Category: Daily News

Steve Menzies, founder and chairman of Applied Underwriters Inc., reacquired his company from Warren Buffett’s Berkshire Hathaway in 2019. Since then, he has been buying businesses, creating new subsidiaries, welcoming new teams of professionals and growing his firm domestically and internationally.

Menzies and Jamie Sahara, President, have announced their goals for 2022 in a letter to stakeholders. Following what it termed a “pivotal year for the Company’s growth,” the leaders have set the realization of larger scale plans and the continued organic growth of the existing and newly introduced coverages and products as the two principal items on the corporate agenda.

According to Mr. Menzies, “While uncertainty, inflation and societal ills have created new resting and directional inertia inside and outside all of our business organizations, we were able to continue working almost at full throttle to add to our financial capacity, bolster our stability and add several new business units in the US and abroad.”

The Excess & Surplus lines (E&S) is a specialty market that insures things standard carriers won’t cover. Mr. Sahara observed that Applied remains somewhat cautious, but never fearful: “We consider the domestic, traditional admitted market to be way oversupplied. Primary carriers are not attaining adequate rates nor reasonable terms and conditions. Conversely, we view the E&S market as quite attractive in some segments, and we expect the E&S market to harden further before leveling off.”

Mr. Sahara continued, “Of course, E&S coverages are characteristically complex to underwrite. Continuing our successful efforts in 2021, Applied is well set to capitalize swiftly on changing market conditions and resulting opportunities.”  A summary of Applied’s 2021 activities includes strategic acquisitions in niche sectors and the creation of new practices, including the transactions that follow Applied Underwriters…

– – acquired Concept Special Risks in February. Founded in 1999, Concept Special Risks, a Yorkshire, UK-based international MGA, is a leader in providing coverage for an extensive variety of nautical vessels and operators across the globe. Concept Special Risks is a licensed cover holder at Lloyd’s and holds a dominant market position in the US and Caribbean markets for motor yachts, trailer craft, sailboats, and catamarans covering both private/pleasure and charter;
– – completed its acquisition of Centauri Specialty Insurance in February. The Centauri companies (Centauri Specialty Insurance Company and Centauri National Insurance Company) based in Sarasota, Florida serve independent agents and brokers in 10 states: Alabama, Florida, Hawaii, Louisiana, Massachusetts, Mississippi, North Carolina, Oklahoma, South Carolina and Texas. The Centauri companies also offer private flood insurance in Florida, Hawaii, and South Carolina;
– – completed the acquisition of Oklahoma Property and Casualty Insurance Company in February. Applied sustained the Oklahoma company’s writing of admitted business in the South Central United States;
– – refocused its Texas Insurance Company in February for E&S Lines countrywide;
– – acquired the Florida Casualty Insurance Company in March; formerly Ashmere Insurance Company, the newly re-branded, Ft. Lauderdale-based insurer is licensed in 41 states;
– – acquired the insurance renewals to approximately 16,700 policies across Alabama, Louisiana and South Carolina from Gulfstream Property and Casualty Insurance Company and Gulfstream Select in February;
– – acquired Alaska Timber Insurance Exchange in the fourth quarter. ATIE is an Alaska-domiciled reciprocal exchange, organized to write non-assessable workers’ compensation policies in that state, and is set to conclude its conversion from a reciprocal to a stock insurance company, as approved by regulators;
– – created Applied Financial Lines, following the acquisition of StarStone’s core products in December 2020, with operations beginning early January. Applied moved into the EU and Middle East for Specialty Business from its Paris and Cologne offices to underwrite several specialty lines including professional indemnity and D&O through an extensive wholesale broker and local retail agent network throughout the EU, Israel and other countries in the region;
– – created Applied Specialty Underwriters in November 2020, with the new excess and surplus casualty unit launching in January to focus on general liability, excess liability and workers compensation for New York construction;
– – launched Applied Underwriters Aerospace in November, joining forces with the former PartnerRe D&F Space Team (Direct and Facultative). The new operation is based in Washington, D.C. with PartnerRe providing treaty reinsurance and other services as the enterprise expands;
– – inaugurated Applied Specialty Risk Construction Infrastructure in November, the Company’s new infrastructure and construction practice, providing alternative markets and options for the wide variety of business exposures in the construction sector;
– – created Applied Warranty & Insurance Services acquiring the US Specialty Lines Division of Generali Group in June, including Generali Warranty Services, LLC, a fully licensed obligor. Applied Underwriters has aggregated the Specialty Lines business into its newly formed Applied Warranty & Insurance Services division;
– – established Applied Fine Art & Collections in December 2020, which commenced operations in 2021 to create the preeminent global provider of coverage and risk management solutions for fine art, jewelry, collectibles, and collector automobiles;
– – expanded D&O operations in January under Applied Financial Lines in New York to provide a range of D&O coverages in the U.S; and
– – forged a unique partnership with Demotech in May to provide particular coverages for as many as 400 financially sound insurers, rated by Demotech, a top US insurance rating agency. Through the Applied custom program, Demotech-rated carriers are enabled to secure needed umbrella and excess coverages, providing a strong competitive advantage to the insurers for packaging and selling their primary coverages for small business insurance.

