CLM September 2020

FURTHERING THE HIGHEST STANDARDS OF CLAIMS AND LITIGATION MANAGEMENT SEPTEMBER 2020 The Edge When Plaintiffs’ Counsel Strike Back of Disaster Let’s Play What Can Past Hurricane Seasons the Blame Game Teach Us About 2020’s Challenges? Marijuana’s Road Risks

WWHHEENN TTHE UNEXPECTED HAPPENS, YOU NEED TO KNOW YOU HAVE QUESTIONS. WE PROVIDE ANSWERS. Numerous factorYs cOanUleHadAtoVsEerioQusUcEonSsTtruIcOtioNn-Ss.iteWacEcidPenRtsO, frVomIDinEadeAqNuaSteWwoErkRerStr.aining and safety Numperorocuedsufraecstotorsfacualntylperaoddutoctssearnioduhsecaovnysetqruuciptimonen-st.itReimackcuisdehanstsd, efrcoamdeisnoafdfeoqreunastiec ewxoprekreierntcreaiinnivnegstaignadtinsagfety proceduarnedsetvoaflauautltinygpirnojudruycatsccaidnednthseaacvryosesqtuhiepmU.eSn. at.nRdimin kmuasnhyafsordeeigcnacdoeusnotrfiefos.reOnusriccoenxsptreurcietinonceexinpveertsstigating conduct in-depth investigations to verify critical issues and can provide strategic solutions for recovery. and evaluating injury accidents across the U.S. and in many foreign countries. Our construction experts and If you’re facing a complex forensic challenge of any kind, count on us to uncover the facts. engineers conduct in-depth investigations to verify critical issues and can provide strategic solutions for recovery. If you’re facing a complex forensic challenge of any kind, count on us to uncover the facts. World-class. Global reach. rimkus.com • 800.580.3228 World-class. Global reach. rimkus.com • 800.580.3228

CLM MAGAZINE SEPTEMBER 2020 36 CONTENTS 18 10 FEATURES COLUMNS AROUND THE CLM 18 THE EDGE OF DISASTER 4 FRONT DESK 36 A TEST-TAKER’S NOTEBOOK What can past hurricane seasons Our community is strong CLM’s Claims College is taking teach us about 2020’s challenges? its final exams virtual 6 CHAT ROOM 22 THE BLAME GAME: DISABILITY CLM editors text it up 37 CAREERS ACCOMMODATION EDITION How to “sell” insurance Predicting verdicts in cases 8 EXPOSURE involving injured employees Derecho devastation 38 EVENTS Upcoming CLM events and webinars 28 WHEN PLAINTIFFS’ 10 RISK MANAGEMENT IN COUNSEL STRIKE BACK THE ERA OF COVID-19 39 BETWEEN THE LINES An assault on business-interruption coverage is What is one trend you’re watching in the making. Are you ready to defend? New strategies for limiting liability closely in construction? 32 MALICIOUS PROSECUTION 12 MARIJUANA’S ROAD RISKS CLAIMS: TREND OR ANOMALY? Medical or not, truck drivers 40 NATIONAL must say nope to dope News and verdicts that affect you Recent decisions create new wrinkle in coverage debate 14 HAZARDS AT HOME from across the country Mitigating the dangers 22 of an at-home workplace 42 VOICES Getting to know Allstate’s Dale Sherman 16 RULES OF THE ROAD Five tips for successful claims 42 and litigation management 16 THECLM.ORG/MAGAZINE CLM MAGAZINE 3

FRONT DESK Our Community Is Strong At a time when tensions are This feels even more powerful as I sit here today trying to not high and divisions are deep, I am be overwhelmed by the news of the day. While the CLM strives grateful for our CLM community. to set the standard for diversity and inclusion, we recognize We are a diverse group in all that there are always opportunities to do better. contexts of the word. Diversity has always been at the heart of How do we encourage a diverse population to pursue the CLM. We recently formalized careers in our industry? How can we make sure to foster our diversity statement, and the young careers of diverse professionals? These are just these sentences from that some of the questions we will continue to ask while we statement strongly resonate seek to continually effect real change. I hope you’ll join in with me: those conversations and help CLM do what we can as a community to further the evolution of diversity, inclusion, At the CLM, diversity is about and equity. recognizing the important perspectives and contributions each person brings to the Anne Blume organization and to the industry. We strive for a culture where CEO, CLM everyone can be authentic, contribute, develop, and thrive. [email protected] SEPTEMBER 2020 • ISSUE 9 • VOL. 4 CHIEF EXECUTIVE OFFICER EXECUTIVE EDITOR CLM Magazine is published monthly and covers news and Anne Blume Eric Gilkey topics of interest to insurance claims, risk, and litigation management professionals. PUBLISHER MANAGING EDITOR Bryan Pifer Phil Gusman Copyright © 2020 by the CLM. All rights reserved. No part of this publication may be reproduced or ADVERTISING QUESTIONS ART DIRECTOR transmitted in any form or by any means, electronic, Bryan Pifer Jason T. Williams mechanical, photocopying, recording or otherwise, [email protected] without prior written permission of the CLM. 513-444-4560 EDITORIAL QUESTIONS Eric Gilkey The views expressed in the articles are solely those of the [email protected] authors or those interviewed and do not necessarily reflect the views or opinions of CLM or the companies in which the REPRINTS For reprints and licensing authors are employed. please contact Shabynka Nealy at [email protected] or 954-587-2488. CLM (ISSN XXXX-XXXX) is published monthly 12 times a year by CLM, a member company of The Institutes, 4100 S. Hospital Drive, A publication of Suite 209, Plantation, FL 33317. Application to mail at Periodical Postage Prices is Pending at Plantation, FL, and at additional mailing offices. Postmaster: Send address changes to CLM, 4100 S. Hospital Drive, Suite 209, Plantation, FL 33317. Allow four weeks completion of changes. Advertising and editorial deadline is the first of each month preceding issue date. 4 CLM MAGAZINE SEPTEMBER 2020

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EDITORS’ TEXTS Phil Gusman Having covered our industry for many years, I’m used to seeing The Chat Room hurricanes threaten our coasts, but watching Hurricane Laura develop left a pit in my stomach. Executive Editor Eric Gilkey and Managing Eric Gilkey Editor Phil Gusman keep Especially in 2020, didn’t the impending destruction feel in touch each month inevitable? But a last-minute “wobble”—that’s a technical term— through text messages. sent it crashing directly into Louisiana’s Cameron Parish, which Here’s a behind-the- only has a population of 7,000. scenes look at some of their chats. Phil Gusman I think the best quote I saw came from Colorado State University Hurricane Researcher Phil Klotzbach, who said in various news reports that “it was really, really bad instead of apocalyptic.” Eric Gilkey It’s an appropriate distinction to make, especially given that initial damage reports put insured losses in the $4 billion-$8 billion range, according to AIR Worldwide—not exactly chump change. But the fact that it could have easily been 10 times worse is worth recognizing. Phil Gusman Speaking of “recognizing,” I bet if I told my friends I was editing articles about cannabis and “Star Wars” this month, they wouldn’t have guessed it was in an insurance publication! Eric Gilkey Christopher Fusco’s piece [page 28], which is all about dissecting plaintiffs’ counsel strategies post-COVID-19, is chock full of great insights gleaned from a webinar he sat in on before putting pen to paper. It’s a terrific read, and I loved his “Star Wars” theme. Phil Gusman Sneaking in to steal the other side’s plans? Perhaps Fusco has earned a new nickname—Rogue One! 6 CLM MAGAZINE SEPTEMBER 2020

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DERECHO DEVASTATION In this aerial image from a drone on Aug. 11, 2020, damaged grain bins are shown after a derecho struck the day before in Luther, Iowa. Gov. Kim Reynolds said early estimates indicate 10 million acres—nearly a third of the state’s land used for crops—were damaged when the “inland hurricane” battered the region. PHOTO: DANIEL ACKER/GETTY IMAGES THECLM.ORG/MAGAZINE CLM MAGAZINE 9

CYBER, MANAGEMENT, AND PROFESSIONAL LIABILITY Risk Management in the Era of COVID-19 New Strategies for Limiting Liability By Kenneth A. McLellan and Regan Toups One of our biggest Here, let’s examine special considerations floods and hurricanes) and acts of people challenges in dealing for those risk-avoidance mechanisms in (e.g., riots, strikes, and wars).” Parties with COVID-19 is the COVID-19 era. use force majeure clauses to plan for adapting traditional catastrophic events. methods of limiting FORCE MAJEURE liability and risk We can look back 100 years to see transfer to our new environment. Black’s Law Dictionary defines “force how courts have specifically addressed Contracting parties have long majeure” as “an unexpected event past pandemics. A 1920 California case, looked to provisions such as force that prevents someone from doing or Citrus Soap Co. v. Peet Bros. Mfg. Co., majeure, limitations of liability, and completing something that he or she had involved a contractual dispute that arose indemnification to help manage risk. agreed or officially planned to do. The during the Spanish flu epidemic. San phrase includes both acts of nature (e.g., Diego issued an ordinance establishing Kenneth A. McLellan is a partner at Winget, Regan Toups, Esq., is vice president of litigation Spadafora & Schwartzberg LLP. management at eMaxx Assurance Group of [email protected] Companies Inc. [email protected] 10 CLM MAGAZINE SEPTEMBER 2020

a general quarantine, which impacted a professional engineers to perform pre- masks, washing hands frequently, and seller of goods. The court found that a purchase home inspections may find engaging in social distancing. force majeure clause allowed the seller exculpatory clauses in their contracts a reasonable extension to deliver its in which the engineer seeks to limit RISK TRANSFER VIA products after the agreed-upon date. damages to the cost of the inspection. INDEMNITY PROVISION However, courts are less likely to In fact, many jurisdictions will allow reliance on force majeure clauses if enforce provisions in which parties seek Another method of reducing risk is via they consider an event to be foreseeable. to limit liability, too. For example, in a contractual-indemnity provisions that shift For example, in a 1984 Illinois case, N. 1988 case, Harris v. Walker, the Illinois liability in certain instances from one party Illinois Gas Co. v. Energy Co-op. Inc., the Supreme Court enforced a liability to another. In 1993, the Texas Supreme court found that a change in price due to waiver in which the plaintiff sustained Court addressed an indemnity provision in a change in governmental regulations did injuries while horseback riding. In a 2002 Dresser Industries Inc. v. Page Petroleum et not excuse performance based on a force case, Benedek v. PLC Santa Monica, al. and adopted the Black’s Law Dictionary majeure defense. a California court enforced a broad definition of an indemnity agreement: liability waiver in which a member of “A collateral contract…by which one In 1986, a New Jersey court a health club was injured in a gym as person engages to secure another against viewed the force majeure defense as a he adjusted a television mounted above an anticipated loss or to prevent him from very narrow one in Seitz v. Mark-O- an elliptical machine. In a 1990 Florida being damnified by the legal consequences Lite Sign Contractors Inc. In that case, case, Theis v. J&J Racing Promotions, of an act or forbearance on the part of one the defendant contractor’s employee the court enforced a liability waiver in of the parties or of some third person.” fell ill due to diabetes. The contractor which the plaintiff was killed in an auto Further, the court explained that “these asserted the defense of impossibility of racing accident. The court noted, “While agreements, whether labeled as indemnity performance due to the disability of its exculpatory clauses are not looked upon agreements, releases, exculpatory expert sheet-metal worker. However, with favor, they are valid and enforceable agreements, or waivers, all operate to the court found that this event was when clear and unequivocal.” transfer risk.”The court emphasized that reasonably foreseeable and ruled such an agreement must give fair notice against the contractor. Further, in a 2019 case, Stelluti v. and be conspicuous. Casapen d/b/a Powerhouse Gym, the New York’s highest court employed New Jersey Supreme Court awarded Contracting parties may wish to similar reasoning in the 1987 case, summary judgment to a gym in which use indemnity provisions to transfer Kel Kim Corp. v. Central Markets Inc. the member was injured during a cycling risks related to COVID-19, especially in In that case, the court found that the class. However, readers should note situations where the contract terms may defendant’s inability to procure insurance that New York State, under General not be met due to human, financial, or was insufficient to invoke a force Obligations Law 5-326, voids the use operational impacts from the pandemic. majeure defense. The court noted that of liability waivers at pools, gyms, and Such provisions could also transfer “[ordinarily], only if the force majeure places of amusement where the owner exposure for third-party claims. In clause specifically includes the event that receives a fee for use of his facilities. drafting these provisions, the choice actually prevents a party’s performance New York will enforce limitation-of- of law becomes very important. Each will that party’s performance be excused.” liability clauses in service contracts in state interprets indemnity provisions cases of ordinary negligence, but not differently, and, in some instances, there Indeed, a future pandemic might gross negligence. may be anti-indemnity statutes that now be foreseeable, if not in timing stipulate the provision is unenforceable then at least in impact. As the law has Whether such limitation-of-liability or a state may require certain language developed, it is clear that if a party clauses will apply in the COVID-19 be included for the provision to be wants to protect itself from the effects context remains to be seen. One can considered enforceable. of a pandemic, it should specifically envision some state legislatures passing identify it, and any associated laws stating that liability waivers COVID-19 creates new challenges government-mandated quarantines, as related to contraction of COVID-19 with respect to limitation of liability and force majeure events. due to negligence are unenforceable risk transfer. However, some familiar as against public policy. Precedent principles should still apply. Any language LIMITATION-OF-LIABILITY CLAUSES suggests that waivers seeking to protect through which parties seek to limit businesses and limit their exposure liability and transfer risk should be clear, We are accustomed to seeing waivers from liability claims should be clear specific, unambiguous, and conspicuous and exculpatory clauses as a part of and unequivocal, and, if applicable to so that parties can proceed with a clear everyday life. Participants in sports COVID-19, should specifically mention understanding of the risks they assume activities like whitewater rafting, certain requirements, including wearing in an activity, business transaction, or skiing, or skydiving may be required contractual relationship. K to sign liability waivers. Those hiring THECLM.ORG/MAGAZINE CLM MAGAZINE 11

