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Preview: LexisNexis® Mealey's™ Reinsurance Legal News

LexisNexis® Mealey's™ Reinsurance Legal News



Headline Reinsurance Legal News from LexisNexis®



 



Reinsurer Questions Supreme Court On Arbitration Clause In Reinsurance Agreement
WASHINGTON, D.C. - A reinsurer on Nov. 9 petitioned the U.S. Supreme Court to answer whether "an argument that applies equally" to an arbitration clause under a reinsurance participation agreement (RPA) "as a whole is sufficient to specifically challenge a delegation provision" under Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70 (2010) (Applied Underwriters Captive Risk Assurance Company Inc. v. Minnieland Private Day School Inc., No. 17-717, U.S. Sup., 2017 U.S. S. Ct. Briefs LEXIS 4426).



Magistrate Judge Confirms Arbitration Award To Workers' Comp Insurer
SAN FRANCISCO - In a dispute regarding a reinsurance participation agreement (RPA), a California federal magistrate judge on Dec. 28 confirmed an arbitration award, ordering an insured to pay $539,246.88 to an insurer in remaining premium payments for the workers' compensation coverage (American ETC, Inc. v. Applied Underwriters Captive Risk Assurance Company Inc., No. 17-03660, N.D. Calif., 2017 U.S. Dist. LEXIS 212811).



Panel Remands Dispute For Decision On Whether Clause Is Unconscionable
SAN DIEGO - A California appeals panel ruled Dec. 22 that a trial judge erred in denying a motion to compel arbitration in a workers' compensation coverage dispute arising from a reinsurance participation agreement (RPA) without deciding whether the RPA's delegation clause is unconscionable (Ramar Production Services Inc., et al. v. Applied Underwriters Inc., et al., No. D071443, Calif. App., 4th Dist., Div. 1, 2017 Cal. App. Unpub. LEXIS 8741).



New York High Court Finds No Set Rule On Reinsurer's Liability Cap On Defense Costs
NEW YORK - In a coverage dispute over asbestos litigation costs, the New York Court of Appeals on Dec. 14 ruled that one of its previous rulings did not establish a general rule that a reinsurance contract's total liability cap encompasses both indemnity and defense costs incurred by an insurer (Global Reinsurance Corporation of America v. Century Indemnity Co., No. CTQ-2016, 0005, N.Y. App., 2017 N.Y. LEXIS 3723).



New York Federal Jury Awards $64M To Insurer, Finds Reinsurer Is Liable
UTICA, N.Y. - A jury in a New York federal court on Dec. 15 awarded an insurer more than $64 million after finding that a reinsurer is liable under seven reinsurance agreements for sums the insurer paid to an insured in an asbestos claims settlement (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y.).



Reinsurer Seeks New Trial After New York Federal Jury Awards $64M To Insurer
UTICA, N.Y. - Following a jury's verdict of $64 million, a reinsurer in a Dec. 29 motion asked a New York federal court for a new trial, arguing that it is not liable under seven reinsurance agreements for sums an insurer paid to an insured in an asbestos claims settlement (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y.).



Judge Dismisses Reinsurer, Related Entities From Breach Of Contract Case
SALT LAKE CITY - A Utah federal judge on Dec. 19 dismissed a reinsurer and other related entities from a breach of contract and bad faith lawsuit over denied coverage under a professional liability policy because there is no personal jurisdiction (Allegis Investment Services LLC, et al. v. Arthur Gallagher & Co., et al., No. 17-515, D. Utah, 2017 U.S. Dist. LEXIS 209257).



Insurer, Reinsurer Agree To Dismiss Dispute Over Payments Made For Asbestos Losses
BOSTON - An insurer and reinsurer on Dec. 15 agreed to dismiss a lawsuit in a Massachusetts federal court concerning coverage under six facultative reinsurance certificates for asbestos losses paid to an insured (Lamorak Insurance Co. v. Everest Reinsurance Co., No. 15-13425, D. Mass.).



Claims Administrator Sues Insurer For Failing To Reimburse Defense Costs
MINNEAPOLIS - A claims administrator and an insurer allege in an Oct. 23 complaint filed in a Minnesota federal court that an insurer breached its contract by failing to reimburse them for unpaid defense costs in a settlement of an underlying workers' compensation claim after reinsurance initially provided coverage (Berkley Risk Administrators Co. LLC, et al. v. National Union Fire Insurance Company of Pittsburgh, PA, No. 17-04765, D. Minn.).



