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FMG Law Blog Line

Connecticut and Delaware Enact New Data Security Laws for the Insurance Industry

Posted on: August 8th, 2019

By: Ben N. Dunlap

Connecticut and Delaware have enacted new laws imposing data security obligations on the insurance industry, joining New York, South Carolina, Ohio, Michigan, and Mississippi.

Connecticut’s Insurance Data Security Law, signed by the Governor on July 26, 2019, creates new information security, risk management, and reporting requirements for carriers, producers, and other businesses licensed by the Connecticut Insurance Department.  Following the model of New York’s Department of Financial Services 2017 Cybersecurity Regulations, the Connecticut law requires licensees to maintain an information security program corresponding to the size and complexity of the licensee’s operations; perform regular risk assessments; and designate a responsible individual to oversee the information security program.  The law requires oversight by the licensee’s board of directors and annual certification of compliance to the Insurance Department.  The law also imposes a new reporting requirement: licensees will also have to report cybersecurity incidents to the Insurance Department within three business days.  The law becomes effective October 1, 2019, but licensees have until October 1, 2020 to prepare and implement programs compliant with the new requirements.

The Delaware Insurance Data Security Act, signed by the Governor on July 31, 2019, establishes a regulatory framework requiring insurers licensed to do business in Delaware to develop and implement a comprehensive data security program. Following the 2018 Model Act published by the National Association of Insurance Commissioners, the Delaware law requires insurers to report instances of data breaches to the Delaware Insurance Commissioner and consumers, and it authorizes the Department of Insurance to investigate violations of and impose penalties against insurance carriers.

The Delaware law requires licensees to (1) implement information security programs and conduct risk assessments to try to prevent data breaches and compromising of consumers’ nonpublic information and personal data; (2) conduct thorough investigations to determine if a cybersecurity event or data breach may have occurred and whose data may have been compromised; (3) notify the Insurance Commissioner within three business days of determining that a data breach or cybersecurity event has occurred; (4) notify all impacted consumers within 60 days of the determination that their data has or may have been compromised; and (5) offer free credit monitoring services for one year to consumers impacted by breaches.

If you have any questions or would like more information, please contact Ben Dunlap at [email protected].

Does a California Lawyer Have to Convey All Settlement Offers to the Client?

Posted on: July 31st, 2019

By: Greg Fayard

Not necessarily. Under Rule 1.4.1 of the ethics rules for California lawyers, in criminal matters, all terms and conditions of plea bargains or other dispositive offers, whether written or oral, have to be communicated to the client promptly. In non-criminal matters, all WRITTEN offers have to be promptly communicated. But what about a VERBAL offer in a non-criminal case? That’s a judgment call for the lawyer. If the lawyer believes the verbal offer is a “significant development,” then, yes, an oral offer should be promptly conveyed to the client. If, however, only a nuisance value oral offer is made, and the lawyer does not believe such offer is significant, then the lawyer cannot be disciplined for failing to communicate said offer. Of course, in the off chance the State Bar investigated the lawyer’s decision to not convey a verbal offer, the Bar would determine if the oral offer was significant or not.

That said, the best practice is to convey all offers, regardless of form, to the client, and to do so promptly.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

Can Silence Be Bought as Part of a Settlement of a Use of Force Claim?

Posted on: July 30th, 2019

By: Jake Loken

Can silence be bought, especially of those who claim excessive use of force? The City of Baltimore thought so, until the Fourth Circuit Court of Appeals said otherwise.

In Overbey v. Mayor of Balt., No. 17-2444 (4th Cir.), decided July 11, 2019, the Fourth Circuit found that public policy and First Amendment rights outweighed the interests of the City of Baltimore in enforcing non-disparagement clauses found in the City’s settlement agreements, which settled use of force claims.

The Fourth Circuit explained that when an individual brought claims of excessive force, the City of Baltimore would only settle the claims if the individual agreed to a non-disparagement clause, which constitutes a waiver of the individuals First Amendment rights, as it prevents that individual from speaking about their claims, the facts of their claims, or the settlement process itself. If the individual did speak out, the non-disparagement clause would be breached, and the individual would be required to return half of the settlement amount back to the City.

Usually, individuals may waive their constitutional rights as part of a settlement, but only if “the interest in enforcing the waiver is not outweighed by a relevant public policy that would be harmed by enforcement.” But in the case of non-disparagement clauses, where individuals’ First Amendment rights are waived regarding speaking out about alleged excessive, the Fourth Circuit said such clauses were unenforceable. The Fourth Circuit explained that “unpleasantly sharp attacks on government and public officials can play a valuable role in civil life and therefore enjoy the protection of the First Amendment. Enforcing a waiver of First Amendment rights for the very purpose of insulating public officials from unpleasant attacks would plainly undermine that core First Amendment principle.”

The ruling is a reminder that public policy must be taken into consideration when deciding to contractual wave constitutional rights, and acts as a reminder that silence can be hard to buy.

If you have any questions or would like more information, please contact Jake Loken at [email protected].

Be Aware of Your Rights When ICE Wants to Review Your I-9 Files

Posted on: July 29th, 2019

By: Ken Levine

Under the current administration, Immigration and Customs Enforcement (ICE) has ramped up investigations on corporate compliance with laws pertaining to the hiring of workers.   The reality is that large, medium and small employers are all at risk of being subject to an ICE enforcement action.

