PLF Coverage

8/7/2019 PLF Coverage

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An Overview of the PLF:

Understanding YourCoverage

Presented by

Ira Zarov

Chief Executive Officer

Oregon State Bar Professional Liability Fund


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Introductory Statement

These materials are not meant to be a substitutefor the Professional Liability Fund Coverage Plan.

Any interpretation of the Coverage Plan should be

made only after reference to the full Plan and theaccompanying comments.

The full Plan is available on the PLF Website www.osbplf.org

Coverage questions can be addressed to the PLFstaff at 503-639-6911
http://www.osbplf.org/http://www.osbplf.org/


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THE PLF IS UNIQUE THERE ARE NO OTHER STATESIN WHICH MALPRACTICE COVERAGE IS MANDATORY

THE PLF HAS A BOARD OF 9 MEMBERS 7 ARE ATTORNEYS AND TWOARE PUBLIC MEMBERS. THEY ARE APPOINTED BY THE BOARD OFGOVERNORS OF THE OSB.

THE PURPOSE OF THE PLAN IS TO PROVIDE A MINIMUM AMOUNT OFMONEY FOR EACH LAWYERS MISTAKES. THE PLAN COVERSINDIVIDUALS NOT FIRMS SHARED RISK

IT IS NOT DESIGNED TO COVER A CATASTROPHIC COVERED ACTIVITY

RESULTING IN MANY CLAIMS AGAINST ONE LAWYER OR A NUMBER OFLAWYERS.


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The PLF Mission

THE PLF MISSION IS TO PROVIDE PRIMARYPROFESSIONAL LIABILITY COVERAGE CONSISTENT WITHA SOUND FINANCIAL CONDITION, SUPERIOR CLAIMSHANDLING, EFFICIENT ADMINISTRATION, AND EFFECTIVE

PERSONAL AND PRACTICE MANAGEMENT ASSISTANCE.

THE DUTY OF THE PLF IS TO COVERED PARTIES

THE PUBLIC IS BENEFITED BECAUSE OF THE CERTAINTYATTORNEYS WILL HAVE MALPRACTICE COVERAGE.


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The PLF has four departments:

1. ACCOUNTING

2. ADMINISTRATION EXCESS INSURANCE

3. PRACITCE MANAGEMENT AND ATTORNEY

ASSISTANCE PROGRAM

4. CLAIMS


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Confidentiality All Claims Information is

Confidential.

All Communications with theOAAP and PracticeManagement Advisors isConfidential. TheConfidentiality is Protected byStatute, OSB Policy and PLFPolicies.

Matters Remain Confidentialfrom the Oregon State Bar,including Discipline, the Boardof Governors and any OtherOSB Entity.

v THE CONFIDENTIALITY OF PLF MATTERS IS ACORE VALUE OF THE PLF.


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Mandatory Coverage

COVERAGE IS MANDATORY FOR ANYATTORNEY WHO IS A MEMBER OF THEOREGON STATE BAR, IS IN THE

PRIVATE PRACTICE OF LAW, ANDWHOSE PRINCIPAL OFFICE IS INOREGON MORE THAN 50% OF THEIR

TIME IS SPENT IN OREGON


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CLAIMS

11 CLAIMS ATTORNEYS HANDLE APPROXIMATELY 925 CASES A

YEAR AND FIELD OVER 1100 INFORMATIONAL CALLS A YEAR.

ON AVERAGE 4 NEW CLAIMS EACH WORK DAY

THE 925 CLAIMS TRANSLATES TO A FREQUENCY RATE IN THE

13% RANGE THAT MEANS STATISTICALLY --

13 OF 100 COVERED PARTIES WILL HAVE A CLAIM IN A GIVEN

YEAR.


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CLAIMS

The PLF PAYS INDEMNITY ON 35% OF CLAIMS.19% WITH EXPENSE, 16% WITHOUT EXPENSE.

PAY CLAIMS EXPENSE ON 40%

PAY NO CLAIMS EXPENSE OR INDEMNITY ON25%

AVERAGE COST PER CLAIM DIFFERS FROM

YEAR TO YEAR IT IS PRESENTLY ESTIMATEDTO BE $19,500.


