Federal court rules for Axis in late-claim case
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A federal appeals court on Wednesday affirmed a lower court ruling in favor of Axis Insurance Co. in a case involving the late submission of a claim filed under a claims-made liability policy.
Miami-based Georgian American Alloys was among the companies sued in May 2019 by a Ukrainian bank that alleged they engaged in “brazen fraudulent schemes orchestrated by Ukrainian oligarchs,” according to a filing in the case, Georgian American Alloys et al. v. Axis Insurance Co.
Axis denied the plaintiffs’ claim in the case, contending the notice of claim was submitted months after the deadline to report it had passed.
The plaintiffs filed suit in U.S. District Court in Wilmington, Delaware, contending extenuating circumstances created by the COVID-19 pandemic caused the late filing.
The district court ruled in the insurer’s favor and was affirmed by a three-judge panel of the 3rd U.S. Circuit Court of Appeals in Philadelphia.
“GAA argues that under Delaware law Axis must show prejudice to support a denial of coverage based upon an untimely claim under a claims-made policy. Axis, however, argues that the prejudice requirement does not apply,” the ruling said.
The panel agreed with the insurer. “The Delaware Supreme Court has not yet directly decided whether the issue of a claims-made policy can deny coverage based upon late notice of a claim without showing prejudice,” it said.
However, state courts “that have examined this issue agree that Delaware law does not condition denial of coverage under a claims made policy upon a showing of prejudice,” it said, in affirming the lower court’s ruling.
GAA should have reported the claim by Feb. 29, 2020, 90 days after the Dec. 1, 2019, end of the policy period, not on April 21, 2020, almost two months later, it said.
Attorneys in the case did not respond to requests for comment.
