Intoxication Not a Defense to Expected or Intended Injury Exclusion, Massachusetts Appellate Court Says

In Liberty Mutual Fire Insurance Co. v. Casey, 91 Mass. App. Ct. 243 (Mar. 29, 2017), the Massachusetts Appeals Court held in essence, that the insured (Casey)’s impairment due to alcohol and drugs at the time of the underlying assault did not render the insurance policy’s expected or intended exclusion inapplicable. The undisputed facts established that Casey had the capacity to form the requisite intent to injure the underlying plaintiff.

Seventeen-year-old Casey “sucker punched” Williams, the underlying plaintiff, in the face with a closed …

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Insured Stuck Defending Itself Against Claims of False Advertising an Elastic Tape Product

In Cincinnati Insurance Company v. KT Health Holdings, LLC et al. (D. Mass. Mar. 27, 2017), a Massachusetts federal district court held that an insurer had no duty to defend or indemnify its insureds, finding that allegations by a putative class that the insureds falsely advertised their product did not trigger bodily injury coverage under a CGL policy.

As background, the defendants, KT Health Holdings and KT Health (collectively “KT”), manufacture and sell KT Tape for sports and fitness activities. The defendants advertise KT Tape …

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Massachusetts Ruling Costs Plaintiff More Than $4 Million in Bad-Faith Litigation Lawsuit: Post-Judgment Interest Not a Factor in Punitive Damages Calculations

In Anderson et al. v. National Union Fire Insurance Company of Pittsburgh PA & Others, the Massachusetts Supreme Judicial Court held that post-judgment interest should not be factored into a punitive damages calculation against an insurer when it was found to have acted willfully and egregiously by engaging in unfair trade practices and refusing to settle the underlying tort suit. In reversing the lower court’s grant of trebled post-judgment interest, the court left other parts of the verdicts undisturbed, ending a case that began …

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Supreme Court of Texas Puts a Dent in Policyholders’ Demand for Discovery of Other Claims in Hail Storm MDL

On October 28, 2016, the Supreme Court of Texas squelched a trial court order granting a policyholders’ motion to compel that reached its bench by mandamus petition. The dispute arose out of multidistrict litigation (MDL) involving claims for property damage caused by the 2012 hail storms that tormented Hidalgo County, Texas. The policyholders sought compensatory and extra-contractual damages against several insurers for underpayment of insurance claims.

A pretrial court appointed by the MDL panel granted the policyholders’ motion to compel the insurer to produce all …

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Seventh Circuit: No Insurable Interest, No Problem (For the Beneficiary, That Is!)

The Seventh Circuit recently affirmed a district court decision upholding payment under a life insurance policy purchased by a securities intermediary. The decision first addressed the common law’s prohibition on wagering contracts, or stranger-originated life insurance, and the traditional remedy which invalidates any such policy of insurance. However, this case was subject to Wisconsin law, whose legislature places the risk on the insurer for issuing a policy to someone without an insurable interest by refusing to invalidate such contracts. Specifically, the Wisconsin statute reads (Wis. …

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U.S. Court of Appeals Issues Major Ruling Against CFPB

The U.S. Court of Appeals for the District of Columbia Circuit recently issued a decision in PHH v. CFPB that fundamentally transforms the power of one of the newest and most powerful agencies in the federal government, the Consumer Financial Protection Bureau (CFPB). First, the court held that the structure of the CFPB was unconstitutional and struck down a provision that only allows the president to dismiss the director of the CFPB for cause. After this decision, the director now serves at the pleasure of …

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Former FIFA Executive Entitled to Criminal Defense Costs in Bribery Case; D&O Insurers Required to Pay

Eduardo Li, one defendant of a widespread racketeering and fraud prosecution against FIFA and its members, brought this case seeking a declaration his insurers have to pay and advance his criminal defense costs regarding those prosecutions. The Eastern District of New York Court found that the insurers must immediately reimburse and advance legal costs for Li under a directors and officers liability policy.

Eduardo Li and other members of FIFA are the subject of criminal actions for corruption related to the administration of the international …

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Massachusetts’ Highest Court Rejects Targeted Tenders

Only three states have adopted the “targeted tender” rule. Massachusetts recently had the chance to join those ranks, but it firmly declined. The concept of “targeted tender” or “selective tender” allows a policyholder to single out one insurer among co-insurers and trigger only that insurer’s policy, leaving the insurer without entitlement to contribution from co-insurers.

In Insurance Company of the State of Pennsylvania v. Great Northern Insurance Company, an employee reported his injury to the insured employer, which then notified only one of two …

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GAO’s Update on ACA Enrollment Process: CMS Encouraged to Take Steps to Monitor Program Cost, Risk, and Performance

The issue of fraud is still alive and well with respect to the health care exchanges established by the Affordable Care Act (ACA). The Government Accountability Office (GAO) recently issued a new update with respect to fraud in the federal exchanges. In that report, the GAO recommended that the Center for Medicaid and Medicare Services (CMS) strengthen enrollment controls and manage Fraud Risk. The report notes that implementation of the new eligibility and enrollment provisions for the first year was “a broad, complex, and costly …

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You’re Barred. Again: Negligent Acts, Conditional Language, and the Assault/Battery Exclusion

A fatal shooting took place at a bar. The bar purchased an insurance policy, which contained an assault and battery exclusion, barring coverage for bodily injury or property damage arising out of “any actual, threatened or alleged assault or battery” and the “failure to any insured or anyone else for whom any insured is or could be held legally liable to prevent or suppress any assault or battery.”

The bar and additional insured premises owner were sued for negligent security following the shooting. The insurer …

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