Are Pre-Award Challenges to Arbitrator Qualifications Still Possible?

qualificationOne of the most vexing issues facing parties in reinsurance arbitrations is whether the other side’s party-appointed arbitrator qualifies under the arbitrator criteria set forth in the arbitration clause of the reinsurance agreement. The issue is frustrating because sometimes the arbitrator criteria is not as clear as it should be, which leaves room for creative appointments. It is also frustrating because when a counter-party appoints an arbitrator that arguably does not qualify, there is very little that the other party can do about it.

Collateral disputes over the qualifications of the arbitration panel may seem to be a great waste of time and money, but given the existing party-appointed system of advocate-arbitrators that has yet to be replaced by a neutral panel system, the make-up of an arbitration panel is seen as critical to a successful outcome. For this reason, parties are sometimes hesitant to go forward with panel selection when the other side appoints an arbitrator that may not qualify under the criteria established by the arbitration clause.

If a party believes that the opposing party’s arbitrator is not qualified, the party may object to the appointment and request the other party to replace its arbitrator with a qualified candidate. If the other party refuses, the objecting party must decide whether to challenge the appointment or go forward with umpire selection under a reservation of rights.

In a recent case, a Massachusetts federal court had an opportunity to address an objector’s challenge to a party-appointed arbitrator as part of a pre-award petition to remove the arbitrator and enforce the arbitration agreement. That challenge failed.

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Health Insurer Loses Reimbursement Claim Against No-Fault Insurer

Couple Reading Letter In Respect Of Wife's Neck Injury

Like many automobile no-fault systems, New York’s no-fault law provides that in an auto accident, each injured person or their medical provider is entitled to direct reimbursement for medical expenses regardless of fault from each person’s own automobile no-fault insurer. So what happens if the medical providers bill the injured person’s health insurer instead of the no-fault insurer and the health insurer pays the bills? The New York Court of Appeals just answered that question.

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New York Keeps Common Interest Doctrine Litigation Related

Woman protecting herself with a shieldThe Common Interest Doctrine is used often in insurance and reinsurance-related disputes. As policyholder and claimant lawyers continue to aggressively pursue communications between insurers and reinsurers about their claims, those seeking to preclude disclosure often turn to the common interest doctrine to assert this as an exception to waiver of the attorney-client privilege. Many courts have extended the common interest doctrine to include any common legal advice and strategy and not just legal advice and strategy on current or anticipated litigation. New York has just chosen not to do so.

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Does an Insurance Examination Privilege Exist?

Stethoscope on the dollars. Concept.Under many states’ insurance laws, the formation of companies or the issuance of policies require filing and often approval by the state insurance regulator. Additionally, every insurance company licensed in a state will come under a periodic examination during which information will be requested and collected by the insurance regulator and will result in an examination report produced on the findings of that examination about that insurance company. In litigation involving the creation of an insurance or reinsurance company, are examination reports and other communications with the insurance regulator subject to disclosure under the applicable discovery rules in federal court?

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Is a Reinsurance Contract an Insurance Contract for Discovery Purposes?

Close-up of contract paper with magnifying glass and eyeglasses.

Litigators know that in federal court initial disclosures are required. Under FRCP 26(a)(1)(A)(iv), parties must provide to the other side for inspection and copying “any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment.” The question is, does this section apply to reinsurance agreements?

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New York Court of Appeals Reaffirms Contract Language Controls Allocation and Exhaustion Methodologies

iStock_000061959038_SmallLong-tail claims from asbestos and other toxic exposures have plagued policyholders and their insurers for decades. Myriad issues arise when trying to determine when injuries are incurred, how policies are triggered, how liability should be allocated among multiple policies and when excess policies are required to cover the losses. None of this is easy and there is no uniformity among the various courts that have dealt with these issues.

That brings us to the latest pronouncement from the New York Court of Appeals, which was asked by the Delaware Supreme Court to answer certified questions under New York law about whether “all sums” or “pro rata” allocation applies in an excess insurance situation that contain non-cumulation and prior insurance provisions and whether horizontal or vertical allocation is required before the excess policies attach in an asbestos situation.

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Reinsurance Premiums, Overcharges and Intermediaries

iStock_000017546606_SmallThe reinsurance industry has always had reinsurance auditors that performed various tasks for cedents and reinsurers to monitor programs and determine whether the counter-parties were complying with the contracts. In the past few years, a newish type of auditor has appeared (at least newish to me). This type of auditor looks at reinsurance programs to determine if the cedent has overpaid reinsurance premiums and has been underpaid for reinsurance recoveries. A recent case in Pennsylvania highlights this type of audit work. Continue Reading

New York Appellate Court Affirms Denial of Coverage Under Blanket Ordinance or Law Coverage Endorsement

iStock_000008336516_SmallWhen a building is damaged sometimes the repair and remediation has to be enhanced because of newly discovered building code or ordinance or law violations. For example, a windstorm causes a facade to collapse off a building and that collapse reveals that the method used to mount the facade on the concrete slabs violates the current building code and requires a different and more costly method to bring the building into compliance. If the building had insurance with a Blanket Ordinance or Law Coverage Endorsement, it is possible that the insurance company will have to pay the additional costs to bring the building in line with the building code. But depending on the nature of the loss and its connection to the building code issue, this coverage may be elusive.

A recent decision by a New York intermediate appellate court addressed the Blanket Ordinance or Law Coverage endorsement and affirmed the motion court’s finding in favor of the insurance company and against the policyholder. St. George Tower v. Insurance Company of Greater New York, No. 651746/12 (N.Y. App. Div. 1st Dep’t Apr. 21, 2016).

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California Weighs In on Enforcement of Other Insurance Clauses

iStock_000018132202_SmallOn Monday, in Certain Underwriters at Lloyd’s, London v. Arch Specialty Ins. Co., 16 C.D.O.S. 3833 (Cal. Ct. App. Apr. 11, 2016), the California Court of Appeal (Third District) rejected Arch Specialty Insurance’s attempt to enforce “other insurance” clauses in the conditions and coverage grant of the relevant policies.

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The Wellington Agreement’s Confidentiality Provision Lives On

lock and chain in confidential agreement document background

You remember the Wellington Agreement don’t you? This was the settlement agreement entered into back in 1985 to resolve numerous coverage disputes between Owens-Corning Fiberglass Corp. and its producers and insurers over pending asbestos litigation. Confidential arbitrations took place as part of the Wellington Agreement to resolve these coverage disputes. Much evidence was created as part of those proceedings under the confidentiality umbrella.

In a recent case, a court was faced with an application by a non-signatory to the Wellington Agreement seeking discovery and a subpoena to obtain evidence from one of the arbitrations under the Wellington Agreement for use in its own coverage dispute.

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