With trial court approval of a settlement, the parties are close to reaching the end of the long and winding road of the Avery case.   It’s about 20 years old and a fascinating case’ class claim approval occurred in 2016; see here.  As explained by Law360 in a September 16, 2016 article, “the RICO plaintiffs allege that State Farm deliberately sought to “recruit, finance, direct and elect a candidate to the Illinois Supreme Court who, once elected, would vote to overturn the $1.05 billion judgment,” in a plan hatched in 2003. ….The plaintiffs claim State Farm, acting in conjunction with Murnane, Shephard and the Illinois Civil Justice League, tapped into a network of contributors to pour as much as $4 million into Karmeier’s campaign — a sum representing about 80 percent of the campaign’s contributions.  The crux of the RICO allegations are two communications conducted through the U.S. Postal Service: written misrepresentations allegedly sent to the Illinois Supreme Court and to the plaintiffs’ counsel in 2005 and 2011 regarding the magnitude of the insurer’s financial support to Karmeier’s campaign.”

Approval of the settlement is described with some color commentary in a December 14, 2018 post at the Madison- St. Clair Record.

A press release yesterday brought news of an interesting next step in the process of increasing the intersections between law and molecular science. In short, liability insurance clients of Allianz will receive access to the ChemMeta analytic system developed by Praedicat. The ChemMeta system evaluates scientific literature regarding a selected set of chemicals that are or alleged to be “toxic” to some degree or another. I’ve been publicly pointing out Praedicat since 2014. See Praedicat – Foretelling the Future of Toxic Tort Litigation.  Their work ties well to our work at ToxicoGenomica. Their latest action is further proof that the future is arriving more quickly than many anticipated. The press release is pasted below, and well worth reading.

“PRESS RELEASE. London/New York/Munich/Paris/Singapore – November 27, 2018.

Allianz Global Corporate & Specialty (AGCS), the Allianz corporate insurance carrier, together with Praedicat, an InsurTech analytics company based in Los Angeles, are expanding their partnership to provide a unique analytic resource to policyholders. Specifically, clients will benefit from access to ChemMeta®, Praedicat’s software solution delivering science and regulatory risk analytics for industrial companies. ChemMeta helps both chemical manufacturers and those who incorporate chemicals downstream minimize their product safety risks. Based on the latest peer-reviewed scientific literature and risk analysis, ChemMeta provides companies customized intelligence on thousands of chemicals and materials to help make better decisions across critical functions, including product stewardship, R&D, enterprise risk management, EHS and regulatory affairs.

“By offering access to ChemMeta with our product liability policies, we help clients maximize the overall safety of their products and production processes, striking the right balance between innovation and risk,” explains Hartmut Mai, Chief Underwriting Officer, AGCS. “Those opting to use ChemMeta will better understand which substances are more likely to cause negative impact on human health and wellbeing or trigger regulatory action in the future, helping them to look around the corner. This is another example of enriching our product offering with strategic risk management services that can prevent or mitigate potential losses.”

“Today’s science is tomorrow’s regulatory action and ChemMeta uses both AI and machine learning to scan, analyze and synthesize data from millions of peer-reviewed scientific journals to identify product risk,” says Robert Reville, CEO of Praedicat. “The early warning provided by mining technical literature at scale allows companies to make proactive product decisions.”

Understanding emerging risks inherent in any manufacturing process is particularly relevant in the chemical, pharmaceutical and food & beverage industries. In the end, it is relevant to any corporation which produces or uses chemicals within their own value chain.

Large companies from the mentioned sectors might employ teams of up to 100 scientists to monitor scientific publications and track relevant findings. However, the scope of their activity is often limited due to manual analysis and, as a result, only a certain number of production elements can be thoroughly investigated. For small and medium companies, resources are even scarcer. At the same time, there is exponential growth of data and information as a result of digitalization. To comprehensively evaluate chemical products or ingredients at a company, a scalable approach is required.

