Zurich American Insurance Group and two law firms representing the insurer have been fined $1.25 million for hiding evidence and denying coverage in a lawsuit over World Trade Center liability insurance.
U.S. District Judge Alvin Hellerstein in New York fined Zurich, a unit of Zurich Financial Services AG, and the two law firms, Wiley Rein and Coughlin Duffy. Hellerstein said they wrongly claimed Zurich hadn’t agreed to insure the Port Authority of New York and New Jersey, which owned and operated the office complex destroyed in the Sept. 11, 2001, terrorist attacks.
Your Business Has Gone Global. Has Your Insurance?
A decade ago, “doing business internationally” was mostly a large-company concern. Today, a manufacturer in…
Learn More
“Zurich, as the lead insurer on the case, and its attorneys, as lead counsel in the proceedings before me, owed the court and the public better conduct,” Hellerstein wrote in an opinion June 18. The decision was reported last week by the Wall Street Journal.
Hellerstein, who is overseeing claims for injury, death and property damage from the terrorist attacks, said the dispute over Zurich’s coverage added delay to their resolution. He didn’t specify what share of the $1.25 million sanction Zurich, Wiley Rein and Coughlin Duffy would each pay.
Developer Larry Silverstein’s World Trade Center Properties LLC purchased $1 billion of liability insurance in July 2001, as part of a lease agreement with the Port Authority, according to Hellerstein. Zurich, with $50 million in coverage, was the lead insurer.
After the Sept. 11 attacks, Zurich claimed the Port Authority and another company that leased retail space at the site, Westfield Corp., weren’t covered.
On the day of the attacks, Zurich’s chief U.S. underwriter printed a copy of a 62-page policy that made clear that the Port Authority was covered, Hellerstein said. Zurich later deleted an electronic version of the document, he said. Hellerstein said Zurich waited until 2005 to turn over the hard copy.
Zurich then agreed that the Port Authority was covered, only after the insurer and its lawyers had “multiplied proceedings and caused undue time and expense,” Hellerstein wrote. Zurich agreed in 2006 that Westfield was also covered, he said.
Angel Serna, a spokesman for Zurich-based Zurich Financial Services Group, declined comment. Coughlin Duffy partner Kevin Coughlin didn’t return a call seeking comment. The firm is based in Morristown, N.J.
The Sept. 11 insurance litigation was “complex and hotly contested,” Washington-based Wiley Rein said in a statement. “Decisions made in that context are inevitably subject to varying interpretations.”
The case is In Re World Trade Center Disaster Site Litigation, 21-MC-100, U.S. District Court, Southern District of New York (Manhattan).
