Preparing for Post-Janus Litigation: An Insurance Perspective

Since the U.S. Supreme Court issued its decision in Janus v. AFSCME back in June, plaintiffs backed by right-wing anti-union groups have been engaged in a full-fledged assault on public sector labor unions. As part of that assault, many unions have received correspondence from bargaining unit members (and anti-union groups on behalf of bargaining unit members) demanding that the unions reimburse them for any and all union dues paid. Putting aside the merits of such a demand, this blog post focuses on what steps unions should take from an insurance perspective to best protect themselves upon receipt of such correspondence.

When a union receives a letter from a bargaining unit member demanding that his or her union dues be refunded, the union should promptly notify its insurance broker of the correspondence (assuming that the union is not self-insured). This is true for each letter that the union receives – even if the union receives multiple letters from the same anti-union group on behalf of different bargaining unit members. Most insurance policies have a notice provision requiring an insured to notify it of any circumstance that may lead to an insurance claim down the line. In light of the Janus decision, it is possible that a request for a refund of union dues could lead to litigation. The notice period in insurance policies differs – it could be a 30-day notice or a 90-day notice. Therefore, unions should notify the broker of such letters promptly. Failure to notify an insurer of a circumstance that may lead to litigation within the notice period may result in the insurer denying the union’s claim should it be sued by that individual subsequent to the union’s receipt of the letter. If a union is not satisfied with or is concerned about the broker’s response, the union can always ask the broker for a contact at the insurance company and notify the insurance company directly.

When the insurance carrier receives notice of a potential claim, it does not typically open a claim file. Instead, it places the notice in a hold file and will follow up with the union from time to time for status. The insurance carrier’s underwriters are typically not notified of the potential claim and therefore, the union may not need to worry that its rates will increase because it put the insurance carrier on notice of a potential claim. Generally, the underwriters will be advised if a lawsuit or agency charge is actually filed because the insurer will then begin to incur costs. You should contact your insurance carrier or broker for specific information about how the carrier will process the notice of a potential claim if you have questions or concerns about this.

Of course, unions should follow the same course of action in terms of notice to the insurance carrier when they receive a National Labor Relations Board or Pennsylvania Labor Relations Board charge, an Equal Employment Opportunity Commission charge, a Pennsylvania Human Relations Commission complaint, and/or a lawsuit.

If you have received a letter like the one described in this blog post and are unsure of what to do next, please contact Willig, Williams & Davidson union and labor law attorney Linda Martin at (215) 656-3665 or Lauren Hoye at (215) 656-3687.

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