Mr. Menzies concluded, “We have added larger scale transactions into our pipeline, and we are hoping to close some bigger deals in 2022. Our Company’s strong work ethic has shown itself in our staff’s desire to stay at work and ensure that our enterprise coasts no more than forced by circumstances.”

Courthouse news reports that a U.S. military veteran filed a federal class action lawsuit Thursday against the makers of an antimalarial drug distributed to military forces, claiming the drug made tens of thousands of veterans permanently sick.

The lawsuit, filed in the Northern District of California by veteran John Nelson, accuses drug makers Roche Laboratories and Genentech of failing to inform the public of severe side effects of mefloquine, carrying the brand name Lariam, a drug given to U.S. service members to help prevent malaria.

The defendants marketed and sold Mefloquine to the U.S. military for service members deployed to Somalia, Afghanistan and other foreign countries for the prevention of malaria. A significant proportion of service members took Mefloquine while deployed to Afghanistan and other foreign countries.

Lariam (pharmacological name mefloquine) is an antimalaria drug discovered by the US Army shortly after the Vietnam War as a result of the US Army’s huge post-Vietnam antimalaria drug discovery program. The drug was subsequently marketed worldwide by F. Hoffmann-La Roche. The first reported trials of mefloquine were in prisoners, and were performed at the Joliet Correctional Center, Illinois, in 1975, and at the Maryland House of Correction in 1976.

There is no question that safe and effective antimalaria drugs were needed in the second half of the twentieth century, once it became apparent that the Plasmodium had developed resistance to the mainstay of antimalaria therapy, namely chloroquine. Chloroquine resistance was observed first in Thailand in 1957, then on the Colombian-Venezuelan border in 1959, and in Kenya and Tanzania in 1978. Within a decade of Lariam being marketed, the safety was in doubt.

In 2013, the Food and Drug Administration required the drug to carry a black box warning due to the severity of its side effects. Roche pulled Lariam from the U.S. market in 2009, but generic versions are still available.

Nelson was a U.S. military service member who was prescribed Mefloquine when deployed to Afghanistan. Upon taking the drug, he immediately began suffering severe and irreversible side effects, which continue to this day. But he had no knowledge that the neuropsychiatric side effects he was experiencing could be due in any way to Mefloquine. The drug insert did not adequately warn of the drug’s toxicity, and U.S. military service members are not typically provided with the drug insert and would be unlikely to receive any such information.

The suit alleges that at at the time they sold the drug to the U.S. military, defendants knew of the substantial danger of severe and irreversible neuropsychiatric side effects of Mefloquine. At that time, there were already widespread reports in the pharmaceutical industry of Mefloquine causing adverse reactions, including symptoms of paranoia, hallucinations, and suicidal ideations. By 1994, Defendants knew or should have known that these adverse reactions were permanent and irreversible. Since that time, numerous scientific studies have confirmed the causal link between Mefloquine and permanent neuropsychiatric effects.

Defendants concealed the scope and nature of the danger and recklessly sold the drug as a safe and effective first-line treatment for malaria prevention. Safer and effective drugs for malaria prevention existed on the market.

But defendants allegedly had no desire to re-brand Mefloquine as a mere secondary or alternative option for malaria prevention, as that would have extinguished its hold on the market and strong demand for it by the U.S. military.

Medical monitoring is a recognized form of relief that allows a plaintiff and class members to obtain diagnostic medical examinations that are funded and/or reimbursed by a defendant when the defendant’s tortious conduct has exposed the plaintiff and class members to harm that proximately causes the need for the comprehensive diagnostic examinations. Plaintiff, individually and on behalf of the Class, seeks medical monitoring as a result of their common exposure to Mefloquine.

In a 2007 Journal article “A lesson learnt: the rise and fall of Lariam and Halfan” the author reviewed the history of the development and distribution of Melfooquine and concluded that it ” seems probable that in the late 1980s and early 1990s the FDA and other national licensing bodies were influenced, perhaps subliminally, by the powerful military-industrial-governmental lobby into over-hasty decisions to approve the marketing of both Lariam and Halfan. These two drugs were authorized for public use on the basis of an incomplete knowledge base, and at too early a stage in the normal cycle of drug development.”

