Roe v. Wade: Corporate Liability and D&O Exposures Abound

Global law firm Reed Smith has created a reproductive health task force to advise companies on health care regulatory and insurance coverage issues that may arise in the wake of the Supreme Court’s opinion. David Weiss, a partner at Reed Smith and a member of the Reproductive Health Task Force, said some states are moving quickly to enforce anti-abortion laws and have made it clear they will punish businesses that try to violate them.

Republican lawmakers in Texas, for example, have reacted aggressively to companies offering workers assistance with travel abortions, threatening criminal prosecution of their executives. More recently, law firms have become targets of this threat. Texas is one of 11 states that have banned or severely restricted access to abortion, with more states soon to follow.

Texas lawmakers also vowed to pass laws banning companies offering benefits that facilitate out-of-state abortions. Such bans could trigger lawsuits from shareholders or customers if the business has contractual or other obligations it can no longer fulfill in the state, according to Weiss. Another threat is the possibility that state law would allow shareholders to sue corporations for spending corporate funds on employees to help them access illegal health care.

Read more: Out-of-State Abortions – These insurance companies will support their staff

“All of these things, if acted upon, create potential exposure for these benefit companies. A derivative suit by shareholders could implicate D&O insurance policies because they would allege mismanagement by company executives,” Weiss said.

“And it’s not just ordinary civil cases: it could be aiding and abetting, it could be some form of personal injury claim that could trigger a general liability policy if [anti-abortion litigators] argue that helping someone get an abortion out of state is tantamount to causing bodily harm to the fetus,” he continued.

Employees themselves could become the target of criminal and civil lawsuits if they take abortion travel benefits offered by their employers. “Will any of these liabilities, including defense costs, be covered by liability insurance available to employees?” Weiss asked.

Additionally, any retaliation or harassment that employees experience when using these company benefits could potentially give rise to employee claims under the Employment Practices Liability Policy.

Finally, there are privacy issues to contend with if employees are forced to provide their employers with reproductive health information in order to receive benefits, or if the state orders those employers to disclose the names of workers seeking benefits for abortion.

As things currently stand, Weiss believes that most current corporate liability and D&O insurance policies can handle the risks arising from abortion travel benefits.

“I think the existing policies that companies have in place can address these lawsuits. Even a criminal claim could potentially be covered depending on the language of the policy,” Weiss said.

One caveat is the possibility that an anti-abortion state like Texas could pass a law barring insurance companies from providing coverage to corporations in connection with lawsuits related to the provision of benefits for illegal medical procedures, such as abortion.

“We’ll have to see how the insurance companies deal with it.” Will they try to enforce such a law? Or are they going to provide the coverage anyway, especially if the law that governs the policy is not in another state’s law?” Weiss asked.

“For example, if a California company purchases D&O insurance, it is likely that California law should apply to all coverage issues under that policy, not Texas law. If California law allows this insurance, it will [insurers] do i agree with this? Or they will try to get out [coverage] pointing out the Texas restriction?’

Read more: Governor signs bill to make abortions cheaper for people with private insurance

Businesses and executives need to be careful as these liability considerations remain unanswered. For Weiss, companies should continue to support their employees in the way they feel is right. But he advised policyholders to review their policies carefully as they roll out these benefits.

“If we can read the tea leaves from these states as to what they’re going to try to do, then I think it’s important to review your coverages to see if they’re broad enough to cover these potential claims, and if not, yes try to work with insurance brokers and carriers to see if you can expand your coverage for those risks,” Weiss said.

Companies that come under state scrutiny for potentially violating abortion bans should consider notifying their insurance carriers, “especially since we don’t know how the carriers will react in terms of putting exclusions on policies,” he added.

Leave a Comment

Your email address will not be published.