Insurance Coverage for Alleged Sexual Misconduct

Written by Gary A. Reinhardt, Esq. As news continues to swirl around allegations of persistent and pervasive sexual misconduct, ultimately lawsuits will result.  In an effort to get around an intentional act exclusion and find coverage, plaintiffs will blame employers, parents or others with some sort of control or supervisory role for negligently handling or dealing with the perpetrator.  Many policies now have exclusions for claims of sexual “molestation,” “physical abuse” or “sexual harassment.” The following language is typical: EXCLUSIONS THAT APPLY TO LIABILITY COVERAGES “We do not provide coverage for: “Bodily injury” or “property damage” that arises out of sexual molestation. “Bodily injury” or “property damage” that arises out of physical or mental abuse. Both exclusions have been deemed valid.  Importantly, neither limits the excluded conduct to conduct of an “insured.”  The policy exclusions reference only the acts, “sexual molestation” and “physical or mental abuse” without referencing the perpetrator.  “The policy refers to claims arising out of sexual molestation without reference to any limitation as to who committed the act of molestation. Thus, the policy appears to state that the exclusion is based on the nature of the act, not the identity of the actor.”  Ristine v. Hartford Ins. Co., 195 Ore. App. 226, 97 P.3d 1206 (2004).  Therefore, regardless of who commits the excluded act, “insured” or not, there is no coverage for any conduct falling into these categories of behavior.   Even an “insured” accused of negligently supervising or controlling a perpetrator of “sexual molestation” or “physical or mental abuse” will not have coverage because the injury arises out of the excluded conduct. In contrast, some policy...

Res Judicata is No Laughing Matter – Just Ask The Funny Guy

Written by Matthew L. Liller, Esq. Edited by William J. Pfund, Esq. The Supreme Court of Virginia recently looked closely at the issue of res judicata, a defense barring a plaintiff from bringing a second lawsuit on the same claim, in the all-too-serious case of The Funny Guy, LLC, et al. v. Lecego, LLC, et al., 293 Va. 135, 795 S.E.2d 887 (2017). The underlying dispute between the parties was simple: Funny Guy contended it was not paid for I.T. work it performed for Lecego. However, in this 4-3 decision, it was Lecego that ultimately laughed all the way to the bank. Funny Guy filed a lawsuit in October 2014 alleging that the parties reached a settlement agreement to the dispute, but Lecego breached that agreement by failing to pay any of the agreed-upon amount. This suit was dismissed because the trial court found no such agreement existed. In June 2015, Funny Guy filed a second lawsuit alleging that (1) Lecego breached an oral agreement to pay for the services given, and (2) even if there were no oral agreement, it should be paid for the value of the work performed. The trial court then dismissed the second suit because it held those claims should have been asserted in the first suit and were therefore barred. The Court looked at Rule 1:6 of the Rules of the Supreme Court of Virginia, which states in pertinent part: “A party whose claim for relief arising from identified conduct, a transaction, or an occurrence, is decided on the merits by a final judgment, shall be forever barred from prosecuting any second or...

Recent Ruling Affecting Admissibility of Payments by Insurance Carrier to Medical Expert and Medical Expert Testimony

Written by Stephanie G. Cook, Esq. Edited by William,  J. Pfund, Esq. A recent, federal case significantly affects the admissibility in Virginia of medical expert information in personal injury cases in at least two ways. Rice v. Williams, 2017 U.S. Dist. Lexis 117504. In Rice, Judge Urbanski, sitting in the United States District Court for the Western District of Virginia, allowed plaintiff to introduce evidence showing the amount of fees that defendant’s medical expert had received from the defendant’s carrier, State Farm. The plaintiff was also allowed to introduce fees the defendant’s expert had received from other insurance carriers. Judge Urbanski found these payments were relevant and admissible because they tended to show show bias or prejudice of the expert witness. The court in Rice also examined the testimony of plaintiff’s treating, orthopedic surgeon and excluded the surgeon from testifying at trial about future surgery he recommended.   Rice v. Williams arose out of an automobile accident. The defendant, Williams, filed two pre-trial motions in limine. The first motion was to exclude the cost of future lumbar or cervical fusion surgeries on the basis that those surgeries were not medically necessary. The court sustained defendant’s motion, finding that the statements from the plaintiff’s treating, orthopedic surgeon during depositions were mere recommendations for the fusions. Consequently, the surgeries were not “reasonably probable.” Rice, 2017 U.S. Dist. LEXIS 117504, 1-2.   The testimony of the orthopedic surgeon is too detailed to go into in this article. However, it is worth reviewing in any case where a physician’s testimony as to future surgery or treatment is somewhat equivocal. During deposition questioning, the...

Personal Jurisdiction in the Age of the Internet

Written by J. H. Revere, Esq. Edited by William,  J. Pfund, Esq. It may seem axiomatic, but a Court’s jurisdiction is never unlimited. In Virginia, the extent to which a Virginia Court may exercise jurisdiction is found in the Virginia Code.   In particular, Virginia Code §8.01-328.1 (Code of Virginia, 1950, as amended).  The code section lists no less than twelve (12) instances where jurisdiction may be exercised over a person by a Virginia Court. For the purposes of this article we are really only concerned with one (1) of those instances. Virginia Code §8.01-328.1A.1. holds that a Virginia Court my exercise jurisdiction over a defendant when that defendant “directly or by an agent…[t]ransact[s] any business in this Commonwealth[.] The code section further makes it clear that “[w]hen jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him”. Va. Code §8.01-328.1C. This is a fairly easy section to apply in many cases, but much more difficult in the age of the internet. Fortunately Virginia’s Federal Courts have interpreted what it means to conduct “business” in the Commonwealth of Virginia using the internet. The United States Court for the Eastern District of Virginia recently addressed this issue in the case of Thousand Oaks Barrel Co., LLC v. Deep South Barrels LLC, 241 F. Supp. 3d 708 (2017). In Thousand Oaks the question for the Court was whether or not a Texas Company could be hauled into a Virginia Court based upon their internet presence and some sales (non-targeted) in Virginia via their website. The...

Don’t Forget the Sudden Mechanical Change!

Written by Chris Wilson, Esq. Edited by Rachel Riordan, Esq. Many workers’ compensation cases in Virginia are defended on the basis that the claimant did not suffer an “injury by accident.” Because Virginia is an “actual risk” as opposed to a “positional risk” state, meaning an accident is not compensable merely because it happened at work, determining whether the claimant can establish an injury by accident is often the first step for both attorneys and adjusters when reviewing a new claim. One component of the “injury by accident” test in Virginia—the requirement that the claimant prove an “obvious sudden mechanical or structural change in the body”—is an often neglected but important means of defending injury by accident claims. Much of the black letter law explaining the meaning of the phrase “injury by accident” is blurred and even contradictory, particularly in light of the recent Court of Appeals decisions in  Van Buren v. Augusta County, 66 Va. App 441, 787 S.E.2d 532 (2016) and Dugger v. Riverside Regional Jail Authority, Record No. 0153-17-2  (July 25, 2017), but returning to the following four-part test can make the process more straightforward. Every claimant alleging an injury by accident is required to establish each of the following: (1) an identifiable incident; (2) that occurred at some reasonably definite time; (3) an obvious sudden mechanical or structural change in the body; and (4) a causal connection between the incident and the bodily change. Although each element of this four-part test must be shown, frequently the analysis of both claims adjusters and defense attorneys is focused on only the first two prongs of the test....