Byron Acohido and Jon Swartz. USA Today. 2009/01/29. Page A1.  According to security specialists, cybercriminals are taking advantage of the fear and confusion created by the current crisis in financial markets by instigating a massive wave of Internet-based schemes to steal personal data and carry out fraud.

The Internet security firm Panda Security reports that the number of malicious programs on the Internet tripled to over 31,000 a day in mid-September, when the U.S. financial sector collapsed.  Ryan Sherstobitoff, a spokesman with  Panda, said, "The criminal economy is closely interrelated with our own economy.  Criminal organizations closely watch market performance and adapt as needed to ensure maximum profit."  Specialists predict that the increase in cybercrimes could accelerate.

Organized groups have become better at assembling massive networks of infected computers, called botnets, and using them to gather large caches of stolen information.  This lengthy article provides a number of examples of cybercrimes and reports on the efforts of Internet sites, the FBI and the Secret Service to combat cybercrimes.

Click here for the full article.

An interstate trucking firm has agreed to pay $2.43 million and provide other remedial relief to a class of women to settle a major sex discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced today.

The EEOC had charged in the litigation that Pitt Ohio Express Inc. denied a class of qualified female applicants employment as truck drivers or dockworkers since 1997, while men were placed in these positions during the same period.

The comprehensive relief obtained by the EEOC includes $2.43 million for the class of women denied employment. Non-monetary relief includes offers of employment to women who should have been previously hired as drivers and dock workers and equal employment opportunity training to all supervisors and managers, as well as reporting and monitoring provisions.

You can see the Consent Decree by clicking here.

In a bad faith claim arising from a medical malpractice action, the U.S. Court of Appeals for the Third Circuit imposed a 1:1 ratio between compensatory and punitive damages in its ruling issued on December 24, 2008.

Jurinko v. The Medical Protective Co., Nos. 06-3519 & 06-3666, 2008 U.S. App. LEXIS 26263 (December 24, 2008). The bad faith claim against The Medical Protective Company ("Medical Protective") was based upon its conduct in an underlying medical malpractice action venued in state court in Pennsylvania brought by plaintiffs Stephen and Cynthia Jurinko ("the Jurinkos") against Stephen Jurinko's treating physician Dr. Paul Marcincin, the pathologist who read Mr. Jurinko's pathology slides and the company who employed the pathologist for failure to diagnose cancer.

The Philadelphia Court of Common Pleas jury rendered a $2.5 million verdict against Medical Protective's insured, which was $1.3 million more than defendant Dr. Marcincin's coverage. Dr. Marcincin settled with the Jurinkos for his policy limits of $1.2 million and an assignment of his insurance bad faith claim against Medical Protective. Dr. Marcincin's policy limit consisted of a $200,000 primary policy and $1 million from a catastrophic loss fund, which was an excess insurer.

Read the full article here on the Duane Morris website.

The Senate last night passed the Lilly Ledbetter Fair Pay Act, which reverses a Supreme Court decision limiting a worker’s ability to sue an employer over sex-based wage discrimination.

Approved by a 61-36 vote, the measure now goes back to the House for a final vote, which proponents of the bill said they expected to come quickly.

It requires a second House vote because that chamber combined the Ledbetter legislation with a measure the Senate did not vote on. It originally passed the House Jan. on a 247-171 vote.

President Obama made support of the measure a point of his campaign.

The bill would make it easier for a worker to sue their employer for pay discrimination on the basis of sex, age, race religion or country of origin.

Read the full story here on the National Underwriter website.

The U.S. Supreme Court said unanimously Wednesday parents could use 19th century civil rights law to sue public schools for child sexual harassment.

The ruling in the case out of Hyaniss, Mass., means parents can use an 1871 civil rights law in tandem or in place of 1972's Title IX of the Education Amendments, which bans school discrimination.

During the 2000-01 school year, the kindergarten-age daughter of Lisa and Robert Fitzgerald told her parents an 8-year-old boy was forcing her to lift her skirt and pull down her panties on the bus. But the boy denied the allegation and the school principal ruled it could not be corroborated. Local police also refused to act.

The parents began driving the girl to school, but the child said the incidents continued at school. The parents then filed suit in federal court alleging violations of the 1871 civil rights law and Title IX. The parents lost their Title IX claim in court, and the lower federal courts ruled the Title IX claim barred the civil rights claim.

Reported data breaches in the US during 2008 were up 47% on the previous year, to 656, of which 78 affected financial institutions, according to a study from the Identity Theft Resource Center (ITRC).

The ITRC breaks down its figures into five sectors - business, educational, government/military, health and financial/credit. Financial services accounted for the fewest number of breaches - 78, or 11.9% of the total.

"The financial, banking and credit industries have remained the most proactive groups in terms of data protection," says the ITRC.

The ITRC says at least 35.7 million records were potentially breached but the true figure is likely to be far higher because 41.9% of cases went unreported or undisclosed.

A $330 million class-action lawsuit accuses LandAmerica 1031 Exchange Services and Sun Trust Banks Inc. of defrauding clients by using their money to pay off other clients.

The lawsuit, filed Wednesday in U.S. District Court for the Southern District of California by four LandAmerica clients on behalf of about 400 customers, characterizes the companies' actions as a Ponzi scheme.