Judge Stays Discovery Until Ruling On Motion To Dismiss Reinsurers' RICO Lawsuit
EL PASO, Texas - In a lawsuit alleging a scheme to take control over an auto dealership and to decline selling vehicle-protection products that are reinsured, a Texas federal judge on Dec. 26 stayed all discovery until a ruling on a motion to dismiss (Richard C. Poe II, et al. v. Anthony E. Bock, et al., No. 17-00232, W.D. Texas).



Government Owed Interest For Reinsurance Payments On Promissory Notes, Judge Says
LOS ANGELES - The federal government is entitled to recover prejudgment interest and attorney fees in its lawsuit seeking to enforce three promissory notes for which the government made reinsurance payments, a California federal judge ruled Dec. 18 (United States of America v. Lorin S. Rosemond, No. 17-00854, C.D. Calif., 2017 U.S. Dist. LEXIS 207751).



Homeowner Says To Court: Reinsurance Scheme Existed With Mortgage Insurance
TRENTON, N.J. - A homeowner argues in his Dec. 4 opposition brief filed in a New Jersey federal court that an insurer and a bank engaged in kickbacks and entered into "riskless captive reinsurance arrangements" for the insurer to "reinsure" property insurance force-placed on borrowers (Mufti Quarashi v. M&T Bank Corp., et al., No. 17-06675, D. N.J.).



Parties Set Arbitration In Reinsurance Suit Over Workers' Comp Risks For August 2018
NEW YORK - In a dispute regarding reinsurance of workers' compensation risks, a New York federal judge on Dec. 18 endorsed a joint status report indicating that the parties have scheduled an arbitration hearing the week of Aug. 13 (In re arbitration between National Union Fire Insurance Company of Pittsburgh, PA v. Federal Insurance Co., No. 16-CV-8821, S.D. N.Y., 2017 U.S. Dist. LEXIS 88470).



Business Arguments Undercutting Bellefonte Re
By Robert M. Hall I. Introduction One of the more controversial reinsurance decisions in living memory is Bellefonte Reins. Co. et al. v. Aetna Casualty and Surety Co., 903 F.2d 910 (2nd Cir. 1990) ("Bellefonte Re"). It held that the limit of liability in a facultative certificate unambiguously capped the reinsurer's liability for losses and expenses. Stated differently, even though the underlying policy paid expenses in addition to limits, the facultative certificate did not thus creating a gap in reinsurance coverage for the ceding insurer. Other courts have followed this decision.



Justice Declines To Compel Arbitration Under Reinsurance Participation Agreement
GOSHEN, N.Y. - A New York justice on Dec. 5 refused to compel arbitration of a dispute pursuant to a provision under a reinsurance participation agreement (RPA) because the provision is invalid under Nebraska law (Milmar Food Group II, LLC, et al. v. Applied Underwriters Inc., et al., No. EF003101-2017, N.Y. Sup., Orange Co., 2017 N.Y. Misc. LEXIS 4634).



Insurer Says Insured Does Not Rely On Reinsurance Agreements In $26M Case
WASHINGTON, D.C. - A financial services company abandoned reliance on reinsurance agreements in its lawsuit seeking to recover a $26 million arbitration award directly from reinsurers, a credit insurer argues in a Dec. 1 reply brief to a District of Columbia federal court, seeking dismissal of the breach of contract lawsuit (Vantage Commodities Financial Services I, LLC v. Assured Risk Transfer PCC, LCC, et al., No. 17-01451, D. D.C.).



Minnesota Appeals Panel: Filed-Rate Doctrine Bars Claims Against Reinsurer
MINNEAPOLIS - The filed-rate doctrine precludes employers' claims to recover assessments that Workers' Compensation Reinsurance Association (WCRA) levied against them, a Minnesota appeals panel affirmed Dec. 11 (Ambassador Press Inc., et al. v. Trifac Workers' Compensation Fund, et al., Nos. A17-0307 & A17-0323, Minn. App., 2017 Minn. App. Unpub. LEXIS 1016).



Judge Orders Insurer To Produce Documents On Reinsurance, Mediation
PITTSBURGH - A Pennsylvania federal judge on Dec. 7 granted and denied in part an insured's request to compel an insurer to produce redacted documents pertaining to mediation in an underlying case, as well as reinsurance information (Golon Inc. v. Selective Insurance Company of the Southeast, et al., No. 17-0819, W.D. Pa., 2017 U.S. Dist. LEXIS 201792).



Magistrate Judge Extends Discovery In Reinsurance Case Over Promissory Note
LINCOLN, Neb. - A Nebraska federal magistrate judge on Nov. 30 extended the discovery deadline by one month in a dispute over whether a reinsurer owes an insured $152,616.35 under a promissory note executed pursuant to a reinsurance participation agreement (RPA) (Applied Underwriters Inc. v. Top's Personnel Inc., No. 15-90, D. Neb.).