“Take DEHP, one of the most widely used phthalates, a plastics additive. More than 3,500 scientific papers are currently published on DEHP globally – with more than 200 articles having been released this past year alone,” explains Jessica Schuler, VP of Strategic Initiatives at Praedicat. “ChemMeta, when coupled with the expertise of the in-house teams, allows clients to significantly expand the scale of their research activities. As a result, they can track all relevant chemicals in their company’s portfolio throughout the product lifecycle, prioritize critical ingredients and more easily identify substances which can be replaced, if and when needed.”

“One of the exciting developments of InsurTech is the ability to bundle insurance with risk insights at scale,” says Nina Everding, Head of Business Analysis at AGCS Liability. “The Praedicat partnership allows us to bring product stewardship risk insights to our product liability clients. AGCS is committed to bringing the benefits of InsurTech directly to our clients.”

“With this partnership, product liability insurance instead becomes product stewardship insurance,” says Dr. Reville.

AGCS liability insurance policyholders may receive access to ChemMeta for a defined period. After this period, they can opt for their own subscription to the analytics.

AGCS and Praedicat began their partnership in 2014 to better predict key catastrophe liability risks of the future. By combining Praedicat’s forward-looking predictive modelling approach with its own underwriting expertise and extensive liability risk portfolio analysis, AGCS aims to accelerate its risk analytic capabilities to identify next generation catastrophe liability risks far earlier than currently possible. AGCS and Praedicat regularly publish white papers on emerging liability risks; the most recent risk bulletin “The Toxic Trio” investigates the potential impact of hazardous chemicals in personal care products.”

Those who understand asbestos litigation will appreciate the karma one could see in this outcome. For the rest of you, sorry, but the story is much too long to tell. Suffice it to say it involves lots of “float” and lots of  premiums for after the fact asbestos coverage.

http://www.krtv.com/story/37651675/judge-says-private-insurer-not-state-on-hook-for-43m-in-libby-asbestos-claims

“Posted: Mar 05, 2018 4:11 PM CSTUpdated: Mar 05, 2018 4:11 PM CST

HELENA – A state judge says a Nebraska-based private insurer is liable for an entire $43 million state settlement of 100 asbestos claims related to Libby’s defunct vermiculite mine – and the full cost to the company is likely more.

State District Judge Holly Brown of Bozeman ruled last last week that National Indemnity Co. – a subsidiary of Warren Buffet’s Berkshire Hathaway firm – improperly tried to deny coverage from an insurance policy held by the state 45 years ago.

By breaching it “duty to defend,” National Indemnity is blocked under state law from denying coverage, and therefore is liable for the $43 million settlement that the state agreed in 2011 to pay those who contracted fatal lung disease by asbestos at the former Libby mine, the judge said.

Those injured by asbestos had sued the state of Montana, beginning in 2000, alleging the state concealed its knowledge that harmful asbestos was in dust at the mine and failed to inform workers or the public.

But the state discovered it held a policy with National Indemnity from 1973-1975, insuring the state against personal-injury and other claims. It notified National Indemnity in early 2002 about the asbestos lawsuits and potential liability, and said the company should be liable for the suits’ costs.

The Nebraska firm argued it should not be liable for the Libby asbestos claims – and, even if it was, the total amount should be limited to $3 million, or based on pro-rated costs from the two years the policy was in effect.

Brown, however, disagreed, and said National Indemnity must pay for any settlement stemming from the Libby cases – and, all of the state’s defense costs after July 2005, any pre-judgment interest related to the cases and the state’s costs of the separate case on whether National Indemnity is responsible.

Lawyers for the state weren’t immediately available for comment Monday, on the decision or its full financial implications for the state.

Attorneys for National Indemnity also could not be reached for comment Monday.

The case involves scores of claims filed by people harmed by asbestos from a Libby vermiculite mine, which had been owned and operated by W.R. Grace & Co.

The asbestos-related lawsuits, filed starting in 2000, said the state had known as early as 1942 that dust from the mining and milling operation was “greatly in excess of safe limits.”

