CLAIMS RESOLUTION
RULES AND PROCEDURES
FOR THE
PURMS JOINT SELF-INSURANCE AGREEMENT
Amended and Restated as of March 30, 1995
Overview of Claims Resolution Rules and
Procedures
The Claims Resolution Rules and Procedures Section (“Claims
Resolution Section”) of the PURMS Joint Self-Insurance Agreement (“SIA”)
governs the handling of Liability Claims asserted against Members of the Fund
and their Employees, Insured Agents and Insured Volunteers. While the primary
focus of the Claims Resolution Section is issues and procedures relating to
Liability Claims, to the extent permitted by the language and not inconsistent
in the context, the Claims Resolution Section also governs the handling of Property
and H&W Claims.
The Claims Resolution Section was unanimously adopted by
the Members of the Fund on March 30,
1995. These Claims Resolution Rules and Procedures, as amended from
time to time pursuant to § I, ¶ 5.2, are specifically incorporated into the
Interlocal Agreement and shall be deemed a part of that Agreement as if fully
set forth therein. Unless specifically
indicated otherwise, use of the term "Employee" in the Claims
Resolution section of the SIA shall include "Insured Agents" and
"Insured Volunteers."
CLAIMS RESOLUTION RULES AND PROCEDURES
1.
Members' Duties.
1.1.
Duty to Report Incidents and
Claims. Members and their Employees shall immediately inform
the Administrator of any Incidents they become aware of and for which the Fund
may provide Coverage if such Incident has caused either (1) Personal
Injury or (2) Property Damage, or other compensable loss, and there is a
reasonable possibility that a Liability Claim will be asserted. In addition, Members and their Employees
shall immediately inform the Administrator of any Claims actually asserted
against them, including Claims in an amount within a Member's discretion to
settle under the Member Settlement Ceiling, and Claims for an amount less than
the Deductible provided for in § III, ¶ 2.3.
The Fund shall not be required to defend or pay any judgment or
settlement arising from any Incident or Claim to the extent the Fund is
prejudiced by the failure of a Member or Employee to immediately report such
Incident or Claim.
1.2.
Cooperation.
All Members and Employees shall cooperate with the Administrative Committee,
the Administrator and Fund Counsel in the handling of Covered Claims and, upon
request, shall reasonably assist in making settlements and in the conduct of
suits, including, but not limited to, producing documents, attending
depositions, hearings and trials and assisting in securing and giving evidence
and obtaining the attendance of witnesses.
2.
Determination of Coverage.
2.1.
Procedures.
Upon receipt of a written request for Coverage of a Claim, the Administrator
shall cause a preliminary investigation to be conducted and determine whether
Coverage is provided under the SIA. The
Administrator, with the advice of General Counsel, shall submit any questions
the Administrator has regarding whether there is Coverage for a Claim to the
Administrative Committee for decision. Whenever a Claim is
submitted by or on behalf of an Employee or an Insured Agent or Insured
Volunteer, the Administrative Committee shall also specifically determine
whether the actions of the Employee, Insured Agent or Insured Volunteer giving
rise to the Claim satisfy the Coverage Qualifications which are preconditions
to Coverage by the Fund for such Insureds under § III, ¶ 2.4; § IV, ¶ 2.4 and §
VI, ¶ 2.1. The Administrative Committee, if reasonably possible, shall
make its Coverage Determination within thirty (30) days from the date the Claim was
submitted, or provide the Member/Employee involved with written notice of the
Committee's extension of its Coverage Determination to a future specified date,
stating the reasons therefor. The
Administrator shall ensure that the Member or Employee is promptly informed of
the Committee's Coverage Determination in writing, stating the basis for any
denial or limitation on Coverage and referring specifically to the Appeal
Procedures contained in § I, ¶ 19.2 and in Op. Rules, § I, ¶ 19.
2.2.
Reservation of Rights re
Coverage. If the
Administrative Committee determines that there are unanswered legal or factual
issues regarding whether the Fund provides Coverage for the Claim asserted, the
Fund may defend the Member and/or Employee involved under a Reservation by so
providing in the Coverage Determination. Under a Reservation, the Fund is
proceeding with Defense of the Claim while reserving the right to terminate the
Fund's Defense, to seek reimbursement of the Defense Costs it has paid, if any,
and to deny Coverage at any time.
