William G Passannante is co-chairman of Anderson Kill PC's insurance recovery group and a member of the firm's executive committee.
In recent years, he has pursued claims for clients including a foreign manufacturer seeking defense and indemnification for a large number of asbestos claims; a university in a claim on its directors and officers liability insurance policy; and franchisees of a food chain in a business income recovery matter stemming from alleged food-borne illness. He also has represented a number of financial institutions, as well as chemical companies, telecommunications companies and health care-related organizations.
Q: What is the most challenging case you have worked on and what made it challenging?
A: Representing the Glidden Company in New Jersey state court in its pursuit of insurance coverage for alleged environmental liabilities was extremely challenging. That case, which was to be tried in an “omnibus” proceeding before a single jury, posed coverage issues for environmental cleanup of pollution that took place over the course of decades at over 20 environmental sites, contested by multiple insurance companies.
Preparing simultaneously to try over 20 sites was a challenge. Each of the sites and each time period and each insurance policy posed its own fact pattern. A recurring issue was whether the damage could be said to be "expected or intended" as defined by the language of various liability insurance policies — and accordingly, what was an "occurrence" that triggered coverage. We settled on terms favorable to the policyholder at the beginning of the “omnibus” trial.
Q: What aspects of your practice area are in need of reform and why?
A: Insurance companies have too much leeway to engage in various forms of post-loss underwriting — that is, finding various means to argue that a claim that should have been covered is invalid because the policy never should have been sold in the first place — as, for example, when a health insurance company rescinds the policy of a sick patient needing expensive treatment because there was a minor, unrelated inaccuracy in the insurance application (a practice now banned by the Affordable Care Act).
More broadly, insurance companies seek constantly to use dispute resolution processes — courts, arbitration, mediation — as a way improperly to avoid losses after the fact. I have argued many cases in which coverage was clearly contemplated at the time the policy was sold but then denied once a loss happened. In one case, with which I am familiar, an insurance company's ad for a D&O product stressed that it "eliminates the industry-standard 'insured-versus-insured exclusion,' instead omitting coverage only in the exceedingly rare event that a claim is made by the organization against an individual insured."
In a claim affecting that very policy, the insurance company asserted a far stricter view of the exclusion than appeared in the policy or in their advertising. The policyholder also saw ads depicting its claim as an example of a covered claim. Yet, still the claim was denied.
Such behavior might be deterred, or at least inhibited, by enhancing the ability of policyholders to recover damages on account of breach of the insurance promise. When an insurance company denies coverage for a covered claim, more should be at stake than simply paying what they owed in the first place.
Q: What is an important issue or case relevant to your practice area and why?
A: A recurring high-stakes issue is the scope of an insurance company's responsibility to provide a complete defense to the policyholder if even one allegation in a lawsuit is potentially covered.
This important principle was upheld last November by the Appellate Division of the New York State Supreme Court, First Department, on behalf of our client, Alfa Laval. In a unanimous decision, the Appellate Division upheld a lower court finding that Alfa is entitled to a full defense from its primary insurance company for asbestos liabilities, with the primary insurance company responsible to pay all defense costs for covered claims that are not paid by other insurance companies.
The upshot was a reiteration of a principle of New York insurance law that a covered policyholder is entitled to a complete defense and that that basic commitment takes precedence over any possibility that the insurance company possibly may seek contributions from other insurance companies.
Q: Outside your own firm, name an attorney in your field who has impressed you and explain why.
A: Dan Bailey of Bailey Cavalieri is one of the nation’s foremost insurance company-side experts on D&O liability and D& O insurance issues. He drafts D&O insurance forms and serves as an expert witness. He is co-author of a book, "Liability of Corporate Officers and Directors," which is on my desk. Since he represents the “other side,” I often disagree with his positions, but at least the disagreement takes place with an advocate who knows the issues and the vocabulary.
Q: What is a mistake you made early in your career and what did you learn from it?
A: I once hired an expert witness with what appeared to be sterling credentials and spot-on experience. In a prep session the day before the expert’s initial pretrial testimony, everything went smoothly. During the expert’s initial pretrial testimony this sterling, prepared, experienced witness delivered an opinion which, had we relied upon it at trial, would have cost us the case. Instead, we had to scramble to work with a less well-known but much more effective expert witness at trial to provide the needed opinion. The lesson learned? Choose your experts wisely.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.