CANNABIS Marijuana’s Road Risks Medical or Not, Truck Drivers Must Say Nope to Dope By Beth Bentley Most truck drivers are impaired limb that might interfere with conditions, there is an even bigger familiar with the the operation of a truck. The section category of medical conditions from screening processes also does not allow medical qualification which a truck driver could suffer required by the if there is an “established medical and still legally operate a commercial Federal Motor history” of some heart conditions that motor vehicle. Carrier Safety could lead to fainting or difficulty Regulations that take place before they breathing, epilepsy, severe high blood Over-the-road (OTR) truck drivers, can be hired by a motor carrier and pressure, diabetes requiring insulin for or the long-haul drivers who often allowed to drive. Among the screening regulation, and a wide range of other spend weeks on the road at a time procedures is the requirement that a general diagnoses—including arthritic, without going home, have a demanding driver be examined by a Department of orthopedic, and muscular diseases—if job. The occupation makes it less likely Transportation (DOT) medical examiner those diagnoses interfere with a driver’s a driver will eat nutritionally, exercise, and given a medical certificate. Section ability to safely operate a big rig. and otherwise maintain a healthy 49 C.F.R. 391.41 generally prohibits lifestyle. In fact, in 2014, the Centers driving for anyone with a missing or While the federal regulations for Disease Control and Prevention cover a variety of problematic medical warned that OTR truck drivers “face a Beth Bentley is an attorney in Swift Currie’s Atlanta office. [email protected] 12 CLM MAGAZINE SEPTEMBER 2020

constellation of interrelated risk factors being physically qualified by a medical law requires a motor carrier to remove for chronic disease” due to the lifestyle examiner if they use any Schedule 1 drivers from operating a commercial they maintain, including obesity, drug. There is no exception when a motor vehicle when they receive a an increased risk of smoking, high Schedule 1 drug is legally prescribed for positive test result. Motor carriers are cholesterol, and lack of adequate sleep a recognized medical reason. also required to report a failed drug and physical activity. test to other motor carriers considering FEDERAL LAWS AND REGULATIONS hiring the driver. None of these conditions by themselves will prevent a truck Section 49 C.F.R. 382.301 requires a HOW MEDICAL MARIJUANA driver from being medically qualified clean controlled-substances test before under the federal regulations, but any motor carrier can hire a driver. CAN AFFECT CLAIMS they will contribute to pain, anxiety, Further, federal regulations require and other symptoms that can force a motor carrier to conduct random Finally, the consequence most certain a truck driver to choose between his drug tests on 50 percent of its drivers, to affect the insurance industry is how livelihood and various methods of and test anytime the motor carrier has a positive drug test, or the discovery controlling the symptoms with which a reasonable suspicion that a driver of a trucker in possession of medical the occupation is plagued, one of might be under the influence or going marijuana after a collision, may drive which is medical marijuana. through withdrawals from any controlled up a claim’s value. If a driver is found to substance. Finally, a commercial have marijuana in his system after a crash ENTER MEDICAL MARIJUANA driver may be required to submit to a and there is evidence that he was acting controlled substances test after a collision, in an impaired manner at the scene, then The use of medical marijuana to treat depending on the injuries, damage, and the chances of that information being these medical conditions and others whether a citation was issued. kept from a jury, or a punitive damages is becoming increasingly popular, claim being tossed out on summary illustrated by the fact that 33 states have The DOT has clarified that state- judgment in a personal injury lawsuit, legalized the use of medical marijuana legalized medical marijuana is not a are significantly reduced. A jury will hear to alleviate symptoms like nerve pain, valid medical explanation for a positive about a truck driver being under the muscle pain, nausea, and other chronic drug-test result, despite the fact that influence of marijuana despite federal or persistent symptoms. the policy of the federal government in law being clear that medical marijuana prosecuting marijuana offenses seems is prohibited, and be asked to award But what happens if a truck driver, to be changing. The bottom line is that punitive damages. who suffers from back pain that is there is no shortage of opportunities severe enough to decrease his quality for a driver to be drug tested, and a However, if a driver is noted to of life but does not interfere with his positive result could mean big problems have no impairment but either has ability to safely drive a commercial for the driver. marijuana in his system or has medical motor vehicle, is legally prescribed marijuana in his possession after a medicinal marijuana to alleviate his For example, the motor carrier collision, a good argument exists that pain in California but is stopped in may have legal grounds to terminate the the evidence should be kept out because Georgia for a delivery? driver, even if the motor carrier is based it was more prejudicial than relevant, in a state where medical marijuana as noted by a federal district court in There is no good result for is legal. In Maine, under the Maine Pennsylvania in Watts v. Hollock. In that a truck driver in that situation. Medical Use of Marijuana Act, 22 case, a toxicology test found marijuana Unfortunately for both OTR and M.R.S. §§ 2421-2430-B (2012), it is in a driver’s system, but the driver local commercial driver’s license illegal for an employer to discipline or claimed he smoked marijuana the night (CDL) holders, marijuana, marijuana terminate an employee for the lawful use before the collision. As there was a lack extract, and tetrahydrocannabinol of medical marijuana. of eyewitness testimony that the driver (THC) are identified by federal law was acting in an intoxicated or impaired and the Federal Motor Carrier Safety But several courts, including courts manner at the scene of the accident, the Regulations as a Schedule 1 drug. in California and the Supreme Judicial court held the probative value of the Schedule 1 drugs are defined by the Court of Maine, have recognized that evidence was substantially outweighed Drug Enforcement Agency (DEA) as federal law trumps state law, and that by its prejudicial effect. having “no currently accepted medical one person’s “right to use medical use and a high potential for abuse,” and marijuana cannot be converted into While truck drivers are more includes other drugs like heroin and a sword that would require another likely to suffer from medical conditions lysergic acid diethylamide (otherwise party…to engage in conduct” that that would be alleviated by medicinal known as LSD). As one might imagine would violate federal law. [See Bourgoin marijuana, using it for relief could lead to based on this definition, the federal v. Twin Rivers Paper Company LLC, headache-inducing consequences brought regulations prohibit truck drivers from 2018 ME 77 (June 14, 2018).] Federal by federal laws and regulations. K THECLM.ORG/MAGAZINE CLM MAGAZINE 13

WORKERS’ COMPENSATION Hazards at Home the lack of preparation created a great deal of uncertainty. Meetings were Mitigating the Dangers of an At-Home Workplace established to put specific precautions By Kirsten Kaiser Kus, Michele Kirkland, and Claire Muselman and standards in place in an attempt keep claims costs down. Since March 2020, life keep their virtual doors open. Court has changed dramatically. settings and depositions have moved to Consider a recent Indiana case. A Everyone is concerned Zoom. One would think this would cause plaintiff was asleep in bed, well after work with COVID-19 claims, the number of workers’ compensation hours, on the date of her alleged injury. but no one is talking claims to decrease significantly; however, The plaintiff placed her cellphone on her about increased work- we have seen an increase in workers’ dresser and went to sleep for the night. from-home exposure. While more and compensation claims in the work-from- She testified that she heard her phone more employers have allowed employees home area. notification ring for a message during the to work from home, the COVID-19 middle of the night, causing her to wake pandemic has forced entire companies to Many employers have found it very up, walk to her dresser, and answer. The close their doors and switch to work- challenging to defend these claims for plaintiff then tripped and fell over her from-home capabilities. Companies a myriad of reasons. Employers were dog, breaking her ankle. The injury was scrambled to transition technology and forced to transition into a work-from- determined to be a compensable claim home landscape without warning, and because the plaintiff said she woke up to answer a work text. This is dangerous territory we are entering if such an action is considered a compensable work activity. Kirsten Kaiser Kus is an Michele Kirkland is a Claire Muselman is the income member and head workers’ compensation unit workers’ recovery unit of Bryce Downey & Lenkov manager at North American director at Continental LLC’s Indiana office. Risk Services (NARS). Western Group. [email protected] [email protected] [email protected] 14 CLM MAGAZINE SEPTEMBER 2020

So what can employers and carriers do Remind everyone that asking for help is not to set better parameters for their staff? Here admitting failure; it is putting the customer are five suggestions to use as guideposts. first to complete the daily tasks at hand. Follow up with your team, workers, and your peers. The need for Create a buddy system. Pair each accounts that she is taking a vacation communication is at an all-time high while person up with another. What you will in advance. Increased communication people search for connection. People are find is that this becomes a helpful way will help put everyone’s minds at ease. no longer in the office and no longer see to keep the team interacting behind More importantly, lead by example. familiar faces with whom to have a quick the scenes. It is often uplifting to have If you take time off, then be truly off. chat in the coffee area. Institutional fatigue someone share that if a teammate needs Employees are always watching. is more apparent, and it is important assistance with a specific task, they can to remember that people need human help. Remind everyone that asking for Any way you look at it, clear interaction to keep their morale up. help is not admitting failure; it is putting communication is critical. Pair your Positive mindsets adapt to change and the customer first to complete the daily connection with compassion and can thrive in uncertain circumstances, tasks at hand. This keeps everyone on understanding for your team. Check which helps build resilience. The best target for their workload, as well as in, ask questions, and do less talking way to convey positive morale is to send preventing undue stress. and more listening. Do not be afraid to a quick text or email to set the day’s change things up and move your staff tone. You may need to discuss the day’s Encourage people to take time off. meetings to Friday. Friday is the best tasks, but what a perfect time to also Institutional fatigue breeds when there day to help send everyone off to start add something positive to let everyone is ongoing instability in an organization their weekends with a smile. If you have know we are all in this together. After during times of uncertainty. When a weekly meeting that everyone calls in all, laughter is the best medicine, and we employees take vacation time, let them to and you are out, keep it scheduled need that interaction as well. unplug and be totally off the grid, as to encourage everyone to discuss recent much as possible. Discuss a “We’ve got wins. Acknowledge that this time When teams are motived and you” mindset to alleviate scrambling impacts each of us in different ways, engaged, it is beneficial to both parties. around after hours. and we are available and approachable Set virtual coffee or social hours to just as we were in the office. With a little check-in and make sure employees’ Keep a team calendar. Alert more care and concern, we can mitigate technology is working appropriately. At the primary contact(s) the person dangers in the at-home workplace. K virtual meetings, ask everyone to turn interacts with daily on any specific their webcams on when possible, and act like it is another day. Keep them motivated with incentives for positive productivity at home. Find humor and laugh together. One of the best ways to build camaraderie during times of uncertainty is to unite on common ground. No makeup? No worries. Children in the background of your meeting? Let them say hi. Pets walking across a keyboard? Introduce them. The more human we can become during times of stress, the more we increase our empathy and ability to collaborate and work together during what comes next. Set parameters for work hours for the staff. Have your team keep a log of the items they work on daily if they do not have a system to track them. Some systems can see user activities for time on/offline. Anything noticed after “office hours” should be discussed promptly and discouraged in a firm but caring manner. Encourage work/life balance. THECLM.ORG/MAGAZINE CLM MAGAZINE 15

