CLM October 2019

FURTHERING THE HIGHEST STANDARDS OF CLAIMS AND LITIGATION MANAGEMENT OCTOBER 2019 When to Deny and Fight Confirmation Bias and the Courtroom What’s Driving Litigation in Transportation Claims Game Changer Universal Claims Certification launch changes the adjuster licensing landscape OCTOBER 2019 DIGITAL EDITION SPONSORED BY:

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FURTHERING THE HIGHEST STANDARDS OF CLAIMS AND LITIGATION MANAGEMENT OCTOBER 2019 When to Deny and Fight Confirmation Bias and the Courtroom What’s Driving Litigation in Transportation Claims Game Changer Universal Claims Certification launch changes the adjuster licensing landscape

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CLM MAGAZINE OCTOBER 2019 36 CONTENTS 24 8 FEATURES COLUMNS AROUND THE CLM 24 GAME CHANGER 4 FRONT DESK 36 FOCUS ON: Universal Claims Certification launch changes Change is in the air CONSTRUCTION CONFERENCE Takeaways From CLM’s second-biggest the adjuster licensing landscape 6 EXPOSURE Dorian’s destruction in Bahamas annual event 28 ERASING UNCERTAINTY How to determine when to deny and fight a 8 KNOCKING DOWN THE 37 PERSPECTIVES DOOR OF FRAUD Boots in the Bahamas workers compensation claim How to pursue affirmative litigation, and 38 BETWEEN THE LINES 32 THE ROUNDABOUT knowing when to change course Meaningful developments or decisions What’s driving litigation in transportation claims 12 LIVES ON THE LINE 39 EVENTS Five ways hotels can minimize Upcoming CLM webinars, events, and photos 28 life-safety liability risk 40 NATIONAL News and verdicts that affect you 14 CONFIRMATION BIAS AND THE COURTROOM from across the country How to mitigate the impact of attorney and 42 VOICES juror biases on litigations Getting to know Cozen’s Gary Gassman 12 42 32 14 OCTOBER 2019 DIGITAL EDITION SPONSORED BY: THECLM.ORG CLM MAGAZINE 3

FRONT DESK Change Is in the Air Temperatures are dropping, One thing that won’t change is our dedication to providing leaves are starting to fall (at exceptional education and networking events. Now least in some parts of the that Claims College, Construction, and CLM Southeast country), and it’s pumpkin- have wrapped, we’re hard at work planning the 2020 spice-everything season. CLM Annual Conference. Thank you to so many of you Change is in the air. One who have submitted amazing speaking proposals. We of the biggest changes for were overwhelmed by the volume of strong topics and our industry is the official speakers, and are really excited to continue having valuable launch of the Universal Claims discussions on cutting-edge topics. Registration for the Certification (UCC), which I’m Annual Conference will open at noon ET on Monday, Dec. thrilled to share we made 2. The CLM team has some great new ideas for the Annual available to the public on Oct. 1. Conference and is planning great networking events in Dallas. It all kicks off on March 18, 2020. The UCC has been a significant initiative spearheaded by the CLM for the past several years. Anne Blume We heard from our membership what a burden it was to obtain CEO, CLM licenses in multiple states, and set out to find a solution. You [email protected] can read all about the UCC in this month’s cover story on page 24. Complete details and instructions on how to secure your UCC are available on the CLM website at theclm.org/ucc. CHIEF EXECUTIVE OFFICER OCTOBER 2019 • ISSUE 10 • VOL. 3 CLM Magazine is published monthly and covers news and Anne Blume topics of interest to insurance claims, risk, and litigation EXECUTIVE EDITOR management professionals. EXECUTIVE GROUP PUBLISHER Eric Gilkey Harry Rosenthal Copyright © 2019 by the CLM. All rights reserved. MANAGING EDITOR No part of this publication may be reproduced or PUBLISHER Phil Gusman transmitted in any form or by any means, electronic, Bryan Pifer mechanical, photocopying, recording or otherwise, ART DIRECTOR without prior written permission of the CLM. ADVERTISING QUESTIONS Jason T. Williams Harry Rosenthal The views expressed in the articles are solely those of the [email protected] EDITORIAL QUESTIONS authors or those interviewed and do not necessarily reflect 513-608-4221 Eric Gilkey the views or opinions of CLM or the companies in which the [email protected] authors are employed. Bryan Pifer [email protected] REPRINTS For reprints and licensing, please A publication of 513-444-4560 contact Harry Rosenthal at harry.rosenthal@ TheCLM.org or 513-608-4221. Application to mail at Periodical rates is pending in Ft Lauderdale, FL, and additional mailing offices. 4 CLM MAGAZINE OCTOBER 2019



EXPOSURE

DORIAN’S DESTRUCTION IN BAHAMAS Workers clean debris in Hurricane Dorian-devastated Elbow Key Island on September 7, 2019 in the Bahamas. At press time, the death toll from Hurricane Dorian was 53, but more than 1,000 remain missing. Total insured losses for Dorian is expected to fall between $3.5 and $6.5 billion, according to RMS. PHOTOS: PHOTO BY JOSE JIMENEZ/GETTY IMAGES THECLM.ORG CLM MAGAZINE 7

INSURANCE FRAUD Knocking Down the Door of Fraud How to Pursue Affirmative Litigation, and Knowing When to Change Course By Laura McAdams and Catherine Gicker Investigating and litigating singular It often has a long investigative tail Then she must perform other similar fraud cases for first- and third-party and has associated legal costs, but the investigation steps, such as license checks, claims used to be the mainstay of benefits are far-reaching and can prove disciplinary action searches, and predictive special investigation units. While these to be extremely beneficial to the carrier, analytic searches on TIN numbers and tactics can be relatively successful, resulting in deterrence, punishment of payouts. Additionally, partnering with the there is still a whole world of abuse the wrongdoers, and financial recovery. National Insurance Crime Bureau will and misrepresentation stemming from A successful affirmative litigation case grant access to other carriers’ submissions medical providers, durable medical can result in a combination of any of through their alert and forewarn systems. equipment suppliers, diagnostics entities, the above, depending on the goals of premium fraudsters, auto body shops, each carrier. It is crucial that the investigation copy service providers, and more. A develops evidence and intent of the newer, cost-effective way to deal with STARTING OFF ON THE RIGHT FOOT wrongdoing. Once the investigation fraud is affirmative litigation. begins, it must be consistent, timely, Think of fighting fraud from both Developing an affirmative litigation and factual. While it is always the a defensive and offensive posture. This case is a multi-layered process. First, the carrier’s decision on when to involve is an exciting avenue and requires, first investigator has to determine a potential counsel, it can be a good idea to include and foremost, agreement and support subject and then develop the evidence them early on in order to guide the from leadership to undertake this process. by obtaining statements from insureds, investigation to the specific carrier’s claimants, and former business employees. goals and desired outcomes. Laura McAdams is a partner in the Los Angeles Cathy Gicker is a senior claims consultant with office of Manning & Kass. [email protected] Allstate Insurance. [email protected] 8 CLM MAGAZINE OCTOBER 2019

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INSURANCE FRAUD What if a carrier either does not are likely to drop their claims instead “door knock,” can prove to be an have enough evidence of “intent” to file of risking the consequences of a judge extremely worthwhile option. This an affirmative litigation case, or wants to declaring their action fraudulent. extremely cost-effective option consists explore other options? If this is the case, of taking the available theories then there are a number of alternative A lien consolidation is a tool that and evidence to those suspected of paths available. Options range from filing a eradicates the need to fight each and wrongdoing and attempting a pre- declaratory relief action, lien consolidation every lien on an individual basis, thereby litigation settlement. The “door knock” (if dealing with workers compensation providing a streamlined way to fight can be attempted with or without a claims), or something as simple as a “door fraud and eliminating the chances of mediator. A pre-litigation settlement knock.”All of these are valuable resources if inconsistent results. It can be brought in can vary from obtaining money back, used timely and effectively. any situation where there are common obtaining a lien waiver, and sorting issues of fact and law. out a “no-bill agreement,” where the LITIGATION STRATEGIES wrongdoer agrees to discontinue any A lien consolidation can be used as billing of the carrier in question. This A declaratory relief action allows a a standalone tool to fight fraud, as a tool can be a very attractive package that carrier to sue for declaration of rights used to develop evidence of intent for a saves the carrier from paying significant and duties under a contract where potential affirmative litigation case, or in amounts of money to fraudsters at a controversy exists. In the insurance conjunction with a parallel affirmative relatively low expense. context, a carrier is basically asking a litigation case. A major benefit of a lien court to declare that there is no duty to consolidation is that all liens are stayed The success of the “door knock” defend or indemnify because of either during the pendency of the action, comes with a very important caveat: The fraud or a failure to cooperate. thereby avoiding the need to pay on “door knock” should not be attempted fraudulent claims. Downsides to consider unless there is enough evidence. If Bringing a declaratory relief action are that these actions can be extremely settlement does not occur, then it is can prove to be both a prudent means costly due to the fact that they require crucial for the carrier to have developed to explore SIU issues via discovery, and service of all known lien claimants in all enough evidence to pursue the fraud a successful avenue to develop intent for underlying workers compensation actions through alternative means. Otherwise, an affirmative litigation case. While not being consolidated. Notwithstanding, there is a substantial risk of developing completely eliminating the risk, bringing in many situations, this downside is a reputation of making demands while a declaratory relief action substantially almost always superseded by the benefits lacking the requisite evidence to back up reduces the risk of a bad-faith action, of uniting the lien-fighting process and the claims made. This could obviously as well. Lastly, when faced with a staying the liens in the interim. have devastating effects on future efforts declaratory relief filing, wrongdoers to fight fraud Another option, known as the Lastly, if the carrier had evidence The Industry Leader in Electronics Restoration of wrongdoing, but not necessarily enough evidence to prove intent for an WE MINIMIZE BUSINESS INTERRUPTIONS affirmative litigation case, the “door knock” just proved to be an important Across all types of industries, our national team of experienced technicians & engineers tool in the arsenal for building a case. It help businesses get back up and running quickly and with minimal revenue loss. will be impossible for the wrongdoer to deny intent once they have been put on We are available 24/7/365 notice of their bad acts. Insurance fraud continues to proliferate. Conservative estimates by the Coalition Against Insurance Fraud show that fraud costs over $80 billion a year across all lines of insurance. In recent years, fraudsters have upped their ante when it comes to uncovering new avenues and schemes to defraud insurance companies. To keep up and properly combat the newly emerging fraud trends, it is crucial for carriers to have a wide array of tools in their arsenal, and to know when to use each one. K 10 CLM MAGAZINE OCTOBER 2019

