Deciding whether there is insurance coverage for restitution and disgorgement is especially problematic because the restitution remedy is subject to misunderstanding by both lawyers and judges. J.P. Morgan Securities highlights the uncertainty surrounding the meaning of disgorgement and how it should be measured. Courts must look at the nature of the claim or payment, rather than the label, to see if it constitutes restitution or disgorgement. However, the problem remains that restitution and disgorgement are not specific terms with universal definitions. Thus, it is imperative for courts and lawyers to gain a sound understanding of what these terms mean in the vernacular of remedies. This Note explores the legal issues surrounding insurance coverage for restitutionary payments and disgorgement of illgotten gains. Furthermore, this Note argues that utilizing and adopting the definitions of restitution and disgorgement from the Third Restatement of Restitution and Unjust Enrichment can provide guidance and clarity for both judges and lawyers in determining whether there is coverage for claims or payments labeled as restitution or disgorgement.
Coverage for Ill – Gotten Gains? Discussing the (Un)Insurability of Restitution and Disgorgement
Katherine C. Skilling
June 9, 2015