Giving Thanks for SNAP

Thanksgiving tableThanksgiving is a joyous holiday gathering of plenty and comfort for most Americans. But as we give thanks for our good fortune, we should not forget the many Americans who cannot afford a bountiful feast and who worry everyday about how to put adequate food on the table. The USDA reports that over 48 million Americans are food insecure, meaning they do not regularly have access to enough food for an active, healthy life. Fifteen million are children.

Thankfully, the Supplemental Nutritional Assistance Program (SNAP, formerly known as food stamps) has significantly reduced food and financial insecurity. In reaching nearly 75 percent of those who are eligible, SNAP helps over 40 million Americans avoid hunger, lifts 4.7 million Americans out of poverty, and helps 2.4 million children escape severe poverty. (In fact, a recent study shows that this program is twice as effective at reducing poverty as previously thought.)

In addition to increased food security and financial stability, SNAP recipients also enjoy significant health benefits — benefits that can span a lifetime. Research shows that children who receive food stamps are significantly less likely to experience obesity, high blood pressure, and diabetes into adulthood. Pregnant women with access to SNAP have more successful births. SNAP truly provides access to healthy and nutritious food, with recipients spending over 85 percent of their benefits on fruits, vegetables, grains, dairy, meat, and meat alternatives.

And SNAP isn’t only beneficial for public health; it’s also a boon for the economy. Research shows that, by giving additional purchasing power to people who are most likely to exercise it immediately, SNAP stimulates the economy. The USDA estimates that every $5 in SNAP benefits generates $9 in economic activity. This translates into tens of thousands of full-time jobs, particularly in the farm and retail industry.

Recognizing the importance of SNAP in the fight against poverty, advocates across the country have worked to ensure that more poor families can access this important benefit. This year, the Shriver Center, in coalition with Heartland Alliance for Human Needs & Human Rights, led a successful advocacy campaign in Illinois that resulted in legislation that extends SNAP eligibility to 40,000 households and 80,000 individuals, over half of whom are children. This benefit is targeted to low-income working families with gross incomes above the income threshold but high living expenses.  

Beyond Illinois, the application process for the Affordable Care Act (ACA) has helped boost SNAP enrollment in 10 other states. Nevada, for instance, saw a 14 percent increase in participation just from the surge in public engagement with assistance programs and administrators caused by Medicaid expansion. A handful of other states have also utilized ACA-funded tools — like call centers, document imaging, and electronic data matching — to improve and streamline both Medicaid and SNAP enrollment systems. Consolidating the two registration processes has been particularly fruitful. New Mexico, for example, generated a 5 percent increase in participation in just 14 months after launching a Web-based sign-up system that lets enrollees apply for multiple programs in a single session. Overall, 632,000 people will be more food secure because of the ACA.

Ensuring that all financially insecure families can access SNAP benefits will go a long way towards enabling families to enjoy abundant Thanksgivings while alleviating the daily fear of going hungry that they experience during the rest of the year.

So, whether it’s helping struggling families, advancing public health, or stimulating the economy, there is an awful lot to be thankful for when it comes to SNAP.

Trevor Brown contributed to this blog post. 


Stadium Owners Watching Closely To See if Insurer Fumbles Reggie Bush Claim

San Francisco 49ers running back Reggie Bush reportedly intends to sue the city of St. Louis after slipping on a concrete surface behind the St. Louis Rams’ bench during a recent game, injuring his knee and ending his season. If a lawsuit is brought, St. Louis (which owns the Rams’ stadium where the injury occurred) likely will look to its liability insurer to pay for its defense and for any damages awarded to Bush at trial. While the insurer may dispute St. Louis’s claim, the city has a strong argument for coverage, and stadium owners across the world—who have a duty of care to the hundreds of multi-millionaire professional athletes who compete on their fields and pitches—will be watching closely to see if the insurance company fumbles the claim.