LITIGATION MANAGEMENT Rules of the Road would be sufficient and appropriate to use if you were to read them aloud to Five Tips for Successful Claims and Litigation Management provide someone—a co-worker or third By James McKeown party—with the picture or snapshot. W hen it comes external hard drive for what should be in To pull these functions together into to claims our brain, or central processing unit (CPU), a succinct image, claims notes should and litigation and we format them in a way that speaks be written with the assumption that management, the to our internal hard drive. someone other than you is going to be specific “rules of reading and explaining them to a third the road” likely However, claims notes are party while a stenographer dutifully takes depend on the individualized experience of multifunctional. First, the notes should notes. If you keep this in mind, then the the claims or litigation manager. However, reflect a picture or snapshot—the multiple functions of the claims notes will there are several general rules we can proverbial who, what, when, where, be present in your brain or CPU. examine that are critical to success: and why. Second, they should provide sufficient detail so that the picture can 2. No surprises, please. When 1. Write your claims notes like you be gleaned by multiple people, including it comes to birthdays and holidays, may get abducted by aliens on the way to co-workers and potential third parties. surprises are great. In the litigation or your deposition. We all take notes in a way It is not enough that the notes conjure claims management arena, though, that speaks to us, which makes sense. From the picture in your head because you surprises evoke vastly different emotions grade school, we are told to take notes so may not be available when the notes are for the recipient, including consternation that we will be able to reference and recall consulted, analyzed, or critiqued. Lastly, and dismay that may be directed at the the information later. The notes act as an the notes should be written in a way that situation, the messenger, or both. To understand these emotions, consider where they come from. The first belief is that someone was not tracking or watching what was unfolding. Second, James McKeown is a director at Maron Marvel Bradley Anderson & Tardy LLC. [email protected] 16 CLM MAGAZINE SEPTEMBER 2020

even if someone was keeping track, the there may be a certain amount of It should come as no surprise, then, that belief may be that he did not take the time creativity someone is willing to exercise in different individuals may view a claim or to communicate effectively and efficiently. order to be effective. Lastly, the amount litigation in completely different ways. Third, the belief is there are now fewer of positivity and optimism toward options on the table than there would reaching the goal or outcome may allow With that in mind, if there is have been had this surprise not sprung you to recognize the strength of certain only one person analyzing a claim or forth. Fourth, the recipient is going to need arguments, facts, or issues and to remain litigation, there is going to be a singular, as much information as possible regarding steadfast in the face of opposition. narrow focus. If this situation persists, how this surprise arose, because now then the claim or litigation management he will have to be the messenger of the But the investment in a claim or may continue in a myopic fashion. The surprise up the chain of command. Lastly, litigation can also cause an inability to lack of diverse viewpoints in analysis and perhaps most importantly, there will see or appreciate certain weaknesses, as can foreclose potential strategies, be the belief that other surprises are right well as a loss of objectivity. In economics, expectations, and potential resolutions. around the corner. there is something called the “sunk cost Therefore, it is important to have fallacy,” which supposes that people will multiple eyes on a claim or litigation. 3. Manage expectations. Effective sometimes continue with an endeavor communication can provide an accurate only because they have already invested Another reason for allowing diverse depiction of a claim or litigation’s status so much. Recognizing and appreciating viewpoints is to allow the possibility so that appropriate expectations can a claim’s strengths and weaknesses for ideas to be challenged and, perhaps, be made, maintained, and managed. is paramount. It is appropriate to be heightened by a collaborative process. For example, if the claim or litigation positive and passionate, but emotions There is an old saying that “iron appears from the outset to have a need to be tempered with educated sharpens iron”—individuals can make certain trajectory, then it is important assessments and practicality. each other better. It is through a diverse to communicate it in a timely and and collaborative process that not only effective manner. This will set the 5. There is no “I” in team, but there can the management of claims and expectation moving forward, thus is one in “myopic.” We all receive and litigation be maximized, but also the establishing the baseline. If there is a appreciate information in different ways. managers themselves. change that affects the trajectory, then One person might feel that a particular it is important to communicate how the piece of art evokes happy emotions The above rules are by no means trajectory changed in order to manage for them, while the another person exhaustive. Every claim or litigation expectations moving forward. perceives sad ones. In other words, we manager has their own set of rules or bring our individual experiences and suggestions. The hope is that these rules are To be clear, the management viewpoints to everything we interpret. helpful and will lead to a successful claims of expectations comes down to or litigation management practice. K communication, since effective communication helps avoid dissatisfaction with the result. Expectations are formulated based on what has happened in the past and the impact those events may have on the future. The more timely and accurate the communication, the quicker the expectation can be managed. 4. Don’t kid yourself. Whether in stocks, businesses, or real estate, we all are susceptible to showing a high level of fondness for things we invest in. Additionally, it often seems like the more we invest, the more the fondness grows. This dynamic has certain benefits, including a desire to persevere and a passion for both the work and the desired goal. In litigation and claims management, this feeling may manifest itself in the amount of time someone is willing to put into the claim or litigation. Additionally, THECLM.ORG/MAGAZINE CLM MAGAZINE 17

An aerial view from a drone shows a home surrounded by water after being damaged by Hurricane Laura on Aug. 27, 2020. PHOTO BY JOE RAEDLE/ GETTY IMAGES 18 CLM MAGAZINE SEPTEMBER 2020

The Edge of Disaster What Can Past Hurricane Seasons Teach Us About 2020’s Challenges? By Taylor Davis The global pandemic and the to-10 of which they thought could become associated issues that 2020 has hurricanes, and three-to-six of which could brought, ranging from health risks become major hurricanes (Category 3, 4, or and social distancing to economic 5). We saw the first of these at the end of July strain and supply-chain difficulties, with Hurricane Hanna—the earliest eighth- have framed a year unlike any other. named storm of any season on record—and Insureds and claims departments alike the second with Hurricane Isaias—the earliest are dealing with a host of unprecedented ninth-named storm—which spawned 38 concerns and challenges. tornadoes. Most recently, Hurricane Laura made landfall in Louisiana as a Category 4 On top of all that, this hurricane season hurricane with 150 mph winds—one of the will present some unique considerations most powerful storms ever to hit the U.S. when it comes to handling property insurance claims. How will adjusters travel IMPACT ON PROPERTY CLAIMS to loss locations? Where will they stay when they arrive? And once they do get there, Although many of the challenges the industry will they be able to gain access to damaged faces this year are unique and unprecedented, properties safely while abiding by social- the experience of past hurricane events distancing protocols? provides some guidance as to what we can expect from this season. A number of Amid all of these open questions, the major named storms over the past several most challenging months of a hurricane years have presented lessons that may be season are upon us. Early indications were relevant to the current situation. Here are that this season was going to be an active some examples of key issues that emerged in one, and that has largely proven true. For the litigation over recent storm seasons. first time on record, dating back to 1850, the Atlantic hurricane season produced more The “HIM” Hurricanes. Beginning than seven tropical systems before August in August 2017, three major hurricanes 1. This is more than the number of tropical hit the U.S. within a month’s time: first storms produced by the same date in 2005, Hurricane Harvey, then Hurricane Irma, the season that brought us Hurricanes then Hurricane Maria in rapid succession. Katrina, Rita, and Wilma. The National Combined, these three storms were Oceanic and Atmospheric Administration partially responsible for making 2017 the (NOAA) forecasted 13-19 named storms, six- most expensive year on record for U.S. THECLM.ORG/MAGAZINE CLM MAGAZINE 19

The Edge of Disaster disasters. NOAA reported that overall and named storm provisions in first- made since the policy’s inception, and damages for Hurricane Harvey topped party property insurance policies. there is no coinsurance penalty or limits $125 billion, and Irma and Maria are not capped at scheduled values, caused $50 billion and $90 billion in First, hurricanes and other then the insured may seek damages total damages, respectively. windstorms frequently involve damage far in excess of what may have been due to storm surge, which is essentially anticipated at the time of binding. Many of the insurance-specific an abnormal rise in sea level caused by challenges presented by these three the offshore winds of a severe cyclone. As Failure to protect property and hurricanes were centered on assessing Superstorm Sandy-related litigation has mitigate damages. It stands to reason that damage quickly. The delay in being highlighted, parties have disagreed over storm-related damages may be worse able to access damaged properties, whether storm surge damage was caused this year than in years past because of and the short period of time between by the perils of flood, wind, or both. the unique circumstances presented by storms, in some cases, created issues This has led to a debate in courts across the pandemic. In the last few months, for insureds in segregating damage, the U.S. over whether flood exclusions, many businesses have switched to especially in the case of properties deductibles, and sub-limits apply, or a work-from-home model, leaving with multiple claims. Even without whether wind-related provisions apply commercial properties vacant. With a the risk of back-to-back storms, the to such losses. With Superstorm Sandy, lack of personnel on site, some of the longer it takes to get adjusters on site, as with Hurricanes Rita and Katrina usual hurricane preparation activities— the more a property’s condition can before it, the question of whether damage boarding up windows, applying storm change, potentially making it harder to was caused by flood or by wind had a shutters, sandbagging—may not be top of assess the extent of the damage. significant impact on how certain policies mind or may not be feasible due to illness responded to claimed losses. or incapacitation this year. In the 2020 hurricane season, we are likely to see many of the same Second, some commercial property Many smaller businesses have issues that the “HIM” storms presented. policies contain a named-storm closed down completely, which raises This time, COVID-19 may present definition and provisions that apply questions about whether the insureds the challenge of getting field adjusters specifically to named storms. These are both willing and able to protect their on site primarily due to factors such definitions vary widely in terms of their now-empty properties. If a property as quarantine requirements, fewer language. Some include tropical storms experiences water-related loss, will the travel options, social distancing, and and cyclones, whereas others are limited insured take immediate steps to prevent other health and safety factors. But the to hurricanes. It is important to pay mold growth? If not, and mold growth issues associated with gaining access to close attention to the exact wording of ensues, will that damage be covered? property to inspect damages are much the definition, as the mere fact that a A policyholder’s failure to mitigate the same. It’s important to note that the storm has a name does not necessarily damages may impact coverage, damages, Atlantic hurricane season is long—June make it a “named storm,” as defined in a or both. Perhaps the policy excludes through November—and the impact of given insurance policy. losses to vacant properties. As with most storms is not limited to the Gulf Coast. losses, the policy language remains of Recall that 2012’s Superstorm Sandy NEW LESSONS TO LEARN critical importance in these situations. made landfall in the Northeast in late October, which also happens to be the Claims resulting from Hurricane Laura Claims technology advances. beginning of traditional flu season. As and future storms this season will no The insurtech industry has brought COVID-19 hot spots shift throughout doubt present a number of new lessons countless new technology capabilities the country and states create their own for the insurance industry. While no one to the insurance industry as a whole in laws in response, we may see increases has a crystal ball, here are some key is- recent years, and the claims process is no in the number of states where adjusters sues to watch in 2020 and beyond. exception. Some of these options may will have to quarantine before they can prove quite useful this hurricane season. enter a state to inspect damage. Potential change in risk due to property improvements. In some For instance, advancements in Superstorm Sandy. Speaking of industries, most notably the food-service satellite imagery and drone technology Superstorm Sandy, readers will recall industry, business owners have made have made it easier to assess damage that when it swept up the East Coast, significant changes to their properties from a safe distance, which could it left over $70 billion in damages in its in recent months, such as adding both reduce in-person interaction and wake, according to NOAA. A late-in- outdoor space or additional windows aid in managing claims efficiently. the-season nor’easter/hurricane hybrid, to ensure proper air flow and adequate Though the need will still exist for Superstorm Sandy created not only social distancing. This may mean that in-person site visits for some losses (in extensive property damage, but also a the risk has materially changed since which case proper personal protection legacy of issues related to flood, wind, it was underwritten. If a property is equipment, social distancing, and underinsured because of improvements minimized interactions are all important 20 CLM MAGAZINE SEPTEMBER 2020

