John B. Garver interviewed by Law 360 on his Insurance Coverage Practice

Q&A With Robinson Bradshaw's John Garver

Law360, New York (June 19, 2013, 12:52 PM ET) -- John B. Garver’s practice includes work in health care, joint ventures and insurance law. As co-chairman of the Robinson Bradshaw & Hinson PA's insurance coverage practice group, he helps clients on insurance issues, including negotiating directors and officers policies and tail coverage, cyber/privacy and brokerage contracts.

Garver has a broad transactional health care practice, assisting hospitals and health systems, physicians and their practices, dialysis providers and dental practices in acquisitions, affiliations, joint ventures and ownership transfers. He counsels corporations and limited liability companies in a variety of commercial and corporate matters, including organizational issues, shareholder and operating agreements and significant commercial contracts.

Q: What is the most challenging case you have worked on and what made it challenging?

A: The most challenging case I have worked on in the insurance area involved obtaining coverage in a situation where it appeared that the insurance application had not been accurately completed. The matter related to a claim by minority shareholders in a family-owned corporation who felt that the side of the family in control had siphoned off company assets. The application for the then-current D&O policy had been signed by the company’s president and stated that there were no irregularities or potential known claims.

However, by the time the claim arose, the president was in the last stages of pleading guilty to fraud and misappropriation of company property. Fortunately, a senior attorney at my firm insisted that we submit the claim to the insurer, notwithstanding the difficulties raised by the statements in the application. He was correct, and after a long process, the company received help in the form of insurance proceeds that went a long way toward resolving the minority shareholder claim.

Q: What aspects of your practice area are in need of reform and why?

A: Probably the best thing that could happen in the insurance area is a bit more competition between brokers. At least at the top end, the field is increasingly limited and now is dominated by three or four companies. However, I see little indication that this will change.

Q: What is an important issue or case relevant to your practice area and why?

A: In the D&O area, we increasingly see more invasive and more costly government investigations. Responding to them promptly and persuasively is sometimes “the whole ballgame.” However, at the same time, insurers are acting pretty decisively to tighten the wording of policies to reduce exposure for costs of responding to such investigations.

There is no ready solution. Companies that may face this exposure should push their brokers to negotiate hard, and if necessary, they should be willing to change carriers to get the coverage they need.

Q: Outside your own firm, name an attorney in your field who has impressed you and explain why.

A: Anna Osborne is an inside counsel I work with at a hospital in North Carolina. As a staff attorney, she is expected to know something about everything and is constantly being tugged in all directions by her client — which includes each and every executive at the hospital. Notwithstanding that, she never fails to dig in on issues to make certain that the hospital is well protected.

Recently, I observed her get to the bottom of a lack of cyber/privacy coverage by a service provider who was handling patient-sensitive data. The provider did not actually know what its coverage failed to include; they had just taken it on faith from the broker. Anna explained to them what they had and what the hospital would require and monitored the situation until they got with their broker and got the coverage they (and the hospital) needed.

Q: What is a mistake you made early in your career and what did you learn from it?

A: In my first case as a civilian litigator, our client, a large national carpet chain, was being sued in a small action for selling “defective” carpet. The plaintiffs were a prominent, wealthy couple who had bought pure white carpet for their multimillion-dollar home. I learned that the “defects” only occurred in places where the carpet was exposed to construction dust. We had an expert witness who testified that what the rich couple was complaining about was plain old dirt. He even cleaned a piece of it to demonstrate for the jury. I figured that should do it, having come from a military prosecutor posting where I needed to prove everything “beyond reasonable doubt” and knowing all I needed was a preponderance.

But, I figured wrong because when the wife got on the stand, she cried when recalling how rude the carpet company had been in its dealings with her — not good. But, I did get the homeowners’ expert also to confirm that it was “just dirt” on the carpet. So we were back in business, or so I thought.

In the end, the jury didn’t award all that plaintiffs asked for, but they did give them enough to cover attorneys' fees and a bit more. I learned from this to never discount the power of sympathy with a human situation because every juror had been in a run-in with a faceless corporation at one time or another. Scientific evidence is no match for a housewife’s tears.

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