There Must be a Claim for Coverage Under a Claims Made Policy
Homeland Insurance Company of New York (Homeland) issued Plaintiff a claims made liability insurance policy covering errors and omissions, effective January 16, 2019 to January 16, 2020. Plaintiff eQHealth AdviseWell, Inc., f/k/a eQHealth Solutions, Inc., a Louisiana corporation that provides health care management services to Medicaid agencies, commercial healthcare payers, third-party administrators, and self-insured employer groups.
In Eqhealth Advisewell, Inc. v. Homeland Ins. Co. Of N.Y., Civil Action No. 22-00050-BAJ-EWD, United States District Court, M.D. Louisiana (July 15, 2023) the USDC resolved the dispute over coverage.
BACKGROUND
Homeland issued a Managed Care Organizations Errors and Omissions Liability Policy (“the Policy”) to Plaintiff. The Policy covered “Damages and Claim Expenses in excess of the Retention that [Plaintiff is] legally obligated to pay as a result of a Claim ...” A “Claim,” as defined by the Policy, “means any written demand from any person or entity seeking money or services or civil, injunctive, or administrative relief from [Plaintiff].”
Plaintiff Authorizes Treatment For B.N., A Florida Resident, In Oklahoma
One of Plaintiff's contracts was to provide Medicaid management services to the State of Florida. Under this contract, Plaintiff's primary operational contact was Florida's Agency for Health Care Administration (“AHCA”), which is the state agency responsible for administering Florida's Medicaid program.
Plaintiff's Communications To Defendant Regarding B.N.'S Treatment At Brookhaven
The lawyer stated that “[n]o lawsuit has been filed, at least as yet.”
Plaintiff and Florida AHCA's Settlement with Brookhaven
At the point of a settlement eQHealth had virtually no choice but to settle on the terms agreed by AHCA and Brookhaven. The settlement agreement was signed by the last parties on September 20, 2019, and pursuant to it, eQHealth paid Brookhaven $262,500.
Defendant denied coverage on February 3, 2020, stating that: “[n]o Claim against eQHealth was reported to Homeland, eQHealth did not ask for consent to settle any Claim, and Homeland did not provide prior written consent for the settlement, or for any expense, payment, liability, or obligation eQHealth may have had in relation to this matter. Therefore, no coverage is available for the settlement payment eQHealth made to Brookhaven.”
DISCUSSION
Homeland expressly conditioned coverage of all claims under the Policy on the filing of notice of a “Claim” against Plaintiff. When considering what constitutes a “claim” to trigger coverage under a “claims-made” insurance policy, the court relied on the Fifth Circuit that instructs trial courts to differentiate the “mere threat of a claim” from an “actual claim.”
The USDC concluded that despite the numerous communications between the parties and relevant third parties, no communication rose to the definitional level of a “Claim” such that coverage under the Policy was triggered.
ZALMA OPINION
Homeland included in its policy wording a definition of the word "claim." For the insured to obtain defense or indemnity it must establish that a claims, as defined, happened. Without question threats were made. A settlement was reached and the insured paid money to fund the settlement. Yet, no one made a "claim" as defined, the insurer was not advised of the settlement nor was it advised of the insured's intent to pay until after it paid although the decision to pay was a "business" decision since no one made a demand in writing that they pay for a cause of loss insured against, there could not be coverage for a claim or loss triggered under the policy's clear and unambiguous definition of the word "claim."
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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