By Michael J. deBarros

Insurers in oilfield legacy lawsuits often argue they are not responsible for their insureds’ settlements with landowners because La. R.S. 30:29 (“Act 312”) requires the settlements to be deposited into the court’s registry for remediation.  On March 7, 2018, the Louisiana Third Circuit Court dealt a significant blow to the insurers’ argument.

In Britt v. Riceland Petroleum Co., 2017-941 (La. App. 3 Cir. 3/7/18), 240 So. 3d 986, writ denied, 2018-0551 (La. 5/25/18), the Plaintiffs sued the current and former operators of Plaintiffs’ property for damages to and remediation of their property.  The operators settled all of the Plaintiffs’ claims, and one of the operator’s insurers argued that Act 312 required the trial court to: (1) hold a contradictory hearing; (2) determine if remediation was required; and if so, (3) order the deposit of funds into the court’s registry.  The Third Circuit disagreed and held that no contradictory hearing is required when the settling parties: (1) provide notice of the settlement to the Department of Natural Resources (“LDNR”) and the Attorney General; (2) allow the LDNR thirty days to review the settlement and provide comments to the trial court; and (3) obtain the trial court’s approval of the settlement.

As a practical matter, a contradictory hearing will rarely be required under Britt since LDNR rarely objects to the settlements.  Thus, Britt makes it more difficult for insurers to refuse to pay for settlements.

If your insurer is refusing to cover your business in oilfield legacy lawsuits, Kean Miller’s Insurance Coverage and Recovery team can help.  We have recovered millions for policyholders in connection with environmental and toxic tort actions, legacy lawsuits, professional liability claims, products liability lawsuits, governmental investigations, intellectual property claims, directors’ and officers’ disputes, property losses, and business interruption losses.

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By G. Trippe Hawthorne and Mallory McKnight Fuller

Click here to review a Practice Note explaining how to enforce arbitral awards in the state and federal courts in Louisiana.  This Note explains the procedure for confirming an arbitration award in Louisiana, and the grounds on which a party may challenge enforcement under Louisiana and federal law, including the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the Federal Arbitration Act (FAA), and the Louisiana Binding Arbitration Law (BAL). This Note also briefly explains the procedure for vacating, modifying, or correcting an arbitral award in Louisiana.

 

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By Daniel Stanton

By emergency declaration issued August 18, 2016, the Commissioner of the Louisiana Department of Insurance adopted Emergency Rule 27. Emergency Rule 27 allows the Department of Insurance to suspend certain statutes in the Louisiana Insurance Code and the rules and regulations promulgated under those statutes that may affect families and business affected by the current flood crisis in Louisiana.

While Emergency Rule 27 suspends many provisions of the Louisiana Insurance Code, most of the suspended provisions affect the ability of an insurer to cancel, terminate, non-renew, or non-reinstate a policy of insurance. One of its most significant provisions provides that an insurer may not terminate, cancel, or non-renew a policy of insurance as a result of the “inability of an insured . . . from complying with any policy provisions,” this includes non-payment of premiums. Insurers are further forbidden from imposing any interest, penalty, or other charge as a result of the enactment of Emergency Rule 27. Furthermore, the rule extends to September 10, 2016, any deadline for the submission of evidence or the completion of any act related to any claim for coverage under a policy of insurance made prior to August 12, 2016.

Emergency Rule 27 currently applies to policy holders residing in the following parishes: Acadia, Allen, Ascension, Avoyelles, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson Davis, Lafayette, Livingston, Point Coupee, St. Helena, St. James, St. John the Baptist, St. Landry, St. Martin, St. Tammany, Tangipahoa, Vermillion, Washington, West Baton Rouge, and West Feliciana. Emergency Rule 27 applies to any policy of insurance in effect as of 12:01 a.m. on August 12, 2016, and will remain in effect through September 10, 2016.

Additional information and a copy of Emergency Rule 27 may be found on the Louisiana Department of Insurance’s website.

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By Brian Carnie

On December 28, 2015, the IRS announced an automatic extension of the Affordable Care Act reporting deadlines for distributing and/or filing the 1094-B/1095-B and 1094-C/1095-C forms. This relief only applies for the 2015 calendar year.

For employers who were considered applicable large employer members (“ALE members”) in 2015, the new deadline for furnishing your full-time employees the 1095-C forms is extended from February 1, 2016 to March 31, 2016. March 31, 2016 is also the new deadline for non-ALE members who sponsored self-insured group health coverage to distribute the 1095-B forms to employees who enrolled and were eligible for benefits for one or more months in 2015.

The deadline for filing these with the IRS by paper (along with the applicable 1094 form) is extended from February 29, 2016 to May 31, 2016. If you choose or are required to electronically file these forms (i.e., you are filing 250 or more 1095 forms for 2015), the filing deadline is extended from March 31, 2016 to June 30, 2016.