The take-away here – will there be similar litigation, and after-the-fact reports, of similar problems with the current “mandated” COVID vaccines a few decades from now?

Lead plaintiff Amanda Frlekin sued Apple Inc., the Cupertino-based technology giant in 2013, claiming it illegally withheld pay from workers who had to spend five to 20 minutes on average waiting for managers and security officers to search their bags and verify their Apple devices before they could leave for lunch breaks or at the end of shifts.

In 2015, Senior U.S. District Judge William Alsup granted summary judgment in favor of Apple, finding that because store employees chose to bring bags and Apple devices to work, they could not prove the bag checks were mandatory. He found Apple could have imposed an even stricter policy by banning workers from bringing bags or personal Apple devices to stores. This ruling gave rise to the decision by the California Supreme Court, and subsequent reversal of the summary judgment by the 9th Circuit in September 2020.

In a unanimous February 13, 2020 decision, the California Supreme Court in the case of Frlekin v. Apple Inc., held that the time spent by employees waiting for and undergoing security checks of bags and other personal items is compensable time under California law, even when the policy only applies to employees who choose to bring personal items to work.

Over the last several years, the question of whether the time employees spent having their bags checked at work is compensable has arisen in several different contexts, in California and across the country:

In late 2014, the U.S. Supreme Court in Integrity Staffing Solutions, Inc. v. Busk (135 S. Ct. 513, 574 US 27, 190 L. Ed. 2d 410) held that security checks are not compensable time under federal law because they are not part of the actual workday.

In California, employees in most industries must be paid for the time they are subject to the control of their employer, not just the time spent doing work. This is so because, since 1947, California has specifically departed from federal law and has provided greater protection to working employees.

This month, Apple has inched closer to ending more than eight years of litigation over claims it owes thousands of its retail employees in California for time spent undergoing security checks of their personal belongings.

Judgle Alsup granted preliminary approval to a $29.9 million settlement in an eight-page order issued Tuesday night.

Defendant Apple, Inc. employed settlement class members in its 52 retail stores in California. The total settlement is settlement worth $29.9 million A net of $18,895,333 will go to the class of 14,683 workers. Separately, Apple will pay $757,000 to cover the employer’s share of the payroll taxes owed on the wage portion of the settlement fund. Attorney fees and other costs will be separately decided.

Class attorney Lee Shalov of Mclaughlin and Stern in New York called it “the largest reported settlement in a security-search case in California.”

American jurisprudence on vaccine mandates dates back over 100 years, but the Supreme Court will likely focus on a 40-year-old administrative precedent that is continually under fire to determine if President Joe Biden can require Covid-19 vaccines and testing for large private businesses.

Courthouse News reports that In the wake of a Sixth Circuit reversal last week, the high court has docketed over a dozen emergency applications in just the last two days challenging a federal mandate that would require businesses with over 100 employees to require Covid-19 vaccinations or weekly testing. The test-or-vaccine mandate is enforced through the Occupational Safety and Health Administration and is set to take effect on Jan. 4. Without relief from the court, 84 million workers will be affected.

The court has already seen multiple applications come across its shadow docket concerning state vaccine mandates. So far, it has declined to offer those individuals any relief. What that will mean for the OSHA mandate, however, is still unclear.

“The OSHA ETS and the CMS Interim Final Rule litigation matters, each of which are headed to the Supreme Court now, present a new question as to whether the federal government agencies have exceeded their authority in implementing their respective vaccine-or-test and vaccine requirements,” Michelle Strowhiro, a partner at McDermott Will & Emery, said via email. “Therefore, while past decisions may be some indication, it is anyone’s guess how the Supreme Court will come out on this latest challenge.”

As the Sixth Circuit determined Friday, one must only read the agency’s name to understand it has this authority and that the vaccine mandate is distinct from August precedent that ended the federal eviction moratorium.

“In comparing this case with Alabama Association, the Fifth Circuit wrote, “But health agencies do not make housing policy, and occupational safety administrators do not make health policy.” The Fifth Circuit fails to acknowledge that OSHA stands for the Occupational Safety and Health Administration,” a 2-1 majority of the Sixth Circuit wrote Friday.

Ranging from Republican states and conservative organizations to business groups and construction workers, groups challenging the mandate claim that OSHA does not have the authority to mandate vaccines.

“For the vast majority of covered employees, the Covid-19-related risk presented by work is the same risk that arises from human interaction more broadly,” Ohio and 26 other states wrote in their brief. “The virus’s ‘potency lies in the fact that it exists everywhere an infected person may be – home, school, or grocery store, to name a few.’ Because it is not an occupational danger, it is not the sort of danger that the Emergency Provision empowers OSHA to address.”

