Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

ARBITRATION AWARD CONFIRMATION ROUNDUP

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Disagreement over result

Bailey Brake Farms, Inc. v. Trout, No. 2011-CA-00610 (Ms. S.C. May 23, 2013) (mere disagreement with the result of arbitration is not a ground for vacating an arbitration award)

Leeward Constr. Co. v. American Univ. of Antigua College of Medicine, Case No. 12-6280 (USDC S.D.N.Y. Mar. 26, 2013) (mere disagreement with the result of arbitration is not a ground for vacating an arbitration award)

Evident partiality

Bain Cotton Co. v. Chestnutt Cotton Co., No. 12-11138 (5th Cir. Je. 24, 2013) (dewnial of discovery by arbitrator did not amount to evident partiality)

Antietam Industries, Inc. v. Morgan & Keegan Co., Case No. 12-1250 (USDC M.D. Fl. Mar, 25, 2013) (lack of disclosure by arbitrator did not amount to evident partiality, nor was arbitrator misbehavior or exceeding powers demonstrated)

Exceeding authority

Donnelly v. Jewel of Kahana, LLC, Case No. 12-00347 (USDC D. Ha. Mar. 28, 2013)(using the completely irrational test, the arbitrator did not act in excess of authority; improper arbitrator bias was not shown; mere disagreement with arbitration result is not a basis for vacating an award)

E*Trade Securities, LLC v. Nash, Case No. 12-1766 (USDC M.D. FL. Mar. 12, 2013)(arbitrator did not exceed authority by deciding issue when the parties waived their right to have the issue determined by a court)

Jurisdiction

Liu v. Mar, Case No. 13-685 (USDC N.D. Ill. April 10, 2013) (motion to confirm arbitratin award dismissed for lack of subject matter jurisdiction because no basis for federal jurisdiction was articulated other than the Federal Arbitration Act, which does not provide a basis for the exercise of jurisdiction)

Manifest disregard

Bartlett Grain Co. v. Sunburst Farms Partnership, Case No. 13-1152 (USDC D. Ks. July 5, 2013)(avoids quesion of whether the doctrine of manifest disregard of law survives Superme Courtt’s Hall Street Associates opinion by finding that manifest disregard not demonstrated)

Stipulation

Berkley Ins. Co. v. Excalibur Reinsur. Corp., Case No. 13-2633 (USDC S.D. N.Y. May 15, 2013) (arbitration award concerning reinsurance dispute confirmed by stipulation)

Untimely request to vacate

Glaser v. Legg, Case No. 12-805 (USDC D. D.C. Mar. 11, 2013) (petition to vacate arbitration award denied as untimely under the Federal Arbitration Act; Petitioner barred from raising arguments in support of vacating award as affirmative defenses to cross-petition to confirm the award)

This post written by Rollie Goss.

See our disclaimer.

APPEALS COURT HOLDS REINSURER’S UNLAWFUL AGREEMENTS AND CONSPIRACIES ARE NOT CLAIM HANDLING ACTIVITIES

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Wellpoint, Inc. sued a number of defendants, chief among them reinsurers Continental Casualty Company and Twin City Fire Insurance Company, for denying coverage for Wellpoint’s defense and settlement of a number of medical reimbursement-related lawsuits against it. Wellpoint’s predecessor, Anthem, was the subject of a class action lawsuit in 1999 that alleged that Anthem’s subsidiary failed to timely and adequately reimburse for medical services. Beginning in 2001, Anthem became the subject to a series of over ten additional state and federal lawsuits alleging improper denial of reimbursement and other wrongful acts, including alleged violations of the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Anthem sought coverage from its insurers for defense and settlement of the CUTPA and RICO claims, and the reinsurers counterclaimed seeking declaration that these claims were not covered by the reinsurance agreement. The trial court granted the reinsurers’ motion for summary judgment on the issue.