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HOW MUCH COVERAGE DO YOUHAVE?

q $300,000 FOR INDEMNITY plus a $50,000 CLAIMSEXPENSE.

q IT IS A BURNING POLICY

BURNING means that once the claims expense is EXHAUSTEDfurther defense expenses are taken from the remaining $300,000.


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WHAT IS A CLAIM?

CLAIM means a demand for DAMAGES or written notice to aCOVERED PARTY of an intent to hold a COVERED PARTY liable as aresult of a COVERED ACTIVITY, if such notice might reasonably beexpected to result in an assertion of a right to DAMAGES.


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WHAT ARE DAMAGES?

DAMAGES means money to be paid ascompensation for harm or loss. It does not refer tofines, penalties, punitive or exemplary damages, orequitable relief such as restitution, disgorgement,

rescission, injunctions, accountings, or damages andrelief otherwise excluded by this Plan.


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WHO IS A COVERED PARTY

The following are COVERED PARTIES:

a. YOU.

b. In the event of YOUR death, adjudicated

incapacity, or bankruptcy, YOUR conservator,guardian, trustee in bankruptcy, or legal or personalrepresentative, but only when acting in such capacity.

Any attorney or LAW ENTITY legally liable for YOURCOVERED ACTIVITIES, but only to the extent such

legal liability arises from YOUR COVEREDACTIVITIES.


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WHAT IS A COVERED ACTIVITY

Two Types Your Conduct and Conduct of Others.

[YOUR CONDUCT]

1. Any act, error, or omission committed by YOU that satisfies all of the followingcriteria:

a. YOU committed the act, error, or omission in rendering professionalservices in YOUR capacity as an attorney in private practice, or in failing to renderprofessional services that should have been rendered in YOUR capacity as anattorney in private practice.

b. At the time YOU rendered or failed to render these professional services:

(1) YOUR principal office was located in the State of Oregon;

(2) YOU were licensed to practice law in the State of Oregon; and

Such activity occurred after any Retroactive Date shown in the Declarations.


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Two Types Your Conduct and Conduct of Others.

[CONDUCT OF OTHERS]

2. Any act, error, or omission committed by a person for whose conduct YOU are legally liable in

YOUR capacity as an attorney, provided at the time of the act, error, or omission each of thefollowing criteria was satisfied:

a. The act, error, or omission causing YOUR liability:

(1) Arose while YOU were licensed to practice law in the State of Oregon;

(2) Arose while YOUR principal office was located in the State of Oregon; and

(3) Occurred after any Retroactive Date shown in the Declarations. (WHEN YOURCOVERAGE BEGINS)

b. The act, error, or omission, if committed by YOU, would constitute the rendering ofprofessional services in YOUR capacity as an attorney in private practice.

The provision also requires the attorney from whose actions the liability arose was at the timethe action occurred a PLF COVERED PARTY.


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AND,

[YOUR CONDUCT IN A SPECIAL CAPACITY]

Any act, error, or omission committed by YOU in YOUR capacity as apersonal representative, administrator, conservator, executor, guardian,guardian ad litem, special representative pursuant to ORS 128.179, or trustee(except BUSINESS TRUSTEE); provided that the act, error, or omission arose

out of a COVERED ACTIVITY as defined in Subsections 1 and 2 above, and aCLAIM is brought by or for the benefit of the beneficiary of the special capacityrelationship and arises out of a breach of that relationship.


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WHERE ARE YOU COVERED?

THE UNITED STATES, ITS TERRITORIES,CANADA AND NATIVE AMERICAN COURTS.


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SAME OR RELATED PLAN PROVISIONS

THE PLAN ALSO INCLUDES A SAME OR RELATED PROVISIONOF THE PLAN. WHILE THIS CIRCUMSTANCE DOES NOT OCCURFREQUENTLY WHEN IT DOES IT HAS POTENTIAL RAMIFICATIONSFOR COVERED PARTIES BECAUSE CLAIMS THAT ARE SAME ANDRELATED SHARE AN INDEMNITY LIMIT

SAME OR RELATED CLAIMS means two or more CLAIMS that arebased on or arise out of facts, practices, circumstances, situations,transactions, occurrences, COVERED ACTIVITIES, damages, liability,or the relationships of the people or entities involved (including clients,claimants, attorneys, and/or other advisors) that are logically orcausally connected or linked or share a common bond or nexus.

