This thought came to me (in a discussion with my wife over the weekend), as we took a road-trip to a not-too-distant city, with our youngest son, on a college visit: What if the market for directors’ and officers’ liability insurance ran more like the markets we all face — for auto insurance? Would that the world were that egalitarian, right?
For it is certain that if you crash a few cars, your rates either go way up — or any coverage (with meaningful protection) becomes altogether. . . unavailable to you.
What lead to this thought was that in the just-settled Legacy Schering-Plough ENHANCE Federal Securities Class Action (Case No. 08-CV-397, U.S. D.Ct., N.J.), we learned on Friday morning that the limits of the D&O policy were tendered, by the insurer(s), as to acts covered by legacy Schering-Plough policies. That means the insurer(s) just opened their checkbooks, and signed over the entire policy to the securities plaintiffs, as to legacy Schering-Plough.
Now, as Mr. Hassan, et al. presently ramp up to take Bausch + Lomb public once more, shouldn’t it be that their personal D&O policy premiums should be very pricey? I mean afterall, Mr. Hassan (allegedly) engineered essentially the same sort of a crash, as he and Carrie Cox directed the sale of Pharmacia to Pfizer, after the Celebrex/Bextra troubled launches, right?
In that case, Pfizer ended up paying what was — at the time — the largest civil penalty ever, for a DoJ settled health care, or pharmaceuticals, or life science case. And that tab was, in large measure, picked up by Pfizer — and its insurers — for Hassan, and Cox and lecagy Pharmacia (all allegedly).
And so, perhaps, just perhaps, D&O insurance on the legacy Schering-Plough directors’ compensation committee (and its consultant), and the legacy Schering-Plough officers — ought to be very, very pricey, or unavailable, as to some sorts of claims of misconduct. Each of them has — over the past decade and a half — effectively “crashed/totaled multiple Veyrons,” (in metaphor-speak) right?
I wonder if the B + L bankers/lawyers/spin doctors are thinking at all about that, with Hassan, Bertolini and Saunders reunited at B + L, as of last week. I do wonder.