Insurance Journal’s Top 10 East Region Stories of 2019

A new year is a time of reflection for some, and last year, the city of Boston began 2019 by reflecting on an important piece of the city’s history: the 100-year anniversary of The Great Molasses Flood.

The flood, which flattened an entire Boston neighborhood within seconds, originally struck without warning on January 15, 1919, when a storage tank containing more than 2.3 million gallons of molasses suddenly ruptured, sending a wave of molasses through the cobblestone streets of Boston’s North End, the Associated Press reported.

The tank was owned by the Purity Distilling Co., and its contents were used mostly to make alcohol for wartime munitions but also to produce rum before Prohibition kicked in. The initial wave rose at least 25 feet high – nearly as tall as an NFL goalpost – and it obliterated everything in its path, killing 21 people and injuring 150 others, the Associated Press said.

“A dull, muffled roar gave but an instant’s warning before the top of the tank was blown into the air,” The Associated Press reported on the day of the flood a century ago.

News of the flood’s anniversary also served as one of the most popular stories among Insurance Journal’s East region readers in 2019. With this in mind, Insurance Journal is ending the year for its East readers just as it began, with reflection. Here’s a look back on the top stories for Insurance Journal’s East region in 2019:

1. Massachusetts Adopts Tough Ban on Flavored Vaping, Tobacco Products

Massachusetts adopted the country’s toughest ban on the sale of flavored tobacco and vaping products, including menthol cigarettes, in late November amid an ongoing rise in youth vaping and vaping-related serious lung injuries, Reuters reported. Massachusetts Governor Charlie Baker on November 27 signed the legislation into law, which also places a 75% excise tax on e-cigarettes.

“We remain committed to doing everything we can to protect the public health,” Baker said during a news conference following the adoption of the new legislation.

According to the Centers for Disease Control (CDC), as of November 20, 2019, there were 2,290 cases of e-cigarette, or vaping, product use associated lung injury reported from 49 states – all except Alaska – the District of Columbia and two U.S. territories – Puerto Rico and the U.S. Virgin Islands. Forty-seven deaths have been confirmed in 25 states and the District of Columbia as of November 20, 2019, as well, Insurance Journal reported.

Recent CDC laboratory test results of bronchoalveolar lavage (BAL) fluid samples from 29 e-cigarette and vape associated lung injury, or EVALI, patients submitted to CDC from 10 states found the cutting agent vitamin E acetate in all of the samples. Vitamin E acetate is an additive in some THC-containing vape products.

2. Insurer Not Responsible for Workers’ Comp Claim Due to Overdose Death

Beyond the vape crisis, the opioid crisis made headlines this year with a slew of lawsuits, as The Associated Press reported in September that nearly every state in the U.S. and more than 2,000 local governments are suing drug companies over opioid abuse.

However, a top story for East in 2019 involved an estate’s request that an insurer pay workers’ compensation benefits as a result of an overdose death. The New Hampshire Supreme Court in August affirmed a decision by the New Hampshire Compensation Appeals Board (CAB) denying the request.

The petitioner, Linda Quinn, a widow of William Quinn, had appealed the CAB’s initial decision denying the estate’s request that the Disability Rights Center of New Hampshire (DRC) and its insurer, Liberty Mutual Insurance Company, pay workers’ comp benefits as a result of William’s death due to “acute intoxication by the combined effects of heroin and oxycodone.”

This came after July 19, 2012, when William was involved in a work-related accident in which he fractured his left ankle. Liberty Mutual paid workers’ comp benefits for his injury and treatments. However, on January 23, 2016, William’s body was found and a medical examiner concluded the cause of death was “acute intoxication by the combined effects of heroin and oxycodone” as a result of “acute substance abuse.”

William had ingested heroin and oxycodone, each in a dose that was most likely sufficient on its own to have caused his death, the court document stated. With this in mind, the CAB determined that William’s intentional ingestion of significant overdoses of both heroin and oxycodone constituted serious and willful misconduct that was not related to his work injury. On appeal, The New Hampshire Supreme Court agreed.

