Insurance Law Commons^™

Bonding Bankers: Notes Toward A Governance Approach To Risk Regulation, Frederick Tung

Faculty Scholarship

Important regulatory failures have been identified in the wake of the recent financial crisis, and comprehensive regulatory reform has been much on the minds of policymakers. Reform proposals call for a number of significant changes to the scope and structure of financial regulation to address systemic risk. With banking regulation, however, the twin tools of capital requirements and external supervision seem to remain the dominant regulatory levers. In this short discussion, I introduce the contours of an important supplement to the existing approach, a governance approach that uses bank executives' compensation arrangements as a policy lever. I propose that bank …

Health Reform: What's Insurance Got To Do With It? Recognizing Health Insurance As A Separate Species Of Insurance, Wendy K. Mariner

Faculty Scholarship

Health insurance can be, and to a large extent already is, a separate species of insurance. This article describes the different views of insurance that made health reform contentious. It argues that the goals of health reform are incompatible with conventional views of insurance. Nonetheless, reforming health insurance to achieve those goals does not require as dramatic shift as some might think, because health insurance has already become primarily a means of paying for health care, rather than a simple risk spreading device for specified losses.

Creating A Paternalistic Market For Legal Rules Affecting The Benefit Promise, Brendan S. Maher

Faculty Scholarship

Notwithstanding the fact that ERISA was enacted to protect employee benefits, courts have narrowly construed the relief available when benefits are denied, out of concern that a stronger remedy would be too costly for the system to bear. Judges, I argue, are ill-equipped to make this policy judgment. Instead, a regulated, subsidized, paternalistic market should be created to permit the benefit players themselves to choose and price the strength of the remedy they desire. This is a superior means to reach the right level of remedial strength for the most players. To protect against undesirably weak remedial options being selected, …

The Devil Made Me Do It: The Corporate Purchase Of Insurance, Victor P. Goldberg

Faculty Scholarship

Despite the fact that public corporations ought to be risk neutral, they often carry insurance. This note first considers why insurance (or more precisely, the package of services provided by insurance companies) might create value, regardless of the risk preferences of managers, shareholders, or other corporate stakeholders. One motive is that their contractual counterparties – buyers, lessors, and lenders – require that they carry insurance. Three explanations for why the requirement might be value enhancing are proposed.

Federalization Snowballs: The Need For National Action In Medical Malpractice Reform, Abigail Moncrieff

Faculty Scholarship

Because tort law generally and healthcare regulation specifically are traditional state functions and because medical, legal, and insurance practices are highly localized, legal scholars have long believed that medical malpractice falls within the states' exclusive jurisdiction and sovereignty. Indeed, this view is so widely held that modern legal scholarship takes it for granted. Articles on general federalism issues use medical malpractice as an easy example of a policy in which federal intervention lacks functional justification, and articles that focus on federalization of other tort reforms use medical malpractice as an easy foil, pointing out that the uniformity interest that justifies …

Dances With Elephants: Administrative Resolution Of Medical Injury Claims By Medicare Beneficiaries, Eleanor D. Kinney, William M. Sage

Faculty Scholarship

In our judgment, Hoffmann and Rowthorn's research clearly demonstrates that the QIO-based complaint review process does not provide genuine relief to beneficiaries. People who complain typically want an explanation of their bad experience, compensation for harm they may have suffered, and assurance that future experiences will be better for themselves and for others. Medicare beneficiaries, however, receive minimal information about the resolution of their complaints and no substantive relief whatsoever.

As Hoffmann and Rowthorn point out, several reform proposals are now before Congress, including moving the beneficiary complaint function from QIOs to new "Medicare Provider Review Organizations." It is not …

Catastrophic Loss, Alternative Risk Transfer, And Terrorism Insurance, Robert J. Rhee

Faculty Scholarship

This paper constitutes a compilation of summary entries on catastrophic loss, alternative risk transfer, and the Terrorism Risk Insurance Act of 2002 and the Terrorism Risk Insurance Extension Act of 2005, along with references and further reading.

