FC&S Legal

If your company been served with a federal subpoena by the Department of Justice (“DOJ”) investigating potential Medicare fraud, an Illinois federal district court may have made it easier for you to get your insurer to cover the costs of your document collection, investigation and response to the subpoena even if your company has not been charged with any health care law violations.

Authors: Lawrence S. Sher Andrew M. Weiner

Background

U.S. District Judge Manish Shah, in the case of Astellas US Holdings, Inc. et. al v. Starr Indemnity et al.,[1] recently handed a victory to a pharmaceutical manufacturer policyholder against its insurers in denying motions to dismiss the company’s insurance coverage claims for the costs of defending and responding to a federal U.S. DOJ subpoena aimed at obtaining documents from the company for alleged Medicare fraud as part of the Department’s nationwide investigation into “Federal health care offenses,” which included drug companies allegedly providing donations to nonprofits that help poor patients buy the drug companies’ products.

In response to the subpoena, the pharmaceutical manufacturer notified its insurer of a potential claim under its insurance policy, which, like many similar policies, broadly provided that the “Insurer shall pay on behalf of the Company the Loss arising from a Claim first made during the Policy Period . . . against the Company for any Wrongful Act, and reported to the Insurer in accordance with the terms of this policy.” The policy also broadly defined a “wrongful act” as “any actual or alleged breach of duty, neglect, error, misstatement, misleading statement, omission or act by the Company.”

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