2.3.
Methods for Resolving
Reservation and Determining Coverage. Any Reservation asserted by the Fund may be
resolved and Coverage determined by the methods set forth in ¶ 7.4.1
below.
3.
Member Participation in
Litigation.
3.1.
Appointment of Representative
to Administrative Committee.
3.1.1.
Claims Involving Single Member
and/or its Employees. At any
time following submission to the Fund of a Claim made against a Member or one
or more of its Employees, or both, the Member shall have the right to appoint
one Representative to the Administrative Committee for purposes of
participating in the discussions and voting on issues relating to the Claim,
including the initial selection of an attorney to represent the Member or its
Employee, and all other issues relating to the progress, settlement, or trial
of any lawsuit, but excluding those issues relating to Defense or Coverage for
the Claim; provided, however, that any Member whose Employee is an appointed
regular member of the Administrative Committee shall not have the right to
appoint an additional Representative to the Administrative Committee. An Administrative Committee member may vote on
all issues before the Committee, even if they relate to a Claim asserted
against the Fund Member that employs the Committee member. If any Administrative Committee vote in which
a Representative participates results in a tied vote, the Chairperson of the
Operations Committee shall be entitled to vote to break the tie.
3.1.2.
Multi-Member Claims. In the case of a Claim against multiple
Members or their Employees, or both, each Member shall have the right to
appoint one Representative to the Administrative Committee for all of the
purposes identified in ¶ 3.1.1 above; provided, however, that all Members
involved in the Claim shall, in combination and through their respective
Representatives, have a common single vote in connection with each
Administrative Committee decision relating to the Claim, except with respect to
issues relating to Defense or Coverage for the Claim where they shall have no
vote; and provided, further, that such single vote shall be exercised by the
majority vote of those Members involved in the Claim; and provided, further,
that in the event of a tied vote among such Members, the decision of the
members of the Administrative Committee shall control. Alternatively, all Members involved in the
Claim may appoint a single Representative on behalf of all of them to
participate in Administrative Committee discussions and decisions relating to
the Claim and to exercise the group's vote. The Administrative Committee shall
have the discretion to determine how and when meetings involving Representatives
are convened to discuss matters relating to the common Claim, including
conducting discussions by telephone conference among the Representatives and
the Administrative Committee.
3.1.3.
Restrictions on Representative
Participation in "Reservation of Rights" or "Conflict of
Interest" Situations.
When the Fund defends under a Reservation, when there is a conflict of
interest among Members and/or Employees in a Multi-Member Claim, or when the
Administrative Committee determines that strict confidentiality with respect to
a particular subject is in the best interests of the Fund, the Committee shall
have the discretion to discuss and decide issues relating to those subjects
outside the presence of any appointed Representatives.
3.1.4.
Limited Rights of Insured
Agents/Volunteers. Neither
Insured Agents nor Insured Volunteers involved in a Claim shall have a right to
appoint a Representative to the Administrative Committee for any purpose;
provided, however, that such Insured Agents/Volunteers shall have the right,
upon written request with reasonable notice, to meet with the Administrative
Committee to discuss matters pertinent to the Claim in which they are involved.
3.2.
Qualification of
Representative. The person appointed as a Representative to
the Administrative Committee by a Member pursuant to this section must be
either an Employee of the Member or an attorney. If the Member appoints
an attorney as its Representative, the Member shall be responsible for the
attorney's fees and costs.
4.
Selection of Defense Counsel.
4.1.
Selection by Administrative
Committee. With respect to all Covered Claims for which the
Administrative Committee determines that an attorney should be hired, the
Administrative Committee shall select an attorney to represent the Member
and/or its Employee, and shall notify the Member in writing of the identity of
the attorney selected.
4.2.
Member's Right to Veto First
Attorney Selected.
4.2.1.
