Excess insurers to pay BASF defense costs

CHICAGO--A jury award of more than $159 million in favor of chemical giant BASF A.G. stands after a federal district judge earlier this month rejected appeals by the chemical giant's excess insurers against the June verdict.

The U.S. unit of Ludwigshafen, Germany-based BASF filed suit against Federal Insurance Co., Great American Assurance Co., and International Insurance Co.'s liability successor for not meeting its defense obligations when a company purchased by a BASF subsidiary--Boots Pharmaceuticals Inc.--was sued for allegedly dishonest advertising, according to Alan Martin, a Chicago-based attorney with Mayer, Brown, Rowe & Maw L.L.P., which represented BASF.

Specifically, the drug company was accused of claiming there were no adequate alternatives to Synthroid, a synthetic thyroid hormone, and that studies revealing otherwise were false. Suits, which were later consolidated into a class action, were filed mostly by consumers in 1996 and 1997, according to Mr. Martin. The consumers claimed they had overpaid for their medication and that a generic alternative was available.

BASF in 2000 settled the class action suit for $98 million and subsequently sued its insurers for damages, legal costs and interest, according to legal documents.

On June 1, a federal jury in Chicago ruled that the umbrella and excess insurers must pay BASF more than $159 million. The award follows a similar suit against BASF's primary insurers for more than $50 million.

U.S. District Judge Samuel Der-Yeghiayan denied all motions challenging that verdict on Oct. 3.