Insuring Corporate Crime, Miriam Baer

Faculty Scholarship

No abstract provided.

Insurance For Acts Of Terrorism, Robert J. Rhee

Faculty Scholarship

This chapter discusses insurance case law arising from acts of terrorism, including those arising from the September 11 attacks. It analyzes the Terrorism Risk Insurance Act of 2002 (TRIA), as amended by the Terrorism Risk Insurance Act of 2005 and the Terrorism Risk Insurance Program Reauthorization Act of 2007, as well as the administrative program created by the legislation. Examples are provided and NAIC Policyholder Disclosure Notice forms are included. Policy considerations surrounding TRIA are also discussed including insurance industry strategies, the difficulties of assessing terrorism risks, the effect of TRIA subsidized insurance on the market, and the benefits and …

Tort Arbitrage, Robert J. Rhee

Faculty Scholarship

The economic models of bargaining and tort law have not been integrated into a coherent theory that reflects the operational realities of the dispute resolution process and the negligence standard. Applying a theory of bargaining based on asset pricing principles of financial economics, this Article argues that there is systematic devaluation of tort claims in the civil litigation system. This results because in essence the parties value different tort transactions, even when they are tied together in a common dispute and view the facts and laws similarly. For the party that can mitigate the risk exposure, the discount to value …

Malpractice Payouts And Malpractice Insurance: Evidence From Texas Closed Claims, 1990-2003, Charles Silver, Kathryn Zeiler, Bernard Black, David Hyman, William Sage

Faculty Scholarship

Background. This study is the first to quantify physicians' malpractice insurance limits. It also examines the connection between policy size and payments on claims, including the frequency of settlement at the policy limits and the frequency of out-of-pocket payments.

Methods. Statistical analyses using data collected by the Texas Department of Insurance (TDI) covering all insured medical malpractice claims against physicians closed between 1990 and 2003 with payment of $25,000 or more (measured in 1988 dollars).

Results. Contrary to conventional wisdom, per-occurrence limits of $500,000 or less were as common as $1 million limits. Nominal policy size was stable over time, …

Coverage Advice: The Missing Piece Of The Cumis Puzzle, Leo P. Martinez

Faculty Scholarship

No abstract provided.

A Crack In The Shield? Malpractice Coverage At Risk, Daniel S. Kleinberger

Faculty Scholarship

A recent, unreported opinion of the Minnesota Court of Appeals has opened up a major hole in the liability shield of professional firms. Continental Casualty Co. v Duckson-Carlson, LLC, misapplies the doctrine of equitable estoppel, misinterprets the Minnesota Professional Firms Act, ignores the fundamental distinction between an entity and its owners, and sub silentio turns the law of third party beneficiaries on its head. From a practical perspective, the decision should trouble every lawyer, doctor, accountant, and other "319B" professional in the state and, moreover, has serious implications for individuals covered by D&O insurance

Resolving Medical Malpractice Claims In The Medicare Program: Can It Be Done?, Eleanor D. Kinney, William M. Sage

Faculty Scholarship

There is increasing interest in an integrated approach to patient safety and medical liability among policymakers. We have proposed Medicareled malpractice reform that would provide Medicare beneficiaries with better safety, improved communication in the event of error, preservation of therapeutic relationships, timely settlement, and fair compensation at a lower administrative cost. Disputes in the reformed system would be adjudicated by Medicare's existing administrative appeals system that would work together with Medicare's quality improvement regulation and payment policy to reduce errors and compensate injured patients.