The Edge of Disaster considerations), technology may be one 2020’S LEGACY? challenging. But previous storms offer way to lighten the load. Hopefully, these insights to help us weather the coming innovations can reduce some of the Forecasters at NOAA’s Climate Predic- season and pinpoint key issues that accessibility challenges experienced in tion Center predicted in May that 2020 may arise. What will the lasting legacy the wake of the “HIM” hurricanes. would likely be an above-average hur- of this hurricane season be? We’ll have ricane season, and so far, that predic- to wait and see. K Valuation and other damages tion has proven accurate. For com- considerations. As we enter the final munities already struggling with the Taylor Davis is partner at Clyde & Co three months of the 2020 hurricane impact of COVID-19, the effects of a (Atlanta). [email protected] season, business owners and severe storm are likely to be even more homeowners alike are already stretched financially, and this raises the question CATASTROPHE whether some insureds will attempt to SERVICES be creative with their claims in order to improve their cash flows. Claims EASY AND IMMEDIATE ACCESS TO MOBILIZE CATASTROPHE TEAM handlers now more than ever will need to be vigilant about making sure that PROVEN EXPERIENCE IN claims are investigated, measured, and adjusted appropriately. All types of Property Losses since 1962 Residential, Commercial and Catastrophic Claims With past hurricanes, there have been massive aid packages from the Nationwide 24 Hour Custard HOTLINE government and recovery from the Federal Emergency Management Agency 1 888 CUSTARD OR 1 800 457-3390 (FEMA). Although such recoveries are often conditioned upon exhausting www.custard.com find us on private insurance first or reimbursing the government if a private insurer pays the claim, carriers will want to satisfy themselves that insureds are not seeking a windfall—that is, seeking to recover for the same damages from multiple sources, often called double recovery. Finally, given the current economic environment, there is the question of whether certain insureds will even want to rebuild. Generally, policies provide for both actual cash value (ACV) and replacement cost value (RCV) under different circumstances. Under typical valuation provisions, to recover the RCV, an insured must repair or replace damaged property within two years of the date of loss. If they fail to do so, then recovery is generally limited to the ACV, which is usually lower because it takes into account depreciation. Normally, insureds seek to repair the damage and recover the RCV, but in a time when businesses are struggling to stay afloat, some insureds may prefer to “take the money and run.” Whether this will make a noticeable difference in overall payouts remains to be seen, but it certainly seems plausible that more covered claims will be limited to ACV than in previous years. THECLM.ORG/MAGAZINE CLM MAGAZINE 21



The Blame GameDISABILITY ACCOMMODATION EDITION The employee brought suit, claiming violations of the Predicting Verdicts in Cases Americans with Disabilities Act. The plaintiff’s counsel argued Involving Injured Employees that the accommodation was not unreasonable and would not have compromised safety, contending at least one other maintenance facility in Texas had a mascot dog that was allowed to freely roam the facility, and that the company had TBy Teresa Beck full access to medical records to confirm the disability. his edition of The Blame Game addresses The employer argued that the employee did not provide a topic that is on the rise as baby boomers come closer to retirement, and vast numbers complete information on either his PTSD diagnosis or the of aging workers begin experiencing need for accommodation, but the company granted the age-related disabilities: requests for accommodation anyway, albeit with restrictions. The company claimed that allowing a dog in the facility posed a safety risk, and that restrictions placed on the accommodation were reasonable, necessary for business operations and employee accommodation. We recently searched for safety, and were not punitive. jury verdicts that involved disability accommodation, and we As far as damages go, the employee claimed the have compiled a few cases so that you can test whether your restrictions placed on the accommodation made it more assessment of disability-accommodation claims is on point with difficult for him to perform essential job functions and caused verdict outcomes. additional stress. Also, company management denied him the As you review each case, consider the probable outcomes. opportunity to work overtime due to the accommodation. Will the particular disability affect the outcome? If so, how? The employee sought $5,400 for past lost income, $30,000 Should the case end in a plaintiff or defense verdict? If you for emotional distress, and an unspecified amount for punitive expect a plaintiff verdict, how much do you predict the verdict damages. It appears no claim for future lost income was made. will be? Are punitive damages a risk? Joining the discussion is Flavia Pemberton, vice president, environmental claims, for EVALUATION AND VERDICT: “A former Marine with PTSD in Ascot Group, who will chip in and share her assessment of the Texas may be very sympathetic under these facts,” says Pemberton. outcome of each case before the actual verdict is revealed. Let’s “I expect the total verdict was likely close to $100,000.” play The Blame Game! Pemberton’s estimate was spot-on. After a four-day trial and 14 hours of deliberation, the five men and three women jurors found CASE ONE: EMOTIONAL SUPPORT IN TEXAS for the employee. The jury awarded $5,400 for past lost earnings, Our first case was venued in the U.S. District Court, Western and $23,200 for past pain and suffering. Since the jury found that District of Texas, in San Antonio, and involved a worker who the employer had specifically violated the ADA, and the ADA wanted to bring his emotional support dog to work. The allows for attorney fees, the employee’s attorney is likely to receive plaintiff, a mechanic technician for a technology company who attorney’s fees that total several times the amount of the award. worked in a maintenance facility, had a severe panic attack at work. He had served three tours of combat duty in Iraq with CASE TWO: DISABLED EMPLOYEE IN NEW JERSEY the U.S. Marines and was diagnosed with post-traumatic stress Our second case comes from Mercer County Superior Court in disorder (PTSD). When he returned to work after the panic New Jersey. The plaintiff, an administrative specialist in her early attack, he asked to bring his service dog with him because the 30s, had been working for the state agency for several years. She dog created a general calming effect and helped prevent him fractured her ankle, which resulted in her developing complex from feeling crowded or startled. The company granted the regional pain syndrome. After being out of work for months, accommodation but placed restrictions, including requiring the the employer created a sedentary job for her, and the employee employee to use a side door and barring the dog from the office returned to work in the accommodated position. Before starting area, locker room, and break room. the accommodated position, and then again a week after, the THECLM.ORG/MAGAZINE CLM MAGAZINE 23

The Blame Game employee met with the employer’s ADA during the fire drill, but she declined it. in future lost earnings, lost pension coordinator to discuss limitations. A Within days of the fire drill, the benefits, and health care costs. The doctor’s note said the employee could not employee testified that the fire drill flee from a dangerous situation and that employee presented to her physician with significantly increased her pain, which walking could exacerbate her condition. a new onset of pain in her upper left thigh, caused sitting in a chair or in a car, lying left hip, rib cage, and left shoulder blade. down, or standing for long periods to A few months later, during a fire drill, She had already been treating with pain be extremely painful. She claimed she is the employee attempted to use an elevator management for her complex regional pain unable to sit upright for more than two but was told by her supervisor that she had syndrome. In the following months, she hours without feeling excruciating pain. to use the stairs. The employee struggled received additional treatment, including down the stairs with her supervisor behind physical therapy and pain management, The defense questioned whether the her. In the middle of the second of five which consisted of nerve-block injections, employee was as injured as she alleged. staircases, she told the supervisor to go ketamine infusions, and pain medication.At The employer played surveillance around her. He did so despite seeing that the time of trial, the employee alleged that video in which the employee was seen she was in obvious pain. The employee the new onset of pain caused her to suffer driving a car, dancing at her wedding, eventually made her way down the five psychiatric injuries, including depression. and climbing stairs to attend a church flights of stairs and outside the building. A psychiatrist prescribed antidepressants, service on Easter—all in the year in and she was eventually hospitalized for which the case went to trial. The defense According to the employee’s psychiatric treatment, where she underwent expert in neurology, who examined the counsel, evidence showed that the electroshock treatment. The employee’s employee, acknowledged her complex employer acknowledged the staff had expert in neurology causally related her regional pain syndrome and associated not been properly trained to address a exacerbation of complex regional pain limitations, but disputed that the staff member with physical limitations syndrome to the fire drill and concluded the fire drill exacerbated her condition. during a fire drill. The employer exacerbation was permanent in nature. The defense expert in employability contended the employee was not as determined that despite her physical disabled as she claimed, and that she The employee alleged that she limitations, she was able to continue never informed the employer she was was unable to return to work with working in her job or a similar unable to walk down stairs. The defense the employer, who terminated her sedentary-type position. The defense further argued that, since exiting the employment eventually, and that she expert in economics testified that the building is not an essential function was permanently disabled. The plaintiff’s employee actually sustained $465,000 of her job, the employer had no duty expert in economics testified that the in back pay, which was more than her to accommodate her. Additionally, employee sustained $389,281 in back economist had calculated. (Likely not assistance was offered to the employee pay and approximately $4.1 million a good sign for the defense!) However, the defense contended that given EVERY ASPECT OF For 27 years, Judicate West has been a the employee was able to work, she THE ADR EXPERIENCE sustained no future lost earnings. premier dispute resolution provider on the THOUGHT OF AND EVALUATION AND VERDICT: “The THOUGHT THROUGH. West Coast, offering services Nationwide. case has a value of up to $2 million, assuming the plaintiff makes a good When selecting us you can expect: witness,” says Pemberton. It appears this plaintiff did make a good witness, as • Well respected, talented neutrals including former the employee was awarded $1.8 million state and federal judges and skilled attorney after an eight-day trial. The court also mediators & arbitrators available nationwide. awarded $606,000 in counsel fees and court costs in favor of the employee, so • Virtual Mediation Days for speedy and economic this award exceeded $2 million once resolution of pre-litigation and litigated matters. these are factored in. • Innovative solutions including: Jury MediationSM, CASE THREE: TEACHING Discovery Mediation, Private Jury Trials, Med-Arb and user-friendly Commercial Rules for Arbitration. A LESSON IN FLORIDA • Case consultants, each with over 20 years of Our third case comes from Palm Beach experience in helping you select the right neutral for County Circuit Court in Florida. The even the most unique case and a dedicated staff of ADR plaintiff, a 57-year-old teacher, was fired professionals consistently exceeding your expectations. from her job with the defendant school 800.488.8805 WWW.JUDICATEWEST.COM Downtown Los Angeles | Sacramento | San Diego | San Francisco | Santa Ana | West Los Angeles 24 CLM MAGAZINE SEPTEMBER 2020

The Blame Game district and sued for violation of a state emotional distress. She sought to recover discrimination, making internal complaints whistleblower act, retaliation, failure to damages for lost wages and benefits, and of discrimination, and requesting a accommodate, and wrongful termination. mental pain and anguish. reasonable accommodation. The jury also The employee, a teacher since 1978, found a reasonable accommodation existed contended that the school district began The defense argued that the school that would have allowed the employee to retaliating against her after she reported district had nothing to do with the revocation perform the essential functions of the alleged unethical hiring practices and of the employee’s teacher certification, citing job, and that the school district failed to health violations at schools. She claimed an outside agency independent of the school provide a reasonable accommodation. to have a pulmonary condition, and said district that rendered the decision.The school As such, the employee is likely to be able she was reassigned to a dusty, termite- district also argued that the employee was not to recover attorney’s fees, which would infested portable trailer classroom entitled to lost wages and benefits because her render this a verdict approaching or following her whistleblower charges. The termination was based on a legitimate reason. exceeding $1 million. employee claimed that the school district was aware she had asthma, and that EVALUATION AND VERDICT: “This Overall, in these cases, the the room aggravated it; she requested a case could have significant value if the attorney’s fees awarded after a verdict transfer to a different classroom but the teacher makes a good witness, and this often paled in comparison to the net district refused to accommodate her. She case is hard to estimate without an judgment. When combined with the was later suspended for 10 days without assessment of the impression the plaintiff payment of fees to defense counsel, these pay for sending inappropriate emails. The makes as a witness,” says Pemberton. cases suggest more effort can be made employee claimed she merely sent emails “With that said, if the plaintiff makes toward early dispute resolution. Yet, to co-workers and school administrators a good witness, then the verdict could defense verdicts are still possible, and with words highlighted in caps. exceed $1 million.” in the right cases, when the employee continues to work for the employer, The school district denied all of the After a seven-day trial, the jury failure to accommodate cases may be allegations. The defense claimed that deliberated for just 90 minutes. The harder to prove. K the school district offered to reassign employee was awarded $337,000, the employee to another classroom but which included $265,000 for lost wages Teresa Beck co-chairs the California she refused, and that there were more and benefits, and $72,000 for pain and teachers than available classrooms. Also, suffering. Notably, the jury found that litigation practice and chairs the the employee only spent four weeks in the school district did not terminate the the classroom that she claimed was dusty employee because of her disability, but Arizona litigation practice at Buchanan, and termite-infested. The defense further that the employee engaged in activity claimed that the employee was suspended protected by the law by filing charges of Ingersoll & Rooney. She was also CLM’s for insubordination, unprofessional conduct, ethical misconduct, and misuse 2018 Outside Counsel of the Year. of district technology. The defense claimed that the employee had a history going back [email protected] as far as 10 years prior of sending bullying and harassing emails to fellow employees as YOUR TALENT PARTNER . well as administrators, and that she misused SHOULD KNOW district technology, including telephone voice messages, to harass and threaten We do. In today’s competitive market, people are the fellow employees. The defense claimed that real differentiator. Partner with an executive search and the employee was ultimately terminated for staffing firm who knows what success means for you. Let us sending abusive, vitriolic, and threatening connect you with the top insurance talent necessary for success. emails, and her termination was based on a legitimate, non-discriminatory, and non- +1 (800) 466-1578 | jacobsononline.com retaliatory reason. Addressing damages, the employee claimed that her teacher certification was taken away as a result of her termination. She claimed that she suffered aggravation of a pre-existing asthmatic condition while teaching in the dusty classroom, which also caused THECLM.ORG/MAGAZINE CLM MAGAZINE 25