Initial Selection of Defense
Counsel and Veto. If for any
reason a Member is dissatisfied with the attorney selected by the
Administrative Committee to defend a Covered Claim asserted against the Member
or against the Member and one or more of its Employees, the Member may exercise
its one-time right to veto the first attorney selected by so notifying the
Administrative Committee within three (3) days of the date the Member receives
written notice of the identity of the attorney selected; provided however: that
this right of veto may be exercised only by the Member (or group of Members, in
a Multi-Member Claim) and only once for each Occurrence, Wrongful Act, Accident
or Pollution Release giving rise to a Covered Claim; that any Employee involved
in the Claim shall be bound by the Member's decision whether to exercise the
veto; and, that the Member's Employee shall not have this right of veto, even
if the Claim is asserted solely against the Employee. The Administrative Committee shall be
prohibited from retaining the attorney vetoed by the Member, without the
Member's approval.
4.2.2.
Selection of Defense Counsel After Veto. Once a Member has exercised its veto, the
Administrative Committee shall then select a second attorney to represent the
Member or the Member and its Employee. The Member may not object to the second
attorney appointed by the Administrative Committee; provided, however, that any
Member or any Employee against whom a Covered Claim is asserted may at any time
unilaterally terminate representation by the attorney selected by the Fund and
retain the attorney of its choice by waiving in writing any right to Defense and
Coverage by the Fund under the SIA for the Claim involved; and provided further, that the Member's
waiver of its right to Defense and Coverage by the Fund shall bind any of its
Employees involved in the Claim whose right to Defense and Coverage from the
Fund shall be similarly terminated, unless an actual conflict of interest
exists between the Member and its Employee, in which event the Employee shall
be entitled to Defense by the Fund, unless the Member has indemnified the
Employee or has an "indemnification upon request" policy in
place. In a Multi-Member Claim, whether
the right to veto the first attorney selected will be exercised shall be
decided by the majority vote of the Members involved in the Claim, and in the
event of a tied vote among such Members, the decision of the Administrative
Committee shall control.
4.3.
Attorneys Retained by Members. No Member or Employee shall retain an
attorney to handle any Covered Claim without the prior written authorization of
the Administrative Committee. If any
Member or Employee retains an attorney to handle a Claim in violation of this
subsection, regardless of whether the Fund is prejudiced thereby, the Fund
shall not be obligated to provide Defense or Coverage for such Claim; provided,
however, that the Fund may, in the Administrative Committee's discretion,
provide Coverage and pay the Defense Costs for such Claim to the extent such
Defense Costs were incurred after the Administrative Committee's written
approval of the Member's choice of Defense Counsel; and provided further, that
this subsection shall not be construed to prohibit a Member or Employee from
retaining an attorney: (a) to take whatever action is reasonably necessary
in an emergency situation to avoid the entry of an order of default or other summary
relief against the Member or Employee (although the Member shall provide the
Administrator with notice thereof as soon as is reasonably possible), or
(b) to monitor the progress of any Claim at the Member's or Employee's
sole expense. With respect to Claims for
an amount which is specified by the Claimant to be less than or equal to the
Member Settlement Ceiling, if the Member retains an attorney to handle the
Claim without first obtaining the approval of the Administrator, the Fund's
obligation to pay any settlement or judgment arising from the Claim, including
Defense Costs, shall be the amount of the Member Settlement Ceiling.
4.4.
Selection of Attorneys re
Multi-Member Claims. The
provisions regarding the selection of Defense Counsel for Multi-Member Claims
contained in ¶ 5.3 herein shall be considered in connection with this ¶ 4.
5.
Defense of Claims.
5.1.
General Defense Provisions.
5.1.1.
Members' and Employees' Right
to Defense. The Fund shall have the right and duty to defend
any suit against a Member or Employee based upon a Covered Claim. The
Administrator, subject to the direction of the Administrative Committee, shall
arrange to provide for investigation and Defense of Covered Claims, provided,
however, that the Fund shall not be obligated to pay for Defense Costs for any
Covered Claim after the Fund has paid its full Coverage Limit, except as
provided in § III, ¶ 2.2; § IV, ¶ 2.2; § V, ¶ 2.2 and § VI, ¶ 2.1.
5.1.2.
Handling of Claims.
