carl E. Metzger
Goodwin Procter’s Insurance & Risk Management
practice counsels nationally recognized insurance
carriers on all aspects of high stakes litigation
and insurance product regulation, as well as
advising both public and private insured entities on
a wide variety of insurance coverage matters.
Insurance
Litigation
Goodwin Procter attorneys have successfully
defended insurers and their affiliates in state and
federal courts and in arbitration on such diverse
matters as market timing, 9/11 coverage claims, Fair
Housing Act cases, and employment and class action
litigation.
Representative litigation matters on behalf of
insurers include:
“Bad Faith” Claims. We represented an
insurance carrier in West Virginia class actions
which alleged bad faith and violations of unfair
claims handling statutes on behalf of thousands of
our client’s policy holders. As a result of our
aggressive trial strategy, the client was able to
settle the cases this year for less than the costs
of litigation. We also represented the same insurer
in an action on behalf of 35 plaintiffs who claimed
that the insurer violated the West Virginia Unfair
Trade Protection Act and committed fraud in
connection with settlement of underlying personal
injury and wrongful death actions. As the result of
our success in persuading the court to grant various
in limine motions, including striking the punitive
damage claim, the case settled favorably on the eve
of trial.
Multidistrict Managed Care RICO Litigation.
We represented a managed care company in a complex
multidistrict litigation brought by subscribers and
physicians against our client and other defendants
alleging violations of ERISA and RICO through the
use of improper “utilization review criteria” to
evaluate whether care was “medically necessary” in
accordance with the terms of their health plans. We
succeeded in getting the ERISA claims dismissed on
behalf of our client, and then defeated plaintiffs’
motion for class certification, resulting in a de
minimis settlement with individual plaintiffs.
New York Managed Care Litigation. We
represented a managed care company in a health care
subscriber class action in New York state court
alleging that our client had breached its health
plan contracts, violated state consumer fraud laws,
and tortiously interfered with the terms of one
plaintiff’s health plan by using improper
utilization review criteria. The plaintiffs sought
certification of a nationwide class of health plan
subscribers. We engaged in extensive briefing in
opposition to the class certification motion and the
trial court ultimately denied certification of a
nationwide class but granted certification of a
subclass of subscribers on a limited claim. On
appeal, we succeeded in defending the denial of the
nationwide class and in reversing the subclass
certification.
Fair Housing Litigation. We defended an
insurer in a discrimination case brought by a group
of five fair housing advocacy groups and three
individual homeowners in federal court in
Washington, D.C. The plaintiffs alleged that our
client had violated the Fair Housing Act by
discriminating against thousands of minorities in
the sale of homeowners’ insurance and sought in
excess of $75 million in compensatory and punitive
damages, and threatened to impose substantial
reputational harm on the insurer. The plaintiffs had
multiple theories of liability, a history of success
against other insurance companies and aggressive and
experienced litigation counsel. After prevailing on
numerous discovery motions, and retaining and
preparing expert witnesses for trial, we were
approached by the plaintiffs with a strong interest
in settlement. After mediation, we entered into a
highly favorable settlement that disposed of all
claims and on terms more favorable then similarly
situated defendants in previous related litigation.
Dispute Concerning Sale of Insurance Lines.
On behalf of a large insurer, we conducted an
internal investigation and prepared a risk
assessment regarding certain claims made by another
insurance company arising from its purchase of a
subsidiary of our client. The purchaser alleged that
our client had breached certain representations and
warranties under a purchase agreement and had also
breached numerous obligations under a related
distribution agreement. We conducted an intensive
factual investigation of the matter, including a
substantial review of numerous documents and
detailed interviews with over a dozen of our
client’s former and current senior executives, as
well as interviews of its outside counsel and
investment bankers. We then prepared a detailed
legal assessment of the strengths and weaknesses of
the numerous claims made by the purchaser based on
the results of that factual investigation.
Ultimately, our client was able to settle the
purchaser’s claims on very favorable terms, and
thereby to avoid the risks of any future litigation
over these claims.
Market-Timing Litigation. A well-known market
timer sued our insurance company client in what
became one of the first actions arising in
connection with market-timing and late-trading of
mutual funds. The suit alleged both breach of a life
insurance contract and fraud claims relating to our
client’s attempts to restrict the plaintiff’s market
timing activities. We first succeeded in obtaining
the dismissal of fraud counts against the insurer
and then litigated the remaining contract claims. In
a detailed 50-page decision, the trial court
ultimately concluded that our client had not
breached the life insurance contract with the
plaintiff, and in the process found in our client’s
favor on every issue the court reached. The
plaintiff appealed the decision to the Third
Circuit, which affirmed the trial court’s decision.
We are currently handling another market timing
dispute that arose between our client and the same
plaintiff, also in connection with his market timing
activities. This time, we represented the client in
filing a preemptory action against the market timer
which sought declaratory relief that our client did
not violate his contractual rights by restricting
his ability to market time. The defendant
counter-claimed against our client, alleging breach
of contract and violation of the Electronic
Signatures in Global and National Commerce, or
“E-SIGN,” Act. We ultimately succeeded in having the
E-SIGN count dismissed and also persuaded the
district court to grant partial summary judgment and
hold that the defendant was collaterally estopped
from re-litigating a number of issues from the first
litigation.