SPONSORED CONTENT LEADING OUT LOUD CONSTRUCTION HOW ARE NEW “GREEN” CONSTRUCTION TECHNIQUES INFLUENCING CLAIMS AND LITIGATION? HAS COVID-19 HAD ANY IMPACTS ON THE INDUSTRY? AND WHAT LITIGATION TRENDS ARE COMING INTO FOCUS WHEN IT COMES TO CONSTRUCTION-RELATED DISPUTES? GREEN BUILDING AND OTHER assurance/control, as well as strict WITH RESPECT TO CONTRACTS TECHNIQUES, SUCH AS construction conformance is essential. THAT MAY NOT BE ABLE TO BE BUILDING TALLER WITH WOOD Builders need to work directly with the FULFILLED. HAVE YOU SEEN ANY CONSTRUCTION INSTEAD OF manufacturers’ representatives and DEVELOPMENTS ON THAT FRONT? STEEL, ARE STARTING TO technical staff to ensure that they BECOME MORE POPULAR. HAVE are properly designing and installing JOHN McCLURKIN, VERNIS & YOU SEEN ANY CLAIMS OR the wide variety of green products BOWLING: Alabama’s COVID-19 LITIGATION TRENDS EMERGING IN flooding the market. shut-down period was relatively short THIS AREA? compared to other states, and a lot JOHN MCCLURKIN, VERNIS & of construction projects here were DAN DUCOMMUN, MC BOWLING: The primary challenge we deemed “essential” and permitted to CONSULTANTS INC. : Yes, multiple have faced in Alabama with regards continue during lockdown. However, green roof litigation failure claims to the few green building-related I anticipate that there will be some have become forensic consulting claims and investigation thereof is the litigation down the road primarily assignments for our experts. In recent lack of qualified and knowledgeable relating to contractual issues as a years, our national consulting team professionals to assess causation and result of COVID-19 delays. I anticipate has also been involved in providing fault. This makes investigating and the primary contractual disputes forensic expertise related to product resolving green building claims difficult. will focus on standard force majeure failures specific to green building As green building becomes more and liquidated damages provisions products and applications. Building commonplace over the next few years of contracts involving projects that codes have been evolving with respect due to expected increased demand for did get delayed. It will be interesting to the use of wood in mid-rise projects green building by consumers, the legal to see how the courts in Alabama as well as the green movement. trends and related risk management interpret these clauses in relation to Excessive shrinkage (differential protocols will follow suit, along with the the pandemic and whether the courts movement) can have an adverse increase in qualified experts. qualify the COVID-19 shutdown as an effect on the structure, MEP systems, “act of God.” and other building components, so WHEN COVID-19 BEGAN CAUSING consideration should be given to SHUTDOWNS, THERE WAS DAN DUCOMMUN, MC incorporate flexible joints, minimum SPECULATION ABOUT HOW CONSULTANTS INC.: There have gaps, and expansion/slip joints into STALLED/DELAYED PROJECTS been delays in supply chain and the design. More than ever, proper MIGHT IMPACT THE CLAIMS staffing. However, construction design by the design team, quality LANDSCAPE, PARTICULARLY projects appear to be moving forward “BUILDERS NEED TO WORK DIRECTLY WITH THE MANUFACTURERS’ REPRESENTATIVES AND TECHNICAL STAFF TO ENSURE THAT THEY ARE PROPERLY DESIGNING AND INSTALLING THE WIDE VARIETY OF GREEN PRODUCTS FLOODING THE MARKET,” SAYS DUCOMMUN. 26 CLM MAGAZINE SEPTEMBER 2020 Advertorial

SPONSORED CONTENT “WE ARE FINDING THAT THE PARTIES, ATTORNEYS, AND CARRIERS ARE MORE APT TO ATTEMPT EARLY NEGOTIATIONS INFORMALLY ON THE FRONT END, KNOWING THAT THE TIMELINE FOR A TRIAL WILL BE MANY MONTHS—IF NOT YEARS—AWAY DUE TO THE COVID-19 SHUTDOWN,” SAYS MCCLURKIN. as usual with added safety and social goal of resolving the underlying claims, MC experts and consultants have distancing protocols in place. As downstream indemnity claims, and witnessed, typical mediation strategies mentioned, construction companies coverage matters within the mediation have not significantly changed. There are considered an “essential” process rather than undergo the are still “rooms” set up so the mediator business. From what our national expense and uncertainty of a long, can get to the facts without having to consulting teammates have seen and complex trial. This trend has continued compromise any animosity between heard, construction has not been in 2020. As for smaller commercial and the experts. Expert meetings and significantly affected by COVID-19. residential projects, we are finding that depositions are all moving forward In fact, many home improvement the parties, attorneys, and carriers are via teleconference, Zoom, or similar construction companies are having a more apt to attempt early negotiations virtual applications. The use of Zoom record-setting year. informally on the front end, knowing to present and communicate precise that the timeline for a trial will be many details of a construction-defect case WHAT ARE YOU SEEING AS months—if not years—away due to is a considerable improvement over FAR AS MEDIATION VERSUS the COVID-19 shutdown and resulting the previous method to present via LITIGATION TRENDS WHEN backlog of trial dockets throughout multi-slide PowerPoints. Small exposure IT COMES TO RESOLVING the state of Alabama. I expect these claims are still arbitrated in person CONSTRUCTION-RELATED trends to continue in the foreseeable with social distancing and personal DISPUTES? HAS THERE BEEN ANY future, until the courthouses can protection equipment requirements in SHIFT IN THESE TRENDS OVER function fully and conduct jury trials place. The “Zoom Boom” is changing THE PAST YEAR? again efficiently—assuming that day the litigation landscape; many find ever comes. this process to be very convenient, JOHN McCLURKIN, VERNIS & too, which leads to the possibility of it BOWLING: In almost all lawsuits DAN DUCOMMUN, MC becoming the new norm. We embrace involving large commercial projects CONSULTANTS INC.: Most claims the evolution of technology and how it and many parties, the attorneys and appear to be moving forward despite can best support the forensic expert’s carriers work towards a mutual end courthouse closures. From what litigation delivery process. K Dan Ducommun is president and CEO of MC Consultants Inc. John McClurkin, Esq., is managing attorney at Vernis & Bowling [email protected] (Mobile, Ala.). [email protected] Advertorial THECLM.ORG/MAGAZINE CLM MAGAZINE 27



AN ASSAULT Luke Skywalker: “I won’t fail you. I am not afraid.” ON BUSINESS- Yoda: “You will be. You will be.” (“The Empire Strikes Back” – 1980) INTERRUPTION COVERAGE IS IN THE By now it’s been well-established that 2020 has been a bit of a letdown. The MAKING. ARE YOU process of “lawyering” has been turned upside down and has needed to be READY TO DEFEND? reimagined at the same time. We have gone from crowded courtrooms to buffering Zoom internet rooms. Our hands burn from too much sanitizer. Our dogs tend to bark at the worst times during conference calls. On the upside, however, it is a lot of fun to wear a mask into a bank. So, in the age of COVID-19, why am I quoting Luke Skywalker and Yoda? We know that a Jedi uses the Force for knowledge and defense and never for attack. In the world of insurance, it is our colleagues on the plaintiffs’ side who pride themselves on being on the “attack” for the recovery of funds or damages. Absent of any federal protection from COVID-19 claims, my sources are telling me to rest assured that they are planning their litigation assault on business-interruption policies by unleashing squadrons of coverage actions. For those who may have never been involved with lead paint claims, asbestos litigation, or any other toxic-tort matters, the same financially motivated factors are at play by plaintiffs’ counsel to create coverage under business-interruption polices. If you spend time talking to plaintiffs’ counsel, it quickly becomes evident that they view COVID-19-related claims—especially business-interruption claims, no matter the odds—as a delicious legal sirloin steak that is too tasty to pass up. But policyholders are losing COVID-19 business-interruption claims, right? Not only are plaintiffs’ counsel losing these cases, but also they are being routed across the country, right? They are in full retreat, correct? Well, not exactly. If you are listening to the rebel outposts, you will hear that they are in full “regroup” mode with new cases to come. We know the basic concepts when it comes to COVID-19/business- interruption coverage litigation. There is a myriad of complex articles by very accomplished practitioners that detail the full history of business- interruption coverage, the virus exclusion, the development of ISO forms, and all the coverage actions that have followed. Suffice it to say, this piece will not be one of them. THECLM.ORG/MAGAZINE CLM MAGAZINE 29

WHEN PLAINTIFFS’ COUNSEL STRIKE BACK A NEW HOPE attorneys,” they might say, “are not must now clearly show “direct physical skilled in coverage matters and did not loss” to covered property and also For our purposes, it is important to note ‘tee up’ the coverage claims properly like overcome the virus exclusion. So how will that policy language excluding claims for us plaintiffs’ counsel coverage ‘masters’ you address these epic tasks in a coverage the loss of business income due to the would.” However, these so-called action? (C’mon you’re better than that.) occurrence of a “virus” was developed due unskilled personal injury attorneys have to the SARS outbreak back in 2006. At its done a tremendous service for plaintiffs’ First, you bring action in the most root, the basic coverage principle is that counsel, as they now have seen and unpredictable jurisdiction you can find business-interruption insurance is triggered understand the legal mountain that they that also has the most favorable state by “direct physical loss or damage” to must scale in order to create coverage. laws for policyholders. Second, you try covered property under a subject policy. to find weaker business-interruption However, this coverage may be excluded According to published reports, policies that may contain language if the “loss or damage” was caused “by there are over 700 pending COVID-19- that can be exploited, and then try to or resulting from any virus, bacterium, related business-interruption lawsuits in push the bad decision as far as the state or other microorganism that induces or the U.S. It is not surprising that many appellate courts will allow. is capable of inducing physical distress, of the outcomes have gone the insurers’ illness, and disease.” It also should be way. As recently as Aug. 13, 2020, To be sure, this isn’t some Force noted that not all policies contain the same a federal judge in Texas dismissed a prophecy subject to interpretation; precise coverage language and exclusions, business-interruption coverage lawsuit this approach to litigation is on the which could account for different premised on a governmental shutdown horizon like the twin suns of Tatooine. outcomes in future litigation. of barbershops due to the coronavirus. On Aug. 12, 2020, a Missouri federal In this Texas case, the court sympathized judge refused to dismiss a COVID-19- If you tried to present this general with barbershop owners, finding that the related business-interruption lawsuit policy language to plaintiffs’ counsel, businesses certainly had suffered losses. on a motion to dismiss. While the court however, they would probably say, “Yes, However, the court concluded that did not pass on the ultimate merits there are coverage hurdles to climb, there was no coverage due to “no direct of the case, the judge found that the but we are only one judicial decision physical loss [under the subject policy], “presence of COVID-19” is not a away from cracking open a new line of and even if there were direct physical “benign condition,” and also that the financial recovery and legal fees.” loss, the virus exclusion applies,” which plaintiffs—a group of hair salons and would bar the claim. restaurant owners—may claim that the Upon further probing, plaintiffs’ virus attached to and damaged their counsel would say that the initial Based on the forgoing, if you are a property, rendering them “unsafe and coverage lawsuits were brought plaintiff’s counsel, you know that you unusable.” No matter how preliminary by personal injury lawyers. “These this decision may be, this result on the motion to dismiss was widely welcomed WE SALUTE THE INDUSTRY by the other side and served to create a disturbance in the Force. THAT MOVES AMERICA PATH TO THE DARK SIDE PERKINSFIRM.COM/RAPID-RESPONSE Now that we have set up the parameters (318) 222-2426 Mark Perkins of legal issues, let’s look a little deeper into what we can anticipate from future coverage actions. Initially, it is critical to note that plaintiffs’ counsel are urging their clients to get policy determinations early on from an insurer. Once a proof of claim has been submitted, plaintiffs’ counsel are routinely anticipating denial letters, which they use to commence lawsuits in as many questionable venues as possible. Again, with plaintiffs’ attorneys, the prevailing view is that “bad law” is going to be created somewhere. The first line of attack will be to break the legal connection regarding policy language concerning “direct 30 CLM MAGAZINE SEPTEMBER 2020

