Mandatory ADR Clause Backfires For Insurer
July 30, 2015
Insurer Columbia Casualty Co. had a mandatory alternative dispute resolution clause written into its contract with a health care provider. Such clauses were once found only in policies written by foreign insurers, but U.S. insurers are now including them in all kind of corporate insurance, including general liability, D&O, E&O, employment, and cyber. These clauses are generally invoked by carriers to thwart insureds that want to go to court over a coverage dispute, but that’s not how it worked in a recent matter before the Northern District of California, which a post from Orrick portrays as sauce for the gander. In Columbia Casualty Co. v. Cottage Health System, the court observed that the insurer did not try to argue the ADR clause was unconscionable or unenforceable – an argument it certainly would have been hard to make, notes Orrick attorney David Klein, because they wrote it.
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