Probably the most important of the pre-holiday ERISA rulings in the First Circuit is Bard v. Boston Shipping Association, in which the First Circuit provides a detailed explanation of exactly how procedural and regulatory violations in handling ERISA claims will be addressed in this circuit henceforth. Notably, the court rejected the premise that such violations shall strip an administrator of the deference to which its decision making would otherwise be entitled. Instead, in this circuit, the court will examine the violations in light of the specific facts of the case before it, and then will design a remedy that resolves the actual harm, if any, caused by the specific violations in question.

Unlike the postman (neither sleet nor rain, etc.), I am easily diverted from my appointed rounds.  This is another way of saying that contrary to what I said in my last post, I am not returning right away to a run down of a handful of interesting ERISA decisions handed down in the First Circuit just before the holidays.  I am digressing from that topic today for the simple reason that if you have any interest in the Hurricane Katrina related coverage litigation that is swamping – pun intended – the states affected by that hurricane, you’ll find no better analysis and discussion of that subject than that offered today by David Rossmiller on his blog.  I wanted to make sure I passed that along today.

It seems that, running up to the holidays, the First Circuit and the district courts in the circuit chose to issue several particularly interesting, some would say even compelling, ERISA decisions. And why not? What lawyer wouldn’t want to receive a detailed analysis of one issue or another under ERISA for the holidays? I know I would. So over the next few posts, I will try to run these cases down for you. And while I make a certain light of it, the truth of the matter is that these are particularly interesting decisions, often presenting detailed and thorough discussions of particular points of importance in the realm of ERISA litigation and practice.

I thought I would begin with Stamp v. Metropolitan Life Ins. Co., out of the District Court for Rhode Island which, interestingly, took up the exact same issue under ERISA that David Rossmiller raised – only in his case, out of the Fourth Circuit – of whether an intoxicated driver’s death is an accident, and thus covered, under an ERISA governed accidental death and dismemberment policy, or instead is not.

In Stamp, the district court addressed almost the exact same fact pattern, and applied what has come to be known as the Wickman test to determine whether such a death should be deemed an accident. Here, the district court recognized that there is a split in authority on this question, but concluded that the plan participant’s level of intoxication was such that the death was “highly likely” and therefore not an accident. Based on this reasoning, the district court concluded that the administrator’s determination that the “death was not accidental is reasonable and supported by substantial evidence in the record.”

And finally, as a brief and not particularly important aside, the court also provides an entertaining digression as to whether Mark Twain, or instead Benjamin Disraeli, deserves the credit – or perhaps the blame – for one of my favorite quotes, that "there are three kinds of lies: lies, damn lies, and statistics." The District Court judge concluded that Twain remains responsible for it.

At the risk of turning this into blog reader month, I thought today I would pass along this article on the use of intellectual property in growing a business that was passed along to me by blog reader Mike Kraft of Customer Standpoint, who specialize in the analysis of the customer experience. It may not be entirely on point for this blog, but for those of you who may come here looking for information on advertising injury coverages, which, as I have discussed before, can cover some intellectual property claims against insureds, it is a good overview of how any business, including insured companies, put intellectual property assets to use.

Moreover, you can see in the article the range of activities – beyond just inventing technology, which is the popular image of intellectual property development – that businesses engage in involving their intellectual property assets and, if you think about it, you can spot all the different possible points of liability exposure in those actions. Advertising injury coverage can insulate a company against liability on at least some of those fronts, and the question for lawyers and brokers who represent insureds who engage in these types of activities is how to structure an insurance program that protects against all the other liabilities as well.