Earlier this year, Bush signed a one-year, $2.5 million contract with the 49ers. In his 10th year, the 30-year-old is at the tail-end of his career, but a strong season with the 49ers potentially could have put him in contention for another big free-agency contract. For example, in March of this year, then-31-year-old running back Frank Gore signed a three-year, $12 million contract with the Indianapolis Colts, which includes $6.5 million guaranteed and an average annual salary of $4 million, according to While Gore has been a more productive carrier running the ball compared with Bush, an outstanding season in San Francisco could have put Bush in the conversation for a similar contract.

Bush is likely to seek as damages his projected lost income under a new contract, pain and suffering, and even punitive damages. As part of his case, Bush may argue St. Louis was on notice of the danger posed by the concrete surface—one week earlier, Cleveland Browns’ quarterback Josh McCown slipped in the same area and had to leave the game. Bush thus may claim that St. Louis acted “willfully and intentionally” in allowing the concrete surface to stay in place for the 49ers’ game.

St. Louis may respond that, by agreeing to take the field that Sunday, Bush “assumed the risk” inherent in playing football. In fact, St. Louis may turn Bush’s argument against him and assert that Bush himself assumed the risk of slipping on the concrete if he was aware of McCown’s injury. Under Missouri law, however, the risks assumed in sports activities are created by the nature of the sport. Sheppard by Wilson v. Midway R-1 Sch. Dist., 904 S.W.2d 257, 262 (Mo. Ct. App. 1995). The risk of a baserunner being hit by a baseball, for example, is a risk inherent to the game of baseball. Id. In this case, however, Bush may argue that the slippery concrete area is not “inherent to the game” of football, but an additional, unnecessary risk created “willfully and intentionally” by the city.

Such allegations could invite St. Louis’s insurer to argue that this type of claim is not what it intended to cover when it issued the policy, and that it is excluded. The reason: almost all liability policies exclude coverage for injuries that are “expected or intended” by the insured. But this should be a losing argument. Under Missouri law (which likely applies to the policy), when determining whether the exclusion applies, courts must focus on the results rather than the causes. Am. Family Mut. Ins. Co. v. Pacchetti, 808 S.W.2d 369, 372 (Mo. 1991). “Expected or intended” as used in a liability policy thus means that the policyholder “deliberately and consciously” intended the injuries to occur. Id. Here, it is almost certain that the insurer will not find any evidence that the city actually intended Bush’s injuries to occur.

The best news for St. Louis: Missouri law appears to permit insurance coverage for punitive damages. Punitive damages directly levied against a defendant are insurable in Missouri where the policy specifically provides for such coverage. See Colson v. Lloyd’s of London, 435 S.W.2d 42 (Mo. Ct. App. 1968) (policy that provided coverage for all losses imposed by law covered punitive damages); New Madrid County Reorganized School District No. 1 v. Continental Cas. Co., 904 F.2d 1236 (8th Cir. 1990) (explicitly insuring “wrongful acts” covered punitive damages). Depending on the language of its policy, and the relevant law that applies, the city could be covered for a big award of punitive damages in Bush’s favor.

Other sports stadium owners should prepare for potential claims by athletes and negotiate the most favorable policy language possible to obtain similar coverage. Like St. Louis in this case, they should consider whether they can seek defense and indemnification for claims from third parties, such as key vendors, who may have been involved in the incident. Owners also may be entitled to obtain insurance from a vendor’s insurance policy, if the vendor is required to make the owner an additional insured on its own policies.

Claimant Actively Seeking Employment Denied LTD Benefits By Anthem

The case of Kindig v. Anthem Life Insurance Company provides an example of how claimants of long term disability benefits may sabotage their own case. A New York Federal Court concluded that Anthem did not act arbitrarily or capriciously by terminating benefits to its claimant following his hip replacement surgery when the court found:

1) his treating physician concurred with the reviewing physician’s report that he was not disabled; and
2) the claimant was actively seeking similar employment with other companies.

Although this is not a recent case and was not handled by our disability insurance lawyers, it is instructive on how claimants can ruin their own case by searching for employment in the same career field with the same job description as the one from which they claim they are disabled.