While the extensions give employers more time to complete the required forms, we recommend distributing the 1095 forms to employees by February 1, 2016 to the extent possible so employees can provide accurate data to the IRS when they file their individual income tax returns. The IRS announced that individuals need not wait to receive the 1095 forms before filing their individual income tax returns. However, by doing so, there is a heightened risk that employees may report inaccurate information about their coverage or eligibility for a premium tax credit and the IRS is likely to put the burden on the employer to explain any discrepancies. If you don’t think you will be able to distribute the 1095 forms by the end of January, you might consider sending employees who were eligible for and/or who enrolled in coverage a separate informational notice about their coverage so they can accurately complete their tax returns by the April 15th deadline.

 

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By Sonny Chastain

We have become accustomed to having regular check-ups with our doctors. The doctor will analyze our current physical condition, including heart rate, blood pressure, cholesterol level, lung condition or otherwise. The doctor may order a treadmill test or a screening for a particular function. The doctor will also compare current test results to any prior tests to determine any changes to the body and mind resulting from the stress of our daily lives. The doctor considers any symptoms to determine whether risks associated with developing any particular disease can be reduced through diet, exercise, medication or other intervention. The goal is to stay healthy and fit. While the probing, pricking, injecting, and waiting are all uncomfortable, these activities are certainly better than a stay in the hospital or worse.

Our businesses should undergo a similar checkup or audit – to analyze risks that are connected to the business. Vital signs of the business should be examined to determine the current state of affairs. Similar to the condition of a body, after the business is formed, business owners are often just too busy competing in the marketplace to “take a physical.” The important and urgent items such as payroll, inventory, and sales are the immediate focus. Matters which are important, but non-urgent, including the “vital signs of the business,” get placed on the back burner. Business owners just do not take the time to pay attention to signs or symptoms. No different than a frog that dies because it does not realize the water is heating up, business owners do not pay attention to growth, market changes, etc., which have caused their own “water to heat up.”

Too many times the legal issues in a business are not noticed until after the business has had a “heart attack.” Steps should be taken to proactively consider areas in which the business may be vulnerable. Remedying problems which may be identified in any check-up are much easier to address before a legal issue arises. A legal check-up should be customized for the particular business, but should typically include: (1) review of the By-Laws or Operating Agreement to determine if they are current and appropriately govern the operation of the business; (2) review of insurance coverage to determine whether operational risks of the business are covered or not; (3) identification of any trade secrets and consideration of whether reasonable steps are really being taken to keep them confidential; (4) review of logos, slogans, or other indicia utilized as a trademark to identify the business and whether they are protected; (5) analyze whether the business owns a copyright in or has a license for any works that are integral to operations, like software, publications, drawings, etc.; (6) review of employee handbook and consideration of whether the business is operating consistent with it; and (7) analysis of whether certain employees should have to execute a valid non-compete or non-solicitation agreement. Similar to action items for the body like exercise, diet, or medication, intervention or remedies can be considered for any identified shortcomings of the business.

So, maybe it is time for a check-up — to pick up your head and work “on” the business and not just “in” the business. Maybe it is time to consider the applicable vital signs of the business so as to get the “house in order.” After all, there are three outcomes for a business: (1) it fails/dissolves, (2) it is inherited by the owner’s heirs, or (3) it is sold or transferred to a third party. Failing to check vital signs may contribute to the first possible outcome. Otherwise, appropriate business checkups and action items to keep the business healthy, wealthy and wise make the other two outcomes much easier to accomplish.

How healthy is your business? Is it fit, fat, or on the verge of a heart-attack or stroke? Maybe it is time to conduct a business audit to determine the current condition of the business. Much like a routine physical exam, a legal check-up by your attorney will help you address any troubling finding, and provide you with a full report on the health of your company.

 

 

By Brian R. Carnie

On February 10, 2014, the Treasury Department released final regulations on the employer mandate provisions under the Affordable Care Act (a.k.a. Obamacare). While the final rules retain much of what was outlined in the proposed regulations issued in December 2012, the most significant news is the additional one-year delay for certain covered employers with respect to the potential penalties (the “no offer penalty” and/or the “unaffordability / lack of minimum value penalty”).

