Recently there has been a fair amount of activity by the insurance departments in New York, New Jersey and Connecticut regarding setting up mediation programs for Superstorm Sandy claims.  These programs typically require insurers to offer mediation to policyholders on certain claims, participate in the mediation in good faith, and pay all or part of the mediator’s fee.  New York was the first to implement this for Sandy, as you would expect because New Yorkers always think they are the best at everything (except for the 2004 baseball post-season).  For more on the New York mediation program for Sandy, see our Property Insurance Coverage Insights blog.  New Jersey’s Governor and Department of Banking and Insurance commissioner have issued a press release saying they intend to establish a mediation program, and Connecticut’s Insurance Department has also suggested that they will follow suit. 

What occurred to me, in light of this, and similar programs that were in place for Hurricane Katrina claims, is whether insurance companies, in their policies, should require all insureds to participate in a mediation as a precondition to filing suit on any claim (or any claim over a certain dollar amount, if you want to exclude small claims court disputes).  The idea would be to give the company an opportunity to resolve every significant dispute that is headed for litigation, before the costs and inconveniences of litigation commence.  Mandatory pre-suit mediation provisions are not uncommon in commercial contracts.  I would imagine that insurance departments would have a hard time not approving these provisions, particularly if insurers agreed to pay for most or all of the mediator’s fee, and the provision was otherwise fair and reasonable.  Surely companies would avoid some litigation if this was required. How much litigation they would avoid would be hard to predict, but insurance department mediation programs have obviously had some significant success.  (By merely suggesting this, I’m probably hurting my own interests as someone who is paid to defend insurance companies in lawsuits.)  So what are the downsides?  Some of these mandatory mediations would no doubt be a complete waste of a mediator’s fee and the company representative’s time.  It is also possible that insureds who have no real intention of filing suit will demand a mediation to try to obtain some more money when they are not owed anything.  But there should be a way to ferret that out in how you draft the mediation provision and in the company’s mediation positions.  Maybe the insured should have to pay something towards the cost of the mediation and/or be penalized for a mediation request that the mediator deems to be in bad faith.  Would such mandatory mediations even be necessary, given that a company can always ask for a mediation immediately after suit is filed?  The risk there is it might send the wrong message, suggesting that the company is concerned about the suit and perhaps willing to open its checkbook.  If mediation is mandatory before any suit is brought, the company avoids sending such a message by requesting mediation.  My idea might be worth a shot.

So now I imagine you’re thinking, why am I reading about this on an insurance class action blog?  Does this have anything to do with class actions?  Well, if implemented, this would require every  would-be named plaintiff who wants to bring a putative class action to go through a mediation first.  Named plaintiffs fall into a variety of camps.  Some are dead set on pursuing a class action and are fully controlled by their counsel, in which case a pre-suit mediation is almost always going to be a waste of time.  But others are just looking to make a little money for themselves, or reluctantly signed up with class counsel not really knowing what they are getting themselves into, and others actually have no idea what a class action is when their counsel brings suit.  Other named plaintiffs agreed to sign onto a suit simply because they were upset with how they were treated by the company, and what they really want is for the company to make things right for them individually.  A simple apology for a mistake might even go a long way for them.  In defending a class action, it is usually quite some time into the litigation before you ever have any chance to talk to the named plaintiff, and the first opportunity comes in a formal deposition.  A mandatory pre-suit mediation would at least give the company a chance to talk directly to the named plaintiff, find out what their story is, and make them an offer, on an individual basis, that they will have a hard time refusing.  That seems likely to eliminate some class actions from being brought.  Of course there may be some danger of people posturing in a mediation about bringing a class action that they have no real intention of bringing.  Companies will not want to let plaintiffs’ lawyers make a cottage industry of threatening to bring phantom class actions that would never be brought.  But there are other ways of dealing with that. 

If any of you know of this concept being tried and how it worked out, please drop me an e-mail or give me a call.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and most of the class actions I’ve defended have been brought against insurance companies. I’ve also handled some involving products liability, managed care, health care, utilities, financial services, higher education and environmental issues.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at work, you might find me running lines or watching a musical with my teenage daughter who hopes to be a Broadway star (or taking her to voice or dance lessons) or reading a good book.

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