Florida PIP Litigation. A class of Florida
medical providers sued numerous insurance carriers,
including our client, in federal court in Florida.
The class plaintiffs alleged that the insurers’
payment of PPO-discounted fees to medical providers
pursuant to personal injury protection provisions of
Florida automobile insurance policies violated RICO
and Florida law. After moving to compel arbitration,
and two successive interlocutory appeals to the
Eleventh Circuit, the parties agreed to mediate the
class plaintiffs’ claims. We ultimately reached a
settlement that required our client to pay only a
small fraction of the amount at issue, with other
defendants settling on less favorable terms.
Pennsylvania Property Insurance Class Action
Litigation. We successfully defended an
insurance carrier in class action litigation brought
in Pennsylvania state court by a putative class of
homeowners which alleged that the insurer had
utilized improper criteria in handling first-party
property damage claims. We were able to secure a
dismissal for the insurer, early in the litigation,
by demonstrating to plaintiffs’ counsel that or
client’s policy language was consistent with the
practices that it had implemented.
9/11 Insurance Litigation. We successfully
defended an insurer in Maryland state court against
a suit stemming from the 9/11 attacks. This was a
million-dollar claim brought by the business
partners of a man who perished in the attack on the
Pentagon, claiming that the insurer had issued two
separate key-man life insurance policies based on
the alleged pendency of a renewal application and
the supposed non-expiration of the then-current
policy. There was significant adverse publicity risk
associated with the case – plaintiffs’ counsel was
quoted in the national press to the effect that
“when the good lord calls your number, you expect
the insurance company to pay up.” After discovery,
we persuaded the court that there was no second
policy and obtained summary judgment in favor of the
client on all counts.
Contact:
John D. Aldock
Insurance & Annuity Products
On the regulatory side, Goodwin Procter has
extensive experience representing life insurance and
annuity product manufacturers, distributors and
related service providers. We advise clients on
product design, distribution and administration
issues for a wide variety of annuity and life
insurance products, including variable annuities,
fixed annuities, indexed annuities, market value
adjusted annuities, fixed and variable life
insurance contracts, including corporate owned and
bank owned life insurance policies (COLI and BOLI).
We advise clients on the legal issues related to
product design and innovation, including securities
law and insurance law issues. We also advise clients
on distribution requirements and practices under the
securities and insurance laws, as well as FINRA
distribution requirements. We assist clients in
responding to compliance matters and regulatory
examinations. We frequently represent clients before
a wide variety of regulators, including the SEC’s
Office of Insurance Products, FINRA and numerous
state departments of insurance.
Representative matters in this area include:
- Serving as primary securities counsel for two top 10 manufacturers of variable annuity and variable life insurance contracts. We advise the companies on product development, including the development of a variety of annuity living benefits. We also advise the companies on registered and unregistered group annuity contracts and COLI/BOLI contracts.
- Representing a top 20 manufacturer of variable annuity and variable life insurance contracts in resolving expense allocation issues between the insurance company and the underlying funds its utilizes.
- Representing a major reinsurer in efforts to obtain certain regulatory relief from the SEC related to the administration of reinsured variable annuity contracts.
- Representing broker-dealers regarding ongoing obligations for the sale of variable contracts.
- Serving as counsel to funds (or their independent directors) that serve as the underlying investment options for variable life and annuity contracts.
- Representing a Fortune 100 financial services company in the defense of a regulatory investigation conducted by the SEC’s Office of Compliance Inspections and Examinations relating to customer disclosures of payments to intermediaries for variable annuity sales. For the same client, we are currently handling an investigation being conducted by the New York State Attorney General’s Office on disclosures to 401(k) plan participants.
Contact:
Christopher E. Palmer
Directors’ and Officers’ Insurance and Risk
Management
In addition to representing insurance carriers, we
also counsel insured entities, their management and
boards of directors in a wide variety of industries
on insurance coverage matters. In this area we have
advised insureds on:
- Selection of appropriate directors and officers, professional liability and other management liability insurance.
- Securing competitive renewal terms and premiums on existing insurance coverage.
- Purchasing appropriate coverage or extended claim reporting options in the event of corporate transactions such as acquisitions, mergers or IPOs.
- Performing insurance and litigation due diligence on acquisition or merger targets.
When a claim does arise, we work closely with the
insured and its carrier to report, facilitate and
resolve coverage issues.
In addition to our litigation and insurance
counseling expertise, we also provide clients with
proactive risk management advice, including the
creation and implementation of appropriate internal
procedures and other best practices to mitigate
risk. These procedures have included conflict of
interest, insider trading, document retention and
data privacy policies, as well as board
presentations and employee training sessions on
various risk management and corporate governance
matters.
Contact:
Carl E. Metzger