3. New Hampshire High Court Rules Board Wrong to Deny Workers’ Comp for Medical Pot

In another popular New Hampshire court story, the New Hampshire Supreme Court ruled in March 2019 that a labor appeals board was wrong to determine that workers’ compensation insurance can’t reimburse an employee for the cost of medical marijuana.

The court found that under the state’s medical marijuana law, a carrier is not banned from reimbursing and that a qualified patient is entitled to medical marijuana under state law. But the court sent the case back for further consideration of the effect of federal law that makes possession or use of marijuana a federal crime.

The opinion is An Appeal of Andrew Panaggio.

4. Amazon Not Liable for Selling Product that Allegedly Caused $300K in Fire Damage

In fact, lawsuits were followed closely in 2019 by IJ East readers. The United States Court of Appeals for the Fourth Circuit’s June ruling that Amazon.com Inc. is not responsible under Maryland law for products liability claims due to a defective product purchased on its website from a third-party seller made its way into IJ East’s top stories for 2019.

The decision came after Trung Cao of Montgomery County, Md., purchased a headlamp on Amazon’s website and gave it to friends as a gift. The headlamp’s batteries allegedly malfunctioned, igniting the friends’ house and causing more than $300,000 in damages.

Erie Insurance Company, which insured the house, paid the loss and filed a suit in the United States District Court for the District of Maryland to obtain reimbursement from Amazon for negligence, breach of warranty and strict liability in tort.

However, the District Court granted summary judgment to Amazon, concluding that Amazon was not the seller and did not have liability in this case. It also found that Amazon was immune from the suit under the Communications Decency Act, a federal law protecting internet intermediaries in the online publication of a third-party’s information.

5. Ben & Jerry’s Is Sued by Environmental Advocate Over ‘Happy Cows’ Claim

Ben & Jerry’s was sued in 2019 by an environmental advocate who said it was deceiving consumers by stating milk and cream used to make its ice cream comes exclusively from “happy cows,” Reuters reported.

In a complaint filed in October, James Ehlers said Ben & Jerry’s “breached consumer trust” by representing that the milk and cream were sourced from cows on Vermont dairies that participate in its “Caring Dairy” program. Ehlers said less than half the milk and cream actually came from “happy cows,” with the rest coming from “factory-style, mass-production” dairy operations, the Reuters report added.

Ehlers argued in the proposed class action, filed in federal court in Burlington, Vermont, that this allowed Ben & Jerry’s and its parent Unilever Plc to charge premium prices while violating a Vermont consumer protection law.

Ben & Jerry’s spokeswoman Laura Peterson told Reuters the company does not discuss pending lawsuits, but was “committed to building a resilient, regenerative dairy supply” and considered its Caring Dairy program “the most progressive in the industry.”

6. Conn. Supreme Court Finds Insurers Not Liable for Crumbling Foundations

Connecticut’s crumbling foundations problem served as an ongoing issue to watch for East readers in 2019, with the Connecticut Supreme Court ruling in November that insurers are not liable for crumbling foundations caused by defective concrete unless the home is on the verge of collapse. The decision is expected to amplify public pressure for a government solution.

Thousands of homes in northeastern Connecticut and western Massachusetts were built on foundations containing pyrrhotite, a mineral that causes concrete to slowly deteriorate as it is exposed to oxygen and water. Insurers have denied homeowners’ claims, arguing that policy language that covers the collapse of a structure does not include defective construction unless the building is literally falling down.

In its November decision, the Connecticut Supreme Court sided with insurers in three unanimous decisions. The court ruled that Liberty Insurance, Liberty Mutual and The Hartford are not liable because the insured homes were not in imminent danger of collapse.

7. So You Comply with New York Reg. 500: Now What?

In March of 2017, the New York Department of Financial Services (DFS) implemented its cyber regulations, or 23 NYCRR §500 (NY Reg. 500). In doing so, it became the first state regulatory authority to impose regulations that address cybersecurity concerns applicable to insurance-related entities and their professionals.

