Seventeen states and Washington, D.C. have laws taking effect in 2019 that either abolish or extend statutes of limitations for victims of child sexual abuse to sue or seek criminal charges against their abusers. A recent A.M. Best report compares child sexual-abuse claims to asbestos liability because the claims can affect decades-old insurance policies and the settlement amounts can be hard to predict.
In a recent blog post, Carey Quigley, a Gen Re treaty account underwriter, discusses what the new laws mean for underwriters that handle commercial “child custodial care” risks. These risks encompass schools, churches, sports, camps, day care and any other organized activities involving minors.
Quigley notes that unless their policies were written on a claims-made basis, the liability of these organizations for the past conduct of employees and volunteers does not typically affect their exposure under current insurance policies. Nevertheless, he recommends that underwriters take the following three steps in reviewing guidelines and policy forms:
Build a hazard scale: The degree of risk increases with the length of the activity, so a boarding school would be on the far end of the spectrum. Since parents are now more involved with their children’s activities, local groups and gatherings would present a lower risk.
Review insurance forms: Most general commercial writers may have a local dance school or a small church in their portfolio. For these types of policyholders insurers have developed Sexual Abuse and Molestation (SAM) endorsements offering critical but not unlimited protection.
Quigley recommends that insurers include language in their SAM endorsement to: Move all coverage into the policy when the abuse first began; treat all abuse by a single perpetrator as a single claim; treat all related or interrelated abuse as a single claim, without further qualification; and provide coverage on a claims-made basis.
Decide exclusions and check wording: When writing exclusions it’s important to determine whether they will extend to all types of physical abuse, or only sexual abuse. Often these terms are defined to prevent overlap with the GL policy and stacked limits from the endorsement and base policy. If a lawsuit alleges sexual abuse with false imprisonment or battery for instance, the insurer probably intends that all such allegations trigger only the SAM endorsement.
In conclusion Quigley says that underwriters should monitor court decisions to learn how policy language is interpreted by courts and check forms filed by other insurers to see how they address stacking issues.
Today Illinois Governor J. B. Pritzker is reportedly going to sign into law a bill that legalizes recreational marijuana in the state. That makes Illinois the eleventh state (plus D.C.) to legalize marijuana for adult use.
But as medical and recreational marijuana legalization spreads, concerns about what this means for workplace safety and workers compensation continue to grow. What is the impact of legal marijuana on workplace safety, employer duties and obligations and workers compensation insurance?
Today, the I.I.I. published a report that examines the current state of the issue. (Download the report here.)
“Haze of confusion: How employers and insurers are affected by a patchwork of state marijuana laws” dives into the following questions:
- How does marijuana intoxication work and how might it impact workplace safety?
- What accommodations, if any, are employers expected to provide for workers that use marijuana?
- Does workers compensation insurance provide benefits to injured employees testing positive for marijuana? What about reimbursement to injured workers for medical marijuana?
Unfortunately, none of these questions have straightforward answers. Every state’s laws and regulations governing these issues are different, not to mention that federal law prohibits marijuana outright. To complicate matters further, state laws and regulations are constantly changing. Employment and insurance activities once prohibited are often now permitted – or required.
Legal marijuana isn’t going away. Employers and insurers will continue to grapple with a rapidly changing environment, perhaps for years to come.
To learn more, download the report here.
In May 2018, the American Law Institute (ALI) gave final approval to its “Restatement of Law, Liability Insurance.” Portions of the restatement continue to prove controversial, and state legislators have begun pushing back against it.
The ALI is an independent organization of legal professionals that seeks to clarify and simplify U.S. case law to help judges in their decisions. To this end, the ALI publishes a variety of materials that describe what the case law says in various areas, including insurance. One of the materials the ALI publishes is called a “restatement of law,” which attempts to describe common law and its statutory elements. It’s basically a way for judges to know where the law currently stands on a variety of issues.
The latest restatement addresses liability insurance and includes provisions that have met with vocal opposition from state legislatures, the insurance industry, and lawyers. These include, among other things, possible changes to how insurance policies can be interpreted; how coverages are triggered for “long-tail” claims (claims that can last for many years, like environmental losses); and how an insurer might be held responsible for breaching its duty to defend.
Opponents argue that some provisions of the restatement could fundamentally – and improperly – change how liability law operates. That in so changing liability law, the restatement arrogates powers to regulate insurance that properly belong to state legislatures. That many aspects of the restatement do not accurately reflect current state case law and weigh the scales against the legal rights of insurance companies. That portions of the restatement are less a description of law than they are a “wish list” for what the law should be.
Others have called these criticisms of the restatement unfounded or have sought a more balanced response to its changes.
