Industry Alerts

Navigating CA Insurance Defense Settlements

Christine Hiler and Samantha Wolff
July 2, 2015

During the 2012/2013 fiscal year, the vast majority of civil cases before California’s Superior Courts – 88.97% – were disposed of before trial. (Judicial Council of California, 2014 Court Statistics Report at p. xv; see also Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 659 (“a large percentage of the claims covered by insurance are settled without litigation and [] this is one of the usual methods by which the insured receives protection.”).) That year, the National Center for State Courts estimated the median cost for litigation from initiation through post-trial disposition to range from $43,000 for a “typical” automobile tort case to $122,000 for a “typical” malpractice suit. (Paula Hannaford-Agor & Nicole L. Waters, Estimating the Cost of Civil Litigation, National Center for State Courts, Court Statistics Project, Caseload Highlights, Vol 20, No. 1, Jan. 2013, at 7.) Costs drive litigation outcomes, even for litigants whose defense and/or indemnity is covered by insurance.

But the prospect of settlement can be a delicate endeavor for insureds, particularly when their interests diverge from those of the insurer. The omnipresent priority of the insurance carrier is to minimize cost exposure. The priorities of the insured, however, can vary and are not always exclusively limited to exposure. The insured may prioritize vindication, the prosecution of cross-claims, and/or other forms of non-monetary resolution over the bottom-line cost of defense.

Insurance struggles in the settlement context more typically arise when an insurer refuses to agree to the proposed settlement. But insurance disputes can also arise where an insurer seeks to settle over the insured’s objection. In these instances, settlement becomes a question of obligations and priorities. This article explores some of the parties’ respective obligations and factors to consider when disputes arise between insureds and insurers during the settlement process.

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Sidestepping Sexual Harassment Allegations at Startups

Emily Taylor
May 20, 2015

An article that appeared on SFGate, “Techies flock to Mission Control, S.F. members-only sex club,” discusses the activities of some tech workers in San Francisco, including several described startup founders, all in their 20s and 30s, which if discussed in the workplace, could quickly lead to situations that might result in sexual harassment claims. While the article discusses an extreme example, other activities and conversations that may seem relatively inoffensive have the potential to lead to allegations of harassment and costly litigation.

A startup may begin with a few friends working on an idea together. In such a collaborative environment, the lines between supervisors and subordinates and employees’ personal and professional lives, may blur. Coworkers may go to a bar together for drinks after work. They may also engage in joking or teasing or discuss with each other aspects of their personal lives, such as romantic and family relationships. Nothing is inherently wrong with this, but the potential for legal headaches arises when that group of coworkers includes a mixture of supervisors and subordinates and especially if it includes a startup’s founders. Employees may interpret certain comments or questions about their romantic or family lives as harassing, and the scene is set for a lawsuit.

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Negotiating Medicare Settlement Terms Is Harder Than It Looks

Shannon Nessier
February 6, 2015

Over the past year and a half, courts across the U.S. have been voiding settlement agreements, or refusing to enforce them, when the parties did not have a true meeting of the minds on terms aimed at addressing their obligations under the Medicare Secondary Payer Act, 42 U.S.C. §1395y(b), including Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007.

Read more about this developing area of law on The Whisper, a publication of DRI.