Calfee Connections

On Episode 17 of Calfee NOW, James Sullivan, Partner and Leader of Calfee's Insurance Recovery practice, and Chris Jones, Senior Counsel with Calfee's Environmental Law practice group, spoke with Judith French, Director of the Ohio Department of Insurance and former Ohio Supreme Court Justice

Topics discussed included:

• How her transition has been going from the Ohio Supreme Court to the Ohio Department of Insurance.
• What services does the Ohio Department of Insurance offer to policy holders. 
• The key initiatives and priorities for the Ohio Department of Insurance in 2021. 
• What the department has seen on the topic of COVID-19 business interruption insurance coverage and how the department can be helpful and involved. 
• Other COVID-19 insurance issues the department has dealt with.

Watch the full episode.

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Video Transcript

Chris Jones:

All right. Well, welcome to the latest edition of Calfee Now where we meet with important people around the state of Ohio. Today, my colleague James Sullivan and I are happy to have Director Judy French join us from the Department of Insurance. I won't go through her whole resume because it'll just make James and I feel inadequate as lawyers, but she is coming off eight years on the Ohio Supreme Court. Prior to that, she was a 10th District Court of Appeals judge and has also argued two cases before the US Supreme Court. So that's enough because as I said, we'll just feel inadequate [inaudible 00:00:46] we keep talking about it. Director French was appointed on February 8th by Governor DeWine. I am envious because her confirmation hearing in the Ohio Senate was I think seven and a half minutes long, which I think reflects how much respect they have for your service and your work in the state of Ohio.

Chris Jones:

So welcome to Calfee Now. I'll get kicked off and then turn over to James. And maybe just starting with, you came from a court with seven justices. So I guess you only had to convince three others of your position to have a majority, but now you're running a state agency with 250 or so employees. How's that transition been for you, going from such a small group to a much bigger group?

Director French:

Yeah. Well, it's good to see you, Chris. Thank you, James. And hello to all of you. First, let me just say thank you for having me and letting me talk about that transition, which has been a really positive experience for me, but I know what good work Calfee does. I've known that for a long time and now I get to see it in a whole new environment. So I'm happy to be with all of you. It's really good to be in the executive branch. Chris, as you know well, it's nice to be a policymaker. For the past eight years, I've been talking about not making policy and here I am in a policymaking role. So it also gives me the opportunity to manage directly, to impact the lives not just of Ohioans but of these 250 employees very directly.

Director French:

It's an important industry. So it's wonderful to be in an industry that matters in the state of Ohio and to think about, what can we do to be more innovative? What can we do to make the insurance industry in Ohio even stronger? But then at the end of the day, too, how do I make the lives of these 250 employees better so that I've said to them, "In a couple of years, I want you to look back and think, 'I grew during that time. My life got better over that couple of years.'" So I'm having a good time. The department is really well respected and it has been well run for a long time. I'm not sure they even need me. And so the bottom line goal is, don't mess that up. They've got a really good reputation nationally, really good reputation statewide. Don't do anything to mess that up. So that's what I'm working on now, but it's been a really smooth transition.

Chris Jones:

That's great. Just one more follow up, how has it been... Your employees are mostly working from home as you are. How has that really been a challenge to you to connect with 250 people you don't see?

Director French:

It is a challenge to be honest. What I've been doing the last few weeks is I go in once a week and at least we can have a taco Wednesday with other senior staff. What I'm finding is that several of them had never met one another because we had even senior staff join in the middle of the pandemic last year. And so they're getting to know each other as well, but it can be a challenge. I've done virtual meet and greets with everybody in the entire department. One thing, they think I'm tall, so there's that. You just don't get the same impression of people. So we're trying to find ways to make that better for everybody. We've got a weekend event coming up where I'm sure I'll get to meet some of them while we help clean up the state park with Director Mertz. And so yeah. It is a challenge, but just like with all of you, we're trying to adapt all the time.

Chris Jones:

Yeah. Well, we will not disclose your actual height to anybody.

Director French:

Yeah. It's different from yours. We can say that.

Chris Jones:

Yes, it is, a little bit. So...

Director French:

Yeah.

Chris Jones:

James, do you want to jump in with probably a little more pertinent questions? [inaudible 00:05:08]

James Sullivan:

Oh, you bet. You bet. And Director French, thanks for joining us. This is, to me as an insurance policyholder lawyer, this is exciting to get a chance to talk to you and hear what you have to say and kind of an illustration of what the pandemic has for us. This conference room I'm in now, you're in here virtually with me. And the last time I saw you and got to hear you speak, you were in the same conference room, but you were there in person that time. So here we are a couple years later, and the world has changed a bit, but welcome through this conference room with me virtually.

