TIPS 75th Anniversary

The Tort & Insurance Law Jounal

Summer 1999
Volume 34, Number 4

Table of Contents

Sex, Lies, and Insurance Coverage? Insurance Carrier Coverage Defenses for Sexually Transmitted Disease Claims

Logical Analysis: A Method of Examination of Expert Medical Opinion Through the Basic Logic of Medical Reasoning

Substantive and Procedural Considerations in Initiating a Recoupment Action Under ERISA Section 502(a)(3)

Kumho Tire Co. v. Carmichael: A Flexible Approach to Analyzing Expert Testimony Under Daubert

The Attorney_Client/Work Product Privileges and Surety Investigative Information: Applying Old Information to Turn New Tricks

Is It Still Possible to Litigate Against Lloyd’s in Federal Court?

Insurance Recovery of Prenotice Defense Costs

Caveat Lawyer: The Restatement of the Law of Lawyer’s Invite to Rely Standard for Attorney Liability to Nonclients

Logical Analysis: A Method of Examination of Expert Medical Opinion Through the Basic Logic of Medical Reasoning, 34 TORT & INS. L.J. 4 (1999)
By: Henry Berry, M.D.

This article examines the technique of logical analysis as an approach that allows for more effective cross-examination of expert medical witnesses. The technique is intended to clarify the methods and reasoning of the expert and expose such shortcomings as superficiality and incompleteness, close-mindedness, failure to consider reasonable alternatives in the differential diagnosis, the lack of confidence in a diagnosis, treatment decisions that might have been imprudent or without rational foundation, and the failure to recognize that an unsuccessful treatment outcome can indicate that the working diagnosis was an incorrect one. Examined in detail the seven stages of logical analysis, including the evidentiary foundation (history, physical examination, and diagnostic testing); hypothesis; differential diagnosis; level of proof and confirmation; final or working diagnosis; and treatment.

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Kumho Tire Co. v. Carmichael: A Flexible Approach to Analyzing Expert Testimony Under Daubert, 34 TORT & INS. L.J. 4 (1999)
By: Patricia A. Krebs and Bryan J. De Tray

The focus of this article can be summarized in one sentence: Daubert’s gatekeeping requirement applies to all expert testimony. The U.S. Supreme Court’s 1993 decision in Daubert v. Merrell Dow Pharmaceuticals, Inc. provoked much debate, as well as a split of authority, over the role of trial courts in determining the admissibility of expert testimony under Rule 702 of the Federal Rules of Evidence. The focus of the debate was the extent of Daubert’s applicability, specifically, whether Daubert applied only to scientific testimony (testimony grounded in scientific principles or particular methodologies) or also to nonscientific expert testimony (testimony based on general experience and knowledge). This debate was recently resolved in Kumho Tire Co. v. Carmichael. In Kumho, the Supreme Court ruled that the Daubert rationale applies to all expert testimony, reversing the Eleventh Circuit’s decision that Daubert applies solely to expert testimony based on application of scientific principles or theories, rather than to “nonscientific testimony” based on an expert’s personal experience and skill. The authors examine the history and potential ramifications of Kumho Tire in detail.

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Sex, Lies, And Insurance Coverage? Insurance Carrier Coverage Defenses for Sexually Transmitted Disease Claims, 34 TORT & INS. L.J. 4 (1999)
By: Daniel C. Eidsmoe and Pamela K. Edwards

This article discusses the policy defenses that insurance carriers have asserted in response to liability claims for sexually transmitted disease against homeowner’s insurance. Although it is clear that liability policies were never written with the intention of covering such claims, litigation has clearly shown that, for the most part, homeowners’ insurance policies of the 1980s did not contain adequate policy language to preclude coverage for such claims. Recent coverage litigation has shown that the policy language written in response to these claims has withstood the test of judicial scrutiny. Insurance carriers must be conservative in the application of the exclusions, however, since the misapplication of any policy exclusion can lead to a legislative or judicial backlash that would limit the effectiveness of the policy language. The article also discusses how exclusions are worded and reviews the successes (and failures) insurance carriers have had litigating these coverage disputes.

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The Attorney-Client/ Work Product Privileges and Surety Investigative Information: Applying Old Information to Turn New Tricks, 34 TORT & INS. L.J. 4
By: Amy L. Fischer
This article discusses the application of the attorney-client and work product privileges to the courts’ changing and unsettled perception of the insurance/suretyship business. Section I defines the basic elements of the attorney-client and work product privileges and implied waiver of these privileges. Section II considers the difference between nonprivileged business functions and the privileged attorney services. Section III defines the common interest doctrine and waiver under this doctrine, explores its application to insurer-insured communications, and then considers the applicability of the doctrine to surety-principal communications. After considering the differing approaches to applying the attorney-work product privilege to insurance investigative files, section IV considers the applicability of these rationales to surety claims. Section V discusses specific expert issues: (1) the distinction between litigation consultants and business consultants; (2) the discoverability of attorney work product of, by, and through expert witnesses; and (3) the discoverability of opinions of a “de-designated” expert.