Judge Denies Extension On Discovery Of Class Policies In Reinsurance Fraud Scheme
BALTIMORE - A Maryland federal judge on Nov. 29 denied a request to extend the relevant time period for discovery as to 11 class policies experiencing an 2015 cost of insurance (COI) increase in a dispute over an alleged life insurance fraud scheme that shifted debt to reinsurers (Richard Dickman, et al. v. Banner Life Insurance Co., No. 16-192, D. Md.).



New York High Court Hears Insurer, Reinsurer's Case On 'Follow-The-Form' Provision
NEW YORK - The New York Court of Appeals heard oral arguments on Nov. 15 on whether the "follow-the-form" provision mandates concurrency between insurance and reinsurance in the context of expense coverage (Global Reinsurance Corporation of America v. Century Indemnity Co., No. CTQ-2016, 0005, N.Y. App.).



Judge Sustains, Overrules Objections To Witnesses In Insurer, Reinsurer's Dispute
UTICA, N.Y. - A New York federal judge on Nov. 28 sustained and overruled objections from an insurer and reinsurer to two witnesses in a dispute over a $325 million settlement of asbestos claims (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y.).



Magistrate Judge Approves Reinsurer's Withdrawal Of Motions To Compel Discovery
SCRANTON, Pa. - In a breach of contract dispute over a reinsurance agreement for a bond program, a Pennsylvania federal magistrate judge on Dec. 1 approved a bond reinsurer's withdrawal of motions to compel discovery and for a protective order (Aegis Security Insurance Co. v. Kingsway Financial Services Inc., No. 16-1555, M.D. Pa.).



Insurer's Liquidator Files Amended Complaint In New York Reinsurance Action
NEW YORK - The liquidator of The Home Insurance Co. on Nov. 22 filed in a New York federal court an amended complaint against reinsurers, seeking $224,886.13 allegedly due under three facultative reinsurance certificates (Roger A. Sevigny v. Trygvesta Forsikring A/S, Trygvesta Forsikring A/S v. Cerberus Holding Company LLC., No. 16-4874, S.D. N.Y.).



Insurer's Receiver Asserts Negligence Claim Against Actuary Company, Officer
OKLAHOMA CITY - An insolvent insurer's receiver filed a second amended complaint on Nov. 27 in an Oklahoma federal court, asserting professional negligence against an actuary services provider and its chief executive officer for their alleged failure to properly investigate and accurately report on the financial standing and reinsurance contracts of the insurer (Oklahoma ex rel., John D. Doak v. CTK Actuarial Services Inc., No. 17-371, W.D. Okla.).



Panel: Insurance Benefits Company Is Entitled To Producer Commission
CHICAGO - An insurance benefits company is entitled to a producer commission but not a marketer's fee for a health insurer's breach of an oral contract under a marketing agreement amended following the health insurer's termination of a reinsurance agreement, an Illinois appeals panel affirmed Dec. 7 (Insurance Benefit Group Inc. v. Guarantee Trust Life Insurance Co., No. 1-16-2808, Ill. App., 1st Dist., 4th Div., 2017 Ill. App. LEXIS 763).



Parties In Dispute Over Workers' Compensation Ask For Reset Of Deadlines
BRIDGEPORT, Conn. - In a dispute over a series of workers' compensation insurance and reinsurance contracts, parties on Nov. 21 jointly moved a Connecticut federal judge to reset pretrial deadlines pending a reinsurer's motion for reconsideration of a ruling denying its request to dismiss or transfer venue of the case (Charter Oak Oil Co. Inc. v. Applied Underwriters Inc., et al., No. 17-00689, D. Conn.).



Nebraska Law Preempts Reinsurance Participation Agreement Clause, Panel Says
LOS ANGELES - Nebraska Uniform Arbitration Act (NUAA) Section 25-2602.01(f) applies to a reinsurance participation agreement (RPA) and renders an arbitration provision unenforceable, a California appeals panel held Nov. 22, finding that a trial judge did not err in refusing to compel arbitration in a breach of contract dispute (Citizens of Humanity, et al. v. Applied Underwriters Inc., et al., No. B276601, Calif. App., 2nd Dist., Div. 2, 2017 Cal. App. LEXIS 1038).



Insolvent Insurer Had No Duty To Reimburse Hospitals, Virginia High Court Finds
RICHMOND, Va. - Governing contractual provisions did not obligate an insolvent insurer to reimburse hospitals for legal fees and costs that they incurred in separate proceedings, the Virginia Supreme Court ruled Nov. 22 (Appalachian Regional Healthcare, et al. v. Jacqueline K. Cunningham, et al., No. 161767, Va. Sup., 2017 Va. LEXIS 167).