Director French:

It's a beautiful one.

James Sullivan:

So as I said, what we do at Calfee is serve policyholders, and I'm often asked, "Okay, James, so what services does the Department of Insurance offer to policyholders and more broadly what do they do?" And I know what I say, but now since I've got you sitting here with me, I'd love to have our clients get to hear it from your own mouth.

Director French:

Yeah. Well, yeah. Thanks for that question because I was asking the same thing when I started. What is it that the Department of Insurance does? First and foremost we are a consumer protection agency. That's what we do is we protect consumers, not just [inaudible 00:06:21] policymaking, but we try to protect and inform and educate them very directly. So we've got a consumer services division that handles calls on a constant basis, just advising policyholders with complaints, with questions, helping them make decisions about insurance. We have something called OSHIIP. It's the Ohio Senior Health Insurance Information Program and that advises senior Ohioans on Medicare. So right now all of that is virtual, but in a typical year, we'd be going out to county fairs and to senior centers and all over the state to advise seniors very directly about Medicare. I don't know as much as I would like about Medicare, but I know it's really complicated and can be. So it's actually become a national model for how we interact with seniors.

Director French:

The other thing that's fairly new to the department and something that I will continue to focus on is our emerging products initiative. So this is more for those insurers that want to do something a little bit different. You'll hear the term InsureTech, using technology, just like everything else, using technology more and more with insurance products. So things like connecting with a vehicle directly to get information about your driving that would then be relayed to an auto insurer. But anybody who has a new idea, come into the department and get kind of a concierge service. Our director is Lori Barron, who is... It's all about customer service.

Director French:

So from an insurer's standpoint, we served them. We want them to feel like a customer coming in. Now at the end of the day, we're the regulator. We have to make sure that our companies are solid. We have to make sure that our companies are following the rules and regulations. And what I didn't really know before I got here was what a national perspective that has, that for the 260 companies that do business with Ohio, we want to be a strong regulator so those other states where they do business know what we're doing, that we're keeping things regulated, stable, predictable for our insurance companies. So it's a broad and kind of diverse day every day at the Department of Insurance, the kinds of things that we deal with.

James Sullivan:

Yeah. I've always been deeply impressed by the balance the Department strikes, all right, because of course all policyholders out there want it to be policyholder skewed and I'm sure the insurers want it to be insurer friendly and a friendly, safe place for insurance companies to do business. And it's always been, I imagine, a tricky balance to find, and yet I've been deeply impressed over the years with the Department of Insurance. So when we learned that you were coming on as director, knowing what I know of you, it's going to continue that way, which is exciting. And speaking of that, any initiatives or key priorities for the department in 2021 and beyond, especially, I know we've got the strange new world as we're emerging hopefully soon from pandemic?

Director French:

Yeah. Well, and I appreciate that observation about the Department. The more we deal with people, for us... Yes, we're the regulator. We've got those requirements. We've got those obligations, but we want to be collaborative. And I think the emerging products initiative is a great example of that, of wanting to be collaborative. We want Ohio to be the innovative space. If there is an insurer out there thinking about bringing a new product to market, we want them to think about Ohio first. And so are there things about our laws? Are there things about our rules? Is there something about the Department that we could do to make that better? And so that is a high priority for us, is this emerging products initiative, and I'm proud of how that's progressing.

Director French:

And just to give you a piece of that, what I've heard Lori say to companies coming in... I've sat in on some of those meetings and what she says to them is, "Look, we want to help you navigate through the Department, but within 30 days we will give you an answer." Now we're not going to... That product isn't going to be all the way through the process, but you're going to know within 30 days whether we think that we can go forward with this or not. So I've seen some of the companies kind of take a step back to say, "Wow, that's a great thing." So that's the big issue. For the governor in particular, mental health, mental health parity, behavioral health, substance use disorder, benefits, all of those issues are really critical for him as a governor and then for me as a director.