Subject to any limitations that may be imposed by the Board by Majority Vote,
the Administrative Committee shall have authority over all aspects of
processing and handling Covered Claims made against a Member or an Employee,
including without limitation, investigating such Claims, retaining an attorney
to represent the Member or Employee, authorizing expenditures related to discovery
or the hiring of experts, and approving any settlement.
5.2.
Defense under Reservation of
Rights. If the Administrative Committee determines that there
are unresolved factual or legal questions regarding whether the Fund provides
Coverage for a Claim, the Fund may proceed under a Reservation, providing
Defense for a Member or Employee while reserving the right to deny Coverage or
discontinue Defense of the Claim at any time.
5.2.1.
Repayment of Defense Costs/Security. If the Fund defends an Employee under a
Reservation, the Administrative Committee, in its discretion, may, as a
condition precedent to providing such Defense, require that the Employee
execute a written undertaking to repay his/her Defense Costs and pledge
security therefore in an amount determined by the Administrative Committee to
be reasonably necessary to secure such repayment in the event it is later
determined that the Fund does not provide Coverage for the Claim; provided,
however, that a Member shall not be required to provide security for repayment
of Defense Costs incurred in connection with a Claim against the Member. A Member may guarantee such repayment on its
Employee's behalf which shall satisfy any security requirement established by
the Administrative Committee. If a
Member guarantees such repayment, and if it is ultimately determined that the
Member's Employee was not entitled to Defense by the Fund, the Member shall
reimburse the Fund for the Employee's Defense Costs and shall solely bear the
risk of recovering such payments from its Employee. Notwithstanding the foregoing, and regardless
of whether the Employee or the Member, on the Employee's behalf, has provided
any security requested, the Administrative Committee may withdraw the Fund's
Defense and demand reimbursement for the Defense Costs it has advanced at any
time it determines from its own investigation or otherwise that the Fund does
not provide Coverage for the Claim asserted.
5.2.2.
Reservation re Coverage
Qualifications for Employees and Insured Agents/Volunteers.
5.2.2.1.
Employee. With respect to an Employee, in addition to
other possible grounds therefore, the Fund may, in its sole discretion, deny
Coverage and Defense, or defend under a Reservation, if it appears that the Employee
cannot satisfy the applicable Coverage Qualifications set forth in § III, ¶
2.4; § IV, ¶ 2.4; and § VI, ¶ 2.1.
5.2.2.2.
Insured Agents/Volunteers. With respect to Insured Agents or Insured
Volunteers, in addition to other possible grounds therefore, the Fund may, in
its sole discretion, deny Coverage and Defense, or defend under a Reservation,
if it appears that the Insured Agent/Volunteer cannot satisfy the applicable
Coverage Qualifications set forth in § III, ¶ 2.4; § IV, ¶ 2.4, and § VI, ¶
2.1. If the Member has indemnified the
Insured Agent/Volunteer for Defense Costs relating to the Claim under
circumstances where the Fund is asserting a Reservation because one or more of
these Coverage Qualifications is not satisfied, and if this results in creating
a conflict of interest between the Insured Agent/Volunteer and the Member which
requires separate counsel for each, it shall be the Member's obligation
initially to pay for the Insured Agent's/Volunteer's defense, subject to
reimbursement by the Fund of the reasonable Defense Costs incurred by the
Member if Coverage for the Claim against the Insured Agent/Volunteer is
ultimately established.
5.2.3.
Apportionment of Defense Costs
Between Covered and Non-Covered Claims. If the Fund defends a Claim under a
Reservation because it appears that some but not all claims, causes of action
or legal theories asserted fall within the Fund's Coverage, the Fund shall only
be obligated to pay for the ongoing Defense Costs relating to the Covered
Claims; provided, however, that the Fund, in its discretion, may advance
Defense Costs for the potentially non-covered portions of any Claim in
accordance with ¶ 5.2.1. The
Administrator shall ensure that Defense Counsel properly allocates Defense Costs
on each billing between Covered Claims and those claims, causes of action or
legal theories for which it appears there is no Coverage, as designated by the
Administrative Committee.
5.2.4.