The plaintiff was employed as the Chief Financial Officer of a New England Supermarket chain which provided disability benefits through Anthem Life Insurance Company. Eighteen months after his hiring date, he underwent hip replacement surgery. He voluntary quit his job just one week after the operation. His initial application for long term disability benefits was granted due to his inability to perform the duties of his regular occupation. The decision to award benefits was based on reports from his surgeon and primary care physician, Dr. Little, that he was disabled.

A few months later, Anthem terminated his long term disability benefits based on a new report from Dr. Little stating that “patient is not disabled.” Additionally, the plaintiff was working with a vocational consultant in search of an executive job with a large retail chain similar to the job he had voluntarily left shortly after his surgery. Plaintiff appealed the termination of benefits.

In support of plaintiff’s administrative appeal, Little issued a report saying that he now believed the plaintiff “cannot return to work.” In response, Anthem ordered a review of the medical records by Dr. Gendron who spoke with Little before preparing a report. Little signed Gendron’s report indicating Little agreed with Gendron’s assessment that the plaintiff was not disabled. This prompted Anthem to deny his appeal leading plaintiff to file the ERISA lawsuit. Plaintiff was found totally disabled by the Social Security Administration one year after Anthem terminated his benefits.

Reasons the Court Agreed with Anthem

In reviewing the decision of Anthem, the federal court concluded the termination of benefits was not arbitrary and capricious for the following reasons:

  • Plaintiff “fails to provide a convincing explanation for his extensive job seeking activities” during the time he was pursuing his appeal and claiming he was totally disabled.
  • Dr. Little gave no explanation as to why “he agreed with Gendron’s opinion that plaintiff could work.”
  • The finding by the SSA that plaintiff was disabled is evidence of disability, but is not binding on the court. Additionally, the SSA decision was not issued until one year after the termination of benefits was upheld pursuant to the administrative appeal.

If you have questions about your claim for disability benefits, call Disability Attorneys Dell & Schaefer for a free consultation.

Eastern District of New York ultimately arrives at right outcome when interpreting “Employer’s Liability” exclusion in CGL policy

In Hastings Development, LLC v. Evanston Insurance Company, No. 14-cv-6203 (ADS)(AKT) (Oct. 30, 2015), the U.S. District Court for the Eastern District of New York correctly determined that an “Employer’s Liability” exclusion in a commercial general liability (“CGL”) policy only applied and precluded coverage when an insured is sued by its own employee(s) and not by an employee(s) of a co-insured. Believing that the exclusion was ambiguous, and based on “the lack of any probative extrinsic evidence” concerning the parties’ intent, the district court applied “the rule of contra preferentem” and found it “appropriate to adopt the Plaintiff’s interpretation of the exclusion because the Plaintiff is the insured and its interpretation of the exclusion is the narrower interpretation.”

The Employer’s Liability exclusion at issue in Hastings Development provides, in pertinent part:

This insurance does not apply to any claim, suit, cost or expense arising out of bodily injury to … an employee of the Named Insured arising out of and in the course of employment by any Insured, or while performing duties related to the conduct of the Insured’s business …(emphasis added).

The exclusion also states: “Wherever the word employee appears [in the exclusion], it shall also mean any member, associate, leased worker, temporary worker of, or any person or persons loaned to or volunteering services to, any Named Insured” (emphasis added).

Plaintiff, a Named Insured, sought coverage from its insurer after it was sued in an underlying tort action by an employee of another Named Insured. The insurer denied coverage, arguing that the Employer’s Liability exclusion applied because the individual who brought suit was an employee of a Named Insured (even though he was not employed by the specific Named Insured being sued, i.e., the Plaintiff). Plaintiff – the policyholder – argued that “the phrase, ‘the Named Insured,’ refers narrowly to only the Named Insured who employed the injured employee, and not to the other Named Insureds under the Policy.” Thus, Plaintiff contended that the exclusion did not apply.

