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Anatomy of an Excess Liability Claim

Mark Bluestein, Vice President/Counsel – AEGIS Insurance Services, Inc.Garrett Finnegan, Senior Litigation Counsel – AEGIS Insurance Services, Inc.Mark Rutkowski, Senior Litigation Counsel – AEGIS Insurance Services, Inc.David Schlee, Shareholder – Schlee, Huber, McMullen & Krause PC

Introduction

• Purpose – “back to basics” discussion of best practices

Claim reporting

Investigation

Evidence collection and preservation

Litigation management

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Claims Procedures

• AEGIS provides specific guidelines to assist in effective claims management “Assure Effective Management of Claims and Claims

Services and Appropriate Advice to AEGIS and its Members Regarding Claims Issues to Achieve the Business Objectives.”

• Claims Procedure Guide is available through AEGISlink.com

AEGIS Claims Reporting Protocol

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AEGIS Claims Reporting Protocol

• Importance of “prompt reporting”

• Proper and timely reporting of claims requires a clear understanding of what and how to report

• Any uncertainties should be clarified by discussions with the Claims Division

AEGIS Claims Reporting Requirements per Policy

The AEGIS Excess Liability Insurance Policy provides that

“As a condition precedent to rights under this POLICY, the INSURED shall as soon as practicable give the COMPANY:

1. Written notice of any CLAIM made against any INSURED estimated by the INSURED to involve ULTIMATE NET LOSS in excess of fifty percent (50%) of the UNDERLYING LIMIT shown in Item 6 of the Declarations, or

2. NOTICE OF CIRCUMSTANCES for any OCCURRENCE or Circumstances likely to give rise to a CLAIM to Condition (C) (1) would apply;

and such information and cooperation as the COMPANY may reasonably require. Neither Application for this POLICY or any Endorsement or for any renewals thereof nor any information contained therein shall constitute a notice of CLAIM or NOTICE OF CIRCUMSTANCES.”

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AEGIS Claims Reporting Requirements

• All occurrences or claims wherein the member’s reserve or evaluation is 50% or more of the self-insured retention

• Any occurrence which may give rise to a claim creating potential exposure to AEGIS regardless of the self-insured retention

• Any claim or class of claim, involving latent injury or damage Where the injury or damage develops over time

Where the time of the injury or damage is uncertain

Where there is repeated exposure before an injury or damage is manifested

• All potential claims involving serious injuries

When to Report

Serious Injuries

• Death

• Brain damage

• Extensive burns

• Paraplegia

• Amputations

• All other injuries likely to result in a permanent disability rating of 50% or more

• Injuries resulting in multiple deaths

• Substantial property damage

• All class actions

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AEGIS Claims Reporting Requirements

• A member should acquire sufficient factual information and report promptly in writing to:

AEGIS Insurance Services Inc.Claims Division

One Meadowlands PlazaEast Rutherford, NJ 07073

Bruce W. Roznowski, Senior Vice PresidentBruceRoznowski@aegislimited.com

Where to Report

AEGIS Claims Reporting Requirements

• Members and brokers can also report electronically on our website:

www.aegislink.com

• To obtain access to our website if you do not have a password, please contact our Claims Division Administrator, Cindy Gagliardi:

cindygagliardi@aegislimited.com 201-508-2865

Where to Report

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AEGISlink.com

• New claims system

• User-friendly reporting process

“My Claims”

Incident Investigation

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The Window of Opportunity

• Official investigators at site Providing cover

• Witness interviews Before they clam up

• Preserve physical evidence Before it goes away

The Investigation Team

• Outside counsel vs. inside counsel Privilege issues Anticipation of litigation vs. standard company practice

Insurer / insured privilege

Inside counsel should only handle litigation – e.g., general counsel may not preserve privilege

• Counsel as team leader

Counsel

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Scene Documentation

• 3D laser scan technology May replace much of the traditional measurement

and photography work Larger engineering firms have it Can also document explosion damage

The Investigation Team

• Company employees vs. outside consultants

• Disciplines Fire cause and origin Engineer Metallurgy / plastics Odorant – chemist Industry codes and standards Gas migration Sewer gas and sewer systems

Experts

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Command and Control

• Essential – decision-maker in charge

• Guidance for investigation

• Guidance for interaction with outside investigators

• Evidence preservation

• Evidence control

• Communications control

Permission to Enter Scene

• Official investigating agency Can give permission if scene not released Should advise official investigator even if scene is released Invite attendance

• If scene released – need owner permission Permission from property insurance carrier If representative is on scene

If not, best to go to owner

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Check the Equipment

• Odorometer, CGI, CO detector

• Selection of unit – check service history Used unit – track record Record serial number for unit Check calibration of unit

• Combustible Gas Indicator (CGI) Hose – not new

• Odorometer Hose – new

Gas

Company Personnel on Scene

• Limit the number of personnel

• Media and adverse investigators Audio and video recorders

• Instructions Do not talk to outsiders Be professional – no wisecracks Refer inquiries to spokesperson Exception: official investigators Stick to the facts – no opinions