Resolution of Disputes
Regarding Defense Costs. If
the Coverage question and/or the validity of the Fund's Reservation is not
resolved by the legal proceedings relating to Defense of the Claim (e.g.,
if the Claim was resolved by settlement), the Administrative Committee shall
determine whether the Fund provides Coverage for all the claims, causes of
action and/or legal theories asserted, and if not, what portion of the Defense
Costs are the Member's or Employee's responsibility.
5.3.
Defense of Multi-Member Claims.
5.3.1.
Non-Conditional Defense of
Group by Common Counsel. All
Members and Employees involved in a Multi-Member Claim shall be deemed to have
common Defense interests when there do not appear to be any actual conflicts of
interest among such Members/Employees.
Under such circumstances, the Fund may retain a single common Defense
Counsel to defend all Members/Employees involved.
5.3.2.
Defense Under Reservation of
Rights. The Fund may
defend under a Reservation as to some or all of the causes of action or legal
theories asserted against one or more Members/Employees or as to some but not
all Members/Employees involved in the Claim, or in other combinations.
5.3.2.1.
Common Defense Issues/Common
Counsel. Regardless of the
nature or scope of the Reservation the Fund has asserted as to some or all of
the Claims of the Members/Employees involved in a Multi-Member Claim, the Fund
may defend with a single, common Defense Counsel so long as there are no actual
conflicts of interest among such Members/Employees.
5.3.2.2.
Conflicts of Interest/Separate
Counsel. When there is an
actual conflict of interest among some or all the Members/Employees involved in
the Multi-Member Claim, the Fund shall provide separate Defense Counsel for
each Member/Employee or group thereof whose interests are in common and are in
conflict with one or more of the others.
6.
Settlements.
6.1.
Authority and Approval of
Administrative Committee.
Except as may be established otherwise by the Board on a claim-by claim
basis pursuant to § I, ¶ 6.2.12 and ¶ 9.2(c) and Op. Rules, § I, ¶ 9.4.3(e),
the Administrative Committee shall have the authority to direct the
negotiations and authorize settlement of any and all Covered Claims. If there is insufficient time to contact all
members of the Administrative Committee for a vote upon a proposed settlement,
any two of the three voting members of the Administrative Committee contacted,
which for this purpose includes the Chair of the Operations Committee, shall
have authority to approve the settlement.
6.2.
Requirement of a Colorable
Claim of Liability. The
Administrative Committee shall not have the authority to provide Coverage for
or approve settlement of a Covered Claim unless, based on a reasonable
investigation of the facts and applicable law, it appears to the Administrative
Committee that it is a Colorable Claim of Liability against the Member or
Employee; provided, however, that a finding of a Colorable Claim of Liability
shall not be required if the Executive Committee
determines by majority vote that providing Coverage for the settlement is in
the best interests of the Fund.
6.3.
Member Settlement Ceiling.
Notwithstanding ¶ 1.1 above, the Fund shall reimburse a Member that settles or
pays a Claim for the amount paid by the Member up to the Member Settlement
Ceiling, regardless of whether the Member has first reported the Claim to the
Fund; provided, however, that the Claim was a Covered Claim and that the
Administrative Committee determines that it was a Colorable Claim of Liability;
and provided further, that the Fund shall not pay more than the amount of the
Member Settlement Ceiling for a Member's/Employee's Incurred Liability and
Defense Costs unless the selection of any Defense Counsel retained by the
Member was pre-approved by the Administrator in accordance with ¶ 4.3. The initial Member Settlement Ceiling shall
be $1,500, less the amount of the applicable Deductible, which must be paid by
the Member; provided, however, that the Board may increase or decrease the
Member Settlement Ceiling from time to time by Super-Majority Vote, and any
such change shall thereafter be reflected in an amendment attached to this
Agreement and in revised Operational Rules.
6.4.
Apportionment of Settlement Between Covered and
Non-Covered Claims. In the
settlement of any Claim involving both Covered and non-Covered Claims, the
settlement proceeds to be paid to the Claimant shall be allocated between such
Claims; provided, however, that the Fund shall not be bound by such allocation
in paying its Coverage to or for the Member unless such allocation was
previously approved by the Administrative Committee prior to such settlement.
