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You are here: Home / Archives for Michael Wolgin

Michael Wolgin

COURT UPHOLDS ARBITRATION AWARD DESPITE CHALLENGE TO ARBITRATOR’S USE OF EXCLUDED EVIDENCE

April 26, 2017 by Michael Wolgin

Jersey Shore University Medical Center discharged a staff nurse employee for her actions when a female patient was assaulted by another patient in the nurse’s assigned work area. A labor organization that represents employees at the medical center, submitted a grievance to arbitration on behalf of the discharged nurse, pursuant to the parties’ collective bargaining agreement. The arbitrator issued an opinion and award which rescinded the medical center’s decision to terminate the nurse and replaced it with a suspension without pay for time served. The arbitrator based his decision on a number of factual findings, including findings related to three pieces of evidence (a medical record, a record of post-incident staffing changes, and the nurse’s work history) that the arbitrator excluded or never heard at the hearing.

The medical center filed an action in court to vacate the award, arguing that (1) the arbitrator disregarded certain evidentiary rulings made at the arbitration hearing and (2) the award was a “manifest disregard of the law.” The medical center explained that the arbitrator’s exclusion of certain pieces of evidence at the hearing and subsequent reliance on that evidence in his ruling, unreasonably prejudiced the medical center’s right to a fair hearing and contradicted the arbitrator’s own legal rulings. The court, however, disagreed and denied the medical center’s petition to vacate the award. The court found that the medical center failed to demonstrate that any of the three evidentiary issues amounted to misconduct or prejudice. The court also found that “even if ‘manifest disregard or the law’ remains a viable argument in the Third Circuit in the wake of Hall Street Associates, [the medical center] has failed to meet the relevant standard.” Jersey Shore University Medical Center v. Local 5058, Health Professionals & Allied Employees, AFT/AFL-CIO, Case No. 16-cv-04840 (USDC D.N.J. Mar. 16, 2017).

This post written by Gail Jankowski.

See our disclaimer.

Filed Under: Confirmation / Vacation of Arbitration Awards

PUTATIVE CLASS ACTION INVOLVING A PATENTED REINSURANCE ARRANGEMENT FOR WORKERS’ COMPENSATION COVERAGE LARGELY SURVIVES DISMISSAL

April 25, 2017 by Michael Wolgin

The case is pending in a federal district court in New York, and involves three allegedly interconnected contracts purportedly “designed to circumvent [state] insurance laws,” including the laws of New York. The three contracts include: (1) a workers’ compensation insurance contract between a licensed insurer and an insured; (2) a reinsurance contract between the licensed insurer and an affiliated reinsurer; and (3) a “reinsurance and profit sharing” contract between the reinsurer and the insured. The plaintiffs (insured employers) allege that the “reinsurance and profit sharing” contract was an illegal contract of insurance that modified the workers’ compensation insurance contract issued by the licensed insurer. The plaintiffs also claim that the “reinsurance and profit sharing” contract was materially misleading, and misled insureds to assume liability for a portion of the losses they believed they had insured. Additional claims asserted by the plaintiffs include breach of contract, rescission, violation of New York law prohibiting deceptive trade practices, and unjust enrichment. The defendants (various alleged members of the Berkshire Hathaway Group) moved to dismiss the complaint for failure to state a claim.

In a lengthy opinion, the court granted in part and denied in part the motion to dismiss. Regarding claims for rescission based on alleged violations of the New York Insurance Laws governing workers’ compensation insurance, the court granted dismissal, reasoning that enforcement of those laws rests with the Superintendent of Insurance and that no private right of action exists. The court permitted claims for rescissory damages to proceed however, as reimbursement of amounts charged and paid over and above the filed rates of the policies is contemplated by New York law and “promotes the legislative purpose of the NYIL to ensure that parties adhere to filed rates.” The court also held that the claims for breach of contract (based on plaintiffs’ contention that the reinsurance and profit sharing contract modified the workers’ compensation insurance policies) and unjust enrichment, should survive dismissal. As to the claims for deceptive trade practices, the court held that for certain named plaintiffs, the claims were time-barred, but for other plaintiffs, the claims could proceed. National Convention Services, L.L.C. et al. v. Applied Underwriters Captive Risk Assurance Co., Inc., et al., Case No. 15-cv-07063 (USDC S.D.N.Y. Mar. 9, 2017).

This post written by Michael Wolgin.

See our disclaimer.

