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Insurer Denies Attorney Fee Coverage

September 22, 2014 | Posted in : Coverage of Fees, Defense Fees / Costs

A recent Legal Intelligencer story, “AmerisourceBergen Denied Attorney Fee Coverage,” reports that AmerisourceBergen is not entitled to have attorney fees incurred from a Massachusetts-based qui tam suit covered by its insurance company, the state Superior Court has ruled.  In AmerisourceBergen v. ACE American Insurance, Chesterbrook, Pa-based drug wholesaler AmerisourceBergen field suit against ACE, its insurer, for ACE’s refusal to pay legal fees stemming from the False Claims Act fraud suit.

A three-judge panel in the case affirmed a Philadelphia Court of Common Pleas ruling that ACE properly denied coverage to AmerisourceBergen because of exclusions in its insurance policy.  Judge Patricia H. Jenkins wrote in the court’s opinion that AmerisourceBergen’s claims were denied because of the “prior or pending litigation” exclusion, or “exclusion L” in its policy with ACE, barring defense or payment of fees from lawsuits filed outside of the policy date.

According to Jenkins, ACE provided excess insurance to AmerisourceBergen from 2006 to 2007, and primary coverage from 2007 through 2010, with every year after 2008 being considered a “renewal” policy.  The plaintiff in the qui tam action, Kassie Westmoreland, filed suit in 2006, Jenkins said.

“Therefore, exclusion L precludes coverage for litigation filed or commenced on or before May 1, 2007,” Jenkins said.  “Since Westmoreland filed her qui tam action on June 5, 2006, almost one year before May 1, 2007, ACE properly invoked exclusion L to deny coverage for defense costs that Amerisource incurred in defending against Westmoreland’s action.”