Professional Liability

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Purchasing insurance for a cannabusiness can feel like a daunting task, but it does not have to be one.

In addition to grappling with many of the same issues and questions that any business confronts when seeking insurance, a cannabusiness encounters certain additional, unique challenges due to the industry in which it operates. That is no reason to panic, however. And, it is certainly no reason to avoid purchasing insurance.

There are a number of steps that a cannabusiness – or, really, any business – can take to maximize the likelihood that the insurance-procurement process will be smooth and successful. In particular, when purchasing insurance, a cannabusiness should consider the following 10 steps: Continue Reading Ten important steps a cannabusiness should consider when purchasing insurance

Businesses in the dietary supplement supply chain are taking cover after the New York Attorney General (NYAG) ordered four major retailers to cease and desist the sale and alleged mislabeling of certain herbal supplements. After genetically testing store-brand product samples of Ginko Biloba, St. John’s Wort, Ginseng, Garlic, Echinacea, and Saw Palmetto, the NYAG alleged that the supplements were unrecognizable or contained substances other than those disclosed on their packaging labels. Class action lawsuits already have been filed, and the NYAG directed the targeted retailers to provide it with detailed information regarding the manufacturing, testing, and procurement of the herbal supplements, and announced that it may bring charges for alleged deceptive practices in advertising.
Continue Reading Pursuing Insurance Coverage for Alleged Mislabeling of Dietary and Herbal Supplement Products

The District Court of Massachusetts’ January 6, 2015 opinion in Biochemics, Inc. v. Axis Reinsurance Co., 2015 WL 71493 (D. Mass. Jan. 6, 2015), reaffirms the importance of providing timely notice of all D&O liability claims – including subpoenas. In Biochemics, the policyholder sought coverage from its primary D&O liability insurer, Axis, for defense costs it incurred in an SEC enforcement action commenced during the AXIS policy period. Judge Rya Zobel held that Biochemics had no coverage for the SEC enforcement action because it related back to two deposition subpoenas that the SEC served on Biochemics before the AXIS policy incepted. Because those deposition subpoenas indicated on their face that the SEC had commenced a formal investigation against Biochemics, each subpoena was a “Claim” that should have been reported to Biochemics’ prior D&O carrier. Because the Claim was “first made” before the AXIS policy period, Judge Zobel granted AXIS’ motion for summary judgment and found that AXIS owed Biochemics no coverage under its policy.
Continue Reading Lessons Learned: Report All Potential D&O Liability Insurance Claims Without Delay

Corporate directors and officers have a long list of things that can keep them up at night. Personal liability for civil fines and penalties arising out of negligence or even gross negligence committed in the course of their service to the company should not be one of them. But recently, in United States v. Trek Leather, Inc., 767 F.3d 1288 (Fed. Cir. 2014) (en banc), a federal appeals court held that the government could hold a corporate officer liable for a civil penalty based on gross negligence committed by the officer or his or her agents acting in the scope of their duties to the company, and without the government establishing fraudulent intent or attempting to pierce the corporate veil.
Continue Reading On the Coattails of United States v. Trek Leather, Make Sure You Have Suitable D&O Coverage

A recent study reports that the median amount of time between a breach of a company’s computer network and the discovery of the incident is 229 days. But some cyberliability policy forms require that both the breach event and discovery of loss (or resulting claim) occur during the policy period. So what happens when a breach is discovered three months into the policy period but, unbeknownst at the time, the intrusion actually occurred six months before, or even earlier? If your company’s cyberliability insurance policy excludes breach events occurring before the inception of the policy period, the company could find itself without coverage for an otherwise-covered claim or loss.
Continue Reading Hackers Don’t Care About Your Insurance

In life, sometimes even the law imitates art. As if copied straight out of the script of “Catch Me If You Can,” the U.S. District Court in South Carolina issued a ruling on October 21, 2014 in which it held that despite a false application for professional liability insurance submitted by an applicant pretending to be a doctor, the insurance afforded to the company and other doctors and nurses identified as named insureds under the policy remained in force and was not void ab initio as to the innocent co-insureds.
Continue Reading Catch Me If You Can: Fake Doctor’s Application Voids Coverage For Himself But Not For Innocent Co-Insureds