Yesterday KC Johnson posted "Duke's $5M Defense?" which began:
National Union, the insurance company sued by Duke, has filed its response — and the brief makes for interesting reading.It sure does, as you know if you’ve already read the rest of KC’s post.
If you haven’t, don’t miss it.
After reading National Union’s response (h/t to KC for providing link)I want to add a few comments to what KC says.
First, in the response in which Plaintiffs are Duke University (“Duke”) and Duke University Health System, Inc. (“DUHS”) and National Union is the Defendant, you’ll find on pg. 37:
FIFTH COUNTERCLAIM FOR RELIEFNational Union (NU) could not have used stronger, more damning language to describe Duke and DUHS than calling their actions “knowingly unfounded, malicious, frivolous, and in bad faith.”
(Attorneys Fees)
65. The allegations contained in Paragraphs I through 64 of this Counterclaim are realleged and incorporated herein by reference.
66. Plaintiffs' allegations in the Complaint that Defendant's conduct violated N.C.G.S. § 75-1.1 et seq, and constituted violations of the provisions N.C.G.S. §§ 58-63-10 and 58-63-15, are knowingly unfounded, malicious, frivolous, and in bad faith. (emphasis added)
67. Defendant is entitled to recover its costs and its reasonable attorneys fees expended in this action pursuant to the provisions of N.e.G.S. § 75-16.1.
Charging Duke and DUHS with making “knowingly unfounded” claims is, to take one instance, the same as saying they lied to NU.
NU would not have used the language it did unless it had a great deal of data to support its charges and was confident it could convince the court Duke and DUHS acted in ways that will confirm its charges.
Second, KC notes:
[In a letter dated March 30, 2006] Duke elected to forward to [National Union] “all that is publicly known about the situation at this time.”I’ll venture an opinion as to “why Duke would’ve chosen to pass along information that University officials knew was false, even if that information had appeared in the local and national press.”
But the University knew that at least some of this “publicly known” information—most notably, the claim that the lacrosse players hadn’t cooperated with police, and instead had erected a “wall of silence”—was false.
It’s not clear why Duke would have chosen to pass along information that University officials knew was false, even if that information had appeared in the local and national press.
Here’s what NU says in its response (bot. pg. 25, top pg. 26):
7. On March 30, 2006 Duke mailed a letter with attached articles to National Union (“the March 30, 2006 letter”). A true copy of the articles attached by Duke to the March 30, 2006 letter is attached hereto as Exhibit A. The March 30, 2006 letter references the 2006 Policy and states as follows:What the March 30, 2006 Duke and DUHS letter did was use the dodge of “Rather than repeat the alleged circumstances” to avoid telling NU anything they knew about the case that hadn’t yet been reported publicly.Please accept this letter and attached documentation as notification of an incident only as required by the policy conditions under the referenced policy. No claim has been made against Duke at this time. Rather than repeat the alleged circumstances, I have attached a number of newspaper articles that summarize all thas is publicly known about the situation at this time.
For example, what Duke learned and very likely agreed to on March 29, 2006, at a meeting Duke VP Aaron Graves and DUPD Director Robert Dean attended with the Durham City Manager, DPD’s Police Chief and Deputy Police Chief, a DPD Attorney, and the two principal DPD investigating officers, Sgt. Gottlieb and Inv. Himan.
I’m sure many of you can think of much else Duke knew March 30, 2006 which wasn’t then public knowledge; and which it made sure not to tell NU by using the dodge of sending press clippings and remaining silent about everything else it knew.
No wonder NU is convinced Duke treated it in ways “knowingly unfounded, malicious, frivolous, and in bad faith.”
Liestoppers has posted on the NU response and included links to it.
Both Liestoppers Meeting here and KC’s post thread have interesting comments concerning NU and Duke. I hope you give them a look.
The Durham Herald Sun's Ray Gronberg reports on the NU response here.
I couldn't find anything about the NU response story in either the Raleigh N&O's print edition or online site; nor could I find anything about it at The Chronicle's site.
7 comments:
Horrible news keeps coming for Duke University. One wonders about the legal advice Duke's Administration is following?
Nice job of reporting!
John,
You're hoax/frame/cover-up reporting has been outstanding.
Pointing out that Duke's 3/30/06 letter allowed it to duck telling its insurer what it really knew then is just the latest example.
Stay at it.
You need to say more about the N&O's role.
