As we previously reported, in February 2021, a Texas federal court ruled that RealPage Inc. was not entitled to insurance coverage for funds diverted in an email phishing scheme because RealPage did not "hold" the diverted funds. The Fifth Circuit Court of Appeals has now weighed in, agreeing that RealPage never "held" the diverted funds as required by the policy and affirming the district court's decision. In 2018, a RealPage employee clicked on a phishing email ... Keep Reading »
Eleventh Circuit Finds No Insurance Coverage for Dental Practice’s COVID-19 Business Income Loss Under Georgia Law
In a recent decision, the Eleventh Circuit Court of Appeals ruled that an insured's failure to allege "direct physical loss or damage" to property was fatal to its COVID-19-related business interruption claim. Although addressed ad nauseam by the district courts - with the overwhelming majority finding no coverage - the Eleventh Circuit's unpublished decision appears to be just the second federal appellate opinion on this issue. The other, the Eighth Circuit's decision ... Keep Reading »
Florida Supreme Court Permits Insurer to Maintain Subrogated Malpractice Claim Against Counsel Retained to Represent Its Insured
Long-standing Florida law recognized only two limited exceptions to the general rule prohibiting a third party from pursuing a legal malpractice claim against an attorney who was not in privity with the third party - a will drafting situation and a private placement memoranda situation. In Arch Insurance Co. v. Kubicki Draper, LLP, the Florida Supreme Court created a third exception, now allowing an insurer with a duty to defend to stand in the shoes of its insured and ... Keep Reading »
Texas Federal Court Finds No Coverage Under Crime Policy for Phishing Scheme Because Insured Did Not “Hold” Diverted Funds and Suffered No Direct Loss
RealPage was the victim of a phishing scheme that resulted in the diversion of its client funds from the bank account of a third-party payment processer, Stripe Inc. In the ensuing insurance coverage litigation styled RealPage Inc. v. National Union Fire Insurance Company of Pittsburgh, the court ultimately concluded that RealPage was not entitled to coverage for its loss because RealPage did not “hold” the diverted funds and because RealPage did not suffer a direct loss ... Keep Reading »
Ninth Circuit Applies Willful Violation of Law Exclusion in Professional Liability Policy To Preclude Coverage for Wrongful Death Lawsuit Stemming From Doctor’s Unlawful Distribution of Fentanyl
In National Fire & Marine Insurance Company v. Hampton, No. 19-17235 (9th Cir. Oct. 21, 2020), the Ninth Circuit held that a doctor’s guilty plea to the unlawful distribution of a controlled substance barred insurance coverage under his professional liability policy for a subsequent wrongful death lawsuit resulting from a patient’s overdose. According to the Ninth Circuit, the doctor’s admission that he intentionally distributed fentanyl clearly implicated the ... Keep Reading »
Eleventh Circuit Finds No “Direct Physical Loss” to Dust-Covered Restaurant that Merely Required Cleaning
As the COVID-19 pandemic continues, so does the deluge of litigation stemming from property insurers' denials of COVID-19 business interruption claims. Much of the debate between carriers and policyholders concerns whether the coronavirus or the COVID-19 shutdown orders caused "direct physical loss of or damage to" the insured's property. The Eleventh Circuit's recent opinion in Mama Jo's Inc. v. Sparta Insurance Co., while not related to COVID-19, arguably supports the ... Keep Reading »
A New Bad Faith Trend Emerges in COVID-19 Business Interruption Litigation
With governments across the world ordering the shutdown of restaurants, bars, and other “non-essential” businesses due to the COVID-19 pandemic, business interruption insurance claims are, not surprisingly, on the rise. While typical commercial property policies require “direct physical loss or damage” to property — a requirement that is unlikely satisfied by the shutdowns — policyholders are getting creative, alleging that the potential presence of the novel coronavirus ... Keep Reading »
Pennsylvania Federal Court Refuses to Dismiss Bad Faith Claim, Even Though Insurer Timely Made Demanded Payments
There have been more developments in Ironshore Specialty Insurance Co. v. Conemaugh Health System Inc., the case brought by Ironshore, as excess carrier, to seek reimbursement of amounts paid in an underlying medical malpractice settlement. While we previously reported that the court denied Conemaugh's (the insured's) motion to dismiss, the court has now also ruled that Conemaugh's counterclaims for bad faith can move forward, despite the fact that Conemaugh did not ... Keep Reading »
Eleventh Circuit Rejects Insurer-Defended Policyholder’s Bid to Expand Florida’s Bad Faith “Excess Judgment Rule” to Include Collusive Settlements Concocted Without Insurer’s Consent
In Cawthorn v. Auto-Owners Insurance Co., No. 18-12067 (11th Cir. Oct. 25, 2019), the Eleventh Circuit affirmed the U.S. District Court for the Middle District of Florida’s grant of summary judgment in favor of Auto-Owners Insurance Co., ruling that a consent judgment does not constitute an excess verdict, which is an essential element of a Florida bad faith claim. This appeal arose from an April 2014 underlying automobile accident in which David Cawthorn and Bradley ... Keep Reading »
Federal Court Declines to Dismiss Excess Carrier’s Suit Seeking Reimbursement of Amounts Paid in Underlying Medical Malpractice Settlement
Reprinted with permission in Medical Liability Monitor In Ironshore Specialty Insurance Co. v. Conemaugh Health Systems, Inc., No. 3:18-cv-153 (W.D. Pa. Feb. 28, 2019), the Western District of Pennsylvania refused to dismiss an excess carrier's suit seeking reimbursement from its insured for settlement amounts the excess carrier paid in an underlying medical malpractice lawsuit. According to the court, Ironshore plausibly alleged that Conemaugh Health Systems Inc. ... Keep Reading »