Firm obtains summary judgment in $28M insurance coverage dispute

BOSTON (Feb. 18, 2011) – The firm on behalf of its client Lexington Insurance Company recently obtained summary judgment in federal court in Massachusetts denying a claim by UnitedHealth Group, Inc. for $28 million in insurance coverage.

U.S. District Court Judge Nancy Gertner found that Lexington did not receive sufficient notice of an underlying lawsuit and associated expenses. As a result, it was not obligated to pay UnitedHealth because its rights under the policy were prejudiced.

Lexington had issued a managed care professional liability policy to UnitedHealth providing coverage for claims over a sizeable self-insured retention. The insurance policy had specific provisions requiring UnitedHealth to provide Lexington with notice of claims or suits that could potentially trigger the coverage provided by Lexington over the self-insured retention.

The underlying commercial lawsuit for which UnitedHealth sought coverage resulted in an $8.5 million settlement in 2008. Lexington argued that it did not receive notice of the lawsuit until shortly before the underlying settlement in a letter from a high-level risk manager. UnitedHealth countered that it gave notice of the claim by providing periodic loss-runs to Lexington over a number of years. After the settlement had been reached, UnitedHealth sought reimbursement of $19.7 million in legal fees and $8.5 million for the settlement.

Gertner concluded that UnitedHealth’s loss-run reports failed to provide sufficient notice in accordance with the policy. Specifically, the judge found that the last loss-run reports provided to Lexington in 2006 contained wrong and incomplete information about the full extent of expenses incurred in defense of the claim and future reserves for legal fees. She also found that UnitedHealth stopped sending claim reports for nearly two years prior to the settlement of the underlying litigation.

About Barton Gilman

Barton Gilman is one of New England’s leading civil litigation law firms with offices in Boston and Providence. Its experienced trial attorneys appear regularly in the federal and state courts of Massachusetts, Rhode Island and Connecticut. The Providence Business News has named the firm as one of Rhode Island’s Best Places to Work for three consecutive years (2008-2010).