A lot of us don't buy the Wonderland story about just a few flawed N&O stories followed by fantastic reporting.
Duke '78
John, I've commented on your blog regarding some of the insurance issues before. I'm an insurance broker by profession, and have the advantage (or is it disadvantage) of knowing just a little bit about the insurance business and policy language/policy construction in general. In the current post about National Union's response to Duke's complaint about the policy provided by NU to Duke, I think many people might have missed some subtle issues regarding policy, rather than notice, timing.
Based on NU's response (and I frankly put a whole lot more faith in their pleadings than those of Wilmer Hale/Gorelick in this matter), I find it interesting that Duke is trying to get two bites at the policy apple. Policies like the one written for Duke are "claims made"; i.e., any claim first made against the insured during the policy term is covered; however, no claims made in later periods are covered arising out of events that are noticed during the policy. Most such claims made policies also have an absolute exclusion of coverage for any occurrence(s) that were notified to any prior policy.
In the Duke LAX case, the critical dates (for this purpose) all fall within the "2006 year" - a policy effective on 12/4/2005 to 12/4/2006. The alleged rape occurred in March, 2006. First notice of circumstances (however, not notice of a claim per se was made by Duke to NU 3/30/2006. This notice effectively "stopped the clock" on all subsequent notices - irrespective of when they were or might be made, all coverage from NU, and any defenses that NU might have, arise from the policy in effect at 3/20/2006.
But here's a funny thing - Duke is now trying to expand the calendar, asserting that they never really made a claim against the policy until after a claim was made against Duke, and that some (or all) of those claims took place in the 2006-2007 (the "2007") year policy! Why is that? Well, if you look closely, Duke only had $5Million of coverage in effect in the 2006 year, but doubled down the limit of coverage in the 2007 year to $10Million.
Duke has tried to give themselves some wiggle room in the claims process, to permit some sort of "policy dance" that will expose the limits of both years' policies, and maybe broaden the overall limit available. Knowing the Duke philosophy only remotely (i.e., through reading much of the coverage about the hoax and its many variants on the web), I nonetheless can presume that they'll try for a two pronged attack: (1) argue that each claim made against the University is a separate event, and thus, seperate coverage under the policies involved (this could bring the 2007 policy into play in addition to the 2006 policy); and (2) seek to "stack" the policy limits, thereby providing a total of $15Million of Limit to the University.
This strategy only has legs if the value of the defense in any one of the sub-matters is less than the policy limit in the applicable year (remember, the policy limits are in the aggregate for all occurrences covered by the policy, and not reinstated with each successive occurrence), but it might give Duke a second bite at the NU apple.
And what to say about Duke's hypocrisy in doubling up the limit when they had to know they were in trouble, while at the same time (Nov.-Dec. 2006), they were still only providing NU with copies of newspaper clippings as the basis of their claim. I can nearly see in my mind's eye the folks at Duke thinking (in December of 2006) that they had pulled the wool over ol' National Union, and would avail themselves of $10Million, rather than only $5Million, of protection from themselves and their now-shameful acts.
I said before on your blog that Duke is now playing against a group of people who know the law, know the policy, and know how to litigate a claim. Wilmer Hale continues to be a little late to arrive on the field in this game, yet they seem to expect to get paid no matter what. Duke may find the entire LAX matter blow up in their collective (and smug) faces as a result of Duke's own avarice with respect to the policies, in a suit that the University itself first brought.
Remember the words of the late Ricardo Montalban in the Star Trek movie - "Revenge is a dish best served cold...."
The thing that confuses me is that did Duke ever think that the insurance company would just take them at their word and pay up?
Insurance companies don't make a profit by paying up every single claim. They investigate them and this blog, DIW, UPI and others sources have presented plenty of evidence that Duke didn't play straight. What were they thinking, were they thinking at all?
Scott S.
Let's hope Duke keeps Jamie Gorelick on the case. She has simply been marvelous. I always said Jamie has delusions of adequacy. I expect her to have a plum assignment in the Obama administration--hope she has enough spare time to continue to sink Duke.
Tarheel Hawkeye
Drew 9:08
A wonderful in depth analysis. It wasn't clear to me how the policies actually worked.
What strikes me about the whole episode is the utter corruption of the people involved.....and the arrogance. After sacrificing their own students, Duke promptly tried to backdoor their insurance carrier.
Sunlight will be the best disinfectant for this cancer.
Ken
Dallas
Things are definitely starting to get uglier and dukier.
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