The justices will have to decide if OSHA is acting within its authority to mandate vaccines.

“The big issue is whether the Supreme Court will show deference to the agency’s determination that this is necessary and that it’s an emergency,” Lawrence Gostin, a professor at Georgetown Law, said in a phone call.

Specifically, the court could apply the 1984 case Chevron USA Inc. v. Natural Resources Defense Council Inc., which says unless Congress has said otherwise, the courts should defer to agencies where the agency’s interpretation of the law is not unreasonable.  

“I think that the court’s new conservative majority, they’re flexing their muscles, and even with the well-established precedents, like Roe v. Wade or Chevron, they seem to be fully prepared to take a different path than the court has done for many decades,” Gostin said.

“There is some dispute between the circuit courts as to whether OSHA’s actions implicate the major questions doctrine, with the Fifth Circuit applying the doctrine in its order granting a nationwide injunction on enforcement, and the Sixth Circuit more recently finding no applicability in its order dissolving that stay,” Strowhiro said.

Another factor to consider when analyzing what the court could do in this case is that multiple justices regularly express their animosity to Chevron. Justice Clarence Thomas did so less than a month ago in a Medicare reimbursement case when he floated overturning the precedent. Justice Neil Gorsuch also seemed skeptical of the precedent implying that the government often uses deference for rules to their advantage.

Riot Games announced that it has reached a global settlement agreement with the California Department of Fair Employment and Housing (DFEH), California Division of Labor Standards Enforcement (DLSE), and several private Plaintiffs to resolve the class-action gender discrimination litigation originally initiated as “McCracken vs Riot Games” in 2018.

Riot is headquartered in Los Angeles, California, and has 3,000+ employees in 20+ offices worldwide. The company was founded by Brandon Beck and Marc Merrill in 2006, and is currently led by CEO Nicolo Laurent.

The settlement covers a 2018 class action lawsuit filed by current and former Riot employees in the wake of a Kotaku report detailing systemic sexism and unfair treatment. The suit described an environment where male employees made derogatory sexual comments about female colleagues and passed them over for promotion, creating a company-wide “unwritten policy and practice of preferring men to women in the hiring, promotion, and compensation of its employees.”

Under the proposed consent decree, Riot will pay over $100 million to remedy violations against approximately 1,065 women employees and 1,300 women contract workers. The decree requires comprehensive injunctive relief in the form of workplace reforms, independent expert analysis of Riot’s pay, hiring, and promotion practices, and independent monitoring of sexual harassment and retaliation at Riot’s California offices for three years.

The decree will also resolve claims brought by the California Division of Labor Standards Enforcement (DLSE) in the first case jointly prosecuted by DFEH and DLSE.

In November 2018, former Riot employees filed a putative class action in Los Angeles Superior Court with private counsel and entered a proposed $10 million settlement of that action soon thereafter. In January 2020, both DFEH and DLSE objected to the proposed $10 million settlement. Both state entities then successfully intervened in the pending private action to protect the interests of the State and the women workers, and ensure the fairness of the resolution of the claims.

Both the DLSE and DFEH have jurisdiction to enforce the Equal Pay Act. This is the first case DFEH has litigated involving claims under that law, which the California Legislature authorized -DFEH to enforce starting January 2021 under SB 973 (Jackson).

Under the consent decree, Riot has agreed to:

– – Pay $100 million, of which a minimum of $80 million is dedicated to compensating workers. This amount includes $4 million in penalties under the Private Attorney General Act (PAGA), one of the largest such penalties assessed by the DLSE in its history.
– – Create a $6 million dollar cash reserve for each year of the three-year term of the consent decree (for a total of $18 million) to make pay adjustments and to fund diversity, equity, and inclusion programs.
– – Make available 40 full-time positions in engineer, quality assurance, or art-design roles to qualified class members who worked as temporary contractors in a competitive process.
– – Hire and pay for an independent third-party expert approved by DFEH to conduct a gender-equity analysis of employee pay, job assignments, and promotions each year for three years and remedy disparities that cannot be explained by bona fide, legitimate reasons.
– – Hire and pay for an independent third-party monitor approved by DFEH to audit compliance with workplace protections, including a review of complaint investigations and outcomes, each year for three years.

Women who worked as employees or contractors for Riot since November 6, 2014 may be eligible to receive compensation. Additional information will be posted on DFEH’s website following entry of the consent decree by the court.

Final approval of the settlement by the court is pending, with a hearing expected in the coming months.