Kirk Pasich Replies: the Mediation Privilege and Bad Faith Carrier Conduct
(photo by Lainey Powell)
A few days ago, I posted an article on the Mediation Privilege and Bad Faith by insurance coverage policyholder counsel Kirk Pasich. The coverage bar is relatively small and tight-knit. So for those of you who don't know who Mr. Pasich is, here's a short bio from his firm's web site:
Kirk A. Pasich is a partner in Dickstein Shapiro’s Insurance Coverage Practice, and serves on the Firm’s Executive Committee. According to Chambers USA: America’s Leading Lawyers for Business, Mr. Pasich “is an unmistakable feature of California’s insurance landscape,” while Lawdragon has said, “When it comes to representing policyholders, there’s no bigger name on the West Coast.”
I am compelled to say here that my husband, Stephen N. Goldberg, a 35-year attorney (and shareholder) at Heller Ehrman, is no policy holder slouch himself, but I do know Mr. Pasich's reputation and I'd recommend his services just after my husband's
Mr. Pasich conducts an active trial and appellate practice, representing insureds in complex insurance coverage matters, as well as motion picture studios, television networks, and others within the entertainment industry in insurance coverage and intellectual property matters. . . . He has negotiated large insurance recoveries for his clients, including recoveries of more than several hundred million dollars, and has served as lead trial counsel in major jury trials. Furthermore, Mr. Pasich has advised clients on policy renewals and policy language. He also has served as an arbitrator and as an expert witness on insurance and ethical issues.
So, that's the high quality of Mr. Pasich's work. We thank him for the following generous response to our post on coverage and mediation confidentiality here.
The Dangers of Protecting Potential "Bad Faith" in Mediation [Mr. Pasich's View]
What I think is missing [from Ms. Pynchon's analysis] is that [it ignores the possiblity that] rhe insurer will act in bad faith again.
What happens if the plaintiff makes a take it or leave it offer in mediation that the insurer refuses to accept and that offer is not repeated again (not frequent, but certainly not unheard of)?
There's a question of how to establish that fact given the insurer's liability for an excess judgment when it refuses to accept a reasonable settlement offer. What happens in that circumstance if the insured accepts the offer and sues for reimbursement? How does it show that the insurer refused to fund and that it exercised its right under the law to pay and sue? The risk to the insured and to the mediation process is very real in such circumstances.
Or, from the insurer perspective, how does it find out what transpired between insured and plaintiff, whether there was collusion, whether the insured and plaintiff agreed to allocate in a way to arguably unfairly put a settlement into the "covered" category?
I have encountered this issue on more than one occasion--that is, where the insurer complains about lack of access and claims prejudice. Furthermore, even the courts have recognized that sometimes the confidentiality results in undesirable things happening. So, my concern is more about the impact on settlements and what happens when a settlement could have happened, but did not, or happened without carrier participation.
If I were being a bit more aggressive, I might ask: Why should a carrier get a license to act in bad faith in a mediation? Cases settled, and still settle, in mandatory settlement conferences without that same shield. I don't think a process should exist that encourages, rather than discourages, a party from acting in bad faith.
You Won't Be Surprised to Hear I Have Thoughts on The Issues Raised
But I do have to earn a living sometime and so will have to come back to this issue soon.
Thanks again, Kirk. This is the precise type of conversation that attorneys and mediators should be having every day of the week. I appreciate your time to share your thoughtful concerns with me and our readers.