The reinsurance agreement at issue covered claims against the insured for a wrongful act “only if such Wrongful Act . . . occurs solely in the rendering of or failure to render Professional Services.” (emphasis added) The reinsurance agreement states that “Professional Services” are “services rendered or required to be rendered solely in the conduct of the Insured’s claims handling or adjusting.” In a divided panel vote, the appeals court affirmed the lower court’s summary judgment ruling for the reinsurers finding professional services only included those rendered in the conduct of Wellpoint’s handling or adjusting of claims submitted on the policies that it had issued. Coverage was available only if the alleged wrongful acts that gave rise to the underlying litigation happened “solely” in the conduct of Wellpoint’s claims handling and adjusting. The court held the alleged acts did not, interpreting “solely” to mean “exclusively” or “entirely.” Thus, the alleged violations of CUTPA and RICO were not claims handling activities and could not be covered. Wellpoint, Inc. v. National Union Fire Insurance Co. of Pittsburgh, Case No. 49A05-1202-PL92 (Ind. Ct. App. June 19, 2013).

This post written by Brian Perryman.

See our disclaimer.

FURTHER DEVELOPMENT IN STATE CREDIT FOR REINSURANCE REQUIREMENTS

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As the legislative seasons comes to a close in many states, several states have enacted modifications to their credit for reinsurance requirements to move towards the revised Credit for Reinsurance Model Act. The Missouri legislature adopted HB 133 and the Rhode Island legislature adopted HB 5608. The Georgia Department of Insurance adopted regulations (120-2-78) designed to help implement the Georgia legislature’s earlier adoption of revised credit for reinsurance requirements.

This post written by Rollie Goss.

See our disclaimer.

SUMMARY JUDGMENT DENIED ON ISSUE OF WHETHER COMPANY WAS PARTY TO REINSURANCE AGREEMENT

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In a long running dispute concerning reinsurance, which we posted on in March 2011, a court was asked to find that Guarantee Trust was a party to a reinsurance agreement that it never signed. Acknowledging that it was a well established principle of Illinois contract law that “a party may, by his acts and conduct, assent to contravct terms and become bound by them even though he has not signed the contract, if it is clear that his conduct relates to the specific contract in question,” the cour found that there were disputed issues of material fact as to whether American Medical had demonstrated the types of acts and conduct which would bind Guarantee Trust to a reinsurance agreement it had not signed. The court therefore denied American Medical’s motion for summary judgment. Guarantee Trust Life Ins. Co. v. American Medical and Life Ins. Co., Case No. 10-2125 (USDC N.D. Ill. Mar, 27, 2013).

This post written by Rollie Goss.

See our disclaimer.

ONLINE ARBITRATION AGREEMENT ROUNDUP

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There are three recent opinions on motions to compel arbitration which illustrate the impact of the Internet in this area of the law.

Guidotti v. Legal Helpers Debt Resolution, L.L.C., No. 12-1170 (3d Cir. May 28, 2013) (reversing lower court’s partial refusal to compel arbitration in putative class action; lower court must permit discovery and make findings whether absence of electronic header associated with third-party document hosting website supported plaintiff’s claim that plaintiff never reviewed arbitration provision nor agreed to arbitrate).

Chatman v. Pizza Hut, Inc., Case No. 1:12-cv-10209 (USDC N.D. Ill. May 23, 2013) (granting motion to compel individual arbitration in case brought as putative employment class action; finding that arbitration provision in online agreement was supported by three forms of consideration: (1) Pizza Hut’s promise to consider the plaintiff for employment; (2) Pizza Hut’s obligation to submit to binding arbitration; and (3) Pizza Hut’s continued employment of the plaintiff).

Dixon v. NBCUniversal Media, LLC, Case No. 2:12-cv-07646 (USDC S.D.N.Y. May 28, 2013) (granting motion to compel individual arbitration in case brought as putative employment class action, notwithstanding employee’s failure to review arbitration agreement in ADR manual; employee completed online PowerPoint training, which disclosed that binding nature of the ADR program, that it applied to employee’s claims, that no collective procedure would be permitted, and that continued employment constituted an agreement).

This post written by Michael Wolgin.

See our disclaimer.