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Insurance Recovery of Prenotice Defense Costs, 34 TORT & INS. L.J. 4 (1999)
By: Stephen A. Klein

This article analyzes the impact of Sherwood Brands, Inc. v. Hartford Accident and Indemnity Co. and Roberts Oil Co. v. Transamerica Insurance Co. on the arguments supporting recovery of prenotice defense costs. Together, these cases provide insureds with a powerful analytical foundation for recovering defense costs incurred prior to notice. Both decisions reject any per se exclusion as inequitable and inconsistent with rational policy. Where an insured defends itself effectively and efficiently in the period prior to notice, the insurer benefits from the insured’s efforts—indeed, had it received notice earlier, the insurer may well have taken the very same measures. Three provisions of the commercial general liability policy, discussed within this article, bear upon the issue of coverage for prenotice defense costs: the defense obligation contained in the policy’s insuring agreement, the notice requirement, and the voluntary payments provision. The analysis turns on the proper scope and timing of the defense obligation, the effect on this of the notice requirement, and the meaning and effect of the voluntary payments provision.

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Substantive and Procedural Considerations in Initiating a Recoupment Action Under ERISA Section502(A)(3), 34 TORT & INS. L.J. 4 (1999)
By: Thomas H. Lawrence and John M. Russell

Initiating litigation seeking recoupment of plan benefits involves a number of considerations. Plan fiduciaries must consider whether to file suit, when to file suit, who is a proper party, and where to file suit. Other issues include obtaining service of process and personal jurisdiction, determining whether the action is being brought within the applicable statute of limitations, pleading "appropriate equitable relief" under the Employee Retirement Income Security Act of 1974, and seeking preliminary injunctive relief. This article discusses the statutes and case law and addresses such issues as whether there is a fiduciary duty to litigate every recoupment case, venue, personal jurisdiction or process, statutes of limitations, and unjust enrichment under federal law.

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Caveat Lawyer: The Restatement of the Law of Lawyer’s “Invite to Rely” Standard for Attorney Liability to Nonclients, 34 TORT & INS. L.J. 4 (1999)
By: Sean Pager

This article discusses the erosion of privity barriers that has led to a dramatic growth in lawsuits filed against attorneys by third-party nonclients. Courts in different jurisdictions have sanctioned such claims under variant theories of negligence and third-party beneficiary doctrines, although they have generally been careful, however, to circumscribe the resulting exposure that attorneys face under any of these theories. This pattern of judicial restraint in the realm of third-party liability for attorneys, however, is threatened by the expansive language of the forthcoming Restatement (Third) of the Law Governing Lawyers. Of particular concern is section 73, which establishes duties of care that lawyers owe to certain nonclients at the risk of malpractice. Each of the section’s four parts codifies a different theoretical basis for finding such a duty of care. Although most of these sections track existing case law in narrowly defining the context in which these duties apply, part two of section establishes an expansive composite duty using untested and potentially ambiguous language. This article argues at length that part two of section 73, in fact, represents a calculated departure from existing case law. Grounded in academic theory instead of precedent, its provisions can be defended neither on positive nor normative grounds.

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Is It Still Possible to Litigate Against Lloyd’s in Federal Court?, 34 TORT & INS. L.J. 4 (1999)
By: John M. Sylvester and Roberta D. Anderson

The answer is maybe. Within the past year, decisions by the Seventh Circuit and the Second Circuit have cast serious doubt about whether a federal court may exercise subject-matter jurisdiction over coverage cases involving Underwriters at Lloyd’s. Historically, coverage cases in federal court involving Lloyd’s have been founded upon diversity-of-citizenship subject-matter jurisdiction. Yet, in Indiana Gas Co. v. Home Insurance Co. and E.R. Squibb & Sons v. Accident & Casualty Insurance Co., the Seventh and Second Circuits, respectively, held that, for purposes of federal diversity jurisdiction, it must be demonstrated that each underwriting member (or Name) subscribing to each Lloyd’s policy at issue resides in a state different from the policyholder’s state of residence. Moreover, the Second Circuit in Squibb also ruled that it must be demonstrated that each defendant Name has at least $75,000 at stake in the policyholder’s claim to satisfy diversity requirements. This article outlines the rationale behind the Indiana Gas and Squibb decisions and compares it with the rationale historically used by federal courts to underlie their conclusion that diversity jurisdiction exists over Lloyd’s. In addition, this article examines various alternative theories, including theories discussed by the Indiana Gas and Squibb courts, under which a coverage action against Lloyd’s may be maintained in federal court, notwithstanding the recently heightened requirements for federal diversity jurisdiction.

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The Tort and Insurance Law Journal

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