Granting in part and denying in part the insurer’s motion to dismiss and the policyholder’s motion for summary judgment, the district court found that the interpretations of the phrase “an employee of the Named Insured” offered by the policyholder and the insurer were both “reasonable”:

Both the Plaintiff [and the actual employer of the employee suing the Plaintiff] are “Named Insureds” under the Policy, and the phrase “the Named Insured” is not defined by the Policy.  Thus, the phrase “employee of the Named Insured,” could conceivably encompass employees of any of the Named Insureds, as the [insurer] contends, or be limited only to the Named Insured who employed the injured employee, as the Plaintiff contends.

In reaching this conclusion, the court was influenced by “the broad definition of ‘employee’ as including any individual performing work on behalf of ‘any Named Insured,’” which the court believed “appears to be in tension with the language in the exclusion precluding coverage to suits by ‘employees of the Named Insured’” (emphasis in the original). Therefore, the court concluded that there was “an ambiguity as to what the exclusionary language, ‘employees of the Named Insured,’ means – does it refer to only the Named Insured who employed the injured worker …or does it refer to any of the Named Insured[s] ….”

As a result, and after finding “no probative extrinsic evidence as to the parties’ intent,” the court found “it appropriate to apply the contra-preferentem rule, which … requires the court to construe an ambiguity in favor of the insured and also, to construe policy exclusions narrowly.” Then, “applying the narrow interpretation of the ‘Employer’s Liability’ exclusion, the Court [found] as a matter of law that the ‘Employer’s Liability’ exclusion does not bar coverage” – because, here, the employee who sued Plaintiff was not employed by Plaintiff.

The court’s decision clearly was complicated by the definition of “employee” in the exclusion – language that does not appear in every Employer’s Liability exclusion.  That said, other considerations could, and should, have made it even easier for the court to reach the same, correct decision. For one, it could, and should, have placed more emphasis on the policy’s “Separation Of Insureds” provision, which requires, except in certain inapplicable circumstances, that, inter alia, “this insurance applies … [a]s if each Named Insured were the only Named Insured ….”  Instead, the court found that this provision was “not a model of clarity[,]” because it “does not explicitly refer to the ‘Employer’s Liability’ exclusion, nor any other exclusion.”  However, there is no requirement that to be effective this provision must reference any specific exclusion; to the contrary, the provision makes clear that “the insurance” (as a whole), with certain limited inapplicable exceptions, “applies … [a]s if each Named Insured were the only Named Insured ….”

Additionally, the court could, and should, have emphasized the use in the Employer’s Liability exclusion of the definite article, “the insured,” as opposed to the indefinite article, “any insured.” Although it discussed a decision by the U.S. District Court for the Southern District of New York that recognized the importance of that distinction, the Eastern District of New York never itself gave the distinction sufficient, serious consideration.

Nevertheless, the court, in Hastings Development, still clearly reached the right result:  The Employer’s Liability exclusion in a CGL policy only applies when an insured or Named Insured is sued by its own employee(s), not when it is sued by an employee(s) of another insured or Named Insured covered by the same policy.


Happy Birthday, Sargent Shriver

Sargent ShriverToday would have been Sargent Shriver’s 100th birthday. Shriver was the right leader, the right man, for a moment in time that was a confluence of several historical trends. The trends included a thirst for economic and social justice, as well as a confidence in the country and in an active role for government in solving difficult problems. These trends met the unique talents of Shriver himself, who was able to inspire and harness the energy, youth, idealism, confidence, and pragmatic know-how of a whole generation as perhaps nobody else could have. Together they produced ideas and methods with true staying power. 

Recently, I was privileged to attend a small dinner that included people who worked with and for Shriver in the 1960s. They all told fascinating stories of how Shriver-led initiatives, including the Peace Corps, Community Action Programs, and legal services, morphed from the most general of ideas and ideals into the long-lasting programs still with us today. They told delightful tales about frantic seat-of-the-pants improvisations, strokes of genius, round-the-clock work, hardball politics, low (or no) pay, and frequent moments of comedy that characterized that time in their lives. Each of these individuals is now extremely successful; all said their years working alongside Shriver were among the best of their lives.