Despite the laudable rationale for Medicare-led malpractice reform, important issues attend the constitutional and statutory authority …

Public Medical Malpractice Insurance: An Analysis Of State-Operated Patient Compensation Funds, Frank A. Sloan, Carrie A. Mathews, Christopher J. Conover, William M. Sage

Faculty Scholarship

Compared to major tort and insurance reforms, PCFs have received virtually no attention by scholars. With an exception or two, they are not a major focus of public policy debate either. Because they are small organizations and there have been lengthy periods in which medical malpractice markets are quiescent, they have not attracted much scrutiny. Given a lack of quantitative evidence, our evaluation depended on qualitative evidence. Yet PCFs address the fundamental issues of medical malpractice that have led to reoccurring crises in the availability of medical malpractice insurance coverage and in its premiums for such coverage. As such, PCFs …

Medical Malpractice Insurance And The Emperor's Clothes, William M. Sage

Faculty Scholarship

Tom Baker and Mark Geistfeld's contributions to this Symposium offer detailed and persuasive analyses of medical malpractice insurance. Their principal contribution to the malpractice reform debate, however, is simple: confirming that liability insurers should not be left to their own devices between malpractice crises or appeased during crisis periods. Instead, liability insurance must be consciously designed to help the health care system work toward its core goals of high quality, broad access, and affordable cost.

In 2000, the IOM issued a follow-up report to its earlier indictment of medical error, calling upon the health care system to become safe, effective, …

The Supreme Court's Limitation Of Managed-Care Liability, Wendy K. Mariner

Faculty Scholarship

This article summarizes and critiques the U.S. Supreme Court's decision in Aetna Health Inc. v. Davila, which limited managed care organizations' liability for negligent decisions about the care of patients in private employer-sponsored health plans governed by ERISA. It contrasts the Court's dichotomous view of health benefit plans, in which insurers administer contracts and treating physicians make medical judgments, with the more complicated relationships that affect decisions about both coverage and treatment.

Can Consumer-Choice Plans Satisfy Patients? Problems With Theory And Practice In Health Insurance Contracts, Wendy K. Mariner

Faculty Scholarship

Much scholarship has considered whether health care - and insurance - should be distributed by voluntary contract or subject to government standards or regulation. Contracts will likely play a key distributive role in any future health care system. Yet we do not fully understand where private contracting does and does not work to further the goals of equitable access to affordable care. This article examines the role of health insurance policies in defining and enforcing access to medical care, focusing on private employment-based group health benefit plans. It describes models of consumer choice health plans and critiques their capacity for …

Managed Care’S Crimea: Medical Necessity, Therapeutic Benefit, And The Goals Of Administrative Process In Health Insurance, William M. Sage

Faculty Scholarship

This Essay explores the concept of medical necessity as it has evolved in the judicial and administrative oversight of managed care. The goals of the Essay are to illustrate the range of plausible rationales for establishing administrative procedures to govern medical necessity disputes, and to demonstrate the difficulty of incorporating into those procedures the most important professional and social responsibilities of managed care in today’s health care system. Part I of the Essay explains the ideological and practical significance of medical necessity as managed care has evolved. Part II examines medical necessity as a legal problem, and questions whether current …

Simple Fairness: Ending Discrimination In Health Insurance Coverage Of Addiction Treatment, Sonja Starr

Faculty Scholarship

No abstract provided.

Before It's Too Late- Addressing Fear Of Genetic Information, Karen H. Rothenberg, Sharon F. Terry

Faculty Scholarship

No abstract provided.

Classic Insurance Law In A Postmodern World, Leo P. Martinez

Faculty Scholarship

No abstract provided.

The Marriage Of Intellectual Property And Insurance Law: An Introduction, Leo P. Martinez

Faculty Scholarship

No abstract provided.