It alleges SunTrust allowed LandAmerica to take money from exchange customer accounts and give it to other clients whose money was locked up in auction-rate securities, a type of investment once considered safe. It says the firms either engaged in or allowed the breach of fiduciary duty, the commission of fraud, and intentionally did not disclose vital information.

The complaint is the latest in a string of lawsuits and filings made after the exchange company and its Henrico County-based parent, LandAmerica Financial Group Inc., filed for bankruptcy protection Nov. 26. Since then, 60 complaints, many alleging fraud and breach of contract, have been filed against the exchange company in U.S. Bankruptcy Court in Richmond.

Read the full story here on the Richmond Times Dispatch website.

The Jesuit order has been sued by 43 Alaska Natives who say they were sexually abused as children, and mounting evidence shows that known pedophile priests were sent to the Fairbanks, Alaska, Diocese for decades, a lawyer said.

Jesuit institutions named as defendants include the Society of Jesus in Rome; the Oregon Province of the Catholic order, which covers Washington, Oregon, Alaska, Idaho and Montana; the Pioneer Educational Society, the province's educational arm and parent institution of Seattle University and Gonzaga University in Spokane, and the Alaska branch of the order.

You can read the full story here on the InsuranceJournal website.

Litigation in United States federal courts rose 9% in the past year, buoyed by a growing number of disputes related to employment matters, antitrust and product safety, according to the 2009 edition of the Law360 Litigation Almanac, released on Tuesday.

So far, shrinking corporate legal budgets have had no impact on the overall case volume in federal courts, suggesting that corporations continue to view litigation as important both as offensive and defensive tactics in their overall business strategy, according to Law360 research.

"In the past year, we've seen a consolidation in the legal industry, with many law firms merging or reducing their staff in response to the challenging economic climate. But our research shows that litigation continued to grow during 2008, and we expect this trend to accelerate in 2009 thanks to fallout from the financial crisis and the expected increase in new regulation under the incoming Obama administration," said Margaret Daisley, a research analyst at Law360's parent company, Portfolio Media, a New York-based publisher focused on business litigation trends.

With a less-friendly political climate and a downright hostile economic climate, U.S. property/casualty insurers are anticipating renewed legislative and regulatory battles in the states in 2009.

Nationwide, Democrats who made significant gains in state legislatures will be more receptive to the arguments of trial lawyers and consumer groups on issues including credit-based insurance scoring, rate approvals and other issues, representatives of property/casualty insurers said.

It is early for determining which states will see the most significant actions on these issues, but the overall trend is one of "defense, defense, defense," said Joe Thesing, state affairs director for the National Association of Mutual Insurance Companies. "NAMIC and its member companies are very much poised for a year of defense."

Moves to restrict the use of consumer credit data in insurance scoring have received a boost from increasing consumer concerns about the economy over foreclosures and job losses. Florida, Nevada, Delaware Wisconsin are states in which this issue may resurface, Thesing said.

Read the full story here on the Individual.Com website.

The impact on the errors and omissions insurance sector from the Bernard Madoff Ponzi scheme scandal will be astronomical and worldwide, according to an E&O specialist.

Jonathan Legge, a managing director with Mercator Risk Services, said the reverberations will likely register as investment advisors and banks that invested clients’ money through Mr. Madoff are hit with actions by investors.

Mr. Legge said insurers initially may have been looking at their exposure to Mr. Madoff specifically, but now they are finding that many big investment advisors, funds and banks had significant money from clients invested through Mr. Madoff. Some had as much as 40 percent of their clients’ money invested through Mr. Madoff, said Mr. Legge.

As a result, clients could make allegations concerning “lack of due diligence” for those who were steering money to Mr. Madoff, he said.  

Read the full story here on the National Underwriter website.

BERNARD MADOFF worked as a lifeguard to earn enough money to start his own securities firm. Almost half a century later, the colossal Ponzi scheme into which it mutated has proved impossible to keep afloat—unlike Mr Madoff’s 55-foot fishing boat, “Bull”.

The $17.1 billion that Mr Madoff claimed to have under management earlier this year is all but gone. His alleged confession that the fraud could top $50 billion looks increasingly plausible: clients have admitted to exposures amounting to more than half that. On December 16th the head of the Securities Investor Protection Corporation, which is recovering what it can for investors, said the multiple sets of accounts kept by the 70-year-old were in “complete disarray” and could take six months to sort out. It is hard to imagine a more apt end to Wall Street’s worst year in decades.

President-elect Barack Obama and Democrats in Congress are planning swift action to overturn a Supreme Court decision that made it much harder for people to challenge discrimination in employment, education, housing and other fields.

The decision, involving a woman named Lilly M. Ledbetter, who had accused her employer of sex-based pay discrimination, was issued in May 2007. Since then, courts around the country have gone far beyond the facts of that case and cited it as a reason for rejecting lawsuits claiming discrimination based on race, sex, age and disability.

In some cases, after initially ruling for employees, judges have reversed themselves and ruled in favor of employers. The judges said they had to switch because of the Supreme Court decision.

Read the full story here on the New York Times website.

There is a great post on Kevin LaCroix's D&O Diary blog which takes a closer look at the 2008 Securities Lawsuits.  He details the state and court distributions, pace of filings, and offers some opinions on the results to the D&O industry.

You can read the post here on the D&O Diary Blog Page.