If an attorney gets duped into executing a check and distributing its proceeds as part of an elaborate fraudulent check scheme – an act which will then of course inevitably get him sued – is he covered for that act under his professional liability coverage? A Massachusetts Superior Court judge has astutely, and on the correct reasoning, found that the answer is no. As I have discussed in other posts, Massachusetts law is clear that professional liability coverages are subject to what is in effect an extracontractual limitation on coverage, namely a requirement that the loss arise out of the unique specialty of the type of professional covered by the policy, and not out of routine practices that, one, did not require that specialized expertise and, two, could have occurred in any type of business. Judges and courts sometimes get fooled by this, and don’t recognize that this limitation exists because it is not expressly stated in the insuring agreement of professional liability policies. However, rationally, that restriction is clearly inherent in the simple statement in professional liability insuring agreements that claims arising out of the insured’s professional services are what is covered; the absence of this restriction would transform a professional services policy into an extraordinarily broad general liability policy covering practically anything and everything that happens in a professional services business.

The trial judge in this case didn’t get that wrong, granting summary judgment to the insurer, and finding, in part, that:

Massachusetts courts have interpreted a professional act to be ‘one arising out of a vocation, calling, occupation, or employment involving specialized knowledge, labor, or skill, and the labor or skill involved is predominately mental or intellectual, rather than physical or manual. …’ … When deciding whether an act is ‘professional’ in nature, the court has ‘look[ed] not to the title or character of the party performing the act, but to the act itself.’ … Therefore, tasks a professional performs are not covered by professional liability insurance if they are ‘"ordinary" activities "achievable by those lacking the relevant professional training and expertise."’ …
Although there is no appellate decision dealing with the precise factual situation involved with this case, there are decisions to assist the court in understanding the nature of professional legal services and its boundaries. . .
With the guidance of these cases, this court finds that Wolsky’s actions that amounted to the receipt, endorsement, and deposit of a check, and the distribution of funds did not require a lawyer’s specialized knowledge, labor, or skill, i.e., they were not professional services. … Wolsky was merely an essential pawn in an elaborate fraudulent check scheme, a role which did not call upon his professional skills but rather required Wolsky’s blind trust to act as a facilitator to convert a check to cash.

The case is Fleet National Bank v. Wolsky v. American Guaranty & Liability Insurance Company (Civil Action No. 04-CV-5075), and you can find more on it, including a source to order the entire opinion, here.

When I first saw this headline – “Doctor can sue insurance company for malicious prosecution” – in the local legal newspaper, my first thought was they are running a dog bites man story to open the new year. Why, after all, would an insurance company be immune from being sued for malicious prosecution? But when you delve a little deeper, you find the story, and the case it discusses, are much more meaningful than the headline suggests. In the case, Chervin v. The Travelers Insurance Company, the issue really wasn’t whether an insurance company could be sued for malicious prosecution, but instead what must be proven to sustain such a claim, whether against an insurance company or anybody else. The Supreme Judicial Court took the opportunity presented by the case to bring the law on this cause of action into the modern era, and to determine what the elements of that claim should be today.

For insurance companies, it’s a particularly useful case in that it really presents the parameters that cabin an insurance company’s decision to file a subrogation or other action against a third party as a result of a loss covered by the insurer. For that reason alone, it is worth a read. The case, ably briefed for the insurer by loyal blog reader and stellar local youth soccer coach Scott McConchie, can be found here.  Unfortunately, however, the Lawyers Weekly article with the questionable headline quoted above, has vanished from the internet in the twelve hours since I came across it.

No more end of the year lists for this blog; the holidays are over and it is time to return to substance. With that in mind, I thought I would kick off the new year by passing on Boston University Law student Anthony R. Ten Haagen’s interesting note on Sereboff, soon to be published in the American Journal of Law and Medicine.

For those of you who might want to find it to cite it, here’s the latest information I had as to where and when it will be published, and under what name: Equitable Relief under ERISA: Supreme Court Allows a Fiduciary to Recover Expenses Paid to a Beneficiary Who Subsequently Recovered Damages from a Third Party in a Tort Action Lawsuit – Sereboff v. Mid Atlantic Medical Services, 32 Am. J.L. & Med. 636, 636-39 (2006).