Here are some of the major takeaways:

  • Applicable large employers that have fewer than 100 full-time employees (including full-time equivalents) in 2014 will not be subject to either employer penalty in 2015 if they meet certain conditions. One such condition is that the employer is prohibited from reducing the size of its workforce, or the overall hours of service of its employees, in 2014 to qualify for this transition relief. There are also limitations on changes the company can make to its previously offered group health coverage for the rest of 2014.
  • All covered employers can avoid the “no offer” penalty in 2015 if they offer employer-sponsored coverage to at least 70% of their full-time employees in each calendar month in 2015 (and any calendar month during the 2015 plan year that extends into 2016 for non-calendar year plans). Beginning in 2016, the employer must offer such coverage to at least 95% of its full-time employees to avoid the “no offer” penalty. Notwithstanding the limited transition relief under this paragraph, the company still would be subject to the individual unaffordability / lack of minimum value penalty in 2015 if it has one or more full-time employees receive premium assistance on the exchange because either they were one of the ones not eligible for coverage, or such coverage was not affordable to them due to their household income, or the coverage did not provide minimum value.
  • The final rules contain additional transitional relief for non-calendar year plans. Most employers with non-calendar year plans now have until the start of their 2015 plan year, rather than January 1, 2015, to bring their plans into compliance to avoid assessment of the employer penalties, and the conditions for this relief are expanded to include more employers.
  • For employers who have not previously offered dependent coverage, there is also a delay in the requirement to offer coverage for dependent children to 2016 as long as the employer is taking steps to arrange for such coverage to begin in 2016.

Applicable large employers with 100 or more full-time employees or FTEs who are assessed a “no offer” penalty in 2015 will get the benefit of a reduction in the monthly penalty for 2015 and any applicable transition relief period into 2016, in that the payment is calculated by reducing the total number full-time employees by 80 (instead of just 30) multiplied by 1/12 of $2,000. If the employer is a member of a controlled group, the company will not get the entire additional 50 full-time employee deductible but rather the member’s allocable share of 80.

The final rules also contain exceptions for various categories of employees such as volunteers, adjunct faculty and seasonal employees, provide further details and guidance on the affordability safe harbors and the safe harbor for determining full-time employee status, and significantly shorten the length of the break-in-service required before a returning employee may be treated as a new hire for purposes of group health coverage.

In the coming months the IRS is expected to issue additional guidance about the employer reporting requirements, among other issues.

To read the full version of the IRS’ final rules, click here
 

By Andrew H. Goodman and Jennifer J. Thomas

In 2013, business owners with 50 or more full-time employees are expected to be finalizing their plans in response to the employer mandate health care reform, which becomes effective in 2014. Among the choices for business owners will be complying with the employer mandate or planning to pay the penalties for opting out, or executing plans to avoid the employer mandate by trimming their workforce or selling all or a portion of their business before 2014.

Beginning January 1, 2014, the so-called “employer mandate” under the Patient Protection and Affordable Care Act (t he “PPACA”) requires employers with 50 or more full-time equivalent employees (“FTEs”), with “full-time” defined as working at least 30 hours per week, to offer “minimum essential” and “affordable” health insurance to those employees and their dependents. Employers who do not comply will be subject to potentially significant penalties. Employers are not required to provide health care coverage for part-time employees, however, part-time employees must be counted as partial employees when determining whether an employer has 50 FTEs. There will also be various other new requirements under the PPACA effecting employers beginning in 2014 that are beyond the scope of this piece.

Many business owners are considering what they can do to get their FTE count below 50 and avoid the employer mandate and the associated cost increases and regulatory burdens.  Beware, however, that a reduction below this threshold effective January 1, 2014 may not avoid the employer mandate.   The proposed regulations provide that a business could be subject to the employer mandate if during 2013 it averaged 50 or more FTEs.  Employers would have the option to determine their 2013 headcounts by averaging the full 12 months of 2013 or any consecutive six-month period during 2013.  These regulations are in the process of being promulgated and are not yet final.    

Additionally, the rules regarding who is an “employer” are not straight forward and contain traps for the unwary, and can render some plans to dodge the employer mandate ineffective. Similarly, having a basic understanding of the rules should alert business owners to seek advice if two or more related businesses may be considered as a single “employer” under the employer mandate rules.
 

Continue Reading The Employer Mandate Health Care Reform: A Decision Point For Smaller Companies

By Mark D. Mese

The purpose of this post is to provide insureds with general information that will assist them in recognizing important facts and issues related to insurance coverage of environmental disasters. The primary areas addressed include (1) understanding the general types of potential insurance coverage; (2) recognizing environmental disasters; (3) deciding what to do once an environmental disaster is discovered to improve the possibility of insurance coverage and finally, (4) long term plans to improve coverage of potential future environmental disaster claims.

Insurance Policies

Insurance Coverage for Environmental Disaster Coverage is a complicated subject that must consider many different issues over many different timelines and many different jurisdictions with many different types of hazards. Understanding what an environmental disaster is and recognizing that one has occurred is the first thing an insured must do. Until the insured has recognized that an environmental disaster has occurred, it cannot ask the insurer for coverage and it cannot provide notice and coverage cannot be triggered. There are many different types of environmental disasters, a brief review of the history of the pollution exclusion in general liability policies provides some prospective as to how insurers look at environmental disasters and coverage.

