A D&O policy provider has been ordered to pay to front the cost to defend John Dougherty, a union leader facing allegations of extortion and conspiracy.
Judge Ramy Djerassi of the Philadelphia Court of Common Pleas ordered the National Union Fire Insurance Co. of Pittsburgh, PA, to advance costs and expenses for Dougherty’s defense March 17, 2022. The order grants a petition for a special injunction that Dougherty filed when the insurance company denied his request for coverage.
Dougherty is insured under National Union’s “D&O and not for profit organizations” liability coverage section of its policy with the International Brotherhood of Electrical Workers, Local 98, where he was business manager until resigning in the wake of his 2021 conspiracy conviction. Under that policy, the insurer must advance the cost of defense if the insured does not have any valid exclusions.
The defendants argued that an exclusion applied because Dougherty knew his conduct was wrong, but the judge called that logic “circular,” as Dougherty is presumed innocent until a trial proves otherwise.
Denying coverage for his legal fees, Djerassi ruled, would cause Dougherty irreparable harm.
Lamb McErlane’s Joseph Podraza represented Dougherty in the case. He said he is unaware of any prior ruling in Pennsylvania establishing that an insurer’s failure to provide expenses rises to the level of irreparable harm.
Given the nature of the injunction, which sought to compel an act rather than prevent one, the judge noted the higher standard of review involved in weighing potential harm. Djerassi said that, given what’s at stake should Dougherty not receive the coverage, the injunction was warranted.
Dougherty argued that without the advance costs, he would be unable to retain trial consultants and would risk his attorneys dropping his case.
Djerassi said that the harm such an outcome would cause would likely be irreparable.
“The damage presented by a potential criminal conviction with its threat to liberty is substantially different from civil liability,” he wrote. “A conviction has consequences to personal freedom, reputation and family life that cannot be measured nor adequately compensated by monetary damages.”
Michael DiFebbo and Sean Mahoney of Kennedys Law represented National Union. DiFebbo declined to comment.
The fees will go toward Dougherty’s defense against an indictment federal prosecutors brought against him and his nephew, Gregory Fiocca, in the U.S. District Court for the Eastern District of Pennsylvania in March 2021.
Dougherty and Fiocca face 18 counts of extortion and one count of conspiracy to commit extortion related to threats they made to Fiocca’s employer for reducing Fiocca’s pay.
The indictment alleges that Fiocca assaulted his project manager and Dougherty threatened economic retribution.
If convicted on all counts, according to the U.S. Attorney’s Office of the Eastern District of Pennsylvania, Dougherty and Fiocca face a maximum possible sentence of 380 years in prison, a $4.75 million fine, a two-year term of supervised release, and a $1,900 special assessment.
Those charges are unrelated to Dougherty’s public corruption case, in which he and former Philadelphia Councilman Bobby Henon were found guilty of conspiracy and honest services fraud.