Director French:

So the Ohio Department of Insurance doesn't regulate much in the health space, but what we've done is really become very active in the education part of that. You'll see some public information announcements, some PIAs out there just telling people, "You have these benefits and here's how we think you ought... Let's help educate you. Call us, call the Department if you don't know how to find them." So we're going to keep really active in that space along with other more health-focused agencies for the state. The final thing I'll mention is about surprise billing. We've all experienced that surprise bill on the health side of saying, "I thought I checked everybody to see if they were within my network and it turns out the anesthesiologist wasn't in the network," or just things like that that are quite literally a surprise bill. With new legislation we're now implementing new rules. We're taking comments on rules and we're trying to contact stakeholders to see what should those rules look like. But that surprise billing, it's also new federal... There's new federal law. So I think you're going to be hearing a lot about surprise billing.

James Sullivan:

Wow. That's great. No, that's fantastic. All three of those are incredible initiatives. And I can say from personal experience, right, that the idea of emerging trends and innovation is not just some aspiration that you all have or some idea, but it's not abstract. It's real because I've been involved recently in a handful of initiatives that are somewhat forward-looking and it's been really nice, the access the Department has given to policyholders and insurers alike and to be open and flexible and trying to really not just say, "It's got to be this way because it's always been this way," but are there new, better or equal ways of doing things, but at the same time being wise and having wise judgment and questioning us where we need to be questioned and saying, "Well, what about these stakeholders? Are they protected?" So it's been real and it's been impressive to watch. So I'm excited to see what more we have here in Ohio and it'll be fun to see Ohio continue being a leader.

James Sullivan:

So we are here talking about insurance and we are in a pandemic. And so you can probably speculate and guess about what I'm going to talk about next. So our policyholder clients tend to be corporations, companies and entities, and with Governor DeWine's shutdown orders and the concern about pandemic, many, many, many of our clients right out of the gate at the beginning of pandemic, they had interruption to their business and historically business interruption coverage has lived in property insurance policies. So we've kind of had these challenges, these struggles, and the place that they were located historically isn't where you necessarily would think of to look in a pandemic context.

James Sullivan:

So policyholders and insurance companies have been doing a dance and trying to figure out whether there is indeed coverage or not for business interruption losses, which have been significant. The governments have been extremely helpful with this and minimizing some of those losses, but I know a lot of our clients say, "Well, geez, can't the Department of Insurance just tell the insurance companies they must cover it?" And of course we have to counsel them that it's not that way, that at the end of the day, your contract with your insurer defined your rights and obligations. But I'm just curious, right? What have you all seen on that topic of business interruption insurance coverage, and where can the department be helpful and involved, and where's the line where it really is the relationship as defined by the contracts?

Director French:

Yeah. Well, I appreciate that you're in that position of having to advise the client in what is a horrible situation for many of them. That is not an understatement to say that these business interruption issues are very, very real and like death for any of these companies. So we certainly recognize the importance of the issue and it is not at all unique to Ohio. There's litigation happening all over the country. The NAIC, the National Association of Insurance Commissioners, is monitoring litigation out there to see how have the rulings gone. There is litigation happening in Ohio. I'm sure you are aware of the federal lawsuit in Northeast Ohio where the federal court has now asked the Ohio Supreme Court to accept a certified question, meaning that the Ohio Supreme Court would make a decision on that very question of, "Is business interruption something that would be protected under that specific policy language?" Of course, you've got lots of different policy language out there about whether certain things are covered or not.

Director French:

And now I have not checked in about a week, but to my knowledge, the Ohio Supreme Court has not made a decision about whether to accept that case. The department did not get in. There were some amicus filings on that case. We did not get in. We of course would have the option to get in at some point, if for no other reason than to simply educate. What would a particular ruling mean for the industry in Ohio? So we have not engaged directly in that question, but we would have the option to do that. So there are moments where I feel like, "Gosh, my prior experience really serves me well in making a decision." And that would be one of them where I would... I know the process that's happening behind the scenes, and I know what would happen if the court does accept.

Director French:

So I'll watch and see what happens. And then we'd have to make a decision about whether to get in, but for a broader perspective, it is an issue that we are very aware of and watching what NAIC does and just an industry perspective, paying attention to something that's very significant to a lot of Ohioans and a lot of Ohio businesses.

James Sullivan:

Yeah. No, thank you for that. And it is obviously a wildly complex issue and it's comforting to know the department is actively monitoring and looking at the lay of the land. And fundamentally, it does seem to be at the moment something that the courts should be weighing in on and determining what those preexisting relationships mean. So...

Director French:

Yeah. [crosstalk 00:18:09]

James Sullivan:

Yeah. Have you all dealt with any other COVID-19 type insurance issues? We've talked just now about the business interruption. That's been the one that has been getting the most press, but of course, as things evolve, you're probably going to see some maybe workers' compensation type issues, some commercial general liability type issues, and maybe even some directors and officers liability issues. Has the department been seeing any action on things other than the business interruption just yet?

