E&O Weekly Prevention
Strategies for the Professional Agent
December 13, 2012


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Letter from the Editor


This week's edition of AOA E&O Prevention:


Table of Contents    


eBay Sued to Halt Enforcement of "No Hire" Agreement                                      
By John A. Snyder, Esq.

Coverage for Defense Fees: What Are Reasonable and Necessary - Two Views 
By Joe Monteleone, Esq.

Mandamus Complaint and Civil Rights Lawsuit Constitute "Related Claims"  
By Elizabeth M. McGarry, Esq.

Architect Not Liable to Unsuccessful Bidder for Tortious Interference                   
By Donald A. O'Brien, Esq 



Check out this week's edition of World Risk & Insurance News at WRIN.tv.


AgentsofAmerica.ORG has partnered with WebCE, a leading nationwide provider of Continuing Education for insurance professionals, to provide you with state-approved self-study CE courses to satisfy your CE requirements online! Check out your CE State Requirements.


Also available is our most recent edition of "AOA Tips, Views, News & More," including our new feature "Insurance Resources." & "Recommended Reading".  Remember that membership in AgentsofAmerica.ORG is FREE! Also if you have any thoughts, comments or suggestions, please email me at info@agentsofamerica.org


"Bringing the Best Together"


Angelo J. Gioia 




AOA Tips, Views, News & More


Employment Practice Liability - Risk Management Tip
By Britton D. Weimer. Esq. of Jones Satre & Weimer PLLC

The top 8 rules of EPL discrimination claims prevention.

Rule number three: "Give each employee a written annual performance review. Include in the review all significant problem areas."


Rationale: Many employers do not provide objective performance reviews, fearing it will diminish employee morale. In many cases, a busy supervisor simply does not want to deal with the conflict that may arise with a candid employee appraisal.


From a risk management standpoint, though, avoiding employee reviews is very problematic. Performance problems raised for the first time in a discrimination suit (after the employee's termination) will seldom be credible.


Verbal performance reviews are better than no reviews at all. However, verbal reviews usually lead to credibility disputes in an employment suit. In the heat of litigation, the two sides will seldom agree on what was said in a verbal review.


Written performance reviews eliminate the dispute over what was said. And, if the written reviews are given annually, they document the problems contemporaneously, adding to their credibility. 


Finally, by providing all employees with annual performance reviews, the employer is insulated from a subsequent claim that it was only writing up the plaintiff -- i.e. the member of the protected class.


Source: Employment Practices Liability, Chapter 6 (2nd Ed. National Underwriter 2012).

Contact Brit 952/820-8403 or bweimer@jonessatre.com




HR Consulting & More 

By Aaron Peterson of CenterPointe Solutions Inc.


The IRS has released new guidance describing methods that employers may use to determine which employees are treated as full-time employees for purposes of the shared employer responsibility requirements under Health Care Reform. The IRS Notice 2012-58 is titled "Determining Full-Time Employees for Purposes of Shared Responsibility for Employers Regarding Health Coverage" and can be read in detail.


Two items that people should remember from the notice are that Employer Shared Responsibility is:


Beginning in 2014, employers with 50 or more full-time employees may be required to make a "shared responsibility payment" if any of the employer's full-time employees is certified to receive a premium tax credit or cost-sharing reduction payment. This may happen if the employer does not offer full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan, or if the coverage offered does not provide minimum value or is unaffordable to the employee. For purposes of this requirement, a full-time employee with respect to any month is an employee who is employed on average at least 30 hours of service per week.


And determining Full-Time Employee Status should include:


The new guidance describes options for employers for determining full-time employee status in the case of ongoing employees and newly-hired variable hour and seasonal employees, including the transition from newly-hired to ongoing employees and a series of examples. It also permits employers to rely on guidance described in previous notices, including safe harbor which provides that an employer may use an employee's Form W-2 wages to determine the affordability of employer coverage.


For additional information, contact Aaron at aaron@mycpsinc.com or 800-340-5856



Results of Last Poll Questions


For a variety of reasons, it appears that many insurance agencies are following up with their customers to "remind" them of a pending non-pay notice.  What is the position of your agency?


9%     (a) We follow up only on specific accounts based on certain factors (size, length of                 client relationship with agency, etc.)                        

86%    (b) We follow up on all accounts                                                                           

5%     (c) We follow up on either commercial lines accounts or personal lines accounts but                not both                                                               

0%     (d) We do not follow up at all                                   

This Week's Poll Question


Performing an annual account review for personal lines clients can be a tremendous E&O prevention initiative as it can potentially identify changes in the client's exposures. A review can be conducted face-to-face, over the phone or via mailing the client a checklist for them to complete and return.


a) Our agency requires that we perform a review (at least once every 3 years) with each of our personal lines clients

b) Our agency offers to do a review (at least once every 3 years) but performs it only for those personal lines clients interested

c) Our agency does not have a formal process to identify personal lines clients interested in a review

d) Our agency just doesn't have the time to do a review for our clients                              


A1eBay Sued to Halt Enforcement of "No Hire" Agreement 

By John A. Snyder, Esq. of Jackson Lewis LLP


The U.S. Department of Justice has filed an antitrust lawsuit against eBay, Inc. in the United States District Court for the Northern District of California. The suit, filed on November 16, 2012, claims that eBay violated antitrust laws by entering into an agreement not to hire or recruit the employees of a competitor, Intuit, Inc. The DOJ asserts that the agreement eliminated competition in the marketplace, stifling access to better job opportunities and salaries of affected employees.


















article2Coverage for Defense Fees: What Are Reasonable and Necessary - Two Views 
By Joe Monteleone, Esq. of Tressler LLP.

It is not often that we see case law addressing what are "reasonable and necessary" defense expenses, a concept addressed in the definition of claim expenses or similar terms in almost all D&O and E&O policies. In recent months, however, we have seen two such decisions in Philadelphia Indemnity Ins. Co. v. Chicago Title Ins. Co., 2012 U.S. Dist. LEXIS 82751 (N.D. Ill., decided June 10, 2012) [See here for a copy of the decision] and in Vicor Corp. v. Vigilant Ins. Co., C.A. No. 07-10517, (USDC, D. Mass., decided September 28, 2012). [See here for a copy of the decision]




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By Elizabeth M. McGarry, Esq. of Tressler LLP  


The United States District Court for the Middle District of Pennsylvania dismissed a declaratory judgment action initiated by policyholders seeking insurance coverage under a Public Officials Professional Liability Insurance Policy ("POPL Policy"), holding there could be no duty to defend or indemnify where the underlying lawsuit at issue arose out of the same or related facts as an earlier complaint filed prior to the inception of the policy period. Borough of Moosic v. Darwin Professional Underwriters, Inc., No. 11-1689, 2012 U.S. Dist. LEXIS 90372 (M.D. Pa. June 29, 2012).   





Architect Not Liable to Unsuccessful Bidder for Tortious Interference 
By Donald A. O'Brien, Esq. of Hinshaw & Culbertson LLP


Defendant architectural firm was retained by a school district to evaluate bid applications and to make recommendation as to which contractor should be awarded a contract to construct a school building. The school district awarded the contract to the second lowest bidder based on the architect's recommendation even though the successful bid was approximately $50,000 more than the low bid. The unsuccessful low bidder sued the architectural firm for tortious interference with a business expectancy. The trial court granted summary judgment for the architect, but the intermediate appellate court reversed. The Michigan Supreme Court reversed, holding that a disappointed low bidder did not have a valid business expectation to be awarded a contract on a public construction project.


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