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Taming The Mass Tort Beast: Taming The Mass Tort Beast: Maximizing Insurance For Maximizing Insurance For Mass Tort Liabilities Mass Tort Liabilities RIMS SAN DIEGO RIMS SAN DIEGO APRIL 20, 2004 APRIL 20, 2004 Lee M. Epstein Lee M. Epstein Michael F. Rettig Michael F. Rettig

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Page 1: Mass Tort Presentation

Taming The Mass Tort Beast: Taming The Mass Tort Beast: Maximizing Insurance For Maximizing Insurance For

Mass Tort LiabilitiesMass Tort Liabilities

RIMS SAN DIEGORIMS SAN DIEGOAPRIL 20, 2004APRIL 20, 2004

Lee M. EpsteinLee M. EpsteinMichael F. RettigMichael F. Rettig

Page 2: Mass Tort Presentation

Fried & Epstein, LLP 2

Taming The Mass Tort Beast Taming The Mass Tort Beast (Overview)(Overview)

GoalGoal:: Secure a Defense and Indemnification Secure a Defense and Indemnification when Needed - - Avoid coveragewhen Needed - - Avoid coverage

LitigationLitigation

Key #1Key #1:: Compile the Right Team Gain CompleteCompile the Right Team Gain Complete

Key #2Key #2:: Coordinate Management of Coordinate Management of Underlying Case and Insurance ClaimUnderlying Case and Insurance Claim

Key #3Key #3:: Understanding ofUnderstanding of Underlying Liabilities and Available Underlying Liabilities and Available

Insurance CoverageInsurance Coverage

CautionCaution: : Do Not Let the Insurance Tail Wag Do Not Let the Insurance Tail Wag the Mass Tort Dogthe Mass Tort Dog

Page 3: Mass Tort Presentation

Fried & Epstein, LLP 3

Taming The Mass Tort Beast Taming The Mass Tort Beast (Know Your Liability)(Know Your Liability)

Quantify Nature and Extent of Potential LiabilityQuantify Nature and Extent of Potential LiabilityNature of Claims AllegedNature of Claims Alleged

– Covered v. Uncovered ClaimCovered v. Uncovered ClaimType and Severity of InjuriesType and Severity of InjuriesTimeframes InvolvedTimeframes InvolvedMethods and Routes of ExposureMethods and Routes of ExposureCompany KnowledgeCompany Knowledge

– What was known about product when soldWhat was known about product when sold– What warnings providedWhat warnings provided– What known about specific uses and disposal practicesWhat known about specific uses and disposal practices

Type of Damages AllegedType of Damages Alleged– Punitive/Consequential/CompensatoryPunitive/Consequential/Compensatory

Page 4: Mass Tort Presentation

Fried & Epstein, LLP 4

Taming The Mass Tort Beast Taming The Mass Tort Beast (Know Your Coverage)(Know Your Coverage)

Looking for Coverage in All the Right PlacesLooking for Coverage in All the Right PlacesIdentify All Types of Potentially Applicable PoliciesIdentify All Types of Potentially Applicable Policies

– CGL, Products, D&O, E&O, 1CGL, Products, D&O, E&O, 1stst Party Property Party Property

Quantify Available Insurance CoverageQuantify Available Insurance CoverageYears of Implicated CoverageYears of Implicated Coverage

– Lost or Missing PoliciesLost or Missing Policies– Insolvent InsurersInsolvent Insurers

Limits/Deductibles/SIR’sLimits/Deductibles/SIR’s– Per occurrence v. aggregatePer occurrence v. aggregate

RetrosRetros

CaptivesCaptives

Coverage ChartCoverage Chart

Page 5: Mass Tort Presentation

Fried & Epstein, LLP 5

Taming The Mass Tort Beast Taming The Mass Tort Beast (Securing a Defense)(Securing a Defense)

Prompt NoticePrompt NoticeForward suit papers to insurer without delayForward suit papers to insurer without delayFocus on allegations which are typically insuredFocus on allegations which are typically insuredDe-emphasize allegations which are not typicallyDe-emphasize allegations which are not typicallyinsuredinsuredInitial notice broad - - target specific carriers as Initial notice broad - - target specific carriers as facts developfacts develop

Request Immediate DefenseRequest Immediate DefenseControl Defense if Insurer Denies Coverage Control Defense if Insurer Denies Coverage or Reserves Rights or if Any Conflict of or Reserves Rights or if Any Conflict of Interest DevelopsInterest Develops

Page 6: Mass Tort Presentation

Fried & Epstein, LLP 6

Taming The Mass Tort Beast Taming The Mass Tort Beast (Coverage Issues)(Coverage Issues)

