Twin City Fire Insurance Co dodges $10M damages award in Virginia federal court

• Twin City Fire Insurance Co. has asked a Virginia federal judge to rule that it does not have to pay out $10 million in punitive damages awarded to Rehab Mohamed, who sued her HR company for racial bias.
• The insurance company claims that under Virginia law, the Society for Human Resources Management's insurance policy does not cover punitive damages based on intentional acts.
• If the court rules in favor of Twin City Fire Insurance Co., it could set a precedent for disputes over insurance policy coverage of intentional acts and impact companies' compliance with anti-discrimination laws.

The jury awarded punitive damages based solely on its determination that SHRMs conduct was intentional.

A Virginia federal judge has been asked to rule on a dispute between Twin City Fire Insurance Co. and an employee who was awarded $10 million in punitive damages after suing her HR company for racial bias. Rehab Mohamed, the plaintiff, had claimed that the Society for Human Resources Management discriminated against her due to her Black and Egyptian heritage. The insurance company, which is a subsidiary of Hartford Insurance Group Inc., has filed a petition for a declaratory judgment stating that it does not have to pay out the damages award. This move comes after U.S. District Judge Gordon Gallagher of the District of Colorado declined to set aside the original $11.5 million award in April.

The Twin City Fire Insurance Co.'s petition is based on Virginia law, which it claims does not require insurance policies to cover punitive damages resulting from intentional acts. The company argues that the jury's award of $10 million in punitive damages was solely due to its determination that SHRMs conduct was intentional, rather than negligence or any other non-intentional conduct. This distinction is crucial, as it could have significant implications for companies and their insurance policies. If the court rules in favor of Twin City Fire Insurance Co., it could set a precedent for disputes over insurance policy coverage of intentional acts.

This case has far-reaching implications for lawyers and their clients, particularly when it comes to compliance with anti-discrimination laws. If the court rules that Twin City Fire Insurance Co. does not have to pay out the damages award, it could create a loophole for companies to avoid liability for discriminatory conduct. Lawyers should be paying close attention to this case as a potential precedent in disputes over insurance policy coverage of intentional acts. The outcome will likely impact how companies approach anti-discrimination laws and their compliance with them.

Lawyers should watch for this case as a potential precedent in disputes over insurance policy coverage of intentional acts, which could impact their clients' compliance with anti-discrimination laws.

Source: Original reporting via Law360