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Handling of Physical Evidence

• Photograph the evidence in place The fire scene is evidence Note the location on diagram

• Who owns the evidence? If someone else Document the preservation request

Set up spoliation claim

Extreme case: legal action

If your company Chain of custody documentation

Storage – secure location

Odorometer Tests

• Do this as soon as possible

• Closest location to the incident location Consider several locations

• Use several different testers Check for colds, allergies, etc. Can be done by company personnel (2) Separate reading by official investigator on scene

• Two readings First odor Readily detectible

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Witness Interviews

• Window of opportunity

• Attorney or under attorney guidance Documentation – attorney memo, including impressions

of witness(es) Decision as to statements, affidavits, recording

• Company personnel on alert If they overhear information, get to counsel for follow-up

Employee Interviews

• Do not record audio – no need Exception – if employee is to be terminated or disciplined

• Attorney interview only – not by non-legal personnel unless at direction of attorney Attorney makes memo of the interview Control who is present – only those needed for technical

support

• Former employees

• Union issues – union representative present?

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Interviews by Official Personnel

• Cooperation is important

• Just the facts – no opinions, unless obvious

• Should have identified and interviewed key personnel before But can't defer or delay Attorney can be present, but don't make a big issue of it.

Ask but don't insist. There are exceptions

If “barred,” then perhaps insist

The Media

• Designate a spokesperson – and stick to it

• Should NOT be counsel

• Usually company communications director Used to dealing with the press Knows the personalities

• Company personnel instructed to refer inquiries to spokesperson – training

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EvidenceAn Example

EvidenceAn Example

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Document Control and Preservation of Evidence

Documents and Tapes

• Paper: memos, correspondence, printouts

• Electronic: email, customer records, dispatch records, dispatch recordings, surveillance video, SCADA, mapping system, telephone calls, voice messages, photographs, text messages, websites

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Objectives

• Preserve information for use in defense

• Avoid generation of adverse evidence

• Avoid evidence spoliation

Legal Hold Notice

• Initial notice – as soon as possible Do not wait for lawsuit

• Identify recipients

• Establish subject matter

• Amend freely as investigation progresses

• Repeat notices

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Creation of Documents

• Create a document only when necessary Required reports and forms Instruction by counsel or others in charge of investigation

• Discourage the creation of documents Especially e-mail Personal memos Long narratives

Fact vs. Opinion

• Stick to the FACTS

• Avoid written opinions No written opinions until all the facts are known Written preliminary opinions – always a problem in litigation

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Internal Evidence Control

• Instruction to personnel In general – no discussion of incident “Shop talk”

On scene Don’t talk to strangers

Don’t talk unless necessary

Be professional

Discussion with dispatch – recorded Be professional

Verbal

Company Evidence

• Identify key company employees Employees who were involved in service to incident location Immediate interview by counsel Before official investigators ask

• Identify key company policies that may be pertinent

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Litigation Management

Selection of Defense Counsel

• Constructive partnership and communication

• Claims professionals must be actively involved in evaluation, strategy, and disposition of each case

• Defend early and an aggressive strategy should be developed and followed on probably tried cases

• Litigation plan and budget are recommended

• Review and reevaluate frequently

• Reasonable and necessary litigation expenses

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Litigation Plan

• Gives the defense team visible targets at which to aim

• Enables the development of a realistic case strategy

• Requires defense counsel to consider litigation strategy before each important phase of the case

• The foundation of a good litigation plan is involvement, management, and control

Defense Counsel Reporting

• Facts

• Expert opinions and believability of the experts

• Assessments of the liability of each party

• Damages / injuries

• Other factors and consideration Venue

Skill of judge or other counsel

• Counsel should provide a verdict range

• Counsel should have a strategy for disposition, including motion practice, i.e. Daubert, summary judgment

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AEGIS Claims Services

AEGIS Claims Litigation Services

• Gas Litigation Service (AGLS)

• Electric Litigation Service (AELS) Expert Witness Database

• Climate Change Litigation Service

• EMF Litigation Service

• Employment Practices Litigation Service

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AEGIS Claim Services

• The AEGIS Structured Settlement Company (TASSC)

• Loss Control Engineers with utility backgrounds perform risk

assessments and hold training programs Investigating Natural Gas and Electrical Incidents

workshops

Educational Programs

• AEGIS Roundtables Witness Selection and Preparation

AEGIS NJ office: September 12 and Boston: September 26

Ethics in 2014 – Across the Board AEGIS NJ office: March 6 and Chicago: March 20

The Essentials of Claims Investigation AEGIS NJ office: June 5 and New Orleans: June 19

• 2014 Wildfire Symposium

• 2014 Claims Seminar

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Working with AEGIS Claims

• Successful resolution of claims is a team effort

• Regular reporting of litigation status

• Regular contact with AEGIS Claims Professional

• Utilizing AEGIS litigation resources and experience

Success Through Partnership

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Thank You!

AEGIS2013 Policyholders’ Conference

Baltimore, MarylandJuly 29 – August 1