WHEN PLAINTIFFS’ COUNSEL STRIKE BACK physical loss.” For policyholders, the interruption policies written before the are not updated, then insurers will ultimate goal is to legally equate “physical COVID-19 pandemic. Maybe plaintiffs’ continue to face coverage litigation, no loss” with businesses closing or business attorneys do not have the cleanest plan matter how shaky. Plaintiffs’ attorneys property being rendered unusable by to create coverage, but we all have read will “try” until they “do,” so prepare the coronavirus. Plaintiffs’ attorneys will bad decisions that make us feel like for incoming fire. K look to pre-pandemic decisions out of we had been Jedi mind-tricked. The the federal courts, including the Federal immediate future requires updated, Christopher Fusco is managing District of New Jersey and the 3rd Circuit specific policy language that excludes partner at Callahan Fusco. Court of Appeals, where this interpretation claims for COVID-19. If policy forms [email protected] can arise and possibly be extended to this type of situation. There have been instances where asbestos, smoke, and ammonia discharges have been argued to bridge the gap to create direct physical loss and associated business interruption. Again, it is important to note that these arguments were made before the time of COVID-19. However, if plaintiffs’ counsel can change the argument to extend coverage from structural loss to a simple unusable condition of a business or business property, then they are half- way home. The next hurdle is that pesky virus exclusion. Even though Yoda said there is no “try,” they are going to try and try again to declaw this policy condition. You will definitely hear that the virus exclusion is far too broad, illusory, and makes no sense. Are we talking about viruses or fungi? We know COVID-19 is no fungus. The vast majority of the written history of the virus exclusion relates to SARS, which did not become a pandemic in the U.S. So plaintiffs’ counsel will claim that the coronavirus creates a different factual situation; namely, a pandemic the likes of which we have not seen in the U.S. in 100 years. Finally, you guessed it, plaintiffs’ counsel will say that COVID-19 should not be excluded due to overwhelming public policy concerns and fundamental fairness. Policies that have failed to be refined since the SARS outbreak simply could not contemplate to exclude an occurrence as widespread and devastating as this international pandemic, they’ll say. HOW TO STRIKE BACK The aforementioned describes the bumpy playing field for business- THECLM.ORG/MAGAZINE CLM MAGAZINE 31

MALICIOUS For years, courts have generally viewed the appropriate trigger of coverage for malicious prosecution claims as a binary choice: either the coverage trigger date for the malicious prosecution claim is the date when the wrongful prosecution against the claimant began, or it’s the date when the accused’s innocence is PROSECUTIONvindicated in a court of law. Unsatisfied with this dichotomy, policyholders have sometimes argued that all policies in effect from the time the claimant was wrongfully arrested until the date of exoneration CLAIMS: are obligated to provide coverage. Until recently, courts had consistently rejected this approach, finding that the claim takes place at a distinct point in time. However, in the past year, decisions by the 6th Circuit Court TREND OR of Appeals, applying Kentucky law [St. Paul Guardian Ins. Co. v. City of Newport, KY, 19-5948, 2020 WL 1514837 (6th Cir. Mar. 30, 2020], and the Missouri Court of Appeals [Ferguson v. ANOMALY? St. Paul Fire & Marine Ins. Co., WD 82090, 2019 WL 6703892 (Mo. Ct. App. Dec. 10, 2019)] have revived what looked to be a dead argument. Although these two appellate decisions are RECENT DECISIONS CREATE NEW unpublished, they could mark the beginning of a new trend in this WRINKLE IN COVERAGE DEBATE area of coverage law. BY GREG MANN CONTINUOUS TRIGGER FOR CLAIMS Historically, courts have offered several justifications for reject- ing continuous trigger for malicious prosecution claims. Some have said a continuous trigger should be limited to a narrow set of circumstances, such as latent injury cases in which the injuries caused by toxic exposure do not manifest themselves until long after the exposure causing the injury. As another example, asbestos cases presented a unique issue in the insurance market that was thought to justify continuous trigger. As it became known that inhalation of asbestos caused 32 CLM MAGAZINE SEPTEMBER 2020

adverse health consequences, insurers ceased providing THE6THCIRCUITHELDTHATTHEINSURER coverage for these injuries. Courts expressed concern that if WASOBLIGATEDTODEFENDANYCLAIM coverage was triggered only when it manifested, insurers would INWHICHCOVEREDINJURIESOCCURRED only be responsible for a fraction of the policyholder’s asbestos- WHILETHEPOLICIESWEREINEFFECT, related liability. To avoid this result, courts have sometimes REGARDLESSOFWHENTHEWRONGFUL applied a continuous trigger in asbestos cases. CAUSALACTOCCURRED. Most courts have held that malicious prosecutions do not present the same types of issues as latent injury cases. In prosecution [see, for example, Sanders v. Illinois Union Ins. Co., __ malicious prosecution cases, there is no time lag between the N.E.3d __, 2019 IL 124565, 2019 WL 6199651 (Ill. Nov. 21, 2019)]. arrest and injury—it is generally accepted that the injury from Standard commercial general liability policies require that the incarceration, humiliation, and damage to reputation starts as claimant’s injury or the insured’s wrongful act must take place dur- soon as charges are filed. Because the injuries are evident from ing the policy period. These courts note that a claimant’s exonera- the outset, courts were not concerned about a time lag in which tion from wrongfully filed criminal charges is not an “injury”—to insurers could terminate or decide not to provide coverage. the contrary, the exoneration is considered the first step in the legal system to rectify the wrong done to the claimant. Some courts have pointed to the differences between personal injury coverage (under which malicious prosecution claims usually The majority view contends that the “injury” in a fall) and other forms of coverage. Courts, such as in Travelers malicious prosecution claim occurs when the prosecutorial Indem. Co. v. Mitchell, 925 F.3d 236, 241 (5th Cir. 2019), have machinery of the state is set in motion against a claimant. noted that, unlike bodily injury coverage, personal injury coverage These courts have held that the injury to the claimant occurs is typically tied to a specified list of torts. Bodily injury coverage is the day he is accused of the crime by authorities. At that point, often focused on the resulting harm, not its cause. the claimant’s reputation is damaged and his legal expenses begin to incur. Thus, the majority view reasons that the policy Some courts have also said that applying a continuous trigger in effect when the prosecution first commences responds, to malicious prosecution claims would contravene the reasonable assuming the other elements for coverage are satisfied. expectations of the parties. It would be unreasonable, the courts have observed, for a municipality to expect to provide coverage for A small minority of courts have held that only policies tortious acts years before the inception of its policies. in effect on the date the claimant is exonerated are triggered. These decisions emphasized that a cause of action for such MAJORITY AND MINORITY VIEWS THECLM.ORG/MAGAZINE CLM MAGAZINE 33 In rejecting a continuous trigger, courts have held that the trig- ger of coverage must be a single point in time: either when the prosecution begins or when the accused is exonerated. The vast majority has held that the trigger date of coverage is the date of the

MALICIOUSPROSECUTIONCLAIMS:TREND OR ANOMALY? a claim did not ripen substantively, The LEL provision provided coverage Many decisions holding that a mali- or accrue for purposes of the statute for “amounts any protected person is cious prosecution claim occurred only of limitations, until the ultimate legally required to pay as damages for at the time of the prosecution involved termination of the criminal action. This covered injury or damage that results occurrence-based, rather than, injury- reasoning has been widely criticized. from law enforcement activities or based, policies. For example, last year, The majority view points out that when operations by or for you; happens in Sanders v. Illinois Union Ins. Co., the a cause of action accrues for statute-of- while this agreement is in effect; and Illinois Supreme Court, in holding that limitations purposes and when a policy is caused by a wrongful act that is a malicious prosecution claim occurred is triggered for insurance purposes are committed while conducting law at the time of the prosecution, explicitly distinct conceptual issues. enforcement operations.” stated that the policy’s classification as an occurrence-based policy “weighs heavily But, until last year, it appears no The policies defined “injury or into our decision.” By contrast, Ferguson court had adopted a continuous trigger damage” as “bodily injury, personal and St. Paul Guardian focused heavily on of coverage. injury, or property damage.” The their conclusion that the policies at issue policies defined “personal injury” were injury-based policies. REJECTING THE BINARY as any “injury, other than bodily injury, caused by any of the following In addition, the presence or CHOICE PARADIGM wrongful acts [including]…[m]alicious absence of a “deemer clause” played a prosecution.” role in Ferguson and St. Paul Guardian. The courts in the previously mentioned Deemer clauses typically state that all Ferguson and St. Paul Guardian cases, The 6th Circuit held that the insurer forms of specified damage rising out though, go in a different direction. In was obligated to defend any claim in of the same wrongful act are deemed Ferguson, the city of Columbia, Mis- which covered injuries occurred while to occur at the time of the wrongful souri, and its officers were insured by the policies were in effect, regardless of act. St. Paul Guardian reasoned that law enforcement liability (LEL) poli- when the wrongful causal act occurred. inclusion of such a provision in the cies through St. Paul from Oct. 1, 2006 Like the Ferguson court, the 6th Circuit policy with respect to property damage, through Oct. 1, 2010, and insured by a emphasized that the policies at issue but not personal injury damage, similar LEL policy through Travelers applied an injury-based trigger of provided further justification for a from Oct. 1, 2010 through Oct. 1, 2011. coverage, not an act-based trigger. The continuous trigger. Ferguson held The relevant policy provision “covered 6th Circuit pointed to the fact that the that the absence of a deemer clause injury or damage that…happens while temporal requirement in the policy— distinguished that case with another this agreement is in effect.” that the injury or damage happen while Missouri case. the agreement is in effect—only applied The court found that the malicious to injury, not the LEL provisions’ other However, it is not easy to prosecution claim did not accrue until requirements. distinguish the cases based on policy the underlying conviction was vacated wording alone. Policies do not always and the state elected not to retry the The 6th Circuit disagreed with fit easily into “injury-based” or accused, holding that any policies in other decisions’ presentation of a “occurrence-based” classifications, and effect before the exoneration could malicious injury as “dichotomy: either sometimes courts make no distinction be triggered—in effect, applying a the injury occurs at the time of the between the two. Nor are deemer continuous trigger of coverage. The commencement of the prosecution or clauses always considered dispositive. court emphasized that the policy was upon exoneration.” The 6th Circuit an “injury-based policy” as opposed to held that the claimant’s injuries were It is unclear if Ferguson and St. an “act-based” or “occurrence-based” continuous—that is, they happened Paul Guardian represent the beginning policy; and concluded that a plaintiff repeatedly during the relevant coverage of a new trend. It is difficult to explain suffers a continuous and ongoing period. The court reasoned that to the different results based on policy injury every day he is imprisoned, hold that the injuries caused by the language alone. What is clear, however, is and that a lay person purchasing an malicious prosecution happened only that malicious prosecution is not settled, insurance policy would understand that when the malicious prosecution begins and this area will continue to develop, incarceration is a continuing injury. came close to rewriting the policies as especially if DNA evidence and other containing an act-based trigger. scientific advances lead to increased Similarly, in St. Paul Guardian, malicious prosecution claims. K the 6th Circuit, applying Kentucky RECONCILING WITH law, adopted a continuous trigger of Greg Mann is an associate in the coverage for malicious prosecution OTHER DECISIONS claims. In that case, the City of insurance coverage practice group at Newport, Kentucky, was insured via Ferguson and St. Paul Guardian attempt three consecutive one-year insurance to distinguish their holdings from other Rivkin Radler LLP. policies with identical LEL provisions. decisions based on policy language. [email protected] 34 CLM MAGAZINE SEPTEMBER 2020