Shriver’s ideas and methods have staying power because he understood that building peace and fighting poverty are not separate problems. Peace-building is an essential part of creating the conditions needed for upward mobility for people in poverty. And people in poverty who perceive that they have a fair chance for upward mobility will value and maintain peace. 

In today’s America, many kinds of external conflict block upward mobility, including the open violence that plagues our neighborhoods, keeps people from working or succeeding in school, and prematurely ends lives. Building peace in neighborhoods is an essential ingredient to fighting poverty in those neighborhoods. But another kind of conflict is internal—the frustration of knowing one does not have a fair chance or the power needed to obtain a fair chance for upward mobility. That inner conflict can perpetuate poverty. 

In the face of that kind of conflict, peace-building requires the enforcement of civil rights, so that there is both the reality and the perception of a fair chance. And peace-building requires that people in poverty have a voice in policy debates—a seat at the table where decisions are made. Will there even be civil rights laws? Will there be good schools? Child care to enable work? Decent wages and working conditions? Effective policing? Whether people in poverty get their way on these issues or not, did they have enough of a voice to balance the power in the decision-making?      

Sargent Shriver and his colleagues thought these peace-building and poverty-fighting issues through.  They made sure that Peace Corps volunteers were sent to help countries and localities address issues the countries had identified themselves, not U.S. interests. Here in America, Shriver and his colleagues anchored the domestic War on Poverty in community action agencies, expressly placing them at the service of local leaders in the communities. They created a legal services program to help empower the voice of those communities in policy debates. Peace was seen not necessarily as the absence of policy disagreements, but in the fair balance of power as communities contended in the policy arena for a fair chance for upward mobility. 

Sargent Shriver would have been 100 today. He would have seen a time in which his ideas are as smart and needed as ever. As money tilts the balance in policy debates, the elements of a fair chance for upward mobility seem eroded or challenged, and communities face increasing issues of violence, there is a need for peace-building through power-building. Shriver and his colleagues showed that an active government, that provides resources to challenged communities to address their own problems and contend fairly in policy debates, and enforces the reality and the perception of a fair chance for upward mobility, not only effectively fights poverty but effectively builds peace.  

Reducing the Human Cost of Being “Crime-Free”: How and Why Local Governments Should Rethink Their Nuisance and Crime-Free Laws

Reducing the Cost of Crime FreeIt’s time for local governments to seriously consider the human and legal costs associated with local crime-free and nuisance property ordinances that regulate rental housing, landlords, and tenants.  The Shriver Center’s 2013 report, The Cost of Being “Crime-Free”: Legal and Practical Consequences of Crime Free Rental Housing and Nuisance Property Ordinances, outlined the serious harm to tenants and landlords caused by these ordinances and the potential liability of local municipalities who enforced them. Yet, in spite of the report’s findings and litigation across the country over these ordinances, nearly 2,000 local governments continue to enforce crime-free and nuisance property ordinances around the country.  Each time we urge a local government not to pass a crime-free or nuisance property ordinance, we are asked, “What can be done to keep our communities safe and landlords accountable for the condition of their rental housing?”

Local governments should question if their communities are actually safer as a result of these ordinances. A common hallmark of many ordinances is a provision linking ordinance enforcement to calling the police. In short, tenants and landlords are penalized, through evictions and monetary fines, because the police have been called for help “too many times.” These provisions directly discourage tenants and landlords from calling the police, leaving them to deal on their own with crime or unsafe conditions. This is a particularly serious problem for victims of domestic violence, who need to call the police to be safe from abuse. Local governments have essentially armed perpetrators with a tool that may seriously endanger the lives of their victims and others. As a result, states like Illinois have taken steps bar local governments from enacting or enforcing ordinances that punish victims of domestic or sexual violence or persons with disabilities for calling the police.

