In this continuation of our video series addressing how clients perceive insurance recovery law, we introduce a principal and founder of one of the largest retail developers in Mexico.
The FCPA Investigation
The principal tells the unfortunate, but not so unusual, story about how companies can get tied up in Foreign Corrupt Practices Act (FCPA) investigations. The expense of defending the FCPA claim was enormous. They hired the best of defense firms, but needed an equally well regarded insurance recovery firm to address the insurance implications of their claim.
Insurance Recovery Success Story
On the advice of outside general counsel and others, they approached Miller Friel to see if we could help them find an insurance solution to the problem.
The insurer had already denied the claim when we got involved. A series of letters were written, but the insurer appeared not to care. We were given authority to sue the insurance carrier in Colorado. A bad faith lawsuit was filed, and the insurer immediately proposed mediation and settlement. The insurance recovery results reached in this case were instrumental to the ongoing success of our client, and we are glad to have been a part of their continuing success story.
The Insurance Carriers Unexpected Response to the Claim
The most interesting thing that happened in this case, however, was not the result. Rather, it was the insurers reaction to the claim. Initially, the insurers took the reaction that the claim was not covered. Later, we found out why. Insurers expect policyholders to self-insure for these kinds of losses. Their basis for the insurers’ conclusion was that policyholders just don’t tender FCPA claims for coverage, despite the fact that they are covered.
We hope that you enjoy the video.
Below is a transcript of today’s video:
Insurance Recovery Law Firm For FCPA Investigations: A Success Story
We received a subpoena from the US Government requesting all the information that we had within the company for the last 8 years. This included emails, accounting records, finance records, and at the end of the day it cost us about $9 million to produce the information. The $9 million was spent on hiring very prestigious law firms, hiring forensic accountants and the distraction associated with the investigation was enormous.
We are a relatively small firm and spending that amount of money in any given year is very troubling. During the course of this process we knew that we had a D&O policy in place which we always carry, and it was our belief that this investigation should be covered and reimbursable through this D&O policy.
We approached the carrier and submitted a claim and very quickly they denied the claim. We had never been through this process before and so didn’t know exactly how to react and we were referred to Miller Friel to look at the investigation. We quickly got together with Mark, and with Tab, we’re a Denver based company and they came out to see us within a couple of days, very responsive.
We put together a very detailed strategy with Miller Friel and submitted a lot of correspondence to the insurance company and at the end of day the insurance company just did not respond and we had no choice but to take legal action. We filed a lawsuit in Colorado courts and very quickly after that lawsuit was filed, the insurance carrier reached out to Miller Friel and asked us to have an open discussion.
We didn’t know exactly what was going to happen and we were somewhat reluctant to file a lawsuit against them, but based on the outcome of the case it was the best thing to do. We ultimately ended up recouping nearly all of our expenses that we had spent on the investigation and also got a commitment from the insurance company to cover all of our legal bills going forward.
So, at the end of the day we knew that we were in the right but because we had never had any experience with this particular matter it was critical that Miller Friel come in and advise us. So, from a business perspective we were, this was out of our wheelhouse.
We went to Miller Friel and they reassured us that this was something that happened with insurance companies and it was important to put together a clear strategy and respond to them quickly, and had it not been for Miller Friel, I don’t think we would have had the confidence or the knowledge to take the appropriate action.
As a business, we always make it a practice to buy D&O insurance, it’s a very expensive policy to buy. So, it was very frustrating when we submitted the claim to the company and they denied it immediately. It was very frustrating because we did nothing wrong and we believe we took all the right steps in responding to the subpoena, and with submitting the claim to the insurance carrier.
Miller Friel was incredibly helpful. This was the first experience we had with this type of event and Mark and Tab were so comforting and so responsive to our questions. We spent much time together, in the same office, we spent a lot of time on the phone and we ultimately got together in Washington, DC to complete the transaction and go to mediation.
During the mediation process they couldn’t have been more professional and more helpful and I think that was really what ended up bringing us to the right conclusion. We ended up meeting with three professionals from the insurance carrier, and the fact that Mark was so well prepared I think really made the difference.
The mediation process went very well. Both sides were very respectful and professional, and the approach that Mark took in the mediation I think is what got us to the right outcome, I think had there been any kind of hostility or aggression we wouldn’t have gotten to where we needed to be and the fact that everybody was respectful and professional really came to the right outcome for us.
When we first received the subpoena we were working with our general counsel whom we respect very much but who didn’t have a tremendous amount of experience with this particular type of litigation and with the involvement of insurance companies.
That firm actually recommended Miller Friel as the experts in this particular space. Had we not brought Miller Friel into the fold, I’m not sure we would have gotten anywhere close to the result that we had with them.
We actually worked very closely with our general counsel and Miller Friel. They spent a lot of time talking to each other, and the feedback that we got from our general counsel was that Miller Friel was absolutely the best firm they had seen in this particular space. Going forward I’m sure that our external general counsel will reach out to Miller Friel for their other clients when needed.
As we’ve moved forward and put this particular experience behind us and we’ve gotten new D&O policies in place, we’ve reached out to Miller Friel to have them review our new policies to make sure that we’re covered going forward.