Sponsored Content Evolving Jury Instructions for Police Liability Claims A Reminder to All Attorneys and Claims Professionals By Zachary M. Schwartz Few moments have captivated an entire nation and pushed of-force claims against police. Although a negligence theory and its institutions to change like what we are witnessing after the intentional tort theory are seemingly inconsistent, the proposed death of George Floyd on May 25, 2020, which has resulted in changes make clear that these inconsistent theories can still be nationwide protests and calls for racial equality. pursued together for unreasonable force claims. Recent events and protests have drawn particular attention The proposed changes to CACI 440 also serve to compli- to our nation’s policing practices. While there are no national ment a new proposed instruction titled, “Negligent Use of policing standards for the nearly 18,000 law enforcement Deadly Force by Peace Officer—Essential Factual Elements.” agencies across the country, some states have already intro- The new instruction reflects a change in law in California duced or passed reforms to police practices. The conversation (California Penal Code § 835a) that creates a separate, higher surrounding police reform has frequently centered on police standard that authorizes a peace officer to use deadly force only unions, use-of-force policies, transparency regarding discipline when “necessary in defense of human life.” records, qualified immunity, and even calls to defund or abolish the police. But for California cities and counties and their law Another proposed change is to CACI 1305, titled, “Battery enforcement agencies, they are seeing change and pressure from by Peace Officer—Essential Factual Elements.” The primary a less notable source—jury instructions. change proposed to this instruction is to make it consistent with the new California standard for use of deadly force by peace In California, the Advisory Committee on Civil Jury In- officers—that deadly force may only be used where necessary in structions has posted proposed additions and revisions to the defense of human life. Judicial Council of California Civil Jury Instructions (CACI). The Advisory Committee is responsible for regularly reviewing Most attorneys and claims professionals are adept at keep- case law and statutes affecting jury instructions, and for making ing apprised of new laws and important judicial opinions that recommendations to the Judicial Council for updating, revising, will or may impact claims and litigation. But changes to jury and adding topics to the council’s civil jury instructions. Some instruction can go unnoticed until just before trial when attor- of the current proposals that are open for public comment neys are preparing to submit their jury instructions to the court. strike at the heart of police liability claims. The recent proposed changes to jury instructions in California by the Advisory Committee on Civil Jury Instructions are an The Advisory Committee is proposing revisions to three of important reminder for all attorneys and claims professionals to its civil jury instructions relating to police liability while also pay attention to changes to jury instructions in your respective adding a new jury instruction. Of particular note is a proposed jurisdictions and area of practice. Oftentimes, like the case in revision to CACI 440, presently titled, “Unreasonable Force by California, there is opportunity to provide input and comment Law Enforcement Officer in Arrest or Other Seizure Essen- upon proposed changes. K tial Factual Elements,” and the addition of a new instruction Zachary M. Schwartz is partner at Koeller, Nebeker, Carlson, specific to deadly force. Presently, there is a single instruction & Haluck LLP. [email protected] for unreasonable force cases, regardless of whether the case involves non-deadly or deadly force. THECLM.ORG/MAGAZINE CLM MAGAZINE 35 The terms “unreasonable force” and “excessive force” have been a bedrock for evaluating police misconduct. Those terms have not only been used in countless judicial opinions, but also have found their way into the mainstream, with even non- lawyers and potential jurors being familiar with the terms. But the current proposal includes changing the title of CACI 440 to “Negligent Use of Nondeadly Force by Law Enforcement Officer in Arrest or Other Seizure—Essential Factual Elements.” The new proposed title doesn’t quite roll off the tongue as well as “unreasonable force,” but the proposed change doesn’t affect the substantive elements and instead highlights the distinction between intentional and negligent tort theories relating to use-

AROUND THE CLM A Test-Taker’s Notebook CLM’s Claims College is using virtual exams this year. Here’s what to expect. By Eric Gilkey Due to COVID-19-related concerns, Clark. Instructions are clear and easy schools with a level three-component many of the schools that make up to follow. The exams utilize a multiple- (plus the School of Leadership) will CLM’s Claims College are taking their choice format, with five questions maintain their traditional oral exams. final exams virtual this year. What’s displaying at a time before the user is The School of Claims Mediation will it like to take the test virtually? What prompted to advance to the next set. have mock mediations as their final.” should test-takers know beforehand? Encounter a question that you want Which schools and levels are offering to revisit? Simply flag it, and you’ll Time is of the essence. “There it? Adam Carmichael, president of be able to go back to it later, time are strict timeframes for taking ProKnowledge & Ethics Counsel at permitting. “Unlike previous paper the online exams,” says Clark. “For The Institutes’ risk and insurance exams, students find out if they testing related to levels one and two knowledge group; and Fran Clark, passed or not as soon as they finish for all schools, the testing window CLM’s programming manager, the exam,” says Carmichael. opens on Saturday, Sept. 12, 2020, answered some of the questions that at 9:00am ET, and closes on Sunday, students might have before heading CLM and The Institutes took Sept. 13, 2020, at 11:59pm ET. For the back to school. steps to ensure the results are School of Extra-Contractual Claims, legitimate. “Students are expected the testing window opens at 9:00am The Institutes played a to follow exam ethical guidelines, so ET on Sept. 19, 2020, and closes big role in making the jump to before the exam begins, they are at 11:59pm ET on Sept. 20, 2020. virtual exams. “The Institutes and asked to review those guidelines Additionally, the School of Litigation CLM moved to virtual exams as a before beginning the test,” says Management is doing something response to COVID-19 to allow our Carmichael. “Additionally, there is completely different—their testing students to continue their work,” an exam timer on the test’s home window opens at 1:00pm ET on Sept. says Carmichael. “In so doing, we page at all times. In a non-proctored 17, 2020 (directly after classes are looked at the best practices for at- exam, having a timed test means over) and remains available through home exams and implemented many the students will need to know the 11:59pm ET on Sept. 18, 2020. The of them. We also looked at other material and be able to apply it within School of Claims Mediation, the testing organizations, such as the AP a reasonable timeframe; they won’t School of Leadership, and all level- exams given by the College Board, be able to spend time learning the three schools will hold their oral which similarly pivoted to at-home material during the exam. Lastly, exams on Friday, Sept. 18, 2020, after online exams in the spring of 2020 to and most importantly, the questions classes have ended.” allow their students to complete their themselves were written by the courses. Fortunately, many state CE Claims College’s instructors—leaders For other questions, go to licensing departments waived the in the industry—with the intent that proctor requirements in order to allow the answers by the students will theclm.org/claimscollege. K students to complete their courses in demonstrate mastery of the course.” a timely manner during this time.” Virtual exams aren’t offered The switch to virtual feels for all levels. “Claims College is intuitive. Claims College’s exams are offering online exams for levels one delivered using The Institutes’ online and two for all three-level schools, learning management system, which plus the School of Extra-Contractual means students simply log in to the Claims and the School of Litigation exam and take it all online,” says Management,” says Clark. “However, 36 CLM MAGAZINE SEPTEMBER 2020

AROUND THE CLM CAREERS How to Sell Insurance Great Insurance Jobs’ Cofounder Roger Lear is here to help you and your family overcome obstacles to your career and job search. This month, he offers tips for helping spread the word about the job opportunities in insurance. Q My niece will graduate from college soon and I’d like her to consider a career in insurance claims. What would you say to pique her interest? A The insurance industry asks the same about The insurance industry is working very hard to themselves almost daily: How will one of the world’s get the word out about the excellent jobs. A great largest industries get the word out that it has jobs resource if you are in college is finding a chapter and great, stable careers? The insurance industry of Gamma Iota Sigma (gammaiotasigma.org). They finds itself at a crossroads with a retiring workforce exist to educate and build a college student talent (400,000 are ready to retire in the next two years) pipeline exclusively for the insurance industry. alongside billions being poured into insurtech This organization has been instrumental in placing startups, changing how the industry will evolve hundreds of students with high-paying insurance for years to come. With so much excitement and industry jobs. GIS chapters are dedicated to opportunity, why do the excellent career paths educating students and are a powerful resource offered in our industry still fly under the “cool jobs” to help students gain valuable information about radar, going undiscovered by younger people? insurance jobs. The claims industry is not just about cars and Another entry point for many is an internship homes anymore, as the Progressive and GEICO with a claims department. For example, commercials may lead many to believe. It is about @TravelersCareers has a great internship artificial intelligence, drones, mobile applications, program that was recognized by WayUp as a telematics, machine learning, autonomous top 100 internship program in the country out of vehicles, document management systems, and all large companies. A claims internship on your so much more. Claims professionals today are resume is powerful and will open doors for your technology experts learning how to settle claims niece that she never imagined. using industry-changing tools. It is just the beginning of this technology revolution. The future claims professional has a great, stable, and exciting future. Maybe one of the For your niece, I would also remind her that best-kept secrets about a job in claims is the the insurance industry is recession-proof. The opportunity to directly work with customers unemployment rate in this industry hovers around and settle their claims in a time of great need. two percent. While COVID-19 has decimated so The skillset needed to close claims and keep many industries over the last five months, most customers happy are tools that will drive your insurance companies saw very few layoffs. It insurance claims career for a long time. The is an industry that promotes from within, and difference moving forward is the claims technology as technology keeps advancing, so will claims you will have in your toolbox that will allow you jobs and opportunities. With so many insurance to do your job more efficiently, so you have the professionals leaving the industry, the vast opportunity to service your clients. Claims jobs gap created will also yield exciting career rock, and the future is bright. advancements. Anyone entering a claims job will be fast-tracked to future roles that may not even Got a question for Roger? exist today. Talk about exciting! Email him at [email protected]. THECLM.ORG/MAGAZINE CLM MAGAZINE 37

AROUND THE CLM EVENTS AROUND THE CLM WEBINARS CLM is focused on the health and welfare of its membership and staff, so September 23, 2020 all remaining 2020 CLM conferences will take place virtually. Here are some TRANSPORTATION upcoming opportunities for targeted professional education. TO LEARN MORE, GO TO THECLM.ORG/EVENTS. Driving Impaired? Toxicology, Legal, and Insurance Perspectives 2020 CLAIMS COLLEGE 2020 LITIGATION September 8-12 MANAGEMENT SYMPOSIUM October 14, 2020 (Levels 1 and 2) October 21, 2020 SUBROGATION September 15-19 Cost: Fellows $49; Members $199 (Level 3 and One-Level Schools) The CLM brings together a limited Subrogation and Reimbursement Cost: Fellows $399; number of leaders and innovators in Michigan After Statutory Members $599 in litigation management for an Changes to No-Fault Scheme Claims College enlists some of the exclusive one-day symposium. industry’s top professionals to create #CLMSymposium October 15, 2020 and teach courses within their RETAIL, RESTAURANT & areas of expertise in the College’s 2020 LITIGATION HOSPITALITY 11 specialty schools. The Schools MANAGEMENT of Casualty Claims, Construction, INSTITUTE (LMI) Tripped Up! Demolishing the Cyber Claims, Professional Lines, October 22-25, 2020 Plaintiff’s Case With Accident Property Claims, Transportation, and Cost: $1,495 Video as a Lethal Weapon Workers Compensation are three-level (includes materials, instruction, programs. Upon successful completion and up to 24 CE/CLE credits) October 21, 2020 of these Schools, students earn their Each LMI course is taught by executives MUNICIPAL LAW Certified Claims Professional (CCP) with extensive litigation management designation in that specialty. The experience. Upon successful completion Defending Public Schools of Claims Mediation, Extra- of the program, participants will receive Employees in the Video Age Contractual Claims, Leadership, and the Certified Litigation Management Litigation Management are one-level Professional (CLMP) designation. Limited November 10, 2020 programs. Upon successful completion to 100 participants. MUNICIPAL LAW of these Schools, participants earn #CLMLMI a certificate of completion for that Sports Concussion Claims – program. What’s in Your Playbook? 2020 CLM CONSTRUCTION December 8, 2020 CONFERENCE ALTERNATIVE DISPUTE September 29-October 1, 2020 RESOLUTION Cost: Free The CLM Construction Conference Mediating Cases Involving Liability covers all aspects of insurance, risk, When There Is No Coverage – and claims management aspects of the Part II insurance related to the construction industry. In addition to addressing December 16, 2020 construction defects and other hot PRODUCT LIABILITY topics, virtual conference sessions will also address facets of construction Judicial Hellholes: site accidents/injuries, coverage issues, Where It Is the Hottest! subcontractor issues, risk management, and new technologies. Sessions will Register and receive address issues on the national, regional, reminders for upcoming and state levels. webinars at #CLMConstruction theclm.org/webinars 38 CLM MAGAZINE SEPTEMBER 2020

