Insurance industry players face legal, regulatory and business challenges, especially given the sector’s complexity and recent, rapid evolution. To successfully tackle these challenges, clients need a legal advisor that understands the market – where it’s been and where it’s going – and has front-line experience advising on a broad range of legal issues unique to insurance.
McDermott’s Insurance team has 35+ years of experience providing advice across a broad range of transactional and regulatory matters and dispute resolution. Because we’ve “seen it all,” we often act as industry consultants; we help clients develop groundbreaking insurance and reinsurance products, leverage private equity and venture capital opportunities, structure acquisitions for optimal tax benefits and defend against “bet the company” claims, disputes and multi-state regulatory investigations and enforcement proceedings. Our cross-border team of 40+ lawyers includes practitioners from several practice areas – Transactions, Regulatory Litigation, Tax and Privacy –to deliver seamless, one-stop shop advice to our clients, no matter where they do business.
Transactions, Regulatory and Technology
The fields of technology and insurance are rapidly converging, creating unprecedented opportunities and challenges for stakeholders. Whether your organization is an InsurTech startup or an industry incumbent, our business-minded lawyers arm you with the regulatory, corporate and tax advice necessary to achieve your business goals. Want to partner with a technology company, spin-off and market a company as a separate business or buy and sell distressed assets? We can help. Our cross-border team is seasoned in the core issues that crop up frequently in tech deals, including fast-tracking 50-state insurance regulatory system approvals, implementing privacy and cybersecurity safeguards, navigating big data ownership, social media and intellectual property issues. As strategic advisors and innovative dealmakers across an international client base, we are your go-to team for tackling the gamut of matters tied to restructuring, distressed special situations, assumption and liability, and loss portfolio transactions. We look forward to helping you stay ahead of industry technology.
Captive Insurer & Risk Retention Group Formation, Governance & Taxation
We know your business needs are unique and require custom solutions. Our award-winning captive lawyers are true innovators in the structuring of alternative risk transfer mechanisms for all types of captives and risk retention groups in US and offshore jurisdictions, including Barbados, Bermuda, the British Virgin Islands and the Cayman Islands, among many others. We blaze new trails not only in the development and structuring of creative risk retention and transfer solutions, but also in the operation of efficient risk-management programs that fuel business performance by aligning economic incentives with loss minimization to lower the cost of risk. We were there as our clients formed the first healthcare captives. Our market-leading tax lawyers are thoroughly versed in the federal and state tax issues that captive insurers and risk retention groups face, and offer practical and effective tax controversy services to clients whose captive arrangements are challenged by the Internal Revenue Service.
We also collaborate with clients on the structure and operation of alternative risk financing mechanisms across diverse geographies and formats. Leveraging our extensive knowledge of stock, mutual and reciprocal formats, we combine our insurance, regulatory, federal and state tax, securities and litigation experience to optimize program structure and achieve tax-efficient and regulatory-compliant results. We handle loss portfolio transfers, novations and reinsurance of all sorts, as well as derivatives and structured reinsurance arrangements that allow capital market participants to take on risk.
Class Action Defense
Class action lawyers have become more sophisticated and aggressive in bringing national class actions against insurers. Our dedicated class action team defends health insurers in class actions brought by plan participants and providers. We also have extensive experience defending class action claims asserted under the Employee Retirement Income Security Act (ERISA) and offer clients the benefit of our intricate familiarity with this complicated area of law.
Working closely with our top-ranked health practice, we have our finger on the pulse of the ever-shifting relationships among health plans, participants and providers. Even as payment and reimbursement structures transform—under ERISA, administration changes and other regulatory initiatives—our class action defense lawyers help you stay ahead of the curve to mitigate evolving risks.
Federal, State and Local Taxation of Insurers & Reinsurers
Commercial and captive insurance and reinsurance companies must grapple with complex federal, state and local tax treatment. Our premier tax team offers thought leadership in the wake of the Tax Cuts and Jobs Act of 2017, which amended or repealed a number of insurance tax provisions. Our tax team also provides innovative, actionable tax planning and tax audit counsel, and represents clients in Internal Revenue Service administrative proceedings and before federal and state courts. We also advise insurance companies on applicable state taxes, including premium tax issues. We partner closely with captive insurers to navigate their complex state tax obligations, particularly in relation to the Nonadmitted and Reinsurance Reform Act of 2010.