In April 2019, two years after implementation, covered entities were required to be fully compliant with every provision of NY Reg. 500, and even had to certify compliance with DFS as recently as February 15, 2019.

A big topic for IJ East region readers in 2019 was compliance with the New York cyber regulations, as well as the National Association of Insurance Commissioners (NAIC) Insurance Data Security Model Law (the Model Law) – a cybersecurity guideline, based in large part on NY Reg. 500, which was slightly modified and adopted into law by South Carolina, Ohio and Michigan (collectively, the Model Law states) in mid-to-late 2018.

8. A Year after GDPR, How Can U.S. Insurers Prepare for Data Privacy Regs Closer to Home?

Speaking of regulation, more than a year after the May 2018 implementation of The General Data Protection Regulation (GDPR) – a regulation in EU law on data protection and privacy for all citizens of the European Union – some U.S. insurers in 2019 began examining what they can learn as they prepare for the implementation of similar data privacy laws in New York.

In fact, The NY Privacy Act – introduced in May of 2019 by state senator Kevin Thomas – would give New York residents more control over their data than in any other state if passed, according to Wired.

The act, which is currently with the New York Senate’s Consumer Protection Committee, would require companies to disclose their methods of de-identifying personal information, to place special safeguards around data sharing and to allow consumers to obtain the names of all entities with whom their information is shared. It also creates a special account to fund a new office of privacy and data protection.

The introduction of the NY Privacy Act comes after California became the first state to pass such a law in 2018 with the California Consumer Protection Act (CCPA).

9. Lockton Affinity to Pay $1M for Administering Carry Guard Insurance in New Jersey

Another big story for IJ East in 2019 was Lockton Affinity LLC’s agreement to pay a $1 million fine as part of a consent order with The New Jersey Department of Banking and Insurance for administering a National Rifle Association-sponsored insurance program in violation of state insurance laws.

An investigation by the department found that Kansas-based Lockton Affinity violated various state laws and regulations in administering the Carry Guard insurance program in New Jersey on behalf of the NRA.

The department found that Lockton Affinity, a licensed insurance producer that contracted with the NRA, permitted the NRA to directly market and solicit for the Carry Guard insurance program in New Jersey. The Carry Guard program was advertised as providing personal firearms liability insurance, including self-defense insurance for those who lawfully carry firearms and their families, including protection against civil liability, the cost to defend against civil and criminal legal actions and immediate access to attorney referrals. It is a violation of state regulation for a licensed insurance producer to permit or allow any unlicensed person to transact the business of an insurance producer in the state.

10. Hartford InsurTech Hub Welcomes Top Startups for 2020

Finally, ending 2019 on a forward-looking note, IJ East readers were interested in Hartford InsurTech Hub, powered by Startupbootcamp, announcing its 2020 cohort of startups. The past two cohorts have consisted of ten startups, and with the help of the Hub’s partners, the accelerator program decided to select 11 companies to relocate to Hartford for three months this coming February.

The startups possess a range of capabilities supporting health and property-casualty insurers. The entrepreneurs were selected from more than 350 applications from 57 countries. Eight of the selected companies are from the U.S., and the remaining three are from South Africa, Canada and India.

During the program, startups will participate in a variety of workshops, which will focus on topics ranging from marketing and IP law to business development. There will also be introductions to industry leaders and investors who are interested in helping the startups grow their business.

The City of Hartford Mayor Luke Bronin congratulated the startups that participated in selection days and described Hartford as a “place with an unbelievable concentration of companies eager to partner and work with innovative companies.”

He urged the 11 companies selected to return in February to “take root here and think of Hartford as your home for the long term.”

Topics Lawsuits Cyber Carriers USA New York Legislation InsurTech Workers' Compensation Flood New Jersey Massachusetts Connecticut Cannabis Gun Liability Vermont New Hampshire