8th Circuit Upholds Dismissal Of Dispute Seeking To Recover ACA Reinsurance Fee
ST. LOUIS - Finding sovereign immunity was not waived, the Eighth Circuit U.S. Court of Appeals on Nov. 27 affirmed the dismissal of a lawsuit filed by trustees of a self-insured group health plan seeking to recoup from the U.S. government a fee paid under the Affordable Care Act's transitional reinsurance program (Paul Batsche, et al. v. Thomas E. Price, No. 16-4305, 8th Cir., 2017 U.S. App. LEXIS 23844).



Magistrate Judge Recommends Denial Of Reinsurance Claims In 9/11 Insurance Dispute
NEW YORK - In a dispute over claims stemming from the attacks on Sept. 11, 2001, a New York federal magistrate judge on Nov. 27 recommended that insurers be awarded $221.5 million but that their claims arising out of reinsurance contracts be denied (In re: Terrorist Attacks on September 11, 2001, No. 03-MDL-1570, Continental Casualty Co. v. Al Qaeda Islamic Army, No. 04-5970, S.D. N.Y., 2017 U.S. Dist. LEXIS 196192).



Judge Resolves Motions To Exclude Testimony, Evidence In Reinsurer, Insurer Dispute
UTICA, N.Y. - In a dispute over a $325 million settlement of asbestos claims, a New York federal judge on Nov. 16 addressed a number of motions filed by an insurer and a reinsurer to preclude expert testimony and certain arguments from trial (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y., 2017 U.S. Dist. LEXIS 189911).



Plaintiffs Seek Extension On Discovery Of Class Policies In Reinsurance Fraud Scheme
BALTIMORE - In an alleged life insurance fraud scheme that shifted debt to reinsurers, a class of plaintiffs on Nov. 21 asked a Maryland federal court to extend the relevant time period for discovery as to 11 class policies experiencing an 2015 cost of insurance (COI) increase (Richard Dickman, et al. v. Banner Life Insurance Co., No. 16-192, D. Md.).



Federal Judge Grants Discovery Extension In Fraudulent Transfers Suit
ATLANTA - In a dispute over alleged fraudulent transfers of reinsurance funds, a Georgia federal judge on Nov. 21 granted in part a request to extend discovery for two additional months "only to follow up on existing issues" but said no new discovery is to occur (Canal Insurance Co., et al. v. Golden Isles Reinsurance Company Ltd., et al., No. 15-03331, N.D. Ga.).



New York High Court Reverses Barring Of Derivative Claims By Reinsurer's Shareholder
NEW YORK - The New York Court of Appeals determined Nov. 20 that a lower court erred in its application of a rule under Cayman law barring a reinsurer's shareholder from bringing derivative claims against the reinsurer, its directors and its affiliates (Paul Davis v. Scottish Re Group Ltd., et al., No. 111, N.Y. App., 2017 N.Y. LEXIS 3277).



Judge Strikes Third-Party Witness Testimony In Insurer, Reinsurer's Coverage Dispute
UTICA, N.Y. - Before trial in a dispute over a $325 million settlement of asbestos claims, a New York federal judge on Nov. 21 granted an insurer's request to strike a reinsurer's submission of deposition testimony in another case by a third-party witness as inadmissible hearsay (Utica Mutual Insurance Co. v. Fireman's Fund Insurance Co., No. 09-00853, N.D. N.Y.).



Insolvent Insurer Asserts Defenses Against Contractual Indemnification Claim
COLUMBIA, S.C. - An insolvent insurer argues in a Nov. 22 reply brief to the South Carolina federal court that a bank is barred from asserting its contractual indemnification counterclaim in a dispute over the bank's role as trustee of a reinsurance trust with an insolvent insurer because the bank has no contractual right (Accident Insurance Company Inc. v. U.S. Bank National Association, et al., No. 16-2621, D. S.C.).



Reinsurer Appeals Ruling In Federal Crop Insurance Suit To D.C. Circuit Court
WASHINGTON, D.C. - A reinsurer on Oct. 10 asked the District of Columbia U.S. Circuit Court of Appeals to reverse the dismissal of its complaint against Federal Crop Insurance Corp. (FCIC) in a reinsurance dispute (ACE American Insurance Co., et al v. Federal Crop Insurance Corp., 16-5348, D.C. Cir.).



Functus Officio: The Clarification Exception
By Robert M. Hall I. Introduction Functus offico is Latin for "a task performed". In the context of arbitrations, it means that once the panel has issued a final and binding order, it becomes functus officio and lacks any further power to make rulings or take other actions.