The suits also said the state had inspected the W.R. Grace operations in the 1950s and found asbestos in the air of “considerable toxicity,” and had issued death certificates in the 1960s that cited asbestos-related health conditions as the cause.

However, the state failed to inform workers or the public of the dangers of asbestos fibers at the Libby operations, the suits said.

An attorney for the state notified National Indemnity in 2002 about its possible liability, stemming from coverage the state had bought from the company from July 1973-June 1975.

National Indemnity argued it had limited liability, but in 2009, it agreed to pay $16 million of the $43 million settlement, while a court settled the issue of who would share the liability. The company filed action in state court in 2012 to resolve the matter, and Brown’s order last week ruled for the state.

National Indemnity can appeal the ruling to the Montana Supreme Court.”

Berkshire’s appetite for asbestos claim revenue has generated numerous interesting deals, to the least. The latest pair of deals received some public analysis in a July 13, 2017 web site article by insurance coverage lawyers at K & L Gates.  The introduction describes the deals reviewed; see the full article for the conclusions.

“Earlier this year, NICO announced that it had entered into two new retroactive reinsurance transactions –one with various AIG group insurers (the “AIG/NICO Deal”) and the other with the Hartford group insurers (the “Hartford/NICO Deal”). These two recent transactions differ from many of NICO’s prior retroactive reinsurance deals ─in which NICO and its affiliated claims-handling entity, Resolute Management Inc. (“Resolute”), had been given claims-handling responsibility ─ in that the recent transactions do not purport to give control of claims handling to NICO (and Resolute).

Despite representations in the press releases from AIG and Hartford announcing these deals that they (and not NICO) will maintain control of claims handling, a careful reading of the transactional documents for the AIG/NICO Deal and the Hartford/NICO Deal reveals that NICO gained important rights related to claims handling which, if fully exercised, could significantly impact how policyholder claims are handled and resolved (and, ultimately, whether those claims are paid). This Alert discusses how policyholders may be impacted by NICO’s exercise of the claims-handling related rights provided to it under the AIG/NICO Deal and the Hartford/NICO Deal.”

For persons and entities involved in mass tort claiming and litigation with insurance companies and/or other payors, there’s a new and potentially notable ruling about access to past bills for legal work. The ruling is described in a February 14, 2017 article at JD Supra by Cozen O’Connor.  Pasted below are the introduction and conclusion from the article. The entire article – and the opinion – should be read by people thinking about the long term, mass torts and insurance.

_______________________________________________________________

“The California Supreme Court recently held, in Los Angeles Board of Supervisors v. Superior Court(2016) that attorneys’ invoices may not be protected by the attorney-client privilege after litigation ends. The issue arose out of a lawsuit brought by the ACLU to obtain billing records by law firms representing the City of Los Angeles to defend litigation brought by jail inmates. The ACLU’s position was that these law firms engaged in “scorched earth” tactics.

***

There are three takeaways from this decision. The first is that this case signals a radical departure from the Court’s prior trend, as exemplified by the Costco case, of giving wide berth to attorney-client privilege, and retaining that privilege beyond the termination of the litigation. The second is that the academics on the Court may not appreciate the degree to which fee bills provide information to clients, especially insurance clients. The third is that this case has significance far beyond a Public Records Act dispute.”

As previously predicted by yours truly and other members of a multidisciplinary team, asbestos losses continue to rise for insurance companies. To start 2017, Hartford announced a $423 million charge to expand its coverage from NICO/Resolute.  Note that the price of the coverage is essentially 43 cents on the dollar. That’s notably more expensive than past prices for similar coverage. The press release of January 3, 2016 is online. It states:

“The Hartford Enters Into Reinsurance Agreement Covering Asbestos And Environmental Liability Reserves With National Indemnity CompanyJanuary 03, 2017 08:00 AM Eastern Standard Time

  • Agreement provides aggregate limit of up to $1.5 billion for adverse net loss reserve development on asbestos and environmental exposures
  • Reinsurance premium of $650 million will result in a fourth quarter 2016 charge to net income of $423 million, after-tax

The Hartford to retain control of claims handling for all exposures reinsured under this agreementHARTFORD, Conn.–(BUSINESS WIRE)–The Hartford has entered into a definitive agreement effective Dec. 31, 2016 with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., for a $1.5 billion aggregate excess of loss reinsurance agreement covering certain of The Hartford’s asbestos and environmental liability exposures. The reinsurance premium for this agreement is $650 million.

