The Supreme Court’s decision last month to overturn Roe v Wade, which provided constitutional protection of abortion rights, has sent shockwaves across the country, and raised many questions about the future of reproductive care.
Numerous companies have stepped up to offer aid to their employees seeking reproductive health services in other states. But legal experts warn this may open companies up to a swath of corporate liability and directors’ and officers’ (D&O) liability risks.
Global law firm Reed Smith established a reproductive health working group to advise companies on the health care regulatory and insurance coverage issues that may arise in the aftermath of the Supreme Court’s opinion. David Weiss, partner at Reed Smith and member of the reproductive health working group, said some states are acting swiftly to enforce anti-abortion laws and have made it clear they would punish businesses trying to violate them.
Republican lawmakers in Texas, for instance, have aggressively responded to firms offering to help workers with abortion travel, threatening criminal prosecution of its executives. Most recently, law firms became targets of that threat. Texas is one of 11 states that have banned or severely cut abortion access, and more states are soon to follow.
Texas lawmakers have also pledged to pass laws banning companies offering benefits that facilitate out-of-state abortions. Such bans could prompt litigation from shareholders or customers if the business has contractual or other obligations it can no longer perform in the state, according to Weiss. Another threat is the possibility of state legislation authorizing shareholders to sue corporations for expending corporate funds on employees to help them access illegal health care.
“All these things, if they are acted upon, create potential exposure to these companies providing the benefits. A derivative case by shareholders could implicate D&O insurance policies because they would be alleging mismanagement by company executives,” said Weiss.
“And that’s not just regular civil suits: it could be aiding and abetting, it could be some form of bodily injury claim that could trigger a general liability policy if [anti-abortion litigators] allege that assisting somebody to get an abortion outside the state is akin to causing bodily harm to a fetus,” he continued.
Employees themselves could become a target of criminal and civil suits if they take abortion travel benefits offered by their employees. “Will any of those liabilities, including defense costs, be covered under liability insurance available to employees?” Weiss asked.
Additionally, any retaliation or harassment employees experience when they make use of those company benefits could potentially lead to employee claims under an employment practices liability policy.
Finally, there are privacy issues to contend with if employees are made to provide their employers with reproductive health information to obtain benefits, or if the state mandates those employers to disclose the names of workers seeking abortion benefits.
As things stand, Weiss believes most current corporate liability and D&O insurance policies can address the risks stemming from abortion travel benefits.
“I do think the existing policies that companies have can respond to these lawsuits. Even a criminal claim could potentially be covered depending upon the language of the policy,” Weiss said.
One caveat is the possibility that an anti-abortion state like Texas passes a law that prohibits insurance companies from providing coverage to corporations in connection with lawsuits relating to the provision of benefits for illegal medical procedures, such as abortion.
“We’d have to see how the insurance companies deal with that. Are they going to try to enforce that sort of law? Or are they going to provide the coverage anyway, particularly if the law under which the policy is governed is not in some other state’s law?” Weiss asked.
“For example, if a California company buys D&O insurance, arguably California law should apply to any coverage issues under that policy and not Texas law. If California law permits that insurance, will [insurers] go along with that? Or will they try to get out of [coverage] by pointing to the Texas restriction?”
Businesses and executives should exercise caution as these liability considerations remain unanswered. For Weiss, companies should continue to support their employees in however manner they feel is right. But he advised insureds to carefully review their policies as they roll out those 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 are broad enough to cover these potential claims, and if not, to try to work with insurance brokers and carriers to see if you can broaden your coverage for these risks,” Weiss said.
Companies that do come under state scrutiny for potentially violating abortion bans should consider giving notice to their insurance carriers, “particularly since we don’t know how carriers are going to respond in terms of putting exclusions onto policies,” he added.