Director French:

Yeah. Now this goes way back... Way back. A year before I got there. Everything before the pandemic seems like a long time ago. There were lots of issues that the department had to jump into. So issuing some emergency orders about, for example, saying you can't cancel auto insurance for failure to have a license if the BnB's aren't open. We suspended pharmacy audits because pharmacies were so focused on all of the health needs around the pandemic. One of the big changes that we've made, and it just got implemented this week, is doing remote testing. Now, I know that's something that the Supreme Court, we had to decide. At the time that I was there, we had to decide whether to do a remote exam, which ended up happening and going well.

Director French:

And so we've started doing that now for insurance licenses-

James Sullivan:

Oh wow.

Director French:

[crosstalk 00:19:37] remote exam or do it in person, which that to me is not just about the pandemic. That's about access. It's about making it easier for people to take those exams where they live and not have to travel to, in the case of lawyers, travel to Columbus or Wilmington, or anywhere else we do exams. So I like those kinds of developments. I like the fact that we're using more technology, making it easy for people, but for those individuals who still want to go in person and would feel more comfortable that way, we're still offering that. So there have been some adjustments in the industry that we've had to make and still dealing with all the other day-to-day issues, but I think some of these changes are here to stay.

James Sullivan:

Wow. That's great. Well, we know that your time is valuable and we don't want to use much more of it here. Is there anything else that we haven't covered that you think you'd like to share with our listeners?

Director French:

Well, again, I just really appreciate the opportunity. This is not a department that I knew a lot about, even though I had good relationships within the insurance industry. But [inaudible 00:20:52] become so clear to me what an incredibly important industry this is for the state of Ohio. And so for all of you listening, when you think about, for those of us who think about things like jobs, workforce development, think about insurance. We are the seventh largest insurance market in the country.

James Sullivan:

Wow.

Director French:

We're the 17th largest in the world.

James Sullivan:

Wow.

Director French:

This is a huge market. We regulate 300,000 insurance agents. We have 260 companies doing business here. Ohio is a significant presence in the insurance market for the entire world. So we employ over 100,000 people in the state of Ohio in this industry. So I think a lot about that. I think a lot about keeping those companies solvent, making sure that we've got the right education programs so that we can make sure that people stay here, new graduates stay here to work in the insurance industry.

Director French:

And I'm thinking every day of how do we just make this better? How do we make it a stronger industry? So I appreciate all that you do to advise those policyholders, to advise businesses and corporations, whether those are small businesses or large corporations, and we want to hear from you. We want to hear from you on that, whether it's official comments like the surprise billing, or it's just something... You've got a company that has a new product that they want to talk about, or you've got a company that says, "You know what? I don't think I was handled quite right by the Department of Insurance." We want to know that. We want to be a consumer-friendly place where insurers want... They want to come to Ohio and we want those policyholders to know that we are all about protecting consumers. So it's a really interesting, fun job and I don't have to go out to chicken dinners very often. So this is a good place for me to be and I'm grateful to the governor for giving me this opportunity.

James Sullivan:

Great. Well, we do hope to have you back here in person at some point, nonetheless. Maybe we will [crosstalk 00:23:03] dinner. Yeah. And no, and I know that you're sincere when you say you all want to hear from policyholders and insurers alike and the public at large. I've seen it, I've witnessed it and I've experienced it. So I know that's true, and we're just excited. The Department's in great hands with you and I know some of the team you've assembled newly, strong team, and then the folks who have been there forever, I know a lot of them and unbelievable depth there. So really encourage all stakeholders and insurers and policyholders alike to be in touch with the department and not hesitate to communicate concerns or ideas. And I know you'll be there. So thank you.

Director French:

Yeah. That's great.

James Sullivan:

[crosstalk 00:23:43] talking to you.

Director French:

Well, thank you, James.

James Sullivan:

Appreciate having you.

Director French:

Yeah, I appreciate it. And thanks to everybody listening. I know what good work you do and you'll get back to it.

James Sullivan:

That's right.

Chris Jones:

Judy, thanks for joining us. I should be more formal. Director French, thanks for joining us today. It's always a pleasure to spend time with you and hopefully at some point in person. So that will end our latest version of Calfee Now. Thanks for joining us Director French.

James Sullivan:

Fantastic.

Director French:

Thanks everybody.

James Sullivan:

Cheers. Thank you.