6.5.
Rights and Procedures When
Member Rejects Settlement. If the Administrative Committee
elects to make any settlement offer or to accept a settlement offer made by the
Claimant, the Member against which the Claim is asserted may, in writing,
direct the Administrative Committee not to make or accept the settlement
offer. In such event, the Fund shall be released from any obligation to
continue Defense of or to provide Coverage for the Claim, and the Member
involved shall be responsible for all Defense Costs incurred thereafter and the
amount of any subsequent judgment or settlement arising from the Claim;
provided, however, that the Fund shall reimburse the Member for any Defense
Costs incurred or any judgment or settlement paid by the Member to resolve the
Claim, so long as it is a Covered Claim, up to the amount of the settlement
offer which the Member directed the Administrative Committee not to make or
accept. If, in a Multi-Member Claim, there is disagreement among the Members
involved whether the Administrative Committee should make or accept the
contemplated settlement offer, the decision of a majority of such Members shall
control and be binding upon all such Members.
Employees may invoke the provisions of this subsection, but only with
respect to Claims made solely against them.
With respect to Claims against both a Member and its Employee, the
Member's decision on this subject controls.
7.
Payment of Coverage.
7.1.
Fund's Discretion re "Pay
on Behalf of" or "Indemnity" Coverage. The basic coverage provided by the Fund is
"pay on behalf of" coverage which obligates the Fund to pay on a
Covered Claim once the Member's or Employee's obligation to pay has become an
Incurred Liability; provided, however, that the Board may, by Super-Majority
Vote, elect to provide "indemnity" coverage under which the Fund
would reimburse the Member or Employee only after such Member/Employee has paid
the Covered Claim in full.
7.2.
Fund's Right of
Subrogation/Loss of Coverage by Member Waiver. The Fund shall have Subrogation Rights, to
the fullest extent permitted by law, succeeding to the rights of any Member or
Employee on whose behalf the Fund has paid a Covered Claim to seek a recovery
therefore from any person or entity that is potentially liable for contributing
to the Occurrence, Wrongful Act, Accident or Pollution Release that gave rise
to the Covered Claim. The Member's and/or Employee's rights against such
potentially liable Third Parties in connection with the Covered Claim shall be
deemed automatically and legally transferred to the Fund upon the Member's or
Employee's acceptance of the benefit of the Fund's Coverage Payment for the
Covered Claim; provided, that in addition, such Members and Employees shall
execute assignments and any other documents necessary to effectuate the Fund's
Subrogation Rights; and, provided further, that a Member's/Employee's
preservation of the Fund's Subrogation Rights shall constitute a condition
precedent to the Fund's Coverage obligation, and if any acts or omissions of a
Member or its Employee occurring after the Occurrence, Wrongful Act, Accident
or Pollution Release result in a waiver of all or a portion of what would
otherwise have been the Fund's Subrogation Rights, the Fund shall have no
obligation to provide Coverage for the Covered Claim to the extent the Fund was
prejudiced thereby.
7.3.
Multi-Member Claims.
7.3.1.
Payment of Coverage Where the
Amount of Coverage is Sufficient to Pay all Incurred Liabilities. The Fund shall pay the Incurred Liability for
a Covered Claim for each Member and Employee involved in the Claim in full, so
long as the Coverage provided by the Fund is in an amount sufficient to do so
for all Members and Employees involved in the Covered Claim.
7.3.2.
Apportionment of Limited
Coverage Monies.
7.3.2.1.
Where the Amount of the
Incurred Liability of Each Member/Employee involved in the Covered Claim has
Been Established in Legal Proceedings. Where the amount of Coverage provided by the
Fund is not sufficient to pay the Incurred Liability established through legal
proceedings of all Members/Employees involved in the Multi-Member Claim, the
Fund shall apportion its Coverage monies based on each Member's/Employee's
relative percentage of the total amount of the Incurred Liabilities of all
Members/Employees involved in the Claim.
7.3.2.2.
