Court affirms insurers’ win in hospital ‘related claims’ case
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A federal appeals court has affirmed a lower court ruling in favor of insurers including Chubb Corp. and Allied World Assurance Corp. units, stating they are not obligated to continue to provide coverage to a hospital corporation for anticompetitive litigation because of “related claims” provisions in their policies.
Rockledge, Florida-based Health First Inc. was formed in 1995 upon the merger of two other health care entities, according to Wednesday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Health First Inc. et al. v. Capital Specialty Corp. et al.
Health First filed suit against insurers including Executive Risk Indemnity Inc. and Executive Risk Specialty Insurance Co., units of Chubb Ltd., and Darwin National Assurance Co. and Darwin Select insurance Co., units of Allied World Assurance Co. whose U.S. headquarters are in Boston.
Health First sought coverage for several lawsuits relating to the company’s alleged anticompetitive behavior, according to the litigation.
Executive Risk accepted coverage for the first two cases filed against it, which left no outstanding requests for coverage relating to those lawsuits, and exhausted its coverage for those years, according to the ruling.
But insurers refused to pay for subsequent coverage, citing “related claims” provisions in their coverage, and stating all the later lawsuits “are related to those first claims, and as result, they are not covered by Health First’s more recent insurance policies,” according to the lawsuit.
The U.S. District Court in Orlando, Florida, ruled in the insurers’ favor, which was affirmed by a unanimous three-judge appeals court panel.
The district court “did not err in finding that all the underlying claims were related under the extremely broad related-claims clauses in Health First’s insurance policies,” the ruling said.
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