Government investigations and enforcement efforts have grown rapidly in the past several years. The Securities and Exchange Commission (SEC), Department of Justice (DOJ), the Office of the Comptroller of the Currency (OCC), the new Consumer Financial Protection Bureau (CFPB), and state attorneys general have come after businesses in a big way, generating a flurry of headlines. What is not getting publicity is the enormous cost of responding to these government investigations. Fortunately, insurance policies provide valuable coverage for many of these investigations.
Brian Friel of Miller Friel, PLLC recently presented on the topic of “Insurance Coverage on the topic of “Insurance Coverage for Governmental Investigations” for HB Litigation Conferences and West LegalEdcenter. The presentation is available through either West Legaledcenter (search insurance) or HB Litigation. Course handouts Insurance Coverage for Government Investigations are available here.
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Jonathan discusses the fact that insurer representatives are receiving more requests for discovery on their claim files, whether in a direct coverage action or via subpoena in connection with a claim against their insured.
This raises a good point, even though it was not raised in this post. Corporate policyholders are entitled to full and complete claims information. We are not aware of any situations where the government has issued a subpoena against an insurer, as that is a total waste of time and effort for them. That is not necessarily the case with non-governmental claims. If an insurance carrier denies a claim, and the policyholder has no objections, it is likely appropriate for the insurance company to turn over claims files to the underlying claimant. If, on the other hand, the insurance company is paying for 100 percent of the claim under an unqualified defense, there is no need for the insurance company to turn over anything, because the insurance carrier is united with the policyholder to defend the claim. The issue only arises in the first instance when the insurance company attempts to limit their liability at the expense of the corporate policyholder’s interests. When they do this, either by reserving their rights, or by denying coverage, the insurance company puts itself at risk and should turn over everything relating to the claim.