Thanks, Ken, much more complicated than I could comprehend.
That's why the lawyers get the big bucks. (We experts only get mini-bucks.)
Let me see if I can further clarify/confuse you on some of the points you raised. I'm not going to bother re-quoting them.
You raise a very good question about teaching for agency A but having insurance through agency B. I believe (but I won't swear this to be 100% true - perhaps a legal beagle could weigh in here) that if you're teaching to agency B's standards, you're likely on safe ground. However, I also believe that agency A's insurance company may have the right to say that if your conduct falls outside the scope of how agency A teaches (which is what insurance A is based on), and if THAT PART of the conduct is found to be deficient, they may be off the hook as far as a judgment goes.
I know that the insurance compnay can do what's known as "reserve their rights". In simple terms, it means that if you strayed from what you were supposed to do (not to beat a dead horse but . . . say . . . a standards violation), and you are found liable because of that deviation, they don't have to pay.
Here's what I got from a legal website (
http://law.freeadvice.com/insurance_law/property_insurance/reservation_right_letter.htm):
"If you are sued, the legal complaint filed against you may state several different claims, some of which may be covered by your liability insurance policy and some of which may not be covered. The insurance company is obligated to provide a defense for you if any of the claims could be covered, but the company may not be obligated to pay the damages for certain types of claims. A 'Reservation of Rights' letter from your insurer is a notice that even though the company is proceeding to handle your claim, depending on what happens, certain losses might not be covered by the terms of the policy. By such a letter, the company preserves or 'reserves' its right to deny coverage at a later date based on the terms of the policy."
So that could possibly apply when you have a cross-agency insurance/standards issue. We'll cover your defense, but we won't cover your damages. It certainly seems simpler if you teach for agency A to get agency A's insurance. And some agencies (L.A. County is one, possibly GUE as well) do not have their own in-house insurance, usually because their instructor base isn't large enough, so their instructors rely on cross-agency insurance. That may or may not be a problem if there's an accident.
And don't lose sight of the fact that this is a business for the insurance companies. I don't think it's quite as crass as only representing PADI's corporate interests (or NAUI or whomever), but at some point, this comes down to number-crunching, risk-taking (in terms of losing/winning), or cutting losses.
By the same token, there are times when you take a principled stand. I'm involved as an expert in a case right now that - IMHO - has zero merit. The insurance company is defending this with all their might since the last thing they want to do is encourage other frivolous cases. No sense in making the industry look like an inviting target.
As to your specific question about mid-water skill teaching, I don't think there's a specific standard in PADI (or NAUI) that requires you to be on the bottom. That may be the way 99% of the instructor's do it, but convention does not always qualify as a standard. If the instructor was being reasonably prudent and if your expert witness could show that being in midwater wasn't what caused the embolism and that it could just have easily happened from the bottom, I don't think there's necessarily a problem. (But again, I'm not a lawayer.)
And, to sort of go back to some previous comments I made, if there IS a standards violation, the reason behind it will come into play too.
Let's suppose you have two students underwater at a depth of 30 feet. You're doing an air-sharing exercise and Student 1 panics and bolts. You immediately spring off the bottom, follow the student up, and arrive with him/her at the surface. What's the standards violation? You just left Student #2 unattended on the bottom. But I think there's a strong argument here that the emergency of Student 1 overides that technical violation.
Different scenario. You are with a student at a depth of 30 feet. While demonstrating mask removal & replace, your mask strap breaks. You motion to the student to stay where they are while you surface, kick back to shore (it's not very far), get your replacement strap, and come back to your student. You're gone less than 5 minutes. When you arrive back, your student is dead on the bottom. What's the standards violation? Once again, you left your student unattended on the bottom. But in this case, you'll get reamed for it.
So yes, it's complicated. The way to make it more understandable is to read, listen, question, listen, ask, listen, inquire, listen, learn, listen, study, listen, etc. Also remember that very few things in diving are black-and-white, and everyone's got an opinion. Part of the trick is learning to separate the wheat from the chaff.