We also must recognize the racial implications of these laws, particularly in segregated, gentrifying, or predominately white communities. The racial bias of the criminal justice system is well documented, and incidents often begin with a police call from someone suspicious of a family of color on their block. Thus, local governments may have unwittingly armed discriminatory private citizens with a tool to maintain or change the racial and ethnic makeup of their neighborhood. Given the U.S. Supreme Court decision this past summer upholding disparate impact as a theory of liability under the federal Fair Housing Act, local governments need to understand that they can be held liable for policies that have a disparate impact on one or more protected classes, unless those policies are justified as necessary to achieve an important municipal objective that could not be achieved with a less discriminatory effect. 

Municipalities have a variety of options for creating healthy, safe communities without harming landlords and tenants or facing potential liability. Our new report with our partner, Open Communities, offers several alternatives to crime-free and nuisance property ordinances, including landlord registration, a hotline for tenants to complain about building or other unsafe conditions, a regular inspection of rental properties (with required notice and consent to entry by tenants), training for landlords and local governments on civil rights and landlord tenant law, and the employment of Crime Prevention Through Environmental Design principles.  The focus here is not on evicting tenants because they called the police or because the police were suspiciously called on them, but on maintaining healthy, safe, and inclusive communities. 

We urge local governments that elect to maintain their ordinances to track and annually assess whether the ordinance’s enforcement is adversely harming protected classes, such as women, families, racial and ethnic minorities, and persons with disabilities. This assessment requires a local government to speak directly to community stakeholders about their experiences with the ordinance, to track the enforcement of the ordinance and its impact on tenants and landlords, and to measure any violation of local, state, and federal law as a result of the ordinance. This assessment tool is consistent with the existing obligation of local jurisdictions who receive federal housing and community funds to affirmatively further fair housing. At a much more fundamental level, it is also consistent with our values as a nation.          

HUD Takes One Step Forward to Help People with Criminal Records, But More Is Needed

Yesterday, the Department of Housing and Urban Development (HUD) released much-anticipated guidance to public housing authorities and owners of HUD-assisted properties on the use of criminal records screening. By rejecting arrest records as a basis to deny admission, HUD slightly opened the door to federally subsidized housing for people with criminal records. To fully remove the burden of unfair barriers for this population, however, HUD needs to take further action. Specifically, it should issue further guidance on the implications of criminal records screening under the Fair Housing Act. In addition, housing providers desperately need direction on how far back they can look into an individual’s criminal history.

What the Guidance Says

The guidance addresses five important topics. First, it stresses that arrest records – without subsequent conviction or plea of guilt – are insufficient proof of criminal activity; Federal housing providers cannot deny housing or evict someone on the basis of arrests alone. Instead, providers must rely on evidence that the criminal activity took place.

Second, the guidance states that federal housing providers have the discretion whether to admit applicants or evict based upon criminal activity. In trying to debunk the myth that “one-strike” evictions are mandatory, HUD reiterated that there is no automatic denial or eviction for every allegation of criminal activity. Indeed, HUD reminded providers that they should consider factors such as the seriousness of the offending action and the extent to which the adverse decision will affect the household, such as rendering them homeless.

Third, the guidance reminds federal housing providers that they must honor the due process rights of individuals who are denied housing or evicted from housing as a result of a criminal record. These rights include notice, an opportunity to dispute the accuracy and relevance of the criminal record before the decision is made, and an opportunity to request an informal hearing or review after the decision was made.

Fourth, the guidance warns PHAs and project owners to create and apply their criminal records policies in accordance with civil rights laws, such as the Fair Housing Act. The discretion that they enjoy, in other words, is not unfettered.

Finally, the guidance ends by providing PHAs and project owners with a list of best practices and encouraging them to read the Shriver Center’s report, When Discretion Means Denial: A National Perspective on Criminal Records Barriers to Federally Subsidized Housing. 