Securitizing Insurance Risks, Tamar Frankel, Joseph W. Laplume

Faculty Scholarship

This Article analyzes and evaluates the legal problems that have arisen in connection with this rapidly developing insurance risk securitization. The first part of the Article deals with legal issues concerning the SPVs that undertake insurance and reinsurance contracts with ceding insurers and the other parties to the transaction. The Article addresses the dilemma in choosing the laws applicable to SPVs, the bonds they issue, and the persons and entities that form part of the securitization transaction. These laws involve state insurance laws, bankruptcy and tax laws, the Investment Company Act of 1940 and the Commodity Exchange Act of 1934, …

Regulating Risk In A Managed Care Environment: Theory Vs. Practice, The Minnesota Experience, Barbara Colombo, Robert P. Webber

Faculty Scholarship

The purpose of this Article is to illustrate the challenges state regulators face when attempting to translate theory into practice in the context of health care risk regulation. Section I reviews the evolution of the risk-bearing market in health care, recognizing that while risk is an inherent part of everyday life, it takes on a delicate meaning when used in the context of health care. Cost and demographic data will be discussed to provide a compelling rationale for the ongoing forceful movement toward cost containment strategies embodied in managed care strategies, as well as the need to develop the next …

Massachusetts' Domestic Partnership Challenge: Hope For A Better Future, Jennifer Levi

Faculty Scholarship

Acknowledging that its decision means that "some household members" may be without a "critical social necessity," the Massachusetts Supreme Iudicial Court (SJC) ruled in Connors v. City of Boston that Boston Mayor Thomas M. Menino's executive order granting health insurance benefits to the domestic partners of city employees could not stand in the face of a Massachusetts state insurance law. In Connors, the SJC simultaneously recognized that although the demographics of Massachusetts households have changed within the more than forty years since the state insurance law, G.L. c. 32B (Chapter 32B), was adopted, that law nevertheless constrains municipalities from extending …

The Tale Of A Tail, James F. Hogg

Faculty Scholarship

The commercial general liability insurance industry shifted, in 1986, from the use of an “occurrence-based” to a “claims-made” policy form. So-called “tail” or “long tail” claims have continued nevertheless, to be asserted under the older “occurrence” policies which required that injury occur during the term of the policy, but not that the claim for such injury be made or brought at any particular time. In seeking state approval to use the new “claims-made” form in 1985-86, the insurance industry represented that the new form would not affect coverage under the old “occurrence” form. Despite that representation, insurers are now asserting, …

Disability And Income Loss Benefits Under The Minnesota No-Fault Act, Michael K. Steenson

Faculty Scholarship

The Minnesota No-Fault Automobile Insurance Act was intended to ensure the “prompt payment of specific basic economic loss benefits to victims of automobile accidents without regard to whose fault caused the accident,” to prevent overcompensation of less seriously injured people by the interposition of tort thresholds, and to encourage appropriate medical and rehabilitation treatment by assuring prompt payment for that treatment. It seems clear that at least some of the initial promise of the Act has not been fulfilled. Payment of basic economic loss benefits, which the legislature intended to be paid promptly, has become bogged down in a quagmire …

Judicial Opinions Involving Health Insurance Coverage: Trompe L'Oeil Or Window On The World?, William M. Sage

Faculty Scholarship

This essay offers a few thoughts about using judicial decisions as the dataset for research into health insurance coverage. Part I offers a general overview of insurance coverage law. Part II considers why students of health insurance coverage gravitate toward studying published opinions. Part III then discusses what is wrong with the approach, and suggests alternatives. Finally, Part IV turns to what may be right with the approach, concluding that judicial opinions in coverage litigation may reveal the functionality (or dysfunctionality) of the coverage process in managed care. Although the basic critique which the essay presents applies to areas other …

Evaluating The Case For Social Security Reform: Elderly Poverty, Paternalism And Private Pensions, Maria O'Brien

Faculty Scholarship

This Article considers the many arguments currently being made in favor of Social Security pension reform and evaluates each of them in terms of the principal Congressional goal of the program-the elimination of elderly poverty-as well as more recent goals that have been articulated by subsequent commentators such as a reduction in government paternalism and the maximization of retirement income. The Article begins with a short history of the public pension program in the United States and considers at length the details of the various reform proposals that currently enjoy support. In addition it examines the enormously regressive tax structure …