School reopenings expected to bring a wave of lawsuits

The decisions of school officials across the U.S. could bring new liabilities related to virus transmission.

A Georgia high school that made headlines for its packed hallways and unmasked students announced Aug. 9 that it would close for at least two days after it identified nine cases of COVID-19. Six students and three staff members tested positive for the virus after the first week of in-person instruction at the school, one of the first to reopen for the 2020-21 school year amid debate around the best way to resume learning during the pandemic. Many K-12 schools and colleges across the U.S. remain undecided over whether students will return this fall in person, virtually or a combination of both.

That uncertainty has worsened in recent days as reports emerge of increased COVID-19 cases in children. A new report from the American Academy of Pediatrics and the Children’s Hospital Association revealed a 90% increase in COVID-19 cases among children between July 9 and Aug. 6, bringing the total of pediatric cases to 380,174, or about 9.1% of all cases. In addition, more than 6,600 COVID-19 cases and 14 deaths have been linked to college campuses since the pandemic began.

“Reopening schools is going to be very difficult,” said Justin Dorman, national product manager, workers’ compensation, Burns & Wilcox in Charleston, S.C. “We have already seen some really harsh impacts with the spike in COVID cases in places where you have students in confined spaces. How to do this safely is still a work in progress.”

Whether school officials have students return in-person or online, their decisions could bring new liabilities related to virus transmission or even digital learning — making directors & officers (D&O) insurance, employment practices liability insurance (EPLI), cyber and privacy insurance, and workers’ compensation insurance necessary for all educational institutions.

“There are a lot of challenges and many unknowns,” said Matthew Lefchik, director, cyber risk management, Node International. “There are so many organizations that are still trying to navigate through the nuances of what the risks could be: not just the health risk, but the cybersecurity risk.”

School board decisions in the spotlight as cases rise

In Florida, where the state’s largest teachers union is suing over a state mandate that K-12 schools must reopen in-person five days per week, COVID-19 cases in children have increased 137% in the last month. While school districts and colleges must adhere to state guidelines, local school boards are ultimately responsible for reopening plans in many areas. The decisions made by these governing boards — from student housing capacity at colleges to desk spacing in elementary schools — could become the subject of lawsuits under an institution’s D&O insurance. This type of policy covers board members in their decisions and actions in their roles.

If there was a misjudgment made in the decision-making process, that can potentially become a D&O claim. It could be the timing of their reopening plan or the way they operated while open. Additionally, if COVID cases rise and schools decide to close again and go 100% remote, any of those decisions made can be scrutinized and possibly turn into a D&O claim.

Even during the summer semester, many colleges have seen COVID-19 spread among students and staff. At least 136 fraternity house residents and six other students were infected with COVID-19 at the University of Washington in Seattle, and Harris-Stowe State University in St. Louis closed its campus in July after eight administrators tested positive for the virus. At Appalachian State in North Carolina, six employees and 47 students tested positive, in addition to 41 subcontractors who were working on campus construction projects.

As more staff report to work at both K-12 schools and colleges, an increase in EPL lawsuits is also anticipated. Hundreds of COVID-related EPL lawsuits have already been filed against employers. Lawsuits could allege Americans with Disabilities Act discrimination if staff members with health conditions are not appropriately accommodated, and wage and hour cases could result if teachers are asked to don PPE, subject to health screenings or perform other unpaid work before officially starting their workday. For instance, if it is an hourly employee, they need to be compensated for that time.

Lawsuits related to protected whistleblowing activity are also expected — whistleblower cases are when someone sees something in the workplace and speaks up about it, and they are retaliated against. Consider the recent story of the Georgia student who was suspended after posting photos from her high school’s crowded hallways. If it had been a staff member and they were fired, that would be a retaliation whistleblower suit under the EPL Insurance.

As information and guidelines change, most school districts and colleges have made multiple versions of their reopening plans. Schools are in a tough position, and they are really working hard to accommodate not only their staff but their students. Schools should review their D&O and EPL insurance so they are ready to confront a potential wave of lawsuits. If they have the coverage, they should keep it or improve on it. Now is not the time to pull back on the coverage to save money, as we know more lawsuits are coming.