AROUND THE CLM BETWEEN THE LINES Question: What is one trend you’re watching closely in the construction industry? “As a result of the “I’m looking closely “Innovation has “COVID-19’s impact “Since COVID-19, ongoing COVID-19 at the impact that rapidly changed on construction I’ve noted an restrictions on revised procedures the construction litigation is still upswing in property litigation, we expect and scheduling, industry as we emerging. Stay- owners pursuing to see dispute due to COVID-19, know it. With an at-home orders; construction-defect resolution through are going to have increased use of court closures; actions prior to virtual mediation on on delay claims, as AI-driven technology virtual depositions completion. It is the rise. COVID-19 well as on future in construction, it’s and settlement unclear if COVID-19 mandates from defect actions due amazing to both use conferences; and is a factor in states have also to projects taking and see the data unknown/vacated ownership’s and caused construction longer to complete captured by these trial dates impact investors’ return on projects to and therefore innovative solutions the complexion investment (such be delayed, being open to the and how they adapt of construction as lost rents or abandoned, or shut elements longer and integrate with litigation. Key construction cost down altogether, than we typically other sophisticated events thought to overages) such that which will naturally see.” tools that provide require in-person they are looking lead to a significant evidence that can attendance to at litigation as an increase in Alex Chazen, be forensically formulate defenses immediate source construction-delay- reviewed, analyzed, and evaluate liability of funding. It also and-fee claims, as Partner, Kahana and relied upon and damages remains to be well as an uptick in & Feld LLP. CLM in ways we never are delayed seen if the recent mediation versus Member since 2017. could before.” or hamstrung. building boom will arbitration.” Collaboration is taper off due to Terence a challenge with potential hesitation Wendy D. Kadlec, people working to break ground.” Testa, remotely.” Practice Leader, Megan Partner, Wilson Elser Construction, Envista Stephen Ferris, Moskowitz Edelman Forensics. CLM Fellow Henning, & Dicker LLP. CLM since 2017. Shareholder Member since 2011. Founding Partner, MacMillan, Scholz & Wood, Smith, Henning Marks. CLM Member & Berman LLP. CLM since 2016. Member since 2012. 25% 7.29 million Percent of construction projects worldwide Estimated number of workers in the U.S. construction industry as of 2018. Source: Bureau of Labor Statistics that were put on hold in Q2 2020. THECLM.ORG/MAGAZINE CLM MAGAZINE 39 Source: Royal Institution of Chartered Surveyors

AROUND THE CLM NATIONAL News and Updates The New York Department of Financial Services files its first cybersecurity enforcement action, Nevada and Tennessee pass COVID-19 liability protections, and, in Maryland, the Court of Appeals rules that marijuana odor alone is not sufficient for establishing probable cause for an arrest and search of a person. California Nevada Texas PENALTIES LIMITED AGAINST COVID-19 LIABILITY PROTECTIONS UNDER $400 MILLION IN CARE FACILITIES SIGNED INTO LAW LOSSES EXPECTED FROM HANNA California’s highest court held in In August, the Nevada Legislature Jarman v. HCR ManorCare Inc. that passed, and Gov. Steve Sisolak As the Gulf Coast deals with a statutory penalty of $500 for signed into law, SB4. This bill Hurricane Laura, and the industry Patients’ Bill of Rights violation grants broad liability protections assesses damage, catastrophe claims brought by residents of to businesses, including for-profit, modeler RMS says U.S. insurance skilled nursing and intermediate care governmental entities, and private losses from an earlier storm, facilities will be capped at $500 per non-profit organizations, creating Hurricane Hanna, which made landfall cause of action, rather than by each immunity from civil liability for late July in southern Texas as a individual regulatory violation. In personal injury or death resulting Category 1 hurricane, will not exceed doing so, the high court reversed the from exposure to COVID-19 as long as $400 million. The estimate includes underlying decision, which involved the business, governmental entity, property damage and business an award of the statutory penalty or private non-profit organization interruption from wind and storm to each of 382 alleged separate substantially complied with surge-driven coastal flooding to violations. This decision is highly controlling health standards. Notably, residential, commercial, industrial, favorable to the skilled nursing hospitals and other health care and automobile lines of business. industry, given that an affirmative facilities, as well as school districts, RMS also says losses to the National ruling would have likely resulted in are exempted from receiving the Flood Insurance Program are a new influx of litigation and would additional protections afforded by expected to be approximately $100 have increased potential exposure. this bill. The immunity will not apply million or less of the total insured- The ability to establish a violation of if the business, governmental entity, loss estimate.—From Managing Editor a patient’s right is readily achievable or private non-profit organization Phil Gusman due to its simplicity in comparison violated controlling health standards to the more esoteric abuse or with gross negligence, and the gross neglect claim. In this regard, it is negligence was the proximate cause relatively akin to strict liability, and of the personal injury or death. the added benefit of attorney’s fees The injured party is not precluded would have resulted in allegations from filing suit, but unless certain of multiple violations.—From CLM requirements are met, the suit will Members Constance Endelicato and be subject to dismissal.—From CLM Randall Romero Member Janice M. Michaels 40 CLM MAGAZINE SEPTEMBER 2020

Tennessee Maryland New York AFTER SPECIAL SESSION, MARIJUANA ODOR NOT DFS FILES FIRST COVID-19 BILL PASSES SUFFICIENT FOR SEARCH CYBERSECURITY OF PERSON ENFORCEMENT ACTION Gov. Bill Lee recently signed a bill providing protections for businesses, Maryland’s Court of Appeals On July 21, 2020, the New York State schools, and nursing homes against recently held that the mere odor Department of Financial Services filed COVID-19-related lawsuits. As noted of marijuana is not sufficient charges against First American Title in CLM Magazine’s June “National” to establish probable cause to Insurance Co. regarding violations of column, a similar bill, which Lee effectuate an arrest and search of a NYSDFS’ Cybersecurity Requirements supported, died earlier on the House person. In Rashard Lewis v. MD, the for Financial Services Companies, floor. Lee then called for a special court relied upon Maryland’s 2014 the first such charges to be filed. The session of the General Assembly decriminalization of possession of NYSDFS alleges that First American’s in August, stating, “As COVID-19 less than 10 grams of marijuana to violation of the cybersecurity regulation continues to present unique find that the smell of marijuana alone stems from a vulnerability on its public challenges, we feel it is in the best no longer establishes that a person website that, for over four years, interest of the state to convene a is possessing a criminal amount exposed tens of millions of records special session to address liability because odor alone is not indicative that contained consumers’ sensitive protections and telehealth.” HB8001 of quantity. The Lewis decision personal information. The charges also passed the House by a vote of builds on last summer’s Michael cite a failure to encrypt documents 80-10 and the Senate by a vote of Pacheco v. MD, which held that an and a serious lack of urgency by First 27-4. Under the act, an individual or officer could not arrest and search American to remedy the website legal entity will not be liable for loss, someone based on observation vulnerability. The charges underscore damage, injury, or death that arises of an amount of marijuana fewer the importance of conducting from COVID-19 unless the claimant than 10 grams. The court, however, regular risk assessments of software proves by clear and convincing distinguished these decisions from applications and ensuring the scope evidence that the person caused Robinson v. MD, which allows police of such assessments is proportional the injury by an act or omission to search vehicles when the smell to the application at issue. Even constituting gross negligence or of marijuana emanates from the after an issue has been detected, willful misconduct.—From Managing car, noting that an individual has a incident-response efforts are of equal, Editor Phil Gusman heightened expectation of privacy if not greater consequence, and in their person compared to a should encompass both the actual diminished expectation of privacy in and potential exposure.—From CLM their automobile.—From CLM Member Members Christopher J. Seusing and Jessica Butkera Sameer Ponkshe THECLM.ORG/MAGAZINE CLM MAGAZINE 41

AROUND THE CLM VOICES Dale Sherman IN HIS FATHER’S FOOTSTEPS “Being a mentor means reflecting Vice President and Assistant Sherman says his father on your leadership General Counsel, Allstate was a proud Allstate style, philosophy, and experiences, An Allstate “lifer” for 25 years agent for 41 years—“he then translating and counting, see how this started as one of those those into digestible former staff counsel leads the guys who worked under pieces of advice.” claim litigation practice group, the escalator at Sears.” investigative services, and Sherman, explaining why he nationwide defense for his So when the younger company. Sherman graduated law school and benefits from being a mentor —By Eric Gilkey, Executive Editor wanted to do trial work, he asked his father who defended his customers if as much as he hopes his they got sued. Armed with his answer, mentees do. Sherman sought a staff counsel position at Allstate, where he got to try cases immediately. ALLSTATE FOR LIFE Sherman is the rare professional who has worked for one company his entire career, but he says it might not be for everyone. He says changing employers every few years can mean larger pay increases, but the absence of deep roots can have diminishing returns over time. If a healthy work-life balance matters most, he says a long corporate career might be the right choice. “The toughest OUTSIDE HELP “I love the part of COVID-19 discipline it is not being able As a threshold, requires and to spontaneously Sherman says all the time for engage with co- firms retained for introspection workers, both on my I get in the teams and across the litigation must solitude of my company.” share the values of his company. gym.” Additionally, he looks for five qualities: Sherman, explaining why he consistently excellent results; deep Sherman, on his passion for lifting schedules check-ins with people subject matter expertise; practical, weights, which is only matched to maintain relationships. actionable advice; responsiveness; by his love of rock music. and reasonable billing. He also watches litigation velocity—getting the case to the optimal result faster than both the competition and the average time frame for the market. 42 CLM MAGAZINE SEPTEMBER 2020

106 CCOs PARTICIPATED IN FOUR VIRTUAL CCO EVENTS ICSTOSHMTATRMNHOUEENNVCGILEETMRRY. (WITH FOUR MORE ON THE CALENDAR) CLM IS LEARNING. 16,471 PARTICIPANTSINWEBINARS CLM IS NETWORKING. AND VIRTUAL CONFERENCES CLM IS BUSINESS. 32,463 CE/CLECREDITSPROVIDED 10,544 UNIQUEVIEWSTOCLMWIKIAND CLM IS SUPPORT. SERVICE PROVIDER DIRECTORY Never has the CLM Community had more of an opportunity to shine than in 2020. For 13 years we’ve staked our claim (no pun 850,833 PAGEVIEWSOF CLM WEBSITE intended!) by providing the most innovative and collaborative events in the business. This year has been challenging in 890,153 VIEWSOFOUR SOCIAL MEDIA POSTS many ways, but it showcased just how resilient, creative, and engaged the CLM membership and staff are. 19,537 INTERACTIONS WITH OUR SOCIAL MEDIA POSTS “A forum for collaboration and innovation.” ALL DATA IS YTD 2020 ~ ATTORNEY PARTNER “The CLM brings together educated, experienced, and proven professionals who go above and beyond to seek out deeper understanding of and better outcomes within our industry disciplines.” ~ SENIOR RISK MANAGER “To me, the ‘C’ in CLM really stands for community. This is an impassioned and intelligent group of professionals who make me proud to do what I do, knowing I have the support of others.” ~ ATTORNEY SHAREHOLDER

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