CLAIMS are related in the following situations:


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CLAIMS ARE RELATED WHEN:AN EXAMPLE

Example No. 7:

Attorney Crepresents a group of clients at trial and commits certainerrors.

Attorney D of the same firm undertakes the appeal, but fails to file thenotice of appeal on time.

Attorney Eis hired by clients to sue Attorneys C and D for malpractice,but misses the statute of limitations.

Clients sue all three attorneys.

The CLAIMS are related and only a single Limit of Coverage applies toall CLAIMS. See Subsection 14.e above. When, as in this example,successive or collective errors each cause single or multiple clients and/orclaimants harm or cumulatively enhance their damages or losses, then theCLAIMS are related. In such a situation, a claimant or group of claimantscannot increase the limits potentially available by alleging separate errorsby separate attorneys.

Attorney E, however, may be entitled to a CLAIMS EXPENSEALLOWANCE separate from the one shared byC and D.


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DOES AN EXCLUSION APPLY

THE PLF HAS 21 EXCLUSIONS.

THE GENERAL CATEGORIES ARE:

INTENTIONAL OR FRAUDULENT ACTS,

BUSINESS RELATIONSHIPS,

CLAIMS FOR FEES,

FAMILY RELATIONSHIPS,NON-LEGAL TORTIOUS ACTS, AND

VOLUNTARILY ACCEPTING LIABILITY ON A MATTER.


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EXCLUSION 1:

This Plan does not apply to a COVEREDPARTY for any CLAIM in which thatCOVERED PARTY participates in a

fraudulent or collusive CLAIM.However, partners of the wrongdoer

would be covered under the protections for

vicarious liability.


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EXCLUSION 2:

This Plan does not apply to any CLAIMbased on or arising out of anyintentional, dishonest, fraudulent,

criminal, malicious, knowingly wrongful,or knowingly unethical acts, errors, oromissions committed by YOU or atYOUR direction or in which YOUacquiesce or remain passive after havingpersonal knowledge thereof.


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EXCLUSION 3:

3. This Plan does not apply to any CLAIMbased on or arising out of a proceedingbrought against YOU by the Oregon State

Bar or any similar entity.


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EXCLUSION 4:

4. This Plan does not apply to:

a. The part of any CLAIM seeking punitive,exemplary or statutorily enhanced damages; or

b. Any CLAIM for or arising out of the imposition ofattorney fees, costs, fines, penalties, or other sanctions onthe COVERED PARTY or others imposed under anyfederal or state statute, administrative rule, court rule, orcase law intended to penalize bad faith conduct and/or theassertion of frivolous or bad faith claims or defenses. ThePLF will defend the COVERED PARTY against such aCLAIM, but any liability for indemnity arising from suchCLAIM will be excluded.


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EXCLUSION 5:

This Plan does not apply to that part ofany CLAIM based on or arising out of YOURconduct as an officer, director, partner,

BUSINESS TRUSTEE, employee,shareholder, member, or manager of anyentity except a LAW ENTITY.


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EXCLUSION 6:

This Plan does not apply to any CLAIM by or on behalf of anybusiness enterprise:

a. In which YOU have an ownership interest, or in which YOUhad an ownership interest at the time of the alleged acts, errors, oromissions on which the CLAIM is based;

b. In which YOU are a general partner, managing member, oremployee, or in which YOU were a general partner, managing member,or employee at the time of the alleged acts, errors, or omissions onwhich the CLAIM is based; or

c. That is controlled, operated, or managed by YOU, eitherindividually or in a fiduciary capacity, including the ownership,

maintenance, or use of any property in connection therewith, or was socontrolled, operated, or managed by YOU at the time of the allegedacts, errors, or omissions on which the CLAIM is based.


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EXCLUSION 7:

This Plan does not apply to any CLAIM made by:

a. YOUR present, former, or prospectivepartner, employer, or employee; or

b. A present, former, or prospective officer,director, or employee of a professional corporationin which YOU were a shareholder,

unless such CLAIM arises out of YOUR conduct

in an attorney client capacity for one of the partieslisted in Subsections a or b.


