2015 Atlanta RIMS Educational Conference

Managing Complex Liability Insurance Claims

Martin A. LevinsonPartner, Hawkins ParnellThackston & Young LLP

Warren JonesMCU Team ManagerSoutheast RegionZurich American Insurance Co.

Initial Investigation Locate and Interview Witnesses

Open Records Requests Communicate with investigating officer, etc.

Interview Potential Claimant(s) Communicate with own

employee/insured Document scene/area of loss (if

applicable)

Initial Investigation Gather & Preserve Evidence

Documents Physical evidence Photographs Surveillance video (yours/others’) Site survey/sketch/map E-mails Statements Personnel records

Litigation holds

When to Hire an Expert Fatality/serious injury Specialized subject matter Data/evidence to be documented Later investigation would not allow

expert sufficient access to evidence Upon advice of counsel Don’t assume that suit will not be

filed just because liability appears favorable

When to Retain Counsel To direct investigation of serious/

potentially serious claims If attorney directs investigation, more

likely to be protected as work product This includes investigation by experts,

independent adjusters, and consultants! Attorney-client privilege may not apply

equally to in-house counsel (check jurisdiction)

Where potential coverage issues exist

To handle citations/criminal charges against employee

Preservation of Evidence Letters Must be complied with Risk of spoliation claim/sanctions

Striking of answer/pleadings Presumption in plaintiff’s favor Attorney’s fees

Huge focus of plaintiffs’ attorneys in recent years

Can easily turn small case into a huge one Can also be used in your favor!

Investigation—Witnesses Who will interview? (atty. vs. adjuster) To record or not to record? Interview as soon as possible—memories

fade Potential discoverability of statements

Medical records Employment records Open Records requests News/media outlets Social media sites Contacting claimant’s employer, friends, etc. Accurint/ISO search Contacting claimant:

Initial contact Follow-up When to close your file

Investigation—Claimant

Incidents can result in various types of citations or charges: Traffic citation Regulatory citation (e.g., OSHA, FRA) Employment-related citation/investigation (EEOC) Misdemeanor/felony charges

These must be considered carefully in determining how to handle investigation/potential defense of incident or claim

Advantages to retaining counsel in early stages to advise

Effect of Citation/Charges

Who needs to be put on notice: Primary insurance carrier Excess carrier Other potential parties? Your employee? Premises liability—third party or lessees employee injured

When to put others on notice First notice of loss On receipt of tender/request for indemnity As soon as possible!

Putting Proper Parties on Notice

Special Considerations:Basic Premises Liability Claims

Preserve all surveillance footage, even if it doesn’t show anything

Interview employees Try to identify/interview other witnesses Document alleged hazard/condition Document/preserve evidence of reasonable

inspection procedure in place on date of incident Document/preserve evidence that inspection

procedure was actually followed on date of incident (e.g., inspection checklists/sign-off sheets)

Special Considerations:Negligent Security Premises Claims

Preserve all surveillance footage Preserve periodic security/inspection logs Obtain relevant documents from prop. manager,

outside security company, or other third parties who provide services on the premises

Pull crime grid (which radius to use?) Document all security measures in place Document/analyze any prior security

audits/inspections—were recommendations followed?

Consider obtaining new security audit/inspection

Special Considerations:Trucking/Transportation Claims

Document scene and vehicles involved Interview all passengers; document any injury

claims Document cargo/load, incl. weight, composition,

position, and any damage Park vehicle and do not remove anything OK’d by

counsel Preserve all relevant evidence, including:

Does injury match impact? (Biomechanical expert)

• Driver’s daily logs• Vehicle/trip logs• ECM/EDR• Qualcomm/GPS/similar

device

• Maintenance records• DQ file/personnel file• Applicable DOT records• Applicable company

policies/procedures

Special Considerations:Product Liability Claims

Take necessary steps to confirm product ID Preserve actual product if possible If not possible, preserve exemplar product Notify/coordinate with mfrs. of any component

parts Contact/work with seller, distributor, installer,

etc. Research/preserve records of chain of

distribution

Special Considerations:Employment Claims

To perform background check or not? Generally: not unless required by law or industry

standard Exception: sensitive type of employment (e.g., person

with access to confidential healthcare/personal data) Examine/document problem Do proper investigation of alleged harassment,

retaliation, etc. Be careful of hiring outside atty. for initial/pre-

suit investigation in “hostile environment” claim—atty. may be witness since proper investigation may be defense

Assume defense of individual tortfeasor or not? (atty-client privilege/open communication vs. being tied to his/her bad behavior & appearance at trial)

Earlier is better Set appropriate reserve Fewer surprises later But be prepared to revise reserve later

Extent/nature of claimed injuries/damages Type of claim(s) Number of potential claimants/plaintiffs Length of statute of limitation Availability of insurance coverage

No. of occurrences Multiple applicable policies? Potential availability of excess/umbrella coverage? Coverage issues?

Evaluating Potential Exposure

Characteristics of claimant/plaintiff: Race/ethnicity Income/socioeconomic status Occupation Employment history Family situation “Intangibles” (e.g., veteran, community involvement, etc.)

Potential defendants (reputation, sympathy, etc.)

Potential venue Claimant/plaintiff’s attorney Media Exposure/Reputational Risk Does claim/case have “fire”? (i.e., will it make jury

angry?)

Evaluating Potential Exposure (cont’d)

Always consider how handling of this claim may affect other actual or potential claims/lawsuits

Examples: Termination of employee in response to incident/loss—will

that employee be needed to defend claim/suit in the future?

Documenting employee’s file to protect against potential wrongful termination/employment claim—will that impede defense of some potential liability claim/suit?

