X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
When Iraq invaded Kuwait in 1990, CIGNA stepped in to cover losses by evacuated Texaco employees who had to leave personal possessions behind. That insurance policy is at the core of a suit by a former CIGNA lawyer who was fired after he complained the policy was illegal and a retired federal judge’s investigation cleared the company. Paul Leodori insists he was punished for doing the right thing and says he has smoking-gun evidence to back up his claims in the 6-year-old Camden County case, Leodori v. Cigna Corp., L-3776-00. The evidence consists of notes by retired Third U.S. Circuit Court of Appeals Judge Arlin Adams, whom CIGNA hired to investigate Leodori’s claims of corporate wrongdoing. He also charges that defense counsel deliberately withheld that evidence, which CIGNA at last turned over in discovery on Aug. 21. The notes, he says, prove that defense lawyers misled the court and that Adams covered up misconduct by CIGNA when he cleared it, contrary to what his investigation showed. Adams, now with Schnader Harrison Segal & Lewis in Philadelphia, is a defendant in the case. Armed with Adams’ notes, Leodori is also trying to bring into the case the defense lawyers and their firms: Michael Furey, of Morristown’s Riker, Danzig, Scherer, Hyland & Perretti, who represents CIGNA, and Edward Ellis, of Philadelphia’s Montgomery McCracken Walker & Rhoads, who represents Insurance Company of North America, a former CIGNA unit. Leodori filed a motion on Aug. 25, asking for leave to amend the complaint to add fraudulent-concealment claims against the lawyers and firms. The motion also asks the court to revisit decisions in 2004 denying his motion for summary judgment and ordering him into arbitration. If not for the wrongful withholding of the notes and deliberate mischaracterizations of what the evidence showed, those rulings would have come out differently, Leodori contends. Furey, who represents CIGNA and several individual defendants, did not return a call but issued a statement saying he will ask the court to deny Leodori’s motion on the ground that it must be decided by the arbitrator, not the court. In his statement, Furey attacks the motion as without merit, saying that Adams’ notes “do not show what plaintiff purports them to show” and that Leodori fails to explain why Adams’ report reached a conclusion contrary to Leodori’s interpretation of the notes. It also points out that the motion to amend is defective because it does not include a proposed amended complaint. Ellis declines comment and Adams did not return a call. A ‘handshake deal’ INA fired Leodori in 1999 after he alleged that CIGNA illegally rebated premiums to Texaco, whose chairman and chief executive officer, Alfred DeCrane Jr., was a member of the CIGNA board and sat on its compensation committee. Leodori, a former assistant Bergen County prosecutor and deputy attorney general, made the accusation in 1998 while head of a Cherry Hill claims office for CIGNA affiliates. The rebate, he alleges, was based on a “handshake agreement” between CIGNA and Texaco that CIGNA would refund part of the $4.5 million to $4.75 million premium Texaco paid on a $5 million directors and officers excess liability policy. The alleged deal was that if CIGNA did not end up paying the full policy limits, it would owe a $1.5 million “chip” to Texaco. That chip was called in at the time of the first Gulf War, when Texaco asked CIGNA to write a sham D&O policy providing retroactive coverage to its employees in Kuwait who were excluded under other carriers’ “war risk” clauses, Leodori claims. INA issued the policy, though it was not authorized to write insurance in Kuwait, and the policy violated Kuwaiti laws requiring policies be written in Arabic by Kuwaiti brokers, Leodori says. The policy also ran afoul of domestic laws barring premium rebates, retroactive policies and discriminatory underwriting, he argues. When his supervisors failed to act, he wrote to CIGNA higher-ups on Oct. 30, 1998. The letter, captioned “Possible Violations of Law,” referred to more than $20 million in illegal refunds to Texaco and other “special considerations” given to DeCrane. It raised questions about Texaco policies in connection with lawsuits in California and the Virgin Islands but did not mention the Kuwait policy. CIGNA placed Leodori on paid leave. It also hired Adams to investigate, at Leodori’s suggestion. Adams met with Leodori three times during the investigation. During one of those meetings, in December 1998, Leodori says he gave Adams a second letter describing a $10 million rebate on a Kuwait D&O policy. Adams’ May 12, 1999, report on the investigation termed Leodori’s allegations serious but “without factual or legal support.” For one thing, the D&O policy mentioned by Leodori was for $5 million, not $10 million. Though Adams did find there was a retroactive Kuwait “war risk” policy on which CIGNA wrote off $1.5 million, he saw no problem with it and no evidence DeCrane had anything to do with CIGNA’s decision to issue it. Leodori was fired right afterward. Conflict of interest alleged The defendants claim Leodori was terminated because his accusations, confrontational manner and threats to go public created a conflict of interest that prevented him from continuing to represent the interests of CIGNA-INA. He was offered $60,000 to sign a release but refused. In 2000 he sued for violation of the Conscientious Employee Protection Act. Leodori says Adams’ notes back up his charges, referring to a “handshake agreement” and a “1.5 million ‘chip’ owed by CIGNA” to Texaco that was called in when the “Gulf War happened” and “Texaco called and asked [CIGNA] to ‘settle up.’ “ He claims the notes also mention “Kuwait” and “war risk exclusions” and reflect what Adams told him when they met during the investigation, in February 1999. Leodori says Furey and Ellis misled the court by filing briefs and making oral arguments to the court that left out any mention of what Adams said in his notes, if not in his report. He also points to a Dec. 11, 2003, certification by Furey stating, “I have no idea what evidence I supposedly have which would vindicate plaintiff or which I have allegedly withheld, destroyed or not disclosed . . . and am unaware of any evidence which would support plaintiff’s allegations.” The certification was filed in response to a prior motion by Leodori to add Furey as a defendant, which was denied in 2003 by Camden County Superior Court Judge Mary Colalillo. Leodori has known of the notes’ existence since June 2004 when he was allowed to inspect documents at Montgomery McCracken’s Cherry Hill office, shortly after Colalillo denied his motion for summary judgment. The defendants refused to provide a copy of the notes because he would not agree to confidentiality. A motion by Leodori to compel their production was denied without prejudice earlier this year. He finally obtained them last month when CIGNA produced them, along with more than 2,000 pages of other documents, as part of the arbitration process. An accompanying cover letter from Riker, Danzig lawyer Brett Reina says the documents are confidential and not to be used outside the arbitration. Leodori, of Leodori & Whelihan in Medford, is handling the case pro se. The motion will be heard on Oct. 6.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.