Specific Technologies Driving Insurtech Investment in 2024

Understanding the Funding Decline The decrease in funding does not necessarily spell trouble for the insurance sector but instead highlights a strategic shift, the report suggests. “The insurance industry, like many sectors, is focusing on the most promising ventures with substantial insurance potential,” the report explains. “Insurers are directing their investments toward key areas and current trends such as embedded insurance, employee benefits, and cyber risk management. This strategic investment approach signals a forward-looking mindset within the industry.” Three Key Insurtech Trends for 2024 The report identifies three major trends shaping insurtech investments in 2024: Public Insurtech Companies: Financial and Growth Strategies The report also notes that public insurtech companies are prioritizing revenue growth as their main goal. These firms are restructuring their financial strategies to boost cash flow and capitalize on rising revenue streams. Their growth prospects are supported by expanding asset portfolios and strong market demand. “Public insurtech companies are focusing on revenue growth and optimizing their financial frameworks to increase cash flow,” the report states. “The growth potential for these companies is driven by increasing revenue opportunities, broadening asset bases, and a robust market for their services.” In summary, while global insurtech funding saw a decline in 2023, the industry’s focus on GenAI, digital process management, and connected insurance technologies is setting the stage for a dynamic and forward-looking 2024.

Business

Insurer Secures Unanimous Supreme Court Victory in New York Choice of Law Dispute

In the world of sports, a clean sweep, a shutout, or a perfect game is the ultimate achievement. In the legal arena, a unanimous decision from the U.S. Supreme Court is equally rare and significant. In a notable legal triumph, Great Lakes Insurance SE achieved a unanimous 9-0 victory in the Supreme Court on February 21, 2024. This victory follows a protracted legal battle that began in the District Court of Pennsylvania, advanced to the U.S. Court of Appeals for the Third Circuit, and culminated in the Supreme Court’s decisive ruling. Background of the Case: Great Lakes Insurance SE v. Raiders Retreat Realty Company The heart of the dispute was the insurance contract’s clause selecting New York law to govern any future legal conflicts. Although the financial implications of this case were relatively minor compared to the broader marine insurance industry, the insurer’s determination to uphold a crucial maritime legal principle has significant long-term implications for marine insurance. Faced with the insured’s counterclaims—including allegations of breach of fiduciary duty, insurance bad faith, and violations of Pennsylvania’s Unfair Trade Practices Law—the insurer was confronted with serious risks. Such claims could lead to the shifting of attorney’s fees, treble damages, and more, which might normally encourage insurers to settle rather than risk pursuing justice. However, Great Lakes Insurance, supported by The Goldman Maritime Law Group, opted to challenge the Third Circuit’s decision and seek clarity from the Supreme Court. Supreme Court Ruling: A Landmark Decision In a landmark ruling, Justice Brett Kavanaugh affirmed that choice of law provisions in maritime contracts should be upheld by default. This ruling is a major victory for establishing a consistent federal standard in maritime law and avoiding a patchwork of state laws that could complicate marine insurance disputes. The Supreme Court’s decision overturned the Third Circuit’s earlier judgment, which had questioned whether Pennsylvania’s public policy concerns might override the insurance contract’s choice of New York law. By upholding the New York choice of law clause, the Supreme Court eliminated the extra-contractual bad faith claims under Pennsylvania law, thereby ensuring that the dispute could be resolved based on the merits of the insurance claim itself. Significance of the Supreme Court’s Decision This ruling represents a significant advancement in maritime law, affirming that choice of law clauses in maritime contracts are generally enforceable. The decision establishes a clear, uniform legal framework for resolving maritime contract disputes, which will streamline the process and ensure fair adjudication of future insurance claims. Justice Clarence Thomas’s concurring opinion was particularly notable for its criticism of the 1955 Wilburn Boat v. Fireman’s Fund Insurance decision, which had previously influenced maritime insurance law. Thomas argued that Wilburn Boat was incorrectly decided and stressed that a uniform and enforceable set of rules is essential for the development of maritime law. Impact on the Marine Insurance Industry The Supreme Court’s decision sets a “bright-line” rule affirming that choice of law clauses are valid unless there is a strong argument against the selected jurisdiction. By endorsing New York’s insurance laws as a reasonable choice, the ruling supports a more consistent and predictable legal environment for marine insurers. This decision represents a major step forward in maritime law, helping insurers better assess risks, determine premiums, and ensure fair and efficient resolution of maritime insurance disputes.

School reopenings expected to bring a wave of lawsuits