When a subpoena from a State Attorney General hits your desk, it is easy to immediately get swept up in the substance. But before becoming absorbed in the details of a subpoena response (recounted here), consider first who should pay for the associated costs. And for that reason, you must review your insurance policies.
Given the broad scope of AG investigations, different types of policies may be applicable, from Comprehensive General Liability to Directors' and Officers' policies or Crime/Fidelity Insurance. Conduct a review of all policies to determine if there are any potential sources of recovery.
Once you receive a subpoena or demand letter from an AG, the best response is to promptly notify your insurer. Even when there is no subpoena or letter, certain policies require notice when you become aware of an occurrence that could trigger liability. Keep a broad view of the investigation and potential litigation in order to preserve any rights you may have to defense and indemnification.
Some insurers may argue that AG subpoenas and demands are too informal to trigger coverage by policies that purport to insure against "claims." But courts have found that written demands and subpoenas that compel a business to produce documents or other information are "claims" triggering coverage. See, e.g., Polychron v. Crum & Forster Ins. Co., 916 F.2d 461, 463 (8th Cir. 1990); Richardson Elecs., Ltd. v. Fed. Ins. Co., 120 F. Supp. 2d 698, 701 (N.D. Ill. 2000). Moreover, an insurer's duty to defend the policyholder is usually broader than the duty to indemnify against adverse determinations of liability.
Having the comfort of knowing that your attorneys' fees and costs will be covered will allow you to concentrate on addressing the substantive issues presented by an AG investigation.
Click here to read Dickstein Shapiro's top 10 tips for analyzing and navigating the pursuit of coverage for government investigations.
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