Applicable LawApplicable LawDefense v. IndemnityDefense v. IndemnityTriggerTriggerAllocationAllocation– Pro Rata v. All SumsPro Rata v. All Sums– Primary v. ExcessPrimary v. Excess– Owens IllinoisOwens Illinois

Number of OccurrencesNumber of OccurrencesExpected or IntendedExpected or IntendedKnown LossKnown LossDuty to CooperateDuty to CooperatePotentially Applicable ExclusionsPotentially Applicable Exclusions

Page 7: Mass Tort Presentation

Fried & Epstein, LLP 7

Taming The Mass Tort Beast Taming The Mass Tort Beast (Know Your Insurer)(Know Your Insurer)

Insurers are Very HierarchicalInsurers are Very HierarchicalWhat authority level does claim rep. possessWhat authority level does claim rep. possess

Get to the decision-makerGet to the decision-maker

There is no Cookie Cutter ApproachThere is no Cookie Cutter ApproachDifferent insurers require different information in order to Different insurers require different information in order to process a claimprocess a claim

Insurers are SlowInsurers are SlowProvide sufficient lead time in advance of key eventsProvide sufficient lead time in advance of key events

Page 8: Mass Tort Presentation

Fried & Epstein, LLP 8

Taming The Mass Tort Beast Taming The Mass Tort Beast (Get Insurers On Board)(Get Insurers On Board)

Fully Apprise - - Avoid SurpriseFully Apprise - - Avoid SurpriseFrequent status reports - paper trailFrequent status reports - paper trail

Package information so that liability can Package information so that liability can be fairly evaluatedbe fairly evaluated

Controlled access to Trial CounselControlled access to Trial Counsel– Be mindful of applicable privilegesBe mindful of applicable privileges– Have trial counsel be vigilant of coverage issuesHave trial counsel be vigilant of coverage issues

Make carriers full participants in defending Make carriers full participants in defending underlying caseunderlying case

Page 9: Mass Tort Presentation

Fried & Epstein, LLP 9

Taming The Mass Tort Beast Taming The Mass Tort Beast (Get Insurers On Board)(Get Insurers On Board)

Develop Relationship with Carrier RepsDevelop Relationship with Carrier RepsBuild trust and respectBuild trust and respectMold facts -- do not misrepresentMold facts -- do not misrepresent

– Consider impact that trial strategy has on coverageConsider impact that trial strategy has on coverage– Focus away from facts which defeat coverageFocus away from facts which defeat coverage

E.g., focus on product, not pollutionE.g., focus on product, not pollution

Realistically Evaluate CoverageRealistically Evaluate CoverageCompromise where warrantedCompromise where warranted

Take a Reasonable ApproachTake a Reasonable ApproachIf multiple carriers - - develop reasonable allocation If multiple carriers - - develop reasonable allocation methodologymethodologyDon’t stick it to any one insurerDon’t stick it to any one insurer

Seek Allies Among Insurer RepresentativesSeek Allies Among Insurer RepresentativesAvoid Fronting Settlement FundsAvoid Fronting Settlement Funds

Page 10: Mass Tort Presentation

Fried & Epstein, LLP 10

Taming The Mass Tort Beast Taming The Mass Tort Beast (Getting to Yes)(Getting to Yes)

Settlement Discussions/MediationSettlement Discussions/MediationStress importance of carriers having Stress importance of carriers having appropriate authority at mediation appropriate authority at mediation If carriers hindering a desirable settlement, If carriers hindering a desirable settlement, get mediator involvedget mediator involvedSeek insurer input regarding case valuation Seek insurer input regarding case valuation Focus on risk to company of not settling Focus on risk to company of not settling within reasonable range and within limits within reasonable range and within limits (punitives, etc.)(punitives, etc.)

Page 11: Mass Tort Presentation

Fried & Epstein, LLP 11

Taming The Mass Tort Beast Taming The Mass Tort Beast (“Dotting the I’s”)(“Dotting the I’s”)

Settlement IssuesSettlement Issues

IndemnificationIndemnification– FullFull

– LimitedLimited

E.g., to amount of settlementE.g., to amount of settlement

Form of ReleaseForm of Release– ClaimClaim– SiteSite

– Policy BuybackPolicy Buyback

Page 12: Mass Tort Presentation

Fried & Epstein, LLP 12

Taming The Mass Tort Beast Taming The Mass Tort Beast (Summary)(Summary)

Compile the Right TeamCompile the Right TeamRetain consultants who posses the required expertiseRetain consultants who posses the required expertise

Success Linked to Realistic Understanding of Success Linked to Realistic Understanding of Underlying Liability and Available Insurance Underlying Liability and Available Insurance coveragecoverage

Insurer Needs Similar to Management NeedsInsurer Needs Similar to Management Needsavoid surpriseavoid surpriseproperly accrueproperly accrue