Texas Supreme Court Finds Coverage for Deepwater Horizon Defense Costs: Three Takeaways from Anadarko Petroleum v. Houston Casualty
Nearly nine years on, the Deepwater Horizon disaster continues to make law for policyholders and insurers—this time in a ruling from the Texas Supreme Court granting Anadarko Petroleum Corporation up to $150 million in coverage for defense expenses relating to underlying bodily injury and property damage claims arising out of the April 2010 blowout and oil spill. Anadarko’s London market underwriters relied on a “Joint Venture Provision” in their “energy package” insurance policy to argue that coverage for defense costs was limited to 25% of the policy’s $150 million limit, based on Anadarko’s 25% ownership interest in the joint venture operating the Deepwater Horizon rig. While the Joint Venture Provision includes three distinct clauses, which were all disputed in the ensuing coverage litigation, the provision that ultimately proved key to coverage contained the following language: [A]s regards any liability of [Anadarko] which is insured under this Section III and which… Continue Reading
An impermissible acquisition, access, use, or disclosure of HIPAA “protected health information” (“PHI”) under an employer’s group health plan (which is a “Covered Entity” under HIPAA) is not uncommon. If such a breach occurs with respect to the PHI of a Covered Entity, the employer needs to know that the Covered Entity may be required by HIPAA’s breach notification rules (the “Breach Rules”) to issue certain notices and perform other tasks. Analysis of the Impermissible Acquisition, Access, Use, or Disclosure of PHI An impermissible acquisition, access, use, or disclosure of PHI is presumed to be a “breach” unless the Covered Entity demonstrates that there is a low probability that the PHI has been compromised. The Breach Rules outline the four-factor risk assessment that a Covered Entity must perform (and document) in order to make such a demonstration. If, after completing the step above, the Covered Entity determines that a “breach”… Continue Reading
The third-party administrator (“TPA”) in this case, UnitedHealth Group and its related entities (“UnitedHealth”), engaged in “cross-plan offsetting”, which involves not paying a claim under Employer A’s group health plan in order to recover an overpayment made by Employer B’s group health plan to the same healthcare service provider. For example, assume UnitedHealth overpaid a provider by $200 on behalf of Employer B’s group health plan, and a participant in Employer A’s group health plan incurred a $250 claim with that same provider. UnitedHealth would only pay the provider $50 on behalf of the participant in Employer A’s group health plan. The U.S. Court of Appeals for the Eighth Circuit agreed with the federal district court that UnitedHealth’s interpretation of the plans was unreasonable and cross-plan offsetting was not permitted under the plans because (i) interpretations that authorize practices that push the boundaries of what ERISA permits should be viewed… Continue Reading
In the recent case of Jander v. Retirement Plans Committee of IBM, the U.S. Circuit Court of Appeals for the Second Circuit ruled in favor of a group of IBM retirement plan participants who alleged that plan fiduciaries had breached their duty to prudently manage the assets of the IBM Company Stock Fund, an ESOP governed by ERISA. The case was filed after IBM’s stock price declined by more than $12 per share in 2014, following an announcement that IBM would pay $1.5 billion to offload its struggling microelectronics business. Plaintiffs alleged that IBM failed to publicly disclose enormous losses being incurred by the microelectronics business and had continued to report an inflated value for the business (which, in turn, resulted in an artificially high IBM stock price). The district court dismissed the suit, ruling that the plaintiffs had failed to state a duty-of-prudence claim under ERISA because a prudent… Continue Reading
The federal government shutdown is affecting IRS operations relating to determination letter filings and submissions under the Employee Plans Compliance Resolution System, among other things. According to page 94 of the IRS Lapsed Appropriations Contingency Plan in effect at the time of the shutdown (the “Contingency Plan”), only three employees in the IRS TEGE Employee Plans department are authorized to continue working through the shutdown to ensure statute protection and continued processing of remittances. Attempts to contact the IRS general assistance line for determination letter filings result in the following automated message: Welcome to the Internal Revenue Service. Live telephone assistance is not available at this time. Normal operations will resume as soon as possible. You may continue to use our self-service tools… View the Contingency Plan.
A recent opinion issued by the U.S. Court of Appeals for the Second Circuit highlights the adverse consequences that may arise when an employer sponsor of a group health plan that is subject to ERISA fails to maintain a summary plan description of the plan (“SPD”) that is clearly written and that adequately and accurately describes the benefits available under the plan and the terms and conditions of coverage. Case Summary “In re: Emily DeRogatis” is a decision out of the U.S. Court of Appeals for the Second Circuit. Under the facts of this case, Mrs. DeRogatis, the widow of a deceased participant in a multiemployer group health plan, filed a breach of fiduciary duty claim under ERISA against the plan administrator, asserting that prior to her husband’s death, they were provided misinformation by two non-fiduciary, “ministerial” plan representatives (the “Representatives”) regarding the effect of Mr. DeRogatis’s retirement on their… Continue Reading