What the Guidance Fails to Say

As the first official document from HUD in favor of increasing housing opportunities for people with criminal records, this guidance is certainly welcome. A quick review of When Discretion Means Denial would show, however, that outstanding issues remain for HUD to address. Two issues are particularly urgent.

First, HUD must issue guidance on the fair housing implications of criminal records screening. Serious racial disparities persist in the criminal justice system. Far from contained, these disparities ripple out well past the system, adversely affecting people of color, their families, and their communities in employment, education, and numerous other areas. Housing policies that deny people with criminal records perpetuate these racial disparities without necessarily improving public safety. Fortunately, over the summer, the U.S. Supreme Court upheld the disparate impact theory as a means of proving discrimination under the Fair Housing Act, thus strengthening a powerful tool for breaking down criminal records barriers that unfairly and disproportionately burden people of color and their communities. On the heels of the Court’s decision and in the midst of the unprecedented re-examination of this country’s deleterious overreliance on mass incarceration, a fair housing guidance from HUD on the use of criminal records would be especially timely. It is also sorely needed, as the demands of prospective tenants and housing providers demonstrate.

Second, HUD must give housing providers direction on how far back they can look into a person’s criminal history. There are too many instances of housing providers imposing overly long lookback periods – 10, 20, 99, 100 years – or no time limits on their criminal records inquiries at all. As long as such policies continue to exist, people with criminal records will get the message that they are not welcome in federally subsidized housing, no matter how much HUD guidance tells them otherwise. The time for HUD to grapple with this issue is now.

HUD Secretary Julián Castro recently spoke about HUD’s need to strike the proper balance between “keeping our housing communities safe and […] afford[ing] more opportunity for people to get back on their feet and not confine them to a life of scrapping and inability to ever get on the right track because of overly burdensome regulations.” The guidance that HUD released yesterday is a welcome step toward achieving that balance. To further realize its “role to play in the larger conversation about criminal justice reform and ensuring that folks have effective and fair second chances in life,” however, HUD needs to issue further guidance on the these remaining issues now – before the conversation about criminal just reform comes to a close.

In July 2015, legal aid attorneys and advocates across the country, including the Shriver Center, sent a letter to Secretary Castro and Attorney General Loretta Lynch (in her capacity as convener of the Federal Interagency Reentry Council), requesting that the federal government take concrete steps toward eliminating unreasonable housing barriers for people with criminal records. Some of the recommendations were included in the HUD guidance, and others are described in this blog post. A copy of that letter can be found here. 


PA Policyholders May Find Road Blocks In Obtaining Coverage For Misappropriation of Advertising Ideas under CGL Policies

Last week, the United States Court of Appeals for the Third Circuit issued a ruling that may make it more difficult for Pennsylvania policyholders to obtain coverage for the misappropriation of advertising ideas under standard commercial general liability policies. In The Hanover Insurance Company v. Urban Outfitters, Inc., No. 14-3705 (Oct. 23, 2015), the Third Circuit adopted a standard for the “prior publication” exclusion – an exclusion that precludes coverage for misappropriation of material that was first published before the insurance policy incepted – that may prove difficult to overcome.

In a recent client alert, members of Reed Smith’s Insurance Recovery Group discuss the Third Circuit ruling, and its potential impact on Pennsylvania insureds.

Leadership Means Putting Needed Revenues on the Table

Mayor Emanuel should be applauded for proposing a budget that seeks needed new revenue while refraining from making deep cuts to important programs.

As an advocate for people living in poverty, the importance of government is crystal clear to me. The core services of government—those involving public safety, education, help for people at risk, opportunity for all, and a strong economy—are supported by a strong consensus. These vital functions are important to all of us, not just those who are poor or at risk. The most basic and first priority of governing is to identify these vital functions and ensure that they are taken care of. That is done by putting together a spending plan and ensuring that there are revenues to cover it.

Reasonable people​ can argue about the variations​ of all this, but the first priority of governing is to see to it that the process gets done. Many other important matters, sometimes including reforms and new policy directions, require leadership. But that leadership is flawed if it does not include the will and the ability to take care of the basics, first and always​.

