Close X
Attorney Spotlight

How did a clerkship with Judge Merritt change the way Chris Climo approaches the practice of law? Find out more>

Search

Close X

Experience

Search our Experience

Experience Spotlight

Primary Care Providers Win Challenge of CMS Interpretation of Enhanced Payment Law

With the help and support of the Tennessee Medical Association, 21 Tennessee physicians of underserved communities joined together and retained Bass, Berry & Sims to file suit against the Centers for Medicare & Medicaid Services to stop improper collection efforts. Our team, led by David King, was successful in halting efforts to recoup TennCare payments that were used legitimately to expand services in communities that needed them. Read more

Tennessee Medical Association & Bass, Berry & Sims

Close X

Thought Leadership

Enter your search terms in the relevant box(es) below to search for specific Thought Leadership.
To see a recent listing of Thought Leadership, click the blue Search button below.

Thought Leadership Spotlight

Download the Healthcare Fraud & Abuse Review 2017, authored by Bass, Berry & Sims

The Healthcare Fraud & Abuse Review 2017 details all healthcare-related False Claims Act settlements from last year, organized by particular sectors of the healthcare industry. In addition to reviewing all healthcare fraud-related settlements, the Review includes updates on enforcement-related litigation involving the Stark Law and Anti-Kickback Statute, and looks at the continued implications from the government's focus on enforcement efforts involving individual actors in connection with civil and criminal healthcare fraud investigations.

Click here to download the Review.

Chris Lazarini Analyzes "Common and Usual Meaning" Interpretation of Insurance Contracts

Securities Online Litigation Alert

Publications

March 5, 2018

Bass, Berry & Sims attorney Chris Lazarini analyzed a case in which UBS Puerto Rico sought to overcome its insurance carriers' refusal to defend and provide coverage for two civil actions, settlements with the SEC and FINRA and hundreds of FINRA arbitrations. Applying Puerto Rico insurance law, the Court sided with the carriers stating that policies should be understood within their most common and usual meaning and, though exclusions should be strictly construed, the law does not compel constructions favorable to the insured when a clear and unambiguous exclusion favors the insurer.

Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SOLA, please visit the SOLA website to sign up for the newsletter.

UBS Financial Services Inc., of Puerto Rico vs. XL Specialty Ins. Co., No. 15-3099 (D. P.R., 2/1/18)

Under Puerto Rico insurance law, policies should be understood within their most common and usual meaning and, though exclusions should be strictly construed, the law does not compel constructions favorable to the insured when a clear and unambiguous exclusion favors the insurer.

UBS-PR brought this breach of contract action after its insurance carriers denied coverage of two civil actions, settlements with the SEC and FINRA and hundreds of FINRA arbitrations. Finding for the carriers on the parties' cross-motions for summary judgment, the Court dismisses UBS-PR's claims with prejudice. The Court's decision hinges on its interpretation and application of a broad exclusionary clause the carriers specifically drafted that barred coverage of matters arising "in connection with" or "in any way involving . . . any fact, circumstance or situation underlying or alleged" in two matters that pre-dated the January 2012 policy issuance dates. In those prior matters, UBS-PR had settled an SEC investigation and been sued in a derivative shareholder action. Both matters alleged that UBS-PR used its conflicting status as investment advisor, bond underwriter and mutual fund manager to manipulate and control the market for its Puerto Rico closed-end mutual funds and Puerto Rico bonds it underwrote. The shareholders alleged that UBS-PR created a fraudulent bond market by dumping the junk bonds into the funds, and the SEC alleged that UBS-PR propped up the funds by purchasing millions of dollars of fund shares for its inventory and then selling those shares while undercutting its customers’ sell orders. UBS-PR accepted the carriers' exclusionary clause, and the policies were issued.

After the policies were issued, UBS-PR faced new investor and regulatory actions. A second derivative action and a putative class action were filed, both of which mimicked the allegations in the prior SEC and derivative action. The SEC initiated a new investigation, focusing on UBS-PR's efforts to have its customers purchase fund shares or bonds using margin and other means of credit. FINRA investigated UBS-PR's supervisory system and procedures. Finally, over one thousand individual arbitration proceedings were filed. UBS sought coverage of all claims, even though only the SEC investigation and some arbitrations were filed during the two-year policy period. The carriers denied coverage, and this case followed.

The Court begins its analysis by pointing out that, under Puerto Rico insurance law, "contracts should be understood within their most common and usual meaning," and "exclusionary clauses are not favored [and] should be strictly construed." However, the Court adds, the law does not compel constructions favorable to the insured when a clear and unambiguous clause favors the insurer. The Court then analyzes each disputed matter, finding that they involve many facts, circumstances and situations underlying the prior matters, and concludes that the litigation exclusions bar coverage.

Here, UBS-PR made no ambiguity claim. Instead, it argued that even one covered claim in a complaint obligates the carriers to pay for the defense. The Court rejects this argument. First, it is inconsistent with the policies' definitions, which define "claims" not in the granular fashion proposed by UBS-PR, but in broad fashion as civil proceedings, arbitrations, or formal civil or criminal, administrative or regulatory proceedings. Second, the Court notes the inconsistencies in UBS-PR's efforts to separate matters into thousands of claims for one purpose, while seeking to aggregate them to gain coverage over matters filed outside the policy period under a policy clause that provides that claims arising from interrelated acts are deemed to have been made at the same time as the earliest such claim.

The defendant carriers were XL Specialty Insurance Company, which issued a $10 million primary policy, Axis Reinsurance Company, which issued a $5 million first excess policy, and Hartford Fire Insurance Company, which issued a $5 million second excess policy.


Related Professionals

Related Services

Notice

Visiting, or interacting with, this website does not constitute an attorney-client relationship. Although we are always interested in hearing from visitors to our website, we cannot accept representation on a new matter from either existing clients or new clients until we know that we do not have a conflict of interest that would prevent us from doing so. Therefore, please do not send us any information about any new matter that may involve a potential legal representation until we have confirmed that a conflict of interest does not exist and we have expressly agreed in writing to the representation. Until there is such an agreement, we will not be deemed to have given you any advice, any information you send may not be deemed privileged and confidential, and we may be able to represent adverse parties.