Congress has given Immigration and Customs Enforcement (ICE) broad authority to investigate and enforce Form I-9 compliance.  Under current laws, employers must verify the employment authorization of a new hire through the Form I-9 verification process.  Forms I-9 must be retained for three years after hiring or one year after the employee’s last day of work, whichever is later. Employers must also make their Forms I-9 available for inspection by ICE or other government agencies upon proper notification.  ICE initiates an I-9 audit by serving a Notice of Inspection (NOI) on the employer, who then has three (3) business days to produce internal I-9 forms as well as the other documentation requested.  During the 3 day period, immigration legal counsel may enter their appearance in the matter and should review a copy of all documents that have already been provided or will be provided to ICE. ICE agents review the documents, identify any technical or serious violations, and provide issue an audit report.

 The ICE I-9 audit did not go well – what could that mean?

Significant defects in the I-9 audit could very well mean that ICE will levy substantial financial penalties or even initiate a raid.  The I-9 audit process is where ICE has the ability to weigh evidence of whether an employer is knowingly hiring and employing unauthorized workers.  If the evidence tends to show a company engaging in willful hiring and retaining of unauthorized workers, then a raid by ICE agents and criminal prosecution of company officials is certainly possible.  An “ICE raid” is the description for when agents (without notice) arrive at an employer’s worksite to arrest unauthorized workers, as well as company personnel who possess knowledge or have facilitated unauthorized employment hiring practices.

Employers should note that that ICE agents are entitled to enter any public area in a workplace but require consent (which can unwittingly come from a receptionist) or a judicial warrant in order to access non-public areas.   A judicial warrant has the following characteristics:  1) It contains the signature of a federal or state judge and the date; and 2) It includes a timeframe for the search; and 3) the areas to be searched.

In the current environment, proper I-9 planning can certainly mitigate the effects of an ICE audit.  Working with attorneys well versed in enforcement compliance will best position a company in the event of an audit or raid.  Good faith efforts by employers to correct defects in their I-9 records on their own will by and large make a favorable impression with ICE.

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Kenneth S. Levine of the law firm of Freeman, Mathis & Gary, LLP at (770-551-2700) or [email protected]

Pennsylvania Superior Court Maintains a Contempt/Sanctions Proceeding is a ‘Civil Proceeding’ Contemplated by the Dragonetti Act

Posted on: July 29th, 2019

By: Courtney Mazzio

In Pennsylvania, the Dragonetti Act created a wrongful use of civil proceedings cause of action, when a person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings if: (1) he acts in a grossly negligent manner or without probable cause and primarily for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based; and (2) the proceedings have terminated in favor of the person against whom they are brought. See 42 Pa.C.S.A. § 8351(a). Attorneys may be found liable under this cause of action.

Raynor v. D’Annunzio is a Dragonetti action brought by Plaintiff/appellant attorney,  stemming from contempt proceedings where sanctions were sought against her in an underlying civil suit. Raynor v. D’Annunzio, 2019 PA Super 72, 205 A.3d 1252. In the underlying action, a Philadelphia County Judge ultimately issued over $900,000 in sanctions against counsel for attempting to elicit certain testimony from her expert that was off-limits per a pre-trial in limine ruling. Plaintiff/appellant then appealed ruling to the Superior Court. There was a question over whether counsel had (1) intentionally violated the in limine ruling with her line of questioning of the expert, particularly where there was no  order instructing counsel to instruct her witness not to mention Plaintiff’s smoking history existed; and (2) whether there was evidence of record proving that counsel colluded with the expert in order to actively ignore the in limine ruling during questioning. On these bases, the Superior Court reversed the sanction orders of the trial court.

Plaintiff/appellant then brought this separate Dragonetti action against Plaintiff’s counsel in the underlying action, claiming counsel knew their requests for sanctions and contempt were unsupported by the facts and law, yet they pursued the action anyway in an effort to ruin counsel’s livelihood and professional life. Appellee filed Preliminary Objections, which resulted in the rare dismissal of a case with prejudice, in part on the basis that the phrase found in the Pennsylvania cause of action  “procurement, initiation, or continuation of civil proceedings” means the filing of a civil action, and does not include the filing of a post-trial motion. See id. at 1260. Plaintiff/appellant once again appealed the decision of the trial court. The Pennsylvania Superior Court found that a motion seeking a finding of contempt and a request for sanctions is, separate and distinct from post-trial motions alleging trial court error filed in the underlying lawsuit for the purposes of the Dragonetti Act. See id. at 1261-62. They determined it is essentially the same as the filing of a civil lawsuit. See id. Put another way, the Court found that seeking an adjudication of contempt and requesting sanctions constituted the procurement, initiation, or continuation of civil proceedings as contemplated by the Dragonetti Act. See id.  On this basis, the Court reversed the decision of the trial court sustaining the Preliminary Objections and remanded it to the trial court. It remains to be seen how the trial court will ultimately rule in this longstanding dispute riddled with contention.

If you have questions or would like more information, please contact Courtney Mazzio at [email protected].