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EXCLUSION 8:

This Plan does not apply to any CLAIMbased on or arising out of any businesstransaction subject to ORPC 1.8(a) or itsequivalent in which YOU participate with a

client unless disclosure in the form ofDisclosure Form ORPC 1 (attached asExhibit A to this Plan) has been properlyexecuted prior to the occurrence giving riseto the CLAIM and either:

A copy of the letter needs to be sent to thePLF. The exclusion describes how that shouldbe done.


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EXCLUSION 9:

Investment advice.

This Plan does not apply to any CLAIM based on orarising out of any act, error, or omission committed by YOU(or by someone for whose conduct YOU are legally liable)

while in the course of rendering INVESTMENT ADVICE ifthe INVESTMENT ADVICE is in fact either the sole causeor a contributing cause of any resulting damage. However,if all INVESTMENT ADVICE rendered by YOU constitutes aCOVERED ACTIVITY described in Section III.3, this

exclusion will not apply unless part or all of suchINVESTMENT ADVICE is described in Subsections d, e, f,or g of the definition of INVESTMENT ADVICE in SectionI.10.


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EXCLUSIONS:

Attorney fees.

The PLAN is not designed to cover thebusiness aspects of a law practice. Forthat reason return of fees, collecting fees, or

collecting anything that inures directly tothe benefit of the covered party are not

covered.


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EXCLUSION 10:

This Plan does not apply to any CLAIM:

For the return of any fees, costs, ordisbursements paid to a COVERED PARTY (orpaid to any other attorney or LAW ENTITY with

which the COVERED PARTY was associated atthe time the fees, costs, or disbursements wereincurred or paid), including but not limited tofees, costs, and disbursements alleged to beexcessive, not earned, or negligently incurred;

Parts b. and c. of the exclusion makes clear thatany fee related matter is not covered.


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EXCLUSION 11:

Family relationship

This Plan does not apply to any CLAIMbased upon or arising out of YOUR legal

services performed on behalf of YOUR spouse,parent, step-parent, child, step-child, sibling, orany member of YOUR household, or on behalfof a business entity in which any of them,

individually or collectively, have a controllinginterest.


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EXCLUSION 12:

This Plan does not apply to any CLAIMarising out of a COVERED PARTYSactivity as a fiduciary under any

employee retirement, deferred benefit, orother similar plan.


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EXCLUSION 13:

This Plan does not apply to any CLAIMarising out of any witnessing of a signatureor any acknowledgment, verification upon

oath or affirmation, or other notarial actwithout the physical appearance beforesuch witness or notary public, unless suchCLAIM arises from the acts of YOURemployee and YOU have no actualknowledge of such act.


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EXCLUSION 14:

[GOVERNMENT ACTIVITY EXCLUSION]This Plan does not apply to any CLAIM arising out of YOURconduct:

a. As a public official or an employee of a governmental

body, subdivision, or agency; orb. In any other capacity that comes within the defense

and indemnity requirements of ORS 30.285 and 30.287, orother similar state or federal statute, rule, or case law. If apublic body rejects the defense and indemnity of such a

CLAIM, the PLF will provide coverage for such COVEREDACTIVITY and will be subrogated to all YOUR rights againstthe public body.


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EXCLUSION 15:

[HOUSE COUNSEL EXCLUSION]

This Plan does not apply to any CLAIM arising out ofYOUR conduct as an employee in an employer employeerelationship other than YOUR conduct as an employee for

a LAW ENTITY.


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EXCLUSION 16:

[GENERAL TORTIOUS CONDUCT EXCLUSIONS]

This Plan does not apply to any CLAIM against anyCOVERED PARTY for:

a. Bodily injury, sickness, disease, or death of any

person;

b. Injury to, loss of, or destruction of any real, personal, orintangible property or loss of use thereof; or

c. Mental anguish or emotional distress in connection

with any CLAIM described under Subsections a or b.This exclusion does not apply to any CLAIM made under

ORS 419B.010 if the CLAIM arose from an otherwiseCOVERED ACTIVITY.