Large Loss CONFERENCE 2019November 15 - 17 Jacksonville, FL Hyatt Regency Jacksonville Hotel Join a prominent Learn with the industry's best and brightest as we evaluate a variety gathering of top-notch of large loss claim scenarios through interactive workshops claims professionals Share knowledge, insight, and experience in adjustment and and service providers resolution strategies with large loss claims professionals from across the nation Network with large loss adjusters and service providers from across in Jacksonville, hundreds of disciplines and specialty areas where we'll: Adjuster-led workshops encourage active audience participation and provide an opportunity to learn from and with many of the industry's leading experts and performers. Register Today! @PLRBconf @plrb.plrb PLRB www.plrblargeloss.org @PLRB.org #LargeLoss2019 Property & Liability Resource Bureau [email protected]

RETAIL, RESTAURANT, & HOSPITALITY Lives on the Line Photo by Keystone/Hulton Archive/Getty Images Five Ways Hotels Can Minimize Life-Safety Liability Risk By Juliana K. O’Brien and Justin R. Bragiel When a guest checks accounting for only one percent of 2006, a fire was intentionally set at the into a hotel, overall reported structure fires. These Mizpah Hotel in Reno, Nevada, killing there is a general statistics are only yearly averages; a 12 people and injuring 31. The arsonist expectation that single incident could reach and exceed was sentenced to 12 consecutive life the property will these numbers, especially if life-safety prison terms, but the Mizpah Hotel was be clean and safe. protocols are not implemented and sued in civil court by the survivors, who Each year, however, guests’ lives are prioritized. The 1980 MGM Grand argued that the hotel was responsible for put at risk from natural and man-made fire in Las Vegas, for instance, killed the circumstances that led to the deadly disasters. If a life-threatening event such 85 people, injured over 1,000 more, blaze since the hotel had left replacement as a fire occurs, the potential exposure and resulted in estimated damages that mattresses stacked in the hallway for for the hotel and its insurers could be exceeded $1 billion. several days. Despite the fire department astronomical. being only 500 feet from the hotel with These high-exposure incidents are an impressive two-minute response time, According to the National Fire of particular concern for hotel insurers, the fire spread was enhanced by this Protection Association, each year, fires as most properties hold varying amounts additional fuel load, directly impacting in hotels and motels cause over $84 of liability insurance. Even when the the time that residents had to escape. million in property damage, over 120 hotel is not responsible for the cause The hotel was insured and the matter injuries, and nine civilian deaths, despite of the fire, liability may still attach. In Juliana K. O’Brien is an associate at McCoy Leavitt Justin R. Bragiel is General Counsel at the Texas Laskey LLC. [email protected]. Hotel & Lodging Association. [email protected]. 12 CLM MAGAZINE OCTOBER 2019

settled for an undisclosed amount. 2. PERFORM REGULAR schedules. At a minimum, these logs When there is a loss at a hotel, should track: INSPECTIONS property owners and managers are likely • Date and frequency of visual targets under a premises liability theory. Hotel operators must ensure, on a property inspections. Such claims generally require proof of regular basis, that the required systems a duty, breach of that duty, causation, are operating as intended. While there • Date alarms were tested and and damages. While the standard varies is sometimes an expense associated batteries changed. by jurisdiction, property owners have with inspection and testing of life-safety a non-delegable duty to use reasonable systems, the expense is justified and • Date staff was trained, and the care to provide for the guest’s safety. necessary. Depending on the jurisdiction, names of staff members who Liability may attach for particular acts if a property owner knew, or should have received the training. or omissions including: known, about a defective system, liability may attach. Testing is an investment in • Sprinkler system testing dates. • Permitting the existence of a fire the property: While a tested sprinkler • Alarm panel testing dates, and the hazard. system will not lead to higher traveler reviews, a malfunction could cost the date the alarm panel was updated. • Failure to provide timely warning of fire. property millions of dollars. • Failure to promptly call the fire These logs are in addition to other Owners and operators should have records required by law, such as OSHA department. a plan for testing their systems to ensure records and any state or local record- • Failure to keep fire from spreading. proper operation. This may be as easy keeping requirements. • Failure to maintain adequate fire as walking around and ensuring the emergency exits are not blocked and fire Proper documentation will not only escapes or other viable paths of egress. doors are not propped open, or testing help owners and operators keep track of evacuation or flood lights. However, some their system’s maintenance needs, but also This duty of reasonable care, systems, such as fire-suppression systems, provide evidence of their compliance with however, may be satisfied by the may require outside consultants. codes and their duty of reasonable care in hotel’s ability to demonstrate proactive the event of an incident. steps taken to install, maintain, and 3. PROVIDE STAFF TRAINING appropriately repair life-safety systems 5. PROMPTLY RESPOND TO A LOSS for each property. Therefore, whether In the event of an emergency, hotel staff you are insuring, defending, or looking are in the best position to guide guests to Owners and operators should have an at subrogation potential at a hotel, the safety. Emergency safety training should emergency response plan in place in following five issues are essential to be a regular part of staff meetings. All the event of a loss. This may include any analysis. hotel staff should be trained to spot and immediate responses, such as finding report issues promptly, evacuate guests, alternative accommodations for guests 1: MAINTAIN THE PROPER and handle minor issues that may arise. for the night, but also proactive defense Staff should have familiarity with all life- plans, including: LIFE-SAFETY SYSTEMS safety equipment. • Immediately notifying insurance It is necessary that the hotel install Training should also include what carriers of the loss. and maintain the proper life-safety not to do. For example, in the event of systems on the premises. At a minimum, a fully involved fire (i.e. one that cannot • Securing the loss location from these systems should meet local code be extinguished with a fire extinguisher), intruders or looters. requirements. Life-safety systems may staff should instead focus on safe include construction materials; detectors evacuation of guests from the property. • Identifying all potentially interested for fire, smoke, and/or carbon monoxide; parties should there be an investigation. an alarm system; automatic sprinklers; Staff training should go beyond and an intercom system. fire evacuations, too. The property may • Retaining an appropriate defense encounter a power outage, flooding, or team. Once the proper systems are wind damage that makes it impossible installed, maintenance becomes for guests or staff to safely remain on the If the hotel is still able to essential. The frequency for property. Staff should be aware of how operate after a fire or other loss, any maintenance will be governed by code, to respond to the disasters most likely to joint investigation for defense or the manufacturers’ recommendations, occur in the area. subrogation purposes should happen in and the authority that has jurisdiction. a timely manner to minimize business Maintenance may include professional 4. KEEP SUFFICIENT RECORDS interruption and potential spoliation. servicing, replacement of batteries, or even replacement of a system if Hotel owners and operators must Ultimately, no property is immune defective or expired. maintain records and maintenance from a loss. However, taking proactive steps can help ensure that the property operates in a way that will minimize life- safety liability. K THECLM.ORG CLM MAGAZINE 13

LITIGATION MANAGEMENT Confirmation Bias and the Courtroom How to Mitigate the Impact of Attorney and Juror Biases on Litigation By Shari Belitz and Eric Rudich Confirmation bias effort needed for considering new or and process this information. We will is the tendency for different information, people more easily also explore how the confirmation bias people to search for, construct their world using information of attorneys potentially impacts the interpret, favor, and that fits into their existing viewpoints. resolution of their cases. recall information Confirmation bias can be found in that confirms their many facets of everyday behavior and CONFIRMATION BIAS OF preexisting beliefs. Conversely, can exert great influence in how people confirmation bias drives the same people process information and make decisions ATTORNEYS AND JURORS to dismiss or ignore information that in politics, finance, medicine, personal supports a different viewpoint. relationships, and our legal system. Attorneys spend a great deal of time reviewing evidence and the law in Confirmation bias is a heuristic For our purposes, we will order to present their cases in the most or mental shortcut that developed as a examine ways confirmation bias can favorable light. Attorneys are continually way for people to make sense of and impact litigation and the trial process, advocating for their clients during provide order in a complex world. specifically with regard to how attorneys discovery, while writing briefs, arguing Rather than exerting the cognitive present evidence and how jurors perceive motions, participating in settlement negotiations, and throughout trial. As an Shari Belitz, Esq.is with Blueprint Trial Consulting. Eric Rudich, Ph.D., is with Blueprint Trial [email protected] Consulting. [email protected] 14 CLM MAGAZINE OCTOBER 2019

