Steven Plitt, Expert Witness Steven Plitt, Expert Witness
Insurance Bad Faith Claim Handling Expert Serving Clients Nationwide

COURT FINDS THAT A GOVERNMENT SUBPOENA SEEKING DOCUMENTS CONSTITUTED A CLAIM FOR NON-MONETARY RELIEF UNDER A D&O POLICY

The Texas court in Oceans Healthcare, LLC v. Illinois Union Ins. Co., 2019 WL 1437955 (E.D. Tx. 3/30/19) (appealed file), held that the subpoena alleged a wrongful act under the policy because the subpoena sufficiently alleged violations of the false claims act. The subpoena had sought documents "in connection with an investigation into . . . possible false claims act violations . . ." On other grounds the court held that the policy did not provide coverage. In this D&O case, the federal government issued a subpoena to the insured corporation seeking documents in a qui tam action, alleging that the corporation had submitted false and fraudulent payment claims to Medicare/Medicaid. The insured submitted a claim to its D&O insurer, seeking coverage for the expenses that the corporation incurred in responding to the government subpoena. The insurer denied the request for reimbursement, arguing that the government subpoena was not a "claim" inasmuch as the subpoena did not seek relief, but rather, sought information. The court rejected the insurer's argument, finding that the subpoena sought non-monetary relief under the policy. Under the D&O policy, a claim was "a written demand against any insured for monetary damages or non-monetary or injunctive relief." The policy did not define the term "relief."

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