Early standard general liability policies issues prior to 1966 contained insuring agreements that provided coverage for injury (caused by accident). The standard insurance service organization (ISO form) which is a general liability form used by most insurers was revised in 1966 to provide coverage for an “occurrence” with neither “expected” nor “intended” by the insured and specifically included continuous or repeated exposure to substantially the same conditions in its coverage. As a result of these changes, claims related to environmental damages increase dramatically. Insurers using the standard form added a mandatory endorsement in 1970 (ISO Form 00020173 1973) that excluded coverage using the following language:

“Bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water.”

The referenced ISO form was often used in conjunction with a carve-back in of coverage which provided: “this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.”

As you might expect, and as many of you may know, the 1970’s and 1980’s were a turbulent period for insureds and insurers who were engaged in coverage disputes under CGL policies for pollution related claims. Courts in the various jurisdictions reached different conclusions and were often at odds which made predicting coverage difficult.

The insurers, through the insurance service organization, created an absolute pollution exclusion in 1985 (See ISO form CG0021207), which excluded coverage for the following:

“Bodily injury” or property damage” arising out of the actual, alleged, or threatened discharge, dispersal, release or escape of pollutants:

At or from any premises, site or location which is or was at any time owned, occupied, or rented or loaned to, an insured[.]

“Pollutants” means solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

The absolute pollution exclusion lacked an exception for coverage for sudden or accidental problems and it did not provide coverage for allegations or threats of a polluting event and it also eliminated the requirement for a discharge into a foreign land, the atmosphere or water course or a body of water.

Not surprisingly, the absolute pollution exclusion was a source of significant litigation between insureds and insurers and lead to various interpretations by courts across the country. Some courts fell into a camp which accepted the insurance industry’s broad interpretation of the exclusion. Another group affords limited exclusion to damages when an undefined claim involved harm to the broader environment. Another group of courts found that the exclusion was ambiguous or required to be interpreted based on history of the exclusion and looked at the presentations of the insurance industry to the various insurance commissioners in the various states “Doer v. Mobil Oil Corporation,” 774 So.2d 119, 2000-0947, (La. 12/19/00). Knowing which state an environmental disaster is in and more importantly, what state law is going to apply to coverage, becomes very important and can be important in planning litigation as will be discussed below in some detail.

There are many types of insurance products today providing various types of coverage for environmental disasters. A review of all of the different products available is beyond the scope of this paper. Coverage ranges from limited coverage provided via endorsements to CGL policies to stand alone policy forms. Over the years, insureds have sought an expansion of coverage to avoid the gaps created by the pollution exclusions in CGL policies. In recent years there has been a significant increase in the number of carriers providing environmental coverage products compared to the limited market of even five or six years ago. Based on work with brokers over the last year or so, it appears that there are around 30 different insurers now offering some form of environmental coverage. Coverage available for environmental claims is more readily available currently on a claims made basis; although occurrence based insurance is also sometimes available.

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Continue Reading Insurance Coverage of Environmental Disasters

By Todd Rossi and Mark Mese

Almost everyone knows insurance policies provide a defense and indemnity for insureds, if the terms and conditions of the insurance policy are met. Insureds include named insureds, other insureds (as defined by the policy) or additional insureds as provided by endorsement. However, insurance policies may also provide payment and defense to others who are not insureds under the policies.

Most liability policies provide coverage to the insureds for liability when the insureds have contractually agreed to provide indemnity and/or defense to or party to a contract. A typical example of contractual indemnity coverage can be found in a construction contract to supply labor and materials related to electrical wiring in the construction of a home, office, pipeline or oil rig.
 

Continue Reading Contractual Indemnity Coverage Under Someone Else’s Insurance Policy May Provide Coverage in Unexpected Places

By Mark D. Mese

The Louisiana First Circuit Court of Appeals has issued the first Appellate Court decision dealing with the Louisiana New Home Warranty Act and its application to Chinese Drywall claims in the case of Jennifer L. Caminita, wife of/and Frank L. Caminita v. Regina, wife of/and Barney Core, Smith and Core, Inc., et al., State of Louisiana Court of Appeals, First Circuit, 2010 CA 1961.

The First Circuit has ruled that the periods of limitation set forth in the New Home Warranty Act provide the exclusive periods by which claims can be brought against home builders for alleged defects related to the installation of Chinese Drywall in new homes. In the Caminita case the First Circuit specifically found that the one year preemptive period provided by La.R.S. 9:3144A(1) was applicable to claims related to Chinese Drywall incorporated into new homes. Based on this finding, the court dismissed the action against the home builder.

This ruling by the Louisiana First Circuit Court of Appeals is the first Louisiana case reported at the appellate level on this issue and is in line with decisions by district courts last year which were also reported on the Kean Miller blog.