attorney works on a case, there is truth to positive and persuasive points of their be the wrong juror for the case, as I do the adage that there is a tendency to “fall adversary’s case, and note the most not think the Red Sox could do any in love with one’s case.” negative points of their own. Attorneys wrong. I would be an excellent juror for may evaluate and even argue their many other cases, but not one about the Confirmation bias initially occurs adversary’s case in order to see the case Red Sox.” when facts uncovered in discovery are more objectively. Trial attorneys should interpreted in a way most favorable to also present their cases to support staff, Another method to ascertain juror the attorney’s client. Favorable facts associates, or their partners. bias is to frame questions to avoid are given disproportionate importance, telegraphing a correct or incorrect while unfavorable ones are disregarded However, the backgrounds, response, and to give permission to be or given less significance and weight. life experiences, and attitudes of the honest and express bias. For example, The disregarded facts, however, may attorneys and their staff are likely very compare the following two voir dire be persuasive to a judge, mediator, or different from the jurors’ experiences, questions: jury. An attorney also may give less and the jurors are the ones who will weight to a seemingly irrelevant fact or ultimately be evaluating and deciding 1. How many of you would feel some an emotional argument, not objectively the cases. Moreover, there is a tendency bias against a plaintiff who is not a understanding how a jury may view this for colleagues to give supportive U.S. citizen? element of the case. feedback that may not reflect the reactions of actual jurors. As a result, 2. If you had to choose, which of the Ultimately, an attorney may a mock trial or focus group exercise following two views would you lean disregard or dismiss important facts provides much more reliable feedback toward: U.S. courts should primarily that do not confirm or easily fit with for testing cases. be for U.S. citizens, or U.S. courts his theory of the case. He may become should be open to all? enamored with facts supporting The jury research results provide his theory that an opportunity for feedback on the effectiveness of case People are often reluctant to admit productive settlement discussions will be themes and storylines, gives insights the flagrant bias that the first question lost, or arrive at an unrealistic valuation into how to counter the evidence attempts to elicit. However, the second of the case that prevents resolution. and arguments likely to be presented question makes it easier for jurors to by the other side, and can lead to indicate that the parties would not start If a case reaches trial, jurors recommendations for enhancing witness out equally at trial. represent another potential source credibility and the visual presentation of of confirmation bias. Jurors bring evidence. The key component of any jury During the trial process, with them various biases, preexisting research exercise is to make sure that the confirmation bias can also be mitigated views, and life experiences about the adversary’s position is fairly presented in by eliminating ambiguities in your case. legal system, parties, and overarching a comprehensive and hard-hitting way. Ambiguities allow jurors to interpret case issues before ever stepping into existing information in ways that fit a courtroom. For example, in civil At trial, mitigating juror bias should with their pre-existing beliefs. In other cases, jurors’ attitudes about issues begin with using a juror questionnaire words, if you do not provide a clear such as corporate conduct, personal in advance of voir dire. Research has story for jurors, they will create one responsibility, and damages can affect indicated that jurors are more likely to themselves based on their preexisting their interpretation of the evidence. give candid responses and indicate bias in ideas. Simplifying ambiguous or Confirmation bias will affect how written questionnaires as compared with complex issues and putting forth each juror evaluates, interprets, and in-person questioning. Once the voir dire compelling themes will assist the jurors remembers evidence, and will ultimately process begins, if your jurisdiction allows in understanding the case issues instead play a role in how a case is decided. it, attorneys should request to conduct of substituting information to fit their Research has shown that even if jurors their own voir dire rather than judge- preconceived notions. believe they will be fair and impartial, conducted voir dire. Studies have shown they will still make decisions based upon that a skilled trial attorney is better able “To err is human,” and bias unconscious biases. to elicit juror bias than a judge. is a fundamental way people err. Confirmation bias impacts how MITIGATING CONFIRMATION BIAS Another technique that attorneys attorneys and litigants evaluate can use during voir dire to ascertain their cases, and how jurors process Despite the prevalence of confirmation bias is to use examples that “normalize” information presented to them at trial. bias, there are ways to help mitigate and destigmatize bias to show how it As we suggest, awareness of how it during the litigation process. occurs in everyday life. Attorneys may confirmation bias may impact litigation Regarding attorney confirmation bias, use a personal example such as this: “I and using strategies to mitigate it will it is crucial to engage in “perspective am a huge Red Sox fan. If there is a case help attorneys achieve better outcomes shifting.” Attorneys should list the most involving the Red Sox, I would probably in their cases. K THECLM.ORG CLM MAGAZINE 15

Advertorial CLM PROFILE Multiple Failures: The Possible, The Plausible, and the Spaghetti Theory By Timothy N. Tresierras, Ph.D. Multiple failures are quite common on opposing sides is a consensus of The as-found failure would more within the practice of failure analysis, the most appropriate and probable commonly be tied to an excessive whether there are two simultaneous conclusions given the body of dynamic load dropping onto the beam failure conditions culminating in evidence. However, when the quickly, overloading it and causing catastrophic failure, or a cascade of opposing experts are unqualified simultaneous failures at each end. failures set forth by a primary one. and are peddlers of junk science, The opposing experts used this they often build their arguments on discrepancy to suggest that there Understanding the causality the layman’s intuition, which, to the may have been someone working of failures and the division of trained professional, is a house of around the beams at the time of responsibility among multiple parties cards. failure, or that something fraudulent is important to claims, litigation, and occurred. It was a case for the subrogation. Equally important is THE PLAUSIBLE scientific method. We had access to determining the characterization of The middle ground of scientific exemplar beams and proceeded to an alleged set of failures as negligent, intuition and skepticism is comprised set up a physical experiment to slowly accidental, and/or fraudulent. Let’s of allegations that are plausible. In load the beam in a similar fashion until take a look at the duty of a qualified such scenarios, qualified experts with it failed. failure analysis expert and a firsthand equal experience are segregated account of a set of failures where the by their level of hubris. Excessively THE SPAGHETTI THEORY foundation in science came from the overconfident experts will simply Flashback: Decades ago, renowned theory of breaking spaghetti. stand by their hardened experience, American physicist Richard Feynman while curious self-confident experts was stumped by a seemingly trivial THE POSSIBLE will lean on the scientific method. problem. He noticed that if you bend Within the practice of failure analysis, a piece of dry spaghetti at each the core methodology is the scientific I investigated a case where a end it will not break into two pieces. method based on the fundamental conference room had horizontal wood Instead, it breaks into three or four principles of physics and engineering. beams pinned across the ceiling. The unequal pieces. It was not an easy An expert with extensive experience beams supported a platform of A/V problem to solve, and it took decades may intuitively propose a strong equipment. The allegation was that to refine the theory that the initial hypothesis for the failure mode(s), and one beam failed at both ends where break sends an impulse wave through many times the strongest hypothesis it was pinned, causing the supported the spaghetti and causes a nearly is developed in the investigation’s equipment to crash to the ground. simultaneous break in the spaghetti earliest stages. However, it is always This allegedly occurred at night with at another location. the duty of any expert to follow the no one around. We quickly determined scientific method to develop logical that the wood beams were a low- Flash-forward: When the subject arguments or physical experiments quality particleboard with wood exemplar beam was loaded to that support or refute a hypothesis veneers and were not suitable to hold capacity in our experiment, one until the most probable conclusions the weight of the A/V equipment. frame of the video recording caught a are presented. complete fracture on one side of the To their credit, the opposing experts beam and a second fracture running The scientific method does not pointed out the peculiarity of the half-way through the other side in guarantee all conclusive findings beam failing at both ends and that a fraction-of-a-second interval. The will be a complete picture of what the location of the fallen equipment beam acted just like a large-scale went wrong, but, many times, suggested both ends failed at the piece of spaghetti, and the original merely refuting weak hypotheses same time. For this scenario—a failure allegation was shown to be plausible. is equally as important when under static loading—an engineer protecting a client. When it comes would expect one side of the beam Timothy N. Tresierras, Ph.D., is to the “the possible,” the ideal to fail and drop down diagonally at a senior engineer at ARCCA. scenario amongst qualified experts the failed end like a hinged ramp. [email protected] 16 CLM MAGAZINE OCTOBER 2019

EXPERIENCE, SERVICE, EXPERTISE AND CREDIBILITY… That’s what our experts bring to every case they work on, every time, every day. It’s what sets us apart, and the reason we’ve earned a national reputation for providing outstanding forensic, scientific and engineering solutions to our clients for over 30 years. Our experts use a variety of scientific and cutting-edge industry tools, practices, and software during their investigations and research to identify and analyze all of the facts in a process, case, or claim. Then they relay their findings to our clients via a comprehensive, easy to understand report and can provide expert testimony in court. When you need help, ask an Expert. Ask ARCCA. FORENSIC ENGINEERING & EXPERT WITNESS CONSULTING SPORTS BIOMECHANICS & HUMAN PERFORMANCE RESEARCH, DEVELOPMENT, TESTING & EVALUATION 800-700-4944 | ARCCA.com BIOMECHANICS | ACCIDENT RECONSTRUCTION | HUMAN FACTORS | TRANSPORTATION PREMISES LIABILITY | FAILURE ANALYSIS | FIRE & EXPLOSION | PROPERTY THECLM.ORG CLM MAGAZINE 17

Advertorial CLM PROFILE Preventing Slips and Falls By Heidi Shetler It’s a drizzly fall day and an employee industrial facility or commercial a slip might occur before someone without an umbrella jogs through the business probably has multiple cleans a spill in time. front door of your business, relieved departments of differing to be out of the rain—and immediately environments and floor surfaces The same goes for a general office slips on a smooth, rug-less floor, linked together. Think of an kitchen or a coffee island. Set up landing hard on her hip. automotive business, where the a coffee machine and watch for a service counter is just a door away stampede of caffeine-lovers. People A slip and fall on a slick surface is from a bay filled with auto fluids, may have uncovered mugs that spill, hardly uncommon in the American grease and oils, or a grocery store, or they might overfill, leaving drips. workplace. According to the Center where a butcher toils on a damp, These may be especially dangerous in for Disease Control and Bureau of rubber-matted floor and may need a kitchen setting with a vinyl floor. Labor Statistics, nearly 20 percent to step into a smooth, dry aisle. of all job-related injuries stem from Anywhere where a transition exists GRIPPY, THE MAT THAT STICKS slips, trips, and falls, accounting for 16 between manufacturing and office For a long time, rubber-backed rental percent of all lost-time injuries. environments has potential to be a mats have been the most common hazard zone. approach to floor safety, but they At commercial and industrial facilities, are based on outdated technology it’s not so much a matter of if a slip, Loading docks: Areas where trucks and often exacerbate fall hazards by trip, and fall injury will occur, but when. are offloading or on-loading get busy, bunching up or shifting during use. To minimize that risk, you should leaving them open to accidents of all That’s why New Pig, a leading provider think about where you can guard stripes. Beyond the human element, of workplace safety solutions, set out against those types of injuries. Many trucks may drip fluids or track in to create the next evolution in floor workplaces have similar problem liquids. protection. areas that are prone to wetness or leaks. The proper attention and Bulk fluid offloading. Mostly found Specifically designed to eradicate maintenance in these areas can save in industrial facilities and often used same-level slips, trips, and falls, PIG a business money from both claims in fueling operations, these areas are Grippy Floor Mat was the world’s and lost manpower. prone to collecting liquids such as first adhesive-backed mat solution fuel, oils, and hydraulic fluids that leak on the market. Grippy Mat lays flat, Let’s identify the trouble spots—and a or spill from tanks and hoses. sticks tight, and never bunches, great way to reduce the risk: ripples or shifts like rubber-backed General storage. In a crowded mats. NFSI-certified as a high-traction Entrances. Most often, a lobby warehouse or storage closet, spills are surface, Grippy Mat helps reduce is the first place a visitor sees. As always possible. A container holding slip-and-fall claims by up to 90 such, great care is taken in a lobby’s liquid might be accidentally damaged percent when used as part of a floor appearance, and the floors may be or degrade on its own, or someone safety program. It’s also absorbent, smoother than other areas. At the bringing in materials from outdoors customizable, and built to last up to same time, they get a lot of foot may track in rain or snow. Any high- three months before change-outs, traffic, making it easy to track in traffic area has an increased risk of meaning it’s a great fit for any of rainwater, melted snow, or slippery slipping hazards. the six areas identified above, and debris, which might go unnoticed countless others. on a recently buffed surface. In Cafeterias/self-service areas. It fact, anywhere someone goes from goes without saying that cafeterias With Grippy in place, a business’ outdoors to indoors is at risk for slip- and self-serve areas like buffets trouble spots go from inevitable to and-fall injuries—employee entrances, are prime spots for spills. People preventable. delivery entrances, loading dock get chatting with friends and get doors, etc. distracted, overload a serving spoon Heidi Shetler is the director of new and drop a bit, or carry too much on market development at New Pig. Transitions. An interconnected a tray at once. And in a busy room, [email protected] 18 CLM MAGAZINE OCTOBER 2019