“Our asbestos and environmental exposures have generated adverse loss reserve development over time, creating uncertainty for investors and others about the ultimate cost of these policy liabilities, most of which were underwritten prior to 1985”
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The agreement covers potential adverse development on The Hartford’s existing asbestos and environmental reserves as of Dec. 31, 2016, excluding those held by the company’s U.K. Property and Casualty (P&C) run-off subsidiaries, which the company is under contract to sell and currently expects to close in first quarter 2017. The agreement provides up to $1.5 billion of reinsurance for adverse net loss reserve development above estimated net loss reserves of $1.7 billion as of Dec. 31, 2016. The Hartford will continue to handle claims, subject to certain conditions, and will retain the risk of recoveries under third-party reinsurance contracts for these exposures.

“Our asbestos and environmental exposures have generated adverse loss reserve development over time, creating uncertainty for investors and others about the ultimate cost of these policy liabilities, most of which were underwritten prior to 1985,” said Chief Financial Officer Beth Bombara. “The agreement announced today is consistent with our stated objective of evaluating options that had favorable economics, while taking into consideration our expertise in handling these complex claims. NICO is a very strong counterparty and this agreement reduces uncertainty about potential adverse development while allowing us to continue to handle both claims and reinsurance recoveries, which we believe will enable us to achieve the best possible resolution for these long-tail exposures.”

The agreement will be accounted for in The Hartford’s fourth quarter 2016 financial statements as a retroactive reinsurance agreement, resulting in a charge of approximately $423 million, after-tax, against fourth quarter 2016 net income, or a pro forma impact of $1.10 per share to Sept. 30, 2016 book value per diluted share of $48.30. The reinsurance premium is expected to have a slightly negative impact on 2017 P&C net investment income and does not affect the company’s expectation to execute its previously announced 2017 capital management plan including equity repurchases of $1.3 billion.

About The Hartford

The Hartford is a leader in property and casualty insurance, group benefits and mutual funds. With more than 200 years of expertise, The Hartford is widely recognized for its service excellence, sustainability practices, trust and integrity. More information on the company and its financial performance is available at https://www.thehartford.com. Follow us on Twitter at www.twitter.com/TheHartford_PR.

The Hartford Financial Services Group, Inc., (NYSE: HIG) operates through its subsidiaries under the brand name, The Hartford, and is headquartered in Hartford, Conn. For additional details, please read The Hartford’s legal notice.

HIG-F

Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our 2015 Annual Report on Form 10-K, subsequent Quarterly Reports on Forms 10-Q, and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.

From time to time, The Hartford may use its website to disseminate material company information. Financial and other important information regarding The Hartford is routinely accessible through and posted on our website at https://ir.thehartford.com. In addition, you may automatically receive email alerts and other information about The Hartford when you enroll your email address by visiting the “Email Alerts” section at https://ir.thehartford.com.