End of the year lists, to alter an old off color joke, are like opinions: everyone, it seems this time of year, has one. Some are superficial, silly and cursory, like this one here, and others, like Randy Maniloff’s list discussed in my last post, are substantive. For those of you who couldn’t get enough of Randy’s breakdown of the leading coverage decisions issued in the last year, David Rossmiller has his own interesting take on Randy’s top ten list here, including David’s wish that one of his favorite cases – from the Hurricane Katrina coverage cases – had made the list. For myself, I would have included a recent decision out of the Massachusetts Supreme Judicial Court in the list of top ten decisions, in which the state’s highest court cabined a developing trend in Massachusetts court decisions shifting the insured’s costs of litigating coverage disputes onto the insurer, at least in cases where the insured prevails in establishing coverage. I discussed that case here.

And why would I have included it in a list like Randy’s? Because beyond just its holding, I think, when you combine it with other decisions out of that particular court in the last year or so, you see a court beginning to rethink a tendency reflected in the state’s common law to favor insureds in coverage disputes, and to disconnect insurance coverage law from contract doctrines and the actual terms of the insurance policy to do so. We see, in cases such as this one, a swinging back of the pendulum, towards a more level field in the courtroom, at least at this point in this state. Time will tell whether this trend is real, and if it is, the results themselves will tell us whether it is a good thing. But for me, having watched a few generations of the Supreme Judicial Court approach this subject area in differing ways, this is what I make of the recent run of decisions out of that court.

And maybe, in honor of New Year’s, that is my own little take on the crystal ball: that we will see this trend continue in the Massachusetts Supreme Judicial Court, with an inevitable trickling down to the state’s intermediate appellate bench and its trial courts.

Here is an article insurance coverage litigator Randy Maniloff is publishing in Mealey’s early next month discussing Randy’s picks for the ten most important insurance coverage decisions from across the country over the past year. The cases cover issues ranging from the absolute pollution exclusion to junk faxes, and a range of topics in-between.

While the article is useful as a primer for staying up to date on what has occurred in the insurance coverage field over the last twelve months, what I think I like the best about it is it demonstrates the breadth of issues at play in this field. Most people – including many lawyers – look at an insurance policy and see a seemingly impenetrable document; in addition, many lawyers who don’t work in this field don’t realize how diverse an area of practice it really is. Insurance coverage lawyers, however, look at insurance policies and see the untold number of issues that lurk within them, and know the range of legal and factual issues that practicing in this field can present to the practitioner. The breadth of Randy’s article really drives home that point.

Here is a neat post about a decision last week out of the Fourth Circuit concerning when equitable relief can be pursued by a plan participant. Supreme Court precedent already narrowly cabins that type of a claim, and the Fourth Circuit enforced that approach in the case before it, in which the participant tried to use the equitable relief provisions of ERISA to launch a full assault on the overall claims processing approach of the administrator, rather than being limited to simply seeking the benefits that were denied to her on her particular claim for benefits. As the post describes the issue before the court, and the outcome: 

"Varity v. Howe (U.S. 1996), permits individual participants to sue fiduciaries under 502(a)(3) for   breaching their fiduciary duties by failing to inform participants, or misleading them, about important changes in the plan. However, there is language in Varity which suggests that such equitable relief under the 502(a)(3) "catch-all provision" is only available if a participant does not have an adequate remedy under one of the more specific provisions under 502(a). . . [T]he Fourth Circuit [followed] this language in Varity when it found that since the plaintiff had an adequate claim for denial of benefits under 502(a)(1)(B), [the plaintiff’s claim for equitable relief ] under 502(a)(3) . . .was not appropriate. "

I read cases like this as part of a general judicial sense that administration of the plan belongs in general in the hands of the administrators and fiduciaries of the plan, with courts to step in only on the narrowest possible grounds and in the most clearly appropriate circumstances, rather than have an employee benefits system in which the courts play a far more intrusive role in the day in and day out management and operation of plans.

The Fourth Circuit decision itself, Korotynska v. Metropolitan Life Insurance, is here.