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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