Look At Your Policies, Attorney Advises Madoff Victims

With legal action heating up in the wake of Madoff pyramid scheme disclosures, a Washington corporate attorney said his firm believes that Madoff clients may recover "hundreds of millions" from their insurers.

And the insurers that will be involved will include industry giants like Lloyd's of London, American International Group, Chubb and CNA, predicted Scott Gilbert, a name partner at Gilbert Oshinsky law firm.

"The misconception out there is that there's no real recourse through insurance claims. This is not the case at all. We believe that there are hundreds of millions of dollars out there to be recovered through insurance claims," said, Mr. Gilbert.

He advised, "The most important thing that claimants and potential defendants can do right now is to understand how and when to effectively navigate this insurance space and do so expeditiously to minimize conflicting claims and insurer defenses."

Another name partner at the firm, Jerry Oshinsky, said in a statement that he believes cases such as Madoff's take on a life of their own.

"Former investors need to reserve and preserve their rights because there are conflicting interests here: Madoff's team, potentially responsible third parties, the victims and the insurance companies who are going to bring up loopholes and drag this matter out," Mr. Oshinsky said.

He advised, "Insurance assets should be analyzed and preserved immediately."

Both attorneys mentioned different types of insurance former Madoff investors and others can tap into such as directors' and officers liability, errors and omissions, fidelity, credit, liability, and other types of coverage that factor greatly into the defense and eventual resolution of these claims.

Mr. Gilbert said, "Many of the parties involved in this are not aware that there are different buckets of insurance they can tap into and that these buckets impact each other, so if you use one during the defense phase of the case, it can use up monies that could have gone toward liabilities later in the case. Thus, to the extent possible, plaintiffs and defendants may want to coordinate in analyzing and ultimately accessing applicable insurance funds."

He noted that victims' and defendants' geographic locations also impact their insurance recourse as state coverage laws may differ.

The two attorneys said they advocate that entities implicated in the Madoff controversy seek counsel that knows the personalities of the primary insurers and reinsurers that will be involved in the aftermath of the scheme--"big names such as AIG, CNA, Chubb, London and others."

"The best advice in this situation is to move quickly to ensure that you fully understand, protect and effectively pursue these important assets" said Mr. Gilbert.

The law firm advised that identifying, preserving and maximizing the insurance assets of defendants and third parties to pay burgeoning defense costs and to fund eventual settlements or other liabilities is an important step for victims of the scheme as defendants are considering claims against third parties and other defense strategies.