But regardless of who is right, state legislatures have begun to act against the restatement. The National Conference of Insurance Legislators has come out against it. Arkansas, Michigan, North Dakota, Ohio, Tennessee, and Texas have all recently passed legislation that in some form seeks to curtail or condemn the use of the restatement under their respective insurance laws. The Kentucky and Indiana legislatures have also passed resolutions stating their opposition to the ALI’s restatement.
How this will all shake out remains to be seen: will the restatement of law for liability insurance begin to make its mark in case law? Will legislation against the restatement continue to spread? Only time will tell.
I once took an Uber in Fairfield, Ohio. As we sat at a light, the driver pointed to an empty big box storefront.
“What’s that building look like?” he asked. I said it looked like an empty big box storefront.
“That’s right. You know where it went?” I said no, confused. He pointed down the street a few hundred yards away to a brand-new big box store.
“There it is. You know why they moved down the street? Taxes. Lower sales tax across the county line.”
I was reminded of that story of fiscal competition at its finest when reading about Apple’s recent decision to close two of its stores in the Dallas suburbs.
Or more accurately, as Ars Technica reported, Apple’s decision to close two stores within the federal court jurisdiction of the Eastern District of Texas. Rumor has it that Apple’s move could be in response to intellectual property litigation. Per Ars Technica:
The Eastern District is known for its extremely patent-friendly judges, and so for decades patent plaintiffs have set up shop there and sued defendants located all over the country. Prior to 2017, the law allowed a plaintiff based in the Eastern District of Texas to sue defendants there if defendants had even tenuous connections to the district. And, of course, a company of Apple’s size has business ties to every part of the country.
These plaintiffs are often called “patent trolls,” which the Electronic Frontier Foundation defines as companies or individuals that cheaply purchase patents (often “overbroad and vague” patents, at that) and then threaten expensive litigation against companies allegedly in violation of said patents:
These letters threaten legal action unless the alleged infringer agrees to pay a licensing fee, which can often range to the tens of thousands or even hundreds of thousands of dollars.
Many who receive infringement letters will choose to pay the licensing fee, even if they believe the patent is bogus or their product did not infringe. That’s because patent litigation is extremely expensive — often millions of dollars per suit — and can take years of court battles. It’s faster and easier for companies to settle.
The Eastern District has been a favorite venue for this kind of litigation – even after the Supreme Court sought to rein in so-called “venue shopping” in a 2017 decision. Ars Technica explains:
[U]nder the Supreme Court’s 2017 TC Heartland decision, a defendant can only be sued in a district where it “resides”—meaning where it was incorporated—or “has a regular and established place of business.”
Apple’s two stores in the Eastern District would likely count as “regular and established places of business” for patent-law purposes. So under the new rules, continuing to operate the stores makes it easier for patent plaintiffs to sue Apple in the Eastern District.
Apple has not confirmed that its move is related to patent-troll litigation. But, tellingly, the company is replacing its two shuttered stores with a new store…directly across the border of the Eastern District. Sometimes, the best offense is a good defense.
Congress has passed the 2018 Farm Bill and President Trump is expected to sign the bill into law. A key part of the bill (once enacted) will legalize hemp cultivation and sale on the federal level – with certain restrictions, of course. The previous farm bill only permitted individual states to develop programs for hemp cultivation.
Hemp is an agricultural commodity that’s used in tens of thousands of products, everything from textiles to industrial products to food. But when we talk about hemp, there are a few things that underwriters and other insurance professional should be aware of.
“Hemp” has a specific definition. Under the bill, hemp is defined as the plant Cannabis sativa L. that contains less than 0.3 percent THC, the cannabinoid that gets users high. THC levels in hemp are so low that they can’t get users high.
Hemp is not marijuana. Hemp is a plant in the genus Cannabis, a genus which includes marijuana and hemp. These two plants are chemically distinct. Marijuana is still illegal under federal law.
Hemp and hemp-derived products can cross state lines. Importantly, hemp can cross state lines in interstate commerce under the 2018 bill. Under the 2014 Farm Bill, only individual states could establish programs for hemp cultivation.
Hemp cultivators will be licensed. Not just anyone can grow hemp. The bill directs state and federal agencies to develop regulatory procedures for licensing hemp cultivators.
Hemp and hemp-derived cannabinoids are non-psychoactive. A popular chemical found in Cannabis plants (including marijuana) is “cannabidiol” (CBD). CBD has some properties like THC but can’t get users high. Hemp-derived CBD is being infused into all sorts of consumers products, from facial creams to chocolate. There’s also at least one cocktail bar in Brooklyn that will add a shot of CBD to your martini.
The FDA has a stance on CBD – and it’s not permissive. But speaking of chocolate, the U.S. Food and Drug Administration (FDA) has said that it’s illegal to sell CBD-added food and food products across state lines. Whether it’s legal to sell CBD-added food within a state depends on that state’s law (this National Law Review article has more information on the issue).