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.”

To continue reading, please download the .PDF!