Notice Considerations in Seeking Reimbursement of Defense Fees Where an Insured Has a Self-Insured Retention
Where a company has a significant self-insured retention, the date for notice may dovetail with the exhaustion of the amount of SIR, creating a potential for full recapture of all fees that could have otherwise been incurred had more timely notice been provided. Moreover, the pertinent policies at issue may be those not presently in place, but those issued many years ago on an “occurrence” basis. Thus many major intellectual property cases continue for a number of years. A 1990 lawsuit which was resolved in 2000, with constructive notice provided in 1991, may permit pursuit of a claim against an insurer for several years.
Where the jurisdiction has a long statute of limitations for breach of contract (i.e., six years in Minnesota, four years in California), a lawsuit that ended three and a half years ago, where constructive notice occurred in 1991 for a lawsuit filed in 1990, may permit recovery of attorneys’ fees under a policy issued in 1986, if allegations of the complaint triggered liability for damages within that policy period. The policy forms in existence as of 1986 may be far broader than those present today. Thus the archeological effort to assess for audit purposes whether the existing insurance coverage best responds to present risks may, as an added benefit, reveal pathways to recovery of outstanding attorneys’ fees long ago incurred by the corporation. This opportunity may be referred to as “meat on the table” which may have been left without notice by the corporation. Another benefit of such an audit is to create a protocol to assess what kinds of claims may properly trigger notice to an insurer.
Although some major corporations may have policy provisions that do not require direct notice of a claim until the self-insured retention is achieved, there may be no tracking mechanism that dovetails with the policy notice clause, especially where different kinds of policies are at issue. Thus a policy form that requires notice when 50% of the retention is exhausted would require careful tracking of litigation expense to see when that threshold had been achieved.
Similarly, a list of hypothetical fact scenarios that would trigger coverage, as exemplars of the kind of lawsuits that should be highlighted and brought to the attention of the coverage oversight designee, is critical. Indeed the best way to assure that proper reporting occurs of such claims is to designate someone with knowledge of both the insurance coverage, templates for situations which may implicate coverage, as well as knowledge of all litigation matters filed against the company, with the task of assessing coverage at a preliminary level to ascertain whether reporting is appropriate.
Outside coverage counsel can enhance the ability of the coverage coordinator to achieve such a goal. Where the corporation presently has in effect pathways for product liability, environmental, securities law, and other non-routine, someone within the IP counsel department can be tasked with assessing coverage for such circumstances. It is also essential that the potential form in which a coverage action may be pursued is factored into this analysis.
Where the jurisdiction has a long statute of limitations for breach of contract (i.e., six years in Minnesota, four years in California), a lawsuit that ended three and a half years ago, where constructive notice occurred in 1991 for a lawsuit filed in 1990, may permit recovery of attorneys’ fees under a policy issued in 1986, if allegations of the complaint triggered liability for damages within that policy period. The policy forms in existence as of 1986 may be far broader than those present today. Thus the archeological effort to assess for audit purposes whether the existing insurance coverage best responds to present risks may, as an added benefit, reveal pathways to recovery of outstanding attorneys’ fees long ago incurred by the corporation. This opportunity may be referred to as “meat on the table” which may have been left without notice by the corporation. Another benefit of such an audit is to create a protocol to assess what kinds of claims may properly trigger notice to an insurer.
Although some major corporations may have policy provisions that do not require direct notice of a claim until the self-insured retention is achieved, there may be no tracking mechanism that dovetails with the policy notice clause, especially where different kinds of policies are at issue. Thus a policy form that requires notice when 50% of the retention is exhausted would require careful tracking of litigation expense to see when that threshold had been achieved.
Similarly, a list of hypothetical fact scenarios that would trigger coverage, as exemplars of the kind of lawsuits that should be highlighted and brought to the attention of the coverage oversight designee, is critical. Indeed the best way to assure that proper reporting occurs of such claims is to designate someone with knowledge of both the insurance coverage, templates for situations which may implicate coverage, as well as knowledge of all litigation matters filed against the company, with the task of assessing coverage at a preliminary level to ascertain whether reporting is appropriate.
Outside coverage counsel can enhance the ability of the coverage coordinator to achieve such a goal. Where the corporation presently has in effect pathways for product liability, environmental, securities law, and other non-routine, someone within the IP counsel department can be tasked with assessing coverage for such circumstances. It is also essential that the potential form in which a coverage action may be pursued is factored into this analysis.