Insurers in today’s healthcare market face unprecedented—and ongoing—disruption and transformation. As the top-ranked healthcare law firm in the United States, we possess robust experience in the health insurance sector.
Our lawyers have been at the forefront of efforts to create, restructure and advise on the full spectrum of issues related to managed care arrangements around the globe. We structure, draft and negotiate complex managed care contracts and arrangements with payors and providers, including cutting-edge commercial, Medicare Advantage, Medi-Cal, point-of-service, narrow network and other risk contracts, as well as bundled payments and a range of value-based contracts.
On the regulatory front, we assist health insurers in navigating regulatory compliance challenges, government investigations, government strategies and litigation arising out of their participation in government programs, including Medicare Advantage and Medicaid managed care, as well as requirements for participants in the Health Insurance Exchanges. We also assist health insurers with a broad array of issues facing their business, including compliance with healthcare laws related to patient privacy and security; implementation of cutting-edge technology solutions; and acquisition, operation and integration of their operations with those of healthcare providers.
Our lawyers successfully license and obtain change-of-control and other Knox-Keene license material modification approvals for full-service, specialized and restricted Knox-Keene Plans, including the negotiation of complex undertakings, and handle major enforcement, for-profit conversion, solvency and other compliance matters. We also have extensive experience advising on investments in UK healthcare and contracting with the NHS on health regulatory matters, including digital health, medtech, health IT, payment and structuring.
Insurance Coverage Litigation & Counseling
Our nimble, highly collaborative insurance litigation team represents commercial and captive insurers, risk retention groups and reinsurers in some of the United States’ most high-profile and contentious disputes. Drawing on decades of experience, we are always ready to roll up our sleeves and develop innovative solutions in your best interests, whether it’s strategic multiyear litigation or a timely settlement to save costs. Our team is top-ranked in numerous directories and received the Financial Times’s prestigious “Innovative Lawyers” award for its historic settlement of 10,116 In re World Trade Center Disaster Site Litigation cases against the City of New York and 140 of the City’s contractors brought by first responders, union workers, volunteers and others who participated in the rescue, recovery and debris removal operations at the former World Trade Center site on and after 9/11.
Our insurance coverage team crafted the largest settlement of Roman Catholic clergy abuse cases in the United States for longtime client Allianz; represented the liquidators of General Electric’s captive with respect to a $4 billion environmental claim involving sites in almost all 50 US states; recovered $228 million for a captive after winning summary judgment in its contribution action against certain London market insurers; and has handled many nine-figure disputes as first-chair trial and appellate counsel throughout the United States. Working with a New York-based insurer, we also created and help to administer the National Hockey League’s league-wide temporary total disability insurance program.
Transactions and Private Equity
We stand ready to partner with you in negotiating and executing all types of insurance and reinsurance-related deals to further your business objectives. Our insurance lawyers work closely with the Firm’s transactions and private equity teams to conduct insurance due diligence and planning. We also negotiate, help place on the market, and handle claims and disputes arising from transactional insurance products, such as representations and warranties (R&W) insurance and tax liability insurance. We have handled dozens of recent deals in the R&W space and have a keen understanding of what policy terms to request upon placement to best protect our clients and to minimize, resolve and win disputes. We have served as insurance counsel for several tax liability policies with the highest limits ever placed in the United States, often with policy limits exceeding $500 million in a single placement.
World Trade Center Captive Insurance Company – Acted as lead counsel regarding the historic settlement of more than 10,000 tort claims against the City of New York and its contractors by first responders, trade union workers and volunteers arising out of the rescue and recovery operations at the former World Trade Center site and nearby locations on and after September 11, 2001. McDermott argued and won the appeal before the US Court of Appeals for Second Circuit regarding implementation of the settlement. In addition, McDermott recovered approximately $230 million from the London marine and non-marine markets after winning summary judgment in the WTC Captive’s contribution action against certain of those insurers.
Allianz – Won bench and six-week jury trials for Allianz in its insurance contribution action against 17 co-insurers arising out of its settlement of a truck manufacturer’s asbestos and environmental liabilities nationwide.
MCIC, A Vermont Risk Retention Group – We represent this academic medical center risk retention group, the largest of its kind in the United States, with respect to all of its operations.
Counsel to a commercial insurer and liaison counsel for 12 of its co-insurers with respect to the largest settlement of Roman Catholic clergy sexual abuse cases in US history, as well as lead reinsurance counsel to the commercial insurer relating to its cession and disputes with its reinsurers arising from the settlement.