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Advertorial CLM PROFILE Resolving Contentious Claims Through ADR By Dwight Smith, CPCU By most accounts, property damages, the umpire will be called it wants. What’s reasonable or insurance claims have become more in to assist. The umpire will rule on customary might no longer be a contentious and litigious. any remaining issues of dispute. The concern. This fact has likely led to appraisal is concluded when an RCV/ many inflated service invoices. Most agree litigation is not the preferred ACV estimate is created and an award method for resolving a disputed signed by any two of the three panel When asked about the AOB issue, property claim. The time and costs members is produced memorializing Hall says, “The majority of AOB issues associated makes litigation undesirable. the settlement amount. In almost all I see are related to excessive water The question that must be asked is, “Is cases the award is final and binding mitigation invoices.” He explains, there an alternative to litigation?” on all parties. “Excessive mitigation invoices are best handled by seasoned IICRC/WRT “Yes, there are other options The award is subject to policy exclusions, certified appraisers. The resolution is available”, says Shawn Hall, president provisions, conditions, limiting clauses, quicker, settlements more reasonable, of Calibrated Insurance Services. and applicable deductibles. and fair for all parties.” Hall adds, “Alternative dispute resolution (ADR) methods such as When compared to litigation, the Mediation involves the insurer appraisal, mediation, and assignment appraisal process is far more cost- and insured or his respective of benefits (AOB) are viable ways of effective and expeditious when representatives meeting with a resolving disputed claims.” resolving a disputed property claim. mediator. The mediator has no authority Not mentioned often is the benefit to settle the dispute; he is simply Let’s look at the options Hall mentions. of the insured seeing the appraisal there to encourage communication panel working to reach a mutual between the two parties to resolve their Appraisal is a provision found in most agreement. With litigation and legal differences. Mediation can be used to insurance policies and is governed by representation, communication with resolve disputes involving damages and the verbiage found in the Appraisal the insured by the carrier is prohibited. coverages. If an agreement is reached, a Clause. Appraisal is designed to This can lead to the insured feeling release might be signed at mediation. resolve issues of dispute over abandoned and dissatisfied with his damages. The insured or the carrier insurance company. Successful ADR can best be described may demand appraisal. The demand as prompt resolution resulting in a fair can be made as soon as a dispute AOB offers an insured the option settlement for all parties. Two factors occurs or after a lawsuit is filed. The of having a professional handle his ultimately determine the success insured and the insurance company damages and the needed repairs through the ADR options presented. each select a representative. The without experiencing an initial cash The first is to select the right person to named representatives, or appraisers, outlay. represent you. Find a professional ADR independently set the value of the expert with the skillset, credentials, loss. The appraisers may choose to An AOB also allows the service provider and knowledge to address the issue(s). select an umpire (a third, unbiased to assume certain rights to the “policy of The second is education. Seek, identify, person) prior to their attempt to insurance.” These rights include direct and engage an approved CE service resolve the dispute or after an indemnification for work performed. provider that offers ADR CE courses. impasse is reached, depending on the Additionally, the service provider can Attending such courses will educate language found in appraisal clause. sue the carrier should they dispute the you on the options available and how These three individuals are referred to invoice(s) they submitted. to effectively manage the disputes. as the appraisal panel. This will assist you in building protocols In a free enterprise, market-based and procedures appropriate for the The insured and insurer are economy, competition is the equalizer. disputes that arise. responsible for paying their Costs to perform a service are appraisers and equally share in the kept in check by competition. The Dwight Smith, CPCU, is general cost of the umpire should his services service provider that holds an AOB manager of Calibrated Insurance be required. If the two appraisers essentially eliminates that possibility; Services, LLC. cannot agree on the value of the it can theoretically charge whatever [email protected] 20 CLM MAGAZINE OCTOBER 2019

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Advertorial CLM PROFILE A Commitment to Service By Pat Walsh To Donan, an appointment is a complete the inspection only a day active outside the fire investigations promise. later than planned. he conducts for Donan; he is the reserve arson investigator for one of In 2016, Jim McCarthy found himself Since that time, Donan’s fire service the departments around his hometown seven hours into a 14-hour commute has expanded to include more of Stockton. He is closely involved with to a job site, steering his Donan investigators to manage the influx of all the county’s local stations and is truck down a two-lane road south of projects. Thankfully, not every project an active member of the San Joaquin Ridgecrest, California. Spearheading comes with a story as dramatic as Country Fire Investigation Unit. He the development of a new territory Jim’s, but each one is treated with the draws on his experience as a firefighter meant he often drove to site visits same sense of urgency, and every when he conducts investigations for that his two licensed investigators Donan employee is committed to our Donan: “Watching how fire behaves were too scheduled to perform. promise of thorough inspections, inside a structure, during suppression, Suddenly, a driver passing a car in the unbiased reports, and the quickest has given me a sense of how fire opposite direction crested a hill in the turnaround time we can deliver. patterns develop and how fire travels,” lane directly in front of Jim. These crucial elements of our mission Wells says. statement are ingrained into every He had no time to stop. They collided new employee, which is especially Another Donan fire investigator, James head-on at 65 miles per hour. Jim’s important as Donan continues to Reyes, is relatively new to the world of truck flipped four times into the grow its service throughout the private fire investigation but brings with desert and landed upside down, country. Building a name synonymous him over 30 years of experience as a with Jim trapped inside. He was with reliability means seeking out firefighter. He spent 17 of those years unresponsive for at least 10 minutes investigators who are as committed to investigating potential arsons for his before passersby managed to free their communities as the homeowners department, and he maintains good him from the vehicle. He awoke to and claims experts they assist. relationships with the surrounding fire smoke in the cab of the truck and departments, having served as their what he called “a sore leg”—later Most of our investigators are acting fire chief and EMS coordinator. revealed to be broken, requiring a former firefighters, while others His ability to “understand the thought four-hour surgery, a metal plate, and come to us from a background processes behind their actions, speak multiple pins and screws to set. in law enforcement. Because of the lingo, and interact easily” with the their civil service, they’re able to firemen gives him—and by extension By the time the ambulance arrived forge important relationships with Donan—credibility in the eyes of the fire to cart him away from his totaled local fire departments, EMTs, and departments. work truck, he was on the phone. police precincts. Their decades of This was doubtless one of the worst experience have also given them Donan recognizes that relationships days of Jim’s life, but Donan had unparalleled insight into the patterns with every local community we made a promise to a homeowner of fire causation and spread. serve are vital. We actively seek civil who was struggling through some servants with years of experience trying times as well; after all, they to form and maintain those had suffered damage to one of the relationships, giving our investigators biggest investments most people access to indispensable resources in make in their lives. Jim first called determining the causes of fire losses. the homeowner he’d been driving to meet and apprised them of the For more information on Donan’s Fire situation. Then he reached out to Investigation service and how we can his Donan colleagues to arrange assist you with claims, please visit another investigator to take over the donan.com. inspection. In the end, another Donan fire investigator was able to dedicate One of Jim McCarthy’s California-based Pat Walsh is general manager, fire extra time to make the drive and fire investigators, George Wells, stays investigations at Donan. 22 CLM MAGAZINE OCTOBER 2019



Game Changer Universal Claims Certification Launch Changes the Adjuster Licensing Landscape By Susan Wisbey-Smith It’s official: The Universal Claims Certification (UCC) is now available to all claims adjusters in the U.S. This game-changing certification program streamlines the adjuster licensing process that, up to this point, has been confusing and cumbersome. Anyone with a UCC can quickly secure a license in certain states by simply presenting their UCC and paying the state’s licensing fees. 24 CLM MAGAZINE OCTOBER 2019