Taking care of these basics is often extremely difficult, especially when it includes the need to raise adequate revenue to fund the spending plan. Raising new revenue is hard, and it should be hard. People rightly demand a strong justification for any increase in taxes they will have to pay. The burden of proof is difficult.

But raising new revenue also runs into much more than a burden of proof. Political opponents find it easy to take advantage of people's instinctive resistance to new revenues. Ideologues who oppose just about any form of government activity will never support a revenue proposal, no matter how necessary, how overdue, or how reasonable. Opposition is easy, because it can be done with high rhetoric but no requirement to take responsibility to put forward some sort of realistic alternative.

So resisting the urge either to cut vital programs or kick more debt down the road, and instead proposing increases in revenue needed to fund core functions, takes courage. It can sometimes lead to political defeat. And thus it takes leadership.

The City Council is debating the contours and details of the budget, including the needed new revenues, as it should. Ultimately, the budget may or may not come out exactly as the mayor proposed it. But I think we should take a moment to appreciate the leadership it took to look the situation in the eye, factually and realistically, assess what is needed from government and what is needed to pay for it, and then put the needed revenues on the table. 

Beware of Good Intentions: Insurer Cannot Escape Duty to Defend by Interpleading Policy Limits That Were Not Subject to Competing Claims

On October 6, 2015, the United States District Court, Northern District of California held that an insurer breached its duty to defend by interpleading remaining policy limits and ceasing its defense of its insured.  Doublevision Entertainment, LLC v. Navigators Specialty Insurance Company, N.D. Cal., No. C 14-02848 WHA. Despite language in the policy stating that the insurer was not obligated to defend after it had deposited remaining policy limits with a court, the district court held that Navigators could not simply interplead the funds and abandon its insured “at the moment of her greatest peril.”

Navigators issued an errors and omissions policy to Commercial Escrow Services (“CES”) and its principal, Antoinette Hardstone. Beginning in 2010, CES and Hardstone were sued by a number of customers alleging improper escrow handling. After CES and Hardstone tendered to Navigators, Navigators assumed the defense of the claims.  While the claims were pending, the California Department of Corporations conducted an investigation into CES and determined that it had a shortage of $195,750. The Department of Corporations appointed a receiver, who had authority to collect any insurance proceeds needed to cover the shortage.

The claims against CES and Hardstone remained pending into 2012, at which time Navigators offered to tender the remaining policy limits. However, the Department of Corporations notified Navigators that the CES shortage had not been satisfied and thus, the Department had a claim against the policy proceeds in the amount of $195,750. In light of these competing claims, Navigators filed a complaint for interpleader and deposited the $466,358 remaining policy limits with the court. Navigators then ceased defending CES and Hardstone in the ongoing cases. Left with no money to fund their defense, CES and Hardstone were forced to hire inexperienced substitute counsel on short notice and ultimately had substantial judgments awarded against them. One such verdict was obtained by Doublevision, which took an assignment of CES and Hardstone’s rights against Navigators as partial satisfaction of the judgment.

Doublevision then instituted a coverage action against Navigators, alleging that Navigators had breached its duty to defend by interpleading the entirety of the policy limits rather than only the $195,750 over which there were competing claims. In response, Navigators argued that the policy explicitly permitted it to cease defending the insured once it had “deposited the remaining available limit of liability into a court of competent jurisdiction.”

The court rejected Navigators’ argument. Relying on the “supreme importance of the duty to defend,” the court held that “the insurance policy in question should be read as erasing the duty to defend only to the actual extent that conflicting claims are pending.” Thus, the court granted Doublevision’s motion for judgment as a matter of law on the issue of breach of the duty to defend and denied Navigators’ motion for judgment as a matter of law that the duty to defend was extinguished by the interpleader action.

This decision serves as a warning to insurers that they may not “cut off the supply of oxygen to the defense” until the entirety of the policy limits have been exhausted or properly interpleaded as subject to competing claims.