Zurich Insurance – We advised Zurich, Switzerland’s largest insurer, and one of the largest insurers in the world, in relation to the formation of a captive insurance structure. We assisted with the legal and tax aspects of the development of a Vermont-based cell captive, designed to be a risk sharing mechanism for Zurich’s international business.
AXA Insurance Company – We represented this global insurance group in designing its insurance products and legal structure in China and with respect to the development of a data compliance strategy focusing on data cross-border transfer issues and key requirements under Chinese laws.
Higher Education Institution – Developed a captive insurance structure for a large state university system to self-insure medical professional liability, workers compensation, construction and other risks.
EMLICO – Acted as counsel to the joint liquidators of General Electric’s captive, EMLICO, regarding the largest environmental claim in US history involving sites in nearly all 50 states.
Captive Resources LLC – We represent this leading captive services provider with respect to its management and operation of numerous offshore captive insurance companies.
NHL – Advised the National Hockey League regarding the negotiation and placement of its league-wide temporary total disability insurance programs, and continued advice concerning the operation of that program.
Lead trial counsel for insurers in coverage litigation arising out of pollution of the “Love Canal” in upstate New York.
CNA – Lead trial and appellate counsel for CNA in a four-month jury trial and subsequent appeals addressing insurance coverage for thousands of breast implant liability claims.
Successfully advised dozens of corporate and private equity clients on the negotiation and placement of representations and warranties insurance and other transactional insurance products, including tax liability insurance.
Completed the comprehensive review and drafting of revised general liability and D&O policy forms for The Church Insurance Company, with a focus on insurance coverage for sexual misconduct claims.
Provided the comprehensive review and drafting of revised professional liability and general liability policy forms for multiple healthcare industry risk retention groups.
Blue Cross and Blue Shield entities – We defeated an attempt from a group of healthcare providers to certify classes in a high-stakes Employee Retirement Income Security Act of 1974 (ERISA) lawsuit against eleven Blue Cross and Blue Shield clients. The named plaintiffs sought to represent a nationwide class of all healthcare providers (including physicians, hospitals, chiropractors, etc.) regarding claims that the defendants violated ERISA when they failed to provide proper ERISA-mandated appeal and notice procedures in recovering overpayments from health care providers.
We achieved a complete dismissal with prejudice of a class action complaint challenging the reorganization of Blue Cross and Blue Shield of Florida, Inc. (Florida Blue) from a nonprofit mutual insurance company into a for-profit stock insurance company. The plaintiff, a former policyholder, alleged that Florida Blue accumulated “excessive” surplus in contravention of its nonprofit status. The Court held that the claim was derivative in nature and that the plaintiff lacked standing to bring a derivative claim. The Court also held that the Florida ultra vires statute barred the action.
We represented several Blue Cross and Blue Shield clients in a national class action filed in the United States District Court for the Southern District of Florida by non-physician medical providers alleging that the health plans conspired to deny reimbursement for medically necessary services rendered by the providers to the health plans’ insureds. We obtained a dismissal with prejudice of the complaint for failure to plead the conspiracy allegations with sufficient particularity.
We obtained a dismissal with prejudice of a class action filed against CIGNA Corporation. Several skilled nursing and supportive living facilities filed a class action on behalf of their residents alleging that the Illinois Department of Healthcare and Family Services and state Medicaid contractors, including CIGNA Corporation, were improperly delaying and denying payment of Medicaid benefits to the residents. The court held that the plaintiff facilities lacked standing to sue on behalf of their residents.
USA Swimming – We advised USA Swimming, the exclusive US representative for the sport of swimming on the US Olympic Committee, on its attempt to re-domesticate its 25-year-old Barbados captive to the District of Columbia to save significant costs. An onshore captive is advantageous in that this type of limited liability company will be disregarded for tax purposes, thus allowing it to benefit from the tax-exempt status of its sole member, USA Swimming. In a unique structuring, we planned to transfer the new captive arrangements to a DC-based limited liability company, and secured the approval of the Barbados financial services commission and the DC authorities.
Manual Life – Advised one of the largest life insurance companies in the world on its acquisition of shares from Chinese shareholders and represented the company in several litigation cases and settlements.
Winterthur – Represented a leading Swiss insurance company on legal issues involved with its China operations.
China Pacific Insurance (Group) Co., Ltd. – Represented one of China’s largest insurers in a contract dispute.