Where the Amount of Each
Member's/Employee's Incurred Liability has not Been Established. Where the Multi-Member Claim was resolved for
an amount in excess of the amount of Coverage provided by the Fund and under
circumstances where the amount of Incurred Liability of each Member/Employee
was not established, the Coverage monies available shall be apportioned based
on each Member's/Employee's relative percentage of the Liability Exposure to
the Covered Claim, as determined by the Administrative Committee. The Administrative Committee shall make this
determination based on the most objective method reasonably available. For example, in a Multi-Member Claim
involving Pollution Liability, the most "objective" method reasonably
available may be the amount of pollution (e.g., KVA) each Member
delivered to a contaminated site. This
might be determined by an agreement among such Members and other Potentially
Responsible Parties, or in the absence of such an agreement, by the
Administrative Committee's investigation, or otherwise.
7.3.2.3.
Coverage for "De Minimis" Settlement
Premium in Multi-Member Pollution Liability Claim. The Fund will provide Coverage for and will
pay the De Minimis Premium portion of a Member's
settlement of a Pollution Claim; provided, however, that it must appear to the
Administrative Committee, based upon its evaluation of the Liability Exposure
of all Members involved in the Claim and given estimates of Remediation Costs
at the time of settlement, that the Coverage provided by the Fund for the Claim
will be able to: (a) Pay the total amount of Incurred Liabilities of all
Members involved in the Claim; and (b) Pay the additional amounts of the De Minimis Premiums for all Members that qualify for De Minimis settlement and desire to resolve the Claim as
against them by entering into such settlements.
Any Member for which the Fund advances Coverage Payments for De Minimis Premiums prior to establishment of the amounts of
Incurred Liability of all other Members involved in the Claim shall remain
liable to the Fund to repay all or a portion thereof in order to equalize the
proportions each Member receives of the Fund's limited Coverage for the
Incurred Liability of all Members.
7.4.
Coverage Payments in
Reservation of Rights Situations.
7.4.1.
Payment upon Resolution of
Reservation/Establishment of Coverage. The Fund shall not be required to pay its
Coverage monies to or on behalf of a Member or Employee because of a Covered
Claim, notwithstanding the existence of such Member's or Employee's Incurred
Liability, unless and until the Fund's Reservation has been resolved and
Coverage has been established. Coverage may be determined by the following
methods:
7.4.1.1.
Through Legal Proceedings
involving the Covered Claim.
If, in the course of legal proceedings involving the Covered Claim, the
Administrative Committee determines that orders or judgments have been entered
that resolve the legal or factual issues that gave rise to the Reservation, the
Administrative Committee shall so notify the Member or Employee involved that
the Reservation has been withdrawn and explain the effect thereof on the
Member's/Employee's Coverage.
7.4.1.2.
Through Suit Against Excess Carrier. Where the total Liability Exposure to the
Covered Claim exceeds the amount of the Fund's Coverage, the Fund and the
Member or Employee under Reservation may agree that the unresolved legal or
factual issues that gave rise to the Reservation be determined through the
prosecution of Coverage Litigation against the Fund's Excess Carriers (or
Subgroup Carriers, where applicable), and that all parties shall be bound by
the facts and law established by such legal proceeding in making the Coverage
Determination. In such event, the Board
may elect to make a Conditional Coverage Payment in accordance with ¶ 7.5
herein.
7.4.1.3.
Through Fund/Member Settlement
or by Administrative Committee Determination. The Reservation may be resolved pursuant to
an agreement between the Fund and the Member/Employee under the Reservation by
which the amount of the Fund's Defense and Coverage obligations are liquidated
and paid to the Member or Employee to the extent that has not already occurred
through prior advances. In the absence
of such a settlement or resolution of the Reservation by another means, the
Administrative Committee, after meeting with the Member or Employee involved,
shall decide whether the Fund provides Coverage for all or a portion of the
Covered Claim, and if so, in what amount.
7.5.
Conditional Payment of
Coverage. The Board may, by
Super-Majority Vote, authorize payment of Coverage monies to a Member for a
Covered Claim, notwithstanding the existence of a Reservation by the Fund or
other circumstances which have prevented or failed to trigger the Fund's
obligation to pay its Coverage, with such terms of repayment and security as
the Board deems appropriate under the circumstances.