GAME CHANGER CLM is actively working to bring other states into Welcome to the Club the UCC, meeting with insurance commissioners and their staff frequently to promote their adoption THE UCC IS ACCEPTED IN THESE of the UCC. STATES: The UCC also makes meeting patchwork for a very long time. Varying • Alabama continuing education requirements standards for licensing, continuing • California much easier to manage. UCC holders education, and renewals make the state- • Florida must earn 24 hours of UCC CE credit by-state way of doing it quite exhaustive • Georgia (24 credits, including five of law/ethics) and disjointed. The UCC makes that • Mississippi every two years. All CLM educational entire process significantly easier and • Texas events offer UCC CE credits effective eliminates a lot of the duplication of • With more to come… Sept. 1, 2019. Other CE providers can effort that has existed.” also apply to be approved UCC CE BEFORE THE UCC providers via the online UCC portal. “For adjusters who are required to Once approved, they can submit their be licensed in several states, the UCC Industry professionals have long known programs for UCC CE. now provides a clear path to secure that adjuster licensing is a cumbersome, some of those licenses without the time time-consuming process. “As someone who is involved and burden of sitting for multiple tests,” in adjusting claims and handling says Jennifer Wojciechowski, operations “As a former claims adjuster and catastrophe losses, not to mention manager for Community Association then claims compliance manager, I know licensed in several states, I think the Underwriters of America Inc. “It also firsthand how much time, money, and UCC is a tremendous game changer,” eases the complexity of managing and effort goes into making sure all of my says Dwight E. Geddes, head of Metro satisfying the renewal criteria for those team members have current licenses Claims & Risk Mgmt. “The UCC licenses. I hope the list of participating in the states where they are adjusting formalizes a process that has been states grows.” claims,” says Tamara Bland, director of compliance for the CLM. “The UCC EVERY ASPECT OF For over 25 years, Judicate West has been a changes all of that. It’s one set of CE THE ADR EXPERIENCE credits to track and one online portal to premier dispute resolution provider on the manage almost every detail.” THOUGHT OF AND THOUGHT THROUGH. West Coast, offering services Nationwide. The McCarran-Ferguson Act, passed in 1945, left the regulation of When selecting us you can expect: the business of insurance to the states, which then enacted their own rules to • Well respected, talented neutrals including former state protect their citizens. That left varying and federal judges and skilled attorney mediators & requirements for pre-licensure courses, arbitrators available nationwide. exams, continuing education, and the licensure chaos that the UCC seeks to • Mediation days hosted in our offices or yours for address. While other industry efforts speedy and economic resolution of pre-litigation that attempted to resolve the adjuster and litigated matters. licensing issue focused on federal legislation, they failed for various • Innovative solutions including: Jury MediationSM, reasons. Since the states control adjuster Discovery Mediation, Private Jury Trials, Med-Arb licensing, the CLM set out to tackle the and user-friendly Commercial Rules for Arbitration. challenge on a state-by-state basis. • Case consultants, each with over 15 years’ experience “I remember discussing the idea in helping you select the right neutral for even the most (use concept) of a simpler uniform unique case and a dedicated staff of ADR professionals certificate in my prior role during the consistently exceeding your expectations. CLM Chief Claims Officer Summit in 2014,” says Caryn Siebert, vice 800.488.8805 WWW.JUDICATEWEST.COM Downtown Los Angeles | Sacramento | San Diego | San Francisco | Santa Ana | West Los Angeles 26 CLM MAGAZINE OCTOBER 2019

GAME CHANGER UCC FAQs UCC Costs Q. DO I NEED TO HAVE A CUR- LICENSED ADJUSTERS RENT ADJUSTER LICENSE TO $69 ($49 for adjusters employed by a CLM Corporate Member Company). GET THE UCC? A. No. Currently licensed adjusters UNLICENSED ADJUSTERS need to simply complete the online $199 for pre-certification course, exam, and two-year registration. $149 for registration and pay the registration adjusters employed by a CLM Corporate Member Company. fee to receive their UCC. Unlicensed adjusters can also secure the UCC, UCC RENEWAL but they must first complete the $69 ($49 for adjusters employed by a CLM Corporate Member Company). UCC’s online 40-hour pre-certifica- tion program and pass the exam. “Attending the National They will also be involved with the UCC Association of Insurance Commissioners CE review and approval process.” Q. IS THE UNIVERSAL CLAIMS and the Securities and Insurance CERTIFICATION A LICENSE? Licensing Association conferences has As the CLM works with each A. No, UCC is a certification. You been enlightening—everyone involved in additional state, the support of must still apply for your license in licensing wants to streamline the process membership will be important. each state. Once you have your for reciprocity,” says Blume. “Once UCC, applications for additional we were able to bring Texas on board, “We may reach out to professionals adjuster licenses can be submitted many other states started to look more who are licensed in specific states to via the CLM license tracking portal, seriously at the UCC.” help us move our efforts along by CLM Tracker. To secure a license in asking them to contact state legislators, Florida, you must currently apply She says last year’s affiliation with commissioners, and others in support of for that via the state’s portal and The Institutes has also made a big the UCC,” says Blume. “It’s helpful for submit fingerprints. difference. that constituency, especially legislators who may not be familiar with the Q. WHEN DOES THE UCC EX- “The Institutes is highly regarded current licensing burden, to hear PIRE? in the industry as an elite provider of firsthand from those affected by the A. Twenty-four months from the professional education for the insurance complexities of adjuster licensing.” K date of certification. industry,” says Blume. “The Institutes’ assessments team has been deeply Susan Wisbey-Smith is chief Q. WHERE DO I GET MY UCC? involved in the design and testing of the A. All of the UCC details, registra- UCC pre-certification course and exam. communications officer for the CLM. tion, and CE provider registration can be found on the UCC online [email protected] portal at theclm.org/ucc. president, carrier practice, at Gallagher Bassett. “It’s amazing to see what has been accomplished by the CLM in less than five years. The industry support has been amazing, and I’m sure more states will adopt the UCC as time moves forward. Reducing the bureaucracy and simplifying the process will benefit insurance departments and claims professionals greatly.” “I’ve used the CLM Tracker system for two years to track my licenses,” says Regina Cedeño, MBA, CLMP, resolution manager at Blackboard Insurance, who is licensed in 29 states. “Now the UCC is an added convenience for obtaining my CE credits.” WHAT’S NEXT? CLM CEO Anne Blume says CLM is actively working to bring other states into the UCC, meeting with insurance commissioners and their staff frequently to promote their adoption of the UCC. THECLM.ORG CLM MAGAZINE 27

ERASING UNCERTAINT Y HOW TO DETERMINE WHEN TO DENY AND FIGHT A WORKERS COMPENSATION CLAIM By Carl “Trey” K. Dowdey III hasing perfect claims results can seem like C chasing the wind, especially when it comes to making denial decisions. As Isaac Newton presented in his third law of motion, every action has an equal and opposite reaction, and deciding when to deny a claim is no exception. Knowing when to deny a claim is critical, but it’s important to remember that there will be repercussions no matter the decision you make. When initially evaluating claims, there are three general claims types encountered: the likely valid, the possibly valid, and the likely invalid. There is an art to analyzing and balancing these three types of claims and deciding which should be denied and fought. An initial analysis requires a grasp of the applicable legal standards and associated potential risks and exposure. Knowing up front how to navigate between types of claims, the applicable law, how much time to devote to a claim, when to hit a decision point, and when to deny and fight is essential to any claims-handling strategy. 28 CLM MAGAZINE OCTOBER 2019



ERASING UNCERTAINTY THE LIKELY VALID ULTIMATELY, THESE CLAIMS HIT A DECISION POINT ON DENIAL, AND Dwight Schrute works for The Schrute KNOWING WHEN THAT DECISION POINT Family Construction Company (TSFCC). IS REACHED IS CRUCIAL TO LIMITING While driving the company truck to a POTENTIAL RISKS AND EXPOSURE. construction site, Dwight is T-boned after an armored personnel carrier, driven receives antivenin. He later suffers that you immediately accept the claim, by Mad Max, ran a red light. At the from chronic pain (complex regional pay indemnity benefits for Dwight’s emergency room, Dwight is diagnosed pain syndrome) and weakness, claims missed work, and pay his medical bills. with a fractured left wrist. As you analyze he cannot work, and seeks workers Dwight’s workers compensation claim, compensation benefits. Obviously, the applicable workers you note his negative drug/alcohol screen, compensation laws in the various states the police report placing Mad Max at After investigating Dwight’s may differ on whether or not Dwight fault for running a red light without detour, you learn that Dwight’s brother had a compensable work injury under a driver’s license, and Mad Max’s .21 Jeb owns the pig farm. Jeb tells you this scenario. As such, before denying, blood alcohol content. that he also owns the family worm it is advisable to obtain a legal opinion farm, is part owner of TSFCC, and is as to the law and the potential risks Here, the law appears in Dwight’s also Dwight’s supervisor. Jeb confirms and exposure for denial, while assessing favor for a workers compensation that he told Dwight to stop by and the best, most likely, and worst-case claim (and a personal injury claim pick up tools for the construction scenarios. If after analyzing the facts and against Mad Max). Dwight’s claim job. Subsequently, you realize Dwight the law you are convinced the claim is appears valid, legal exposure to was properly driving to the farm, not compensable, then you would be TSFCC appears limited to workers and running out of gas was simple on better ground to deny, also being compensation benefits, and the risks negligence and not a good reason to prepared for a potential fight. You would and exposure associated with denying deny workers compensation benefits. also gain a general idea of the potential Dwight’s claim appear high without risks, exposure, likely costs, and possible solid legal grounds (where denial could However, as to Dwight’s decision to defense/case strategy with the same. conceivably expose the employer/ walk into a field and pick blackberries, carrier to tort liability). As such, denial you initially conclude that the snake THE LIKELY INVALID here would be a poor choice. bite had nothing to do with his job and was a personal detour. You discuss all of This last type of claim generally appears THE POSSIBLY VALID these facts with Dwight’s cousin, Mose immediately dubious. With these, you Schrute, also part owner of TSFCC and see gaps in required legal standards or Many claims are not so clear and another one of Dwight’s supervisors. suspicious facts and evidence. This often fall in a middle category of “possibly Mose tells you that he likes blackberries leads to a fight, and knowing this up valid,” containing unanswered factual and TSFCC often provides fresh fruit front can help set expectations and assist and legal questions that require to its employees to strengthen morale. with initial strategic planning. investigation. During the investigation, Mose confirms that he did not direct it takes time to sort out evidence and Dwight to pick the blackberries (as For instance, you discover applicable legal standards. Ultimately, Mose does not have a phone), but he Dwight, instead of driving directly these claims hit a decision point on says he would have told him to pick the to the construction site, decided to denial, and knowing when that decision blackberries if Dwight had asked. drive to Kata-Kan Goju-Ryu Dojo for point is reached is crucial to limiting some extra Goju-Ryu karate training potential risks and exposure. You are still not convinced the (five miles in the opposite direction). snake bite is a compensable claim, While working on his Crane Boxing For example, on his way to so you deny it. A week later, you are technique, Dwight fractures his right the construction site, Dwight takes contacted by Dwight’s attorney, Jackie wrist and heads to the emergency a detour to stop by a pig farm. He Chiles, who tells you that denying room. However, while driving very runs out of gas and walks to a gas Dwight’s claim was “lewd, lascivious, slowly with his injured wrist (10 mph station. On his way, Dwight spots salacious, and outrageous,” as under the speed limit), Mad Max’s some blackberries in a field 20-30 blackberries are frequently offered for friend Snake Plissken, enraged by feet off the road. While walking TSFCC employees. Jackie then demands Dwight’s slow driving, intentionally through the field, he steps on a rattlesnake and is bitten on his right ankle. Dwight becomes dizzy and weak, but he manages to call 911. He is picked up by an ambulance, rushed to the emergency room, and 30 CLM MAGAZINE OCTOBER 2019