Contacts
The Hartford
Media Contact:
Michelle Loxton, 860-547-7413
michelle.loxton@thehartford.com
or
Investor Contact:
Sabra Purtill, 860-547-8691
sabra.purtill@thehartford.com”

Resolute’s asbestos claims management is in the gunsights of many, for multiple reasons. Resolute just took a notable discovery hit from Amtrak and Anderson Kill. Specifically, a November 23, 2016 opinion reaffirms and extends prior orders requiring broad production of documents and/or privilege logs. The new opinion and order is  Certain Underwriters at Lloyd’s v. Amtrak, No. 16-MC-2778 (FB), 2016 U.S. Dist. LEXIS 162783 (E.D.N.Y. Nov. 23, 2016). The ruling provides the following broad overview of the outcome:

“Currently pending before the Court is Amtrak’s motion to enforce a subpoena duces tecum served upon non-party Resolute Management, Inc. (“RMI”), which directs litigation, manages discovery and conducts the handling of Amtrak’s claims for coverage, including those at issue in the underlying action, on behalf of all the Underwriters at Lloyd’s who are parties to the coverage case and on behalf of a number of additional London insurers and non-London insurers. See Amtrak’s Motion to Compel (Oct. 11, 2016) (“Amtrak Mot.”), DE #1. In the underlying action, the Court previously ruled on, and in substantial part denied, a motion for a protective order filed by the RMI-represented entities concerning the same subpoena served upon RMI. See Minute Entry (Aug. 9, 2016) (“8/9/16 Minute Entry”), DE #423.

For the reasons set forth below, the Court grants Amtrak’s motion to compel, except to the limited extent described herein.”

The Johns-Manville chapter 11. A debacle of expediency and short-term thinking from 1992-1998, and then later “do overs.” In one of its phases, there were multiple “direct actions” suits against Travelers, which was the primary primary insurer of Manville. According to some plaintiff lawyers, Manville and Travelers conspired to defraud many plaintiffs. As a result, there were settlements and then debates about attorneys’ fees payable to plaintiff lawyers who filed some but not all of the direct action claims. The debate about attorneys’ fees ultimately recently produced an opinion that revisits some of the old days.  In it, the court explained:

“These direct action lawsuits reached a critical mass in early 2002. Trial Tr. June 14, 2016, 11:19-20, June 24, 2016, ECF No. 213 (“Tr. 6/14/2016″). On June 19, 2002, Travelers filed its first order to show cause for a temporary restraining order in this Court, seeking to preliminary enjoin certain direct action asbestos lawsuits that had been filed against Travelers in various state courts. See Mem. Law Supp. Order to Show Cause, In re Johns-Manville Corp., No. 82-11656 (Bankr. S.D.N.Y. June 19, 2002), ECF No. 3413. The Court granted the order to show cause the same day. Order to Show Cause, In re Johns-Manville Corp., No. 82-11656, ECF No. 3412. On July 2, 2002, this Court entered a signed stipulated briefing schedule agreed to by Travelers and certain asbestos plaintiffs’ attorneys, [*10] including Lawrence Madeksho. Stipulation, In re Johns-Manville Corp., No. 82-11656, ECF No. 3425.”

The opinion recounts some of the amazing Manville history. It is not for publication, but is online as Bogdan Law Firm v. Bevan & Assocs., LPA (In re Johns-Manville Corp.), Nos. 82-11656 (CGM), 15-01023 (CGM), 2016 Bankr. LEXIS 3145 (U.S. Bankr. S.D.N.Y. Aug. 26, 2016).

Plaintiffs continue to probe the limits of bankruptcy court injunctions, an effort that is even more interesting while the Second Circuit’s GM decision makes it way up to SCOTUS. As to the probes, this week brought two new rulings in the WR Grace chapter 11 proceedings. One partially succeeded and one did not succeed at all. Both sets of claims were direct action “failure to warn” claims against insurers that provided workers’ compensation insurance to WR Grace for the Libby Montana manufacturing plant, which included vermiculite processing. The two opinions do not address any due process issues, or whether there was any actual effort to protect the rights of the claimants. Instead, the opinions proceed on the assumption that section 524(g) injunctions are proper. From that perspective, the court barred direct action claims against CNA but allowed direct action claims against Maryland Casualty. The opinions are in many ways identical and the differing outcomes depend on the wording of particular documents from the final chapter 11 plan. The CNA opinion is here and the Maryland Casualty opinion is here.