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EXCLUSION 17:

This Plan does not apply to any CLAIMbased on or arising out of harassment ordiscrimination on the basis of race, creed,

age, religion, sex, sexual preference,disability, pregnancy, national origin, maritalstatus, or any other basis prohibited by law.


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EXCLUSION 18:

[PATENT EXCLUSION]

This Plan does not apply to any CLAIM based upon orarising out of professional services rendered or any act,error, or omission committed in relation to the prosecution

of a patent if YOU were not registered with the U.S. Patentand Trademark Office at the time the CLAIM arose.


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EXCLUSION 19:

[SUA EXCLUSION]

This Plan does not apply to any CLAIMfor damages consisting of a specialunderwriting assessment imposed by thePLF.


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EXCLUSION 20:

This Plan does not apply to any CLAIM:

a. Based upon or arising out of any bond or any surety,guaranty, warranty, joint control, or similar agreement, or anyassumed obligation to indemnify another, whether signed or otherwiseagreed to by YOU or someone for whose conduct YOU are legallyliable, unless the CLAIM arises out of a COVERED ACTIVITYdescribed in SECTION III.3 and the person against whom the CLAIMis made signs the bond or agreement solely in that capacity;

b. Any costs connected to ORS 20.160 or similar statute orrule;

c. For liability based on an agreement or representation, if

the Covered Party would not have been liable in the absence of theagreement or representation; or

Claims in contract based upon an alleged promise to obtain acertain outcome or result.


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EXCLUSION 21:

[BANKRUPTCY TRUSTEE EXCLUSION]

This Plan does not apply to any CLAIM arising out ofYOUR activity (or the activity of someone for whoseconduct you are legally liable) as a bankruptcy trustee.


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Excess Program

v INDEPENDENT FROM PRIMARYPROGRAM AND TOTALLY SELF-SUPPORTING

v TOTALLY REINSURED

v You can purchase anywhere from$700,000 to $9,700,000.

v The PLF recommends that you haveexcess coverage.


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SECTION XIV AUTOMATIC EXTENDEDCLAIMS REPORTING PERIOD

v If you stop practicing during a year or at the endof a year the PLF plan has Extended ReportingCoverage (ERC) for all claims that arise in thefuture from your practice while you were a

covered party. The coverage is $300,000 plus a$50,000 claims expense.

v If at the time you stop practicing a portion ofyour coverage has been used for a claim, the

amount of your limit remaining will be theamount of ERC available.


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SPECIAL UNDERWRITING ASSESSMENT

IN THE EVENT YOU HAVE A CLAIM FOR WHICHOVER $75,000 IS SPENT THERE WILL BE ASPECIAL UNDERWRITING ASSESSMENT ORSUA.

THE SUA IS 1% OF THE AMOUNT OVER $75,000 PAIDFOR EACH OF THE NEXT FIVE YEARS.

IF YOU ARE NO LONGER A PLF COVERED PARTY THESUA IS NOT COLLECTED.


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What happens if you report a claim?

q The PLF will open up a file in your name.q We will ask for your file. The claimant is entitled

to your file, subject to removal ofcommunications that might not pertain to the

case notes to the PLF for example -- or mightbelong to you for some other reason. The PLFclaims attorney will discuss what must beproduced.

q

An assigned claims attorney handles matter or iflitigation or in need of special evaluation thenoutside counsel is also appointed.

q Defense panel 55 firms around the state.


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DUTY TO DEFEND

THERE IS A TRIPARTIE RELATIONSHIPBETWEEN DEFENSE PANEL ATTORNEY, THEPLF AND THE COVERED PARTY

THE DEFENSE ATTORNEY REPRESENTSBOTH THE PLF AND THE COVERED PARTY,BUT IN THE EVENT OF A CONFLICT HIS OR

HER FIRST DUTY IS TO DEFEND THEINTEREST OF THE COVERED PARTY.


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Under the PLF Coverage Plan the PLF has theright to handle the claim and does not need theapproval of the Covered Party to settle thematter.

The PLF endeavors to work closely with theCovered Party in all ways and provides allcorrespondence to the Covered Party.

PLF Coverage

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