ERASING UNCERTAINTY rams the back of Dwight’s truck. RECOGNIZE plan violently executed now is better Practicing karate would not than a perfect plan executed at some THAT WITH indefinite time in the future.” Voltaire appear to be part of Dwight’s job, and is purported to have similarly said, Dwight’s brother Jeb confirms that CONTINUED “Perfect is the enemy of the good.” it is not in his duty description. To be thorough, you also obtain a copy INVESTIGATION Perfect can certainly be the enemy of the police report and interview of good claims handling. Knowing Dwight, Snake, Jeb, and the Goju- COMES INCREASED risks and potential exposure early is Ryu karate master Chojun Miyagi. crucial to help drive the investigation, You learn that Jeb fired Dwight TIME, OPPORTUNITY clarify facts, and assess claims for for his karate excursion and, while denial. Knowing the applicable statute interviewing Miyagi, he says he is not COSTS, AND of limitations, potential venue, judge, surprised Dwight is a bad worker and possible jury pool, and risks associated would frequently ditch work. Miyagi ASSOCIATED RISKS, with denial are also important. says Dwight is his worst student, does not follow directions, and EXPENSES, AND There is no “one size fits all” for requires severe, remedial training to evaluating claims for denial. However, learn proper technique. As such, you EXPOSURE. it’s best to ensure that the facts are conclude that Dwight cannot likely fully investigated up front, the correct meet his legal standard for a workers not clearly in a certain category or, after legal standards are identified, and compensation injury claim, where additional investigation, some claims may an analysis is made of how the facts his injury did not arise out of or take shift between these three categories. The match the legal standards. Further, an place in the course of his work for key to knowing when a claim may fall analysis of risks associated with denial TSFCC, so you deny the claim. into a certain category or when you hit and possible secondary effects should a workable decision point to accept or be done (e.g., an outrage lawsuit). Almost two years later, just before deny hinges on a thorough analysis of the Ultimately, if these steps are taken, Dwight’s statute of limitations runs out, facts to the law, recognizing that you will then the suitability of denial should Dwight’s attorney Jackie Chiles calls, never have 100 percent fidelity. Recognize become clearer. K telling you that Dwight was appallingly that with continued investigation comes fired because of a genuine work injury, increased time, opportunity costs, and Carl “Trey” K. Dowdey, III, is a senior as Dwight needed karate skills to protect associated risks, expenses, and exposure. the construction site from looters. Jackie attorney in Swift Currie’s Birmingham exclaims that the denial of benefits General George Patton has and termination were “outrageous, often been quoted saying, “A good office. [email protected]. egregious, and preposterous,” and demands workers compensation benefits The Industry Leader in Electronics Restoration and damages for wrongful termination, or else he will file suit. WE MINIMIZE BUSINESS INTERRUPTIONS Certainly, there are numerous Across all types of industries, our national team of experienced technicians & engineers red flags with this claim. Denial help businesses get back up and running quickly and with minimal revenue loss. appears appropriate. The facts do not appear to support the law behind a We are available 24/7/365 valid workers compensation claim, a wrongful termination claim, THECLM.ORG CLM MAGAZINE 31 or otherwise. Consequently, you feel confident denying this claim after weighing the facts, the law, and possible defenses, while still recognizing the risk of wrongful termination or outrage claims (knowing Jackie’s courtroom skills). FACING UNCERTAINTY Certainly, we often “don’t know what we don’t know.” Sometimes claims are



RThoeundabout What’s Driving Litigation in Transportation Claims CLM’s Transportation Committee gathered together a team of experts in the transportation community to discuss trends in the industry. In this edition, moderator Jim Foster leads a discussion about distracted driving, plaintiffs’ approaches to litigation, and the effects of litigation funding. JIM FOSTER: HAVE YOU SEEN AN UPTICK IN ACCIDENTS INVOLVING DISTRACTED DRIVING BY COMMERCIAL MOTOR VEHICLE DRIVERS? ARE THESE THE TYPES OF CASES WHERE YOU WANT TO CONSIDER ADMITTING LIABILITY, THEN FOCUS ON THE EXTENT OF DAMAGES? HAVE YOU UTILIZED PRESERVATION LETTERS OR DISCOVERY AS AN AFFIRMATIVE SWORD TO DETERMINE IF THE CLAIMANT/PLAINTIFF WAS ALSO ON A CELLPHONE OR OTHERWISE DISTRACTED? TIM ROTH: I would not say that I have seen a significant uptick in accidents involving distracted driving by truck drivers, since most of the drivers we encounter are familiar with the risks and potential consequences of failing to use hands-free mobile devices. Unfortunately, we have had a few cases involving truck drivers distracted by their handheld devices. In these cases, we have recommended letting go of liability arguments and trying to resolve the case early. On the other hand, I have seen an uptick in distracted-driving accidents involving passenger vehicle drivers and definitely take steps to obtain the cell phone records of these drivers. THECLM.ORG CLM MAGAZINE 33

The Roundabout TOM MCLAUGHLIN: Distracted driving pursuing plaintiffs’ phone records on factors. Most of these claims are wholly has been a problem for years. I don’t contested liability cases. unsupported by any actual evidence, and think we’re seeing any more distracted- in federal court cases, we recommend driving accidents than before. However, FOSTER: DO YOU OFTEN SEE filing Iqbal/Twombly motions to dismiss determining whether someone was TWO-COUNT COMPLAINTS, these unfounded claims. distracted is getting easier to prove because WITH ONE COUNT SOUNDING IN most large carriers have drive cameras. NEGLIGENCE, AND A SECOND FOR MCLAUGHLIN: Yes. Most complaints Also, obtaining cellphone data from WILLFUL AND WANTON CONDUCT come with two counts, with one providers is now commonplace. I know SEEKING PUNITIVE DAMAGES? pleading punitive damages. We see these of some defense attorneys who request DO THESE TYPES OF CASES pleadings regardless of the severity of a driver give up their phone in exchange INVOLVE CLAIMS OF AGGRAVATED the case. Most allege negligent hiring, for a surrogate, just to be safe. Distracted DAMAGES STEMMING FROM DRUG retention, supervision, maintenance, and driving goes both ways. I’ve gone on the OR ALCOHOL USE, NEGLIGENT entrustment, and they also assert hours- offensive in several cases, demanding HIRING OR RETENTION, OR of-service violations. plaintiffs preserve their phones. It can be OTHER FEDERAL REGULATION an effective tool. VIOLATIONS? REINOEHL: Yes, though the second one comes later, typically. We see allegations RICK REINOEHL: It is unclear to us if ROTH: Virtually every complaint we see seeking punitive damages regardless of there is an increase in accidents due to against trucking companies these days the facts of the case. More a factor of distractions because it is not something seems to automatically include a claim for the plaintiffs attempting to leverage a that is readily admitted to by the at-fault negligent hiring, training, or supervision better settlement. party. We do know that there is much as well as a claim for punitive damages, more focus on the issue. Admission of regardless of the nature of the accident. We FOSTER: ARE PLAINTIFFS’ liability would be more a factor of a clear now anticipate such claims after almost violation of the law, but I would consider every truck accident and direct much of ATTORNEYS CONTINUING TO USE admitting liability if there were issues our pre-suit handling toward identifying with our policy. And, yes, we have been and analyzing potential aggravating THE REPTILE THEORY? ARE THEY Meet the Panel PUTTING YOUR COMPANY OR JAMES A. FOSTER is a partner at Chicago-based Cassiday YOUR CLIENT ON “TRIAL,” ARGUING Schade LLP. He leads an emergency response team for catastrophic transportation accidents and serves as co-chair of THAT THERE WAS A VIOLATION CLM’s Transportation Committee. OF FEDERAL LAW AND SAFETY TIM ROTH is partner at Gallagher Sharp in Cleveland, Ohio. He is a member of the firm’s Transportation Practice Group with a REGULATIONS, AND THAT THE focus on the representation of trucking companies and their drivers following major truck accidents. He is a frequent speaker COMMUNITY AND PUBLIC IS BEING on transportation topics and is on the faculty and executive council of CLM Claims College’s School of Transportation. SUBJECT TO A NEEDLESS RISK TOM MCLAUGHLIN is the director of risk management and OF DANGER WITH RESPECT TO A claims for Transport America and CFI in Eagan, Minnesota, where he oversees all auto, general liability, workers compensation, and CATASTROPHIC ACCIDENT? cargo claims, as well as risk management functions. Transport America and CFI are truckload carriers with over 4,000 combined power ROTH: The use of the specific formula units and 4,500 drivers. set forth in the reptile theory seems to be less prevalent now that the trucking RICK REINOEHL is the senior vice president of safety and risk industry is aware of these tactics and management at Covenant Transport Services, and has over 27 is taking countermeasures. However, years of experience in risk management. the trend of going after the trucking company’s safety procedures and policies has become more prevalent than ever and typically becomes the focal point of almost every trucking case. MCLAUGHLIN: Some attorneys pursue the reptile theory; some don’t. You can usually tell if they are going down that road by their discovery requests. Regardless, we prep our corporate witnesses on how to properly respond to reptile questions. Most plaintiffs’ attorneys will back down once they 34 CLM MAGAZINE OCTOBER 2019