Evaluating Potential Exposure

Pre-Suit Mediation Potential Benefits:

Early discovery Obtain potential “preview” of trial and claimant’s

arguments Control monetary exposure Save on defense costs Minimize negative publicity/media exposure Plaintiff may be looking for quick settlement (i.e., price

may be go up later) Potential Pitfalls:

Setting unreasonable/undesirable “floor” for future negotiations

Insufficient information to evaluate case properly Unrealistic expectations by plaintiff or his/her counsel

Pre-Suit Mediation When to mediate pre-suit

Cases that will not get any better once in suit Cases that may get worse once in suit

Factors to consider: Can reasonable settlement be reached? Have you valued/reserved case appropriately? Would additional discovery be helpful?

Beware of mediating “too soon” Sometimes, claimants may need time to come to

terms (esp. fatality/catastrophic injury) Claimant still treating—may not be willing to mediate Additional information may change complexion of

claim (but not always the case)

Pre-Suit Demands—O.C.G.A. § 9-11-67.1

Applies to claims arising on or after July 1, 2013 Requires settlement demands to be made in writing Requires demands to contain certain essential

terms: time period offer will remain open (at least 30 days); amount of demand; party/parties to be released if the offer accepted; type of release claimant(s) will execute; and specific claims to be released

Permits offeree “to seek clarification regarding terms, liens, subrogation claims, standing to release claims, medical bills, medical records, and other relevant facts”

“An attempt to seek reasonable clarification shall not be deemed a counteroffer”

O.C.G.A. § 9-11-67.1 – Limitations

New statute apparently displaces Holt and progeny where it applies, but: Applies only to “causes of action for personal

injury, bodily injury, and death arising from the use of a motor vehicle”

Applies only to pre-suit demands – plaintiff can circumvent by filing suit

Applies only to demands “prepared by or with the assistance of an attorney”

Holt Demands Permit plaintiff to obtain potential coverage outside

policy limits if insurer fails in bad faith to pay demand within limits

“Bad faith”—Insurer fails to give insured’s interests same faithful consideration insurer gives its own interests, and insured is exposed to excess judgment as a result

Rationale—insurer should not be permitted to “gamble” with potential of excess liability on part of insured

Often seen with low-limits policies, but not always Even if insurer ultimately defeats subsequent bad-

faith claim, can make case extremely costly to litigate

Insured can improve chance that insurer will have to cover excess verdict by demanding, within demand deadline, that insurer pay demand

Responding to Settlement Offers: Clarification or Counteroffer?

Several recent GA appellate cases on this topic Significance: “counteroffer” = rejection of

demand; “clarification” of some element of demand does not

Know whether you (or your insurer) is/are “clarifying” or making a counteroffer!

Responding to Settlement Offers: Clarification or Counteroffer?

Often arises in context of amount/handling of liens

Key question: “Conditional” or “precatory” language”? “Conditional” = “makes acceptance conditional

on the offeror’s assent to an additional term” “Precatory” = “import[ing] entreaty,

recommendation, or expectation rather than any mandatory direction”

“Conditional” language = counteroffer rejection, potential extra-contractual liability for insurer

“Precatory” language = clarification (not counter)

Torres v. Elkin, 317 Ga. App. 135, 141 (2012); Pourezza v. Teel Appraisals & Advisory, Inc., 273 Ga. App. 880, 883 (2005); Herring v. Dunning, 213 Ga. App. 695, 699 (1994).

Clarification or Counteroffer?

Examples of “precatory” language in response: Letter referencing “understanding that no liens

of any kind exist in this case” and asking plaintiff to “confirm this at [his] earliest convenience”

Providing “proposed revisions” to limited-liability release drafted by plaintiff’s counsel, including inserting statutory lien affidavit (O.C.G.A. § 44-14-473) “If you do not want your client to sign a release

with my proposed changes, please let me know and let’s discuss”

Defendant’s counsel later “invited feedback if the [plaintiffs] disagreed with the proffered changes”

Herring, 213 Ga. App. at 698; Sherman v. Dickey, 322 Ga. App. 228 (2013).

Clarification or Counteroffer?

Examples of “precatory” language in response (cont’d): Sending plaintiff general release and asking

plaintiff to “please” sign it, rather than limited release as indicated by plaintiff in time-limited, policy-limits demand

Also note: “mere inclusion of a release form unacceptable to the plaintiff does not alter the fact that a meeting of the minds had occurred with regard to the terms of the settlement” Since parties had already reached an agreement to

settle, subsequent proffer of unacceptable release did not constitute rejection of offer

Newton v. Ragland, 325 Ga. App. 371 (2013);Turner v. Williamson, 321 Ga. App. 209 (2013).

Clarification or Counteroffer?

Examples of conditional language in response: Response to offer stating “payment is

complicated by what appears to be a [hospital lien] as well as potential liens by your client's health carrier.”

Purported acceptance directed plaintiff’s counsel to “call…to discuss how the lien(s) ([s]pecifically, but not limited to the $273,435.35 lien from [the hospital]) will be resolved as part of this settlement”

Insurer’s purported acceptance contained statement that “I trust that your office will satisfy any liens arising out of this matter”

Frickey , 280 Ga. 573 (2006); McReynolds v. Krebs, 290 Ga. 850 (2012); Torres, 317 Ga. App. 135 (2012).

Keep Claim/Case Moving Forward Wherever possible, keep close tabs on

claimant/plaintiff and stay alert for chance to resolve case reasonably

Claimant’s/plaintiff’s injuries may worsen May obtain better/more competent/more

aggressive counsel Employees/witnesses may turn on you Avoid being “last man standing”