Filed Under: Contract Interpretation, Reinsurance Regulation, Week's Best Posts

APPELLATE COURT PRECLUDES ASSIGNEE OF REINSURANCE CLAIMS FROM RE-LITIGATING LACK OF ENTITLEMENT TO ARBITRATION

April 24, 2017 by Michael Wolgin

In 1986, Pine Top Insurance Company became insolvent and was placed into liquidation. The liquidator eventually sold Pine Top’s accounts receivable, including reinsurance claims, to an entity named Pine Top Receivables of Illinois, LLC. In 2015, Pine Top Receivables sued Transfercom, Ltd. to collect on an assigned reinsurance claim and sought to compel Transfercom to arbitrate the claim pursuant to the underlying reinsurance agreement.

Several years earlier, Pine Top had unsuccessfully sued a Uruguayan entity in a federal district court in Illinois, and similarly sought to compel arbitration. That court and the Seventh Circuit Court of Appeals determined that Pine Top Receivables had no right to enforce the arbitration clause in the reinsurance contract because, among other reasons, the assignment of the reinsurance claims from the liquidator conveyed only the right to collect the debt but did not convey the contractual right to demand arbitration.

In the current litigation, Transfercom argued that the Seventh Circuit’s decision collaterally estopped Pine Top Receivables from relitigating the issue of whether it was entitled to demand arbitration with respect to the assigned reinsurance claims. The trial court agreed with Transfercom and denied Pine Top’s motion to compel. And on appeal, the court affirmed the judgment of the trial court. The appellate court reasoned that the earlier case resolved on the merits the issue of whether Pine Top Receivables was entitled to demand arbitration of claims assigned to it by the liquidator. The appellate court further explained that once the Seventh Circuit resolved the arbitration issue in Pine Top Receivables’s interlocutory appeal in the earlier litigation, the issue could not be revisited and the judgment on that issue was final. Pine Top Receivables of Illinois, LLC v. Transfercom, Ltd., Case No. 15 L 009145, (Ill. App. Ct. Mar. 31, 2017).

This post written by Gail Jankowski.

See our disclaimer.

Filed Under: Arbitration Process Issues, Reorganization and Liquidation, Week's Best Posts

SOUTH DAKOTA ADOPTS CREDIT FOR REINSURANCE MODEL LAW

April 6, 2017 by Michael Wolgin

On March 6, 2017, the Governor of South Dakota signed into law House Bill 1045 conforming South Dakota law to the current version of the Credit for Reinsurance NAIC Model Law (Model 785). The law becomes effective July 1, 2017. S.D. HB 1045ENR.

This post written by Michael Wolgin.

See our disclaimer.

Filed Under: Reinsurance Regulation, Reserves

EXTENSIVE USE OF ATTORNEY-CLIENT MEMO IN PRIOR LAWSUIT DESTROYED ATTORNEY-CLIENT PRIVILEGE

April 5, 2017 by Michael Wolgin

Insured companies sued Travelers for allegedly misrepresenting the scope of coverage afforded for asbestos injury claims under certain Excess Overlayer Indemnity policies. At issue has been the discoverability of a memorandum prepared by Travelers in preparation for and involuntarily produced by Travelers in an earlier related lawsuit in federal court in Pennsylvania and, ultimately, the Third Circuit Court of Appeals. See Travelers Cas. & Sur. Co. v. Ins. Co. of N. Am., previously discussed here. That case involved a dispute surrounding layers of insurance provided for losses relating to breast implants and chemical products. In preparation for that litigation, Travelers requested that its general counsel prepare a reinsurance analysis memo addressing the reinsurance implications of different coverage scenarios for the breast implant claims.

In the present lawsuit, plaintiffs requested production of this memo on the theory that it likely contained information relevant to the current plaintiffs’ claims and Travelers’ prior interpretation of its policies. Travelers, however, refused to produce the memo, claiming that it was protected by attorney-client privilege. A January 2017 discovery ruling ordered an in camera review of the memo. Following the in camera review, the court has now ruled that the significant discussion and quotation of the memo’s contents by the Third Circuit in the earlier lawsuit destroyed the privilege. While the general rule is that a party does not waive privilege for documents which it is compelled to produce, “the exhaustive discussion of it by the Third Circuit makes it impossible to consider it” privileged. The order cited the fact that the memo was admitted as an exhibit at trial as well as the fact that the Third Circuit extensively quoted from the memo and summarized testimony about it, all of which appeared in a published court ruling. As such, the memo was in the public domain, notwithstanding that the court records were later sealed. Travelers was ordered to produce the sections of the memo addressed by the Third Circuit to plaintiffs’ counsel “for attorney’s eyes only.” ITT Corp. v. Travelers Cas. & Sur. Co., Case No. 12-38 (USDC D. Conn. Feb. 27, 2017).

This post written by Gail Jankowski.

See our disclaimer.

Filed Under: Discovery

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