The Roundabout “The amount of technology available FOSTER: HAS LITIGATION to trucking companies and their ability FUNDING OF CASES INCREASED to track almost every move of a IN FREQUENCY? ARE THEY FUELING THE FILING OF CASES? IS LITIGATION FUNDING AN OBSTACLE TO SETTLING CASES? driver can create some challenges in ROTH: Although plaintiffs’ attorneys a case with a bad set of facts.” typically will never share the fact that litigation is being funded by a third party, realize they are going nowhere with internal document-retention policies, this appears to be more prevalent and these questions. and I respond to most preservation is absolutely an obstacle to resolution demands myself. However, I assign since the cost of litigation is far less of a REINOEHL: I have not experienced a defense counsel on the more lengthy deterrent when litigation is being funded. well-versed plaintiffs’ counsel using the and burdensome demands. We often reptile theory in the way that the authors go on the offensive by demanding the MCLAUGHLIN: I’ve only had a couple of of the book intended, as I understand it. claimant retain certain data, as well cases involving litigation funding. Several But, generally, yes, the discussion is how as preserve social-media accounts and of my peers state that it’s becoming more the company is the bad actor; not the electronics, such as phones. prevalent. They are definitely a hindrance truck driver. to getting cases settled. REINOEHL: “Swinging for the fences” FOSTER: WHAT HAVE YOU SEEN seems to have grown with some of REINOEHL: In practicing the empathic IN YOUR PRACTICE AND CASES these verdicts. We try to move the cases approach, we often offer wage THAT YOU WOULD DESCRIBE AS forward before it gets to an attorney replacement in certain accident situations. A “SCARY” TREND IN TRUCKING that would like to take a swing. Our We have seen fewer plaintiffs accept that LITIGATION BY PLAINTIFFS’ impression is that they are often just offer the past couple of years. I believe ATTORNEYS? WHAT TECHNIQUES trying to get a trucking verdict of the size that is hurting us in two ways: We HAVE YOU USED TO COMBAT listed in the firm’s advertisements. don’t have the opportunity to build that THIS TREND IN ORDER TO DEFEND relationship the same way, and the cases YOUR CASES? seem to go on longer in general when there is litigation funding involved. K ROTH: Although I would not use the RAPID RESPONSE term “scary” related to any tactics TO CATASTROPHIC INCIDENTS by plaintiffs’ attorneys since they are PERKINSFIRM.COM/RAPID-RESPONSE generally expected and can be mitigated against, the amount of technology available to trucking companies and their ability to track almost every move of a driver can create some challenges in a case with a bad set of facts and a knowledgeable plaintiffs’ attorney. We combat this by carefully analyzing all available driver tracking information before this has to be produced in discovery and, if appropriate, accelerate early-resolution efforts. MCLAUGHLIN: We’re seeing Mark Perkins preservation demands with just about every letter of representation. It’s 401 Market Street Suite 900 • Shreveport, LA 71101 • (318) 222-2426 dangerous if you don’t properly act or respond. You have to have good THECLM.ORG CLM MAGAZINE 35

AROUND THE CLM Focus on: Construction Conference Takeaways From CLM’s Second-Biggest Annual Event By Phil Gusman Technology’s increasing role in During the session “Unintended second-largest conference for CLM, construction; the skilled labor Consequences of Going Green,” right behind the annual.” says Henning. shortage; and the latest coverage, panelists discussed potential legislative, and litigation trends unforeseen conditions, such as He adds, “Because of the nature of around the nation were topics in untested materials and how they might the breakout sessions, we witnessed focus at CLM’s 2019 Construction impact other aspects of a building, and incredible energy in the sessions— Conference in September. the lack of expertise when it comes to people asking questions and installing and servicing emerging green participating actively, which truly raised Technology was a major theme technologies. the bar on the level of education.” across several of the conference’s Henning says the regional focus of presentations. During the session, The panel stressed that it is many of the sessions drew particular “Smart Building Technology: Is It the important when undertaking a green praise from attendees this year. New Trend in Construction Defect construction project for contractors Litigation?” panelists discussed and design professionals to As for what caught Henning’s ear, he cutting-edge construction projects understand what the building owner’s took interest in a point raised in the that incorporate the latest in smart risk tolerance is, and that is often opening session by David Simons, technologies, and the issues that can related to the motivation for going vice president and assistant general arise from that. green. Some owners may believe it counsel in the legal department of will reduce operating costs, some may KB Home. “I thought [Simons] made Regarding claims implications for be complying with jurisdictional laws an interesting point on the tension these buildings, Marie Cheung-Truslow, and regulations, some may be taking between providing affordable housing principal and owner of the Law Offices advantage of tax breaks and financial and the roadblocks thrown in the way of Marie Cheung-Truslow, pointed incentives, and some may be doing it of builders, particularly in California.” to cybersecurity issues stemming out of principle. from the amount of data collected by Modlin, on her top takeaway, says, smart devices in buildings. She also “Depending where on that spectrum “There is a huge building boom that discussed how builder’s risk policies the client falls, you really want to see is not necessarily translating to more could be impacted if an issue during what their risk tolerance is, because a claims. Severity of claims has been the construction phase results in lot of the technology isn’t necessarily impacted favorably because of the some of the technology failing or not ready for primetime,” said Mark builders’ right to repair laws throughout working as it should. Hopkins, vice president of Guardian the nation. Attorney fee entitlement, Group Inc. standing, and other legislative Cheung-Truslow predicted that the insurance industry will begin writing CO-CHAIRS WRAP-UP enactments are impacting claims.” K more manuscript policies for specialty Stephen Henning, founding partner at buildings to address new risks, adding Wood, Smith, Henning & Berman; and that the technology is currently far Phyllis Modlin, claims manager, Markel ahead of policy provisions. West Insurance Services, are the co-chairs of Construction Conference. In addition to smart technology, They said nearly 800 attendees came buildings today are also incorporating to San Diego this year. “In terms of various types of green technologies. numbers, this continues to be the 36 CLM MAGAZINE OCTOBER 2019

AROUND THE CLM PERSPECTIVES Boots in ELIZABETH DEMARET, the Bahamas Chief of Staff, EVP, Carrier Relations What’s the scene like in the Bahamas post-Hurricane Dorian, where insured Q. What challenges were involved in getting your and uninsured losses are predicted to team to the scene? What did they do, once there, for hit $7 billion? We chat with Sedgwick’s accommodations? Elizabeth Demaret and Laura De Sordi, two members of the company’s A. Getting people to a catastrophe is a balance catastrophe team, to find out. between speed, effectiveness, and safety. Clients, understandably, want information quickly on their staff, LAURA DE SORDI, property, and businesses. We have to balance that with Managing Director, the question of whether they can be effective once on Latin America & Caribbean the island and, more importantly, safe. Q. What was the worst catastrophe you handled? How does working in the Bahamas after Dorian compare? From a colleague standpoint, we worked with a A. Hurricane Maria’s destruction in Puerto Rico in team to provide alternate transportation such as 2017 was the worst. Working in the Bahamas after helicopters and private planes; identified safety and Hurricane Dorian is very different, as logistical health issues; and secured housing for the claims difficulties are worse because different islands were professionals. Additional logistics included ensuring hit. It’s making the accessibility and transportation that our colleagues are appropriately licensed in that between the various islands really difficult. Another jurisdiction. All of this took about five days. aspect of Hurricane Dorian in the Bahamas was the Once on the island, we worked with existing clients emotional impact—it’s been very different. Some areas who had housing available and a lot of word of looked like a bomb had exploded. mouth to get our teams in a location where we could ensure that they had food, water, and basic safety Q. How long were your days? How did you manage the stress? taken care of. A. The days have been endless. They start early in the Q. What is the general atmosphere like? What are your morning and go on until late at night—of course this biggest problems? is common for most serious catastrophes. Experience I guess is key, so stress doesn’t kick in! Most of the A. As the infrastructure of the islands begins moving challenges and tensions felt were not new, just a bit toward recovery, the atmosphere is stabilizing from different. Having a great team there and huge company a security standpoint. Additionally, basic necessities support make the impossible possible. like water, food, A/C, and phone service are also getting more constant, which makes it easier. Our teams all report that the Bahamian residents are really resilient. As far as problems, the biggest issue from our view is getting supplies to the island and removing debris so rebuilding can begin will be a real challenge for insureds. Q. What kinds of losses are you handling? A. Our losses run the gamut from personal homes with values ranging from $300,000 to more than $2 million, to commercial losses with values over $100 million. It took about two weeks for the volume to become steady—insurers and insureds were working with the same logistics issues we were. THECLM.ORG CLM MAGAZINE 37

AROUND THE CLM BETWEEN THE LINES Question: In your practice area, what is one decision or development, either recent or historical, that you find particularly interesting and/or meaningful? “The 2014 K2 Inv. Grp. “Cedell v. Farmers Ins. “In Flowers v. Harborcenter “In 1975, California LLC v. Am. Guarantee Co. of Washington made Development LLC, an responded to the & Liab. Ins. Co. decision significant changes to an upstate appellate court insurance crisis by from the New York insurer’s ability to seek set aside an award for enacting tort reform Court of Appeals advice from counsel, and past and future lost legislation that set a reversed its own 2013 made the application earnings in a Labor cap on non-economic decision permitting of the attorney-client Law 240 (1) case. The damages in actions coverage by estoppel privilege unpredictable appellate panel agreed brought against health and held that an where the client is an that since the worker care providers. The insurer that breaches insurance company. had secured alternate cap has survived the duty to defend This affects aspects of employment post- numerous constitutional may still rely on policy legal practice. As more accident, the trial court challenges and set the exclusions. Proof jurisdictions adopt should have instructed stage for tort reform that even the state’s Cedell’s holding, we the jury to consider across the nation.” highest court can admit may see those impacts whether the attempt to and correct a mistake!” spread and manifest in mitigate damages was Constance A. new ways.” ‘reasonable.’” Endelicato, Laura Dowgin, Jennifer P. Josh H. Partner, Wood, Smith, Member, Cozen O’Connor. Dinning, Kardisch, Henning & Berman LLP. CLM Member since 2015. CLM Member since 2015. Senior Associate Attorney, Esq., Of Counsel, Russo & $250,000 $1.6 Million Soha & Lang, P.S. CLM Toner LLP. CLM Member California’s cap on non- Award set aside by the economic damages in Member since 2015. since 2012. appellate court in Flowers v. medical-malpractice cases. Harborcenter Development LLC Source: National Conference 1985 Source: Court documents of State Legislatures The year Servidone Const. Corp. v. Security Ins. Co. of Hartford was decided, which set the precedent that the New York Court of Appeals determined it failed to consider in its initial decision in K2 Inv. Grp. LLC v. Am. Guarantee & Liab. Ins. Co. Source: Justia $1.1 Million $30,000 Amount that California’s cap on non-economic damages would have been raised to if 2014’s Proposition One-time dollar amount offered by the insurer that kicked off 46 had not been rejected by voters. Source: Ballotpedia legal action in Cedell v. Farmers Ins. Co. of Washington. Source: Court documents 38 CLM MAGAZINE OCTOBER 2019

AROUND THE CLM WEBINARS AROUND THE CLM EVENTS UPCOMING CLM WEBINARS CHAPTER EVENTS 14: Greater St. Louis Chapter; October Westport Social October 8, 2019 10: Greater Dallas Chapter; WORKERS COMPENSATION Greater Denver Chapter; Tommy Bahamas (Plano) The Franciscan Loss Control & Claims Maryland Chapter; Management Programs Eastern Pennsylvania Chapter; Pessin Katz (Towson) Sofitel Hotel (Philadelphia) October 9, 2019 Greater Houston Chapter; TRANSPORTATION 15: Seattle Chapter; Safeco Plaza True Anomoly Brewing 21: Virginia/D.C. Chapter; Understanding the December 2019 Upstate New York Chapter; Electronic Logging Device Rule Casa del Barco (Richmond) Helium Comedy Club (Buffalo) Nevada Chapter; October 23, 2019 16: Western Pennsylvania Chapter; INSURANCE COVERAGE Firefly Tappas (Las Vegas) TopGolf (Pittsburgh) San Diego Chapter; Bali Hai With Reservations – An Overview 17: Sacramento Chapter; New York City Chapter; of the Sufficiency of Reservations of Rights Letters Judicate West Planet Hollywood 22: Southeast Wisconsin Chapter; 26: Orange County Chapter; October 30, 2019 PROPERTY Maggiano’s (Wauwatosa) Dave & Busters 23: New York City Chapter; Navigating the Property NATIONAL EVENTS Claims Environment Kaufman Borgeest and Ryan October 17-20, 2019 24: Kentucky Chapter; LITIGATION MANAGEMENT November 6, 2019 INSTITUTE CYBER, MANAGEMENT, & Belle’s Cocktail House (Lexington) CHICAGO PROFESSIONAL LIABILITY November December 5, 2019 Defense Strategies for Traditional CLM NEW YORK CONFERENCE and Emerging Sources of 6: San Francisco Chapter; & HOLIDAY PARTY Insurance Agent/Broker E&O Hyatt Regency Embarcadero NEW YORK CITY Exposures 7: Los Angeles Chapter; November 14, 2019 Clifton’s Republic CONSTRUCTION 12: Maryland Chapter; Avoid Risk Transfer Roulette: Pessin Katz (Towson) Does Your Tender Have Any Teeth? On September 12, CLM’s Nevada Chapter gathered at Gordon Biersch in Las Vegas to learn about the use of structured settlements in claims handling and litigation. Register and receive The presentation was led by Tim Kosor (Brant Hickey & Associates Inc.); Cynthia reminders for upcoming McGraw (Alternative Service Concepts LLC); and Brooke Bohlke (Wood Smith webinars at Henning & Berman LLP). theclm.org/webinars The Nevada Chapter is led by President Lynn Rivera (Burnham Brown); Vice President Brooke Bohlke (Wood Smith Henning & Berman LLP); Secretary Patrick Thantacheva (Diversified Restaurant Group LLC); Director of Events Eric Powers (Selman Breitman); Director of Education Gerod Wilson (NARS); and Director of Membership Cynthia McGraw (Alternative Service Concepts LLC). The event was sponsored by Advanced Resolution Management; Brant Hickey; Corvel; CoventBridge Group; and Rimkus. THECLM.ORG CLM MAGAZINE 39

AROUND THE CLM NATIONAL News and Updates A court in Oregon allows a federal RICO suit concerning a cannabis grower to proceed, Arizona now has a statewide texting-while-driving ban, and, in Texas, flood damage from Imelda brings back memories of 2017’s Hurricane Harvey. Washington Oregon Arizona COURT APPLIES INVERSE COURT CONSIDERS STATE VS. DUCEY SIGNS STATEWIDE PROXIMATE CAUSE FEDERAL LAW ON CANNABIS TEXTING-WHILE-DRIVING LAW LANGUAGE In Momtazi Family LLC v. Wagner, Gov. Doug Ducey has signed H.B. In the matter of Belmain Place the District Court of Oregon denied 2318, which institutes a statewide Condominium Owners Association a legal cannabis grower’s motion ban on texting and driving. The v. American Insurance Company, to dismiss a vineyard’s lawsuit law has already taken effect, and the Washington federal district filed under the federal Racketeer penalties will begin Jan. 1, 2021. The court denied an insured/plaintiff’s Influenced and Corrupt Organization law replaces a patchwork of local motion for summary judgment on (RICO) Act, alleging the grow ordinances throughout the state. coverage related to water damage operation was running a “criminal The legislation prohibits holding or to a condominium. Based on the enterprise,” because marijuana is supporting a wireless device while “inverse proximate cause” language illegal under federal law. The court driving; writing or reading text-based found in the “Washington Changes— held that the vineyard had plausibly communications while driving; and Excluded Causes of Loss” form, alleged that it had suffered a watching, recording, or broadcasting the court rejected the insured’s “concrete financial loss,” because video while driving. Texting while argument that if water intrusion a customer canceled an order over driving is considered a primary damage is not specifically excluded, fears, “whether valid or invalid,” that offense, which means officers are then it is always covered under an the grapes were contaminated with allowed to pull drivers over for this ensuing loss provision. The court the smell of marijuana. Because violation. Civil penalties include explained that the Washington marijuana remains illegal under a fine of up to $150 for the first Supreme Court expressly allowed federal law, the vineyard may offense and up to $250 for second for “inverse proximate cause” proceed with a racketeering lawsuit. and subsequent offenses. Criminal language in Vision One LLC v. Phila. This case highlights the emerging penalties include up to six months Indemn. Ins. Co. and distinguished liabilities associated with cannabis in jail and a $2,500 fine for causing this matter from another Western markets legalized under state laws a crash resulting in serious injury or federal district court decision that and the challenges to insurers from death.—From CLM Member Penny addressed different policy language. legal cannabis businesses.—From McCloud and Managing Editor Phil Notably, the decision also states CLM Member Kevin Clonts Gusman that “plaintiff’s position has the potential to swallow the exclusions in an all-risk policy whole.”—From CLM Member Jennifer Dinning 40 CLM MAGAZINE OCTOBER 2019

Texas Alabama New Jersey IMELDA CAUSES OVER 10,000 STATUTE OF LIMITATIONS NEW BILLS IMPACT VEHICLE FLOOD CLAIMS RULES UPDATED PIP, AUTO BI Insureds have filed over 10,000 The Alabama Department of As a result of the New Jersey vehicle flood claims in Southeast Insurance has made a change to Supreme Court decision in the Texas so far as a result of Tropical Regulation 482-1-125-.07(4), which is Haines v. Taft case in March 2019— Storm Imelda, according to the set to take effect on Jan. 1, 2020. The and the justices encouraging the Insurance Council of Texas (ICT). The regulation has been expanded to legislature to change the law—Gov. storm, which struck Texas in mid- include language requiring insurers Murphy signed two new bills that September, brought more than 30 to give notice to any claimant who impact PIP and auto BI settlements inches of rains to the area, which is unrepresented regarding the going forward. The first, S-2432, caused rising flood waters. The expiration date of the statute of allows injured victims of motor intensity of the floods in some areas limitations. Prior versions of the vehicle accidents to seek payment has drawn comparisons in media regulation have not put any notice for medical expenses due to the reports to 2017’s Hurricane Harvey. on insurers to notify claimants of the negligent or reckless actions of “Homeowners are still assessing expiration date. Under the revised another driver when those expenses damages caused by flooding, but regulation, insurers must give notice exceed their insurance policies damage estimates will likely reach to the unrepresented claimant not under PIP coverage. The new law well into the billions of dollars,” ICT less than 45 days before the date will permit a party injured in an said in a statement. News reports on which the statute of limitations automobile accident to recover all indicate that five people were killed will expire.—From Alabama Chapter medical expenses that exceed, or are as a result of Imelda.—From CLM Secretary Jeremy Richter unpaid or uncovered by any injured Managing Editor Phil Gusman party’s auto insurance medical PIP coverage. The second bill, S-3963, revises the law concerning recovery of unreimbursed medical expenses as economic loss in civil actions for damages arising from an automobile accident. It permits the injured person to recover all unreimbursed medical expenses not covered by the insured’s own PIP limits.—From CLM Member Denise Koval THECLM.ORG CLM MAGAZINE 41

AROUND THE CLM VOICES Gary Gassman HOOKED ON COVERAGE “In light of what’s happening right Co-Chair, Professional Liability Soon after graduating law now, I will not be Practice Group, Cozen O’Connor school, Gassman took surprised if we a job with a small law see other major Recently recognized as a firm where he tried his pharmaceutical- notable Gen X leader in law, first case within a week related claims Gassman offers his insights of starting. Much of his come to a head in into professional lines, trends, work over the next few years involved the near future.” and characteristics that insurance defense, and when a carrier should define today’s legal asked for a couple of coverage opinions Gassman, on one trend he’s professionals. with respect to an E&O claim, he was —By Eric Gilkey, Executive Editor hooked. He cut back on litigation and keeping an eye on. educated himself on D&O and other professional lines to focus on being a coverage attorney. WHAT’S HOT IN D&O “From the moment you enter a room In the public company D&O world, or conversation, Gassman says he is seeing more high- observation is your greatest ally. Strive value derivative actions; large nine- to be your personal, figure settlements; imposition of fines authentic best at and penalties; increased shareholder all times and in appraisal and merger and acquisition everything you do.” actions; and more litigated coverage Gassman, on advice he would disputes. In the private sector, he’s give to millennials and other Gen seeing SEC and regulatory reviews of X lawyers like himself. private companies; matters involving false claims; antitrust and professional services issues and exclusions; as well as matters implicating contract exclusions and bankruptcy-related issues. “It means doing RISKY BUSINESS “I am a major dog whatever I can lover, and my partner to ensure that Gassman and I currently have service, civility, and says he thinks three. I love singing respectability are and enjoy karaoke reignited in our next the world is with family and generation of leaders becoming friends, and I am and continue to play passionate about a significant role in riskier my pro bono work our profession.” because the global economy and with the LGBTQ exchange of and access to information community.” Gassman, on what being a both public and private exposes us all leader means to him. to risks most do not comprehend. He Gassman, on life when the suit says emotional, economic, and political comes off. 42 CLM MAGAZINE OCTOBER 2019 volatility at home and throughout the world leads to desperate people taking desperate measures, and that exposes us all to a variety of risks.



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