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Hiscox does not have to cover legal costs in a rejected case



A company that faced significant legal costs arising from a whistleblower lawsuit that was eventually dismissed has no coverage according to Hiscox Insurance Co.'s board members and executives, a federal court of appeal said Friday by confirming a lower court ruling. [19659002] Louisville, Kentucky-based Springstone Inc., which provides behavioral health services at multiple facilities, was sued in July 2016 in a whistleblower lawsuit alleging that it had violated the False Claims Act by receiving compensation from Medicare and Medicaid for medically unnecessary services such as it provided to patients, according to the judgment of the 6th U.S. Circuit Court of Appeals in Cincinnati in Springstone Inc. v. Hiscox Insurance Co.

The informant was rejected in 201

9, according to the verdict. In the meantime, however, Springstone had incurred "significant" legal fees in the matter, including those associated with a lawsuit issued by the Department of Health and Human Services' Office of the General Inspector to seek documents related to its patient care and management practices. .

Hiscox refused to reimburse the company for its legal costs, and Springstone sued it in the U.S. District Court in London, Kentucky, accusing the insurer of claims including breach of contract and bad faith.

The district court ruled in favor of Hiscox and was unanimously confirmed by an appellate panel of three judges.

"Springstone claims that the (whistleblower) action and the government's mood triggered coverage under its D&O policy," the ruling said.

"But we must apply the clear meaning of the terms of the policy. And under the clear meaning of the policy, Hiscox was able to deny coverage for three reasons.

" First, no whistleblower suit was submitted during the insurance period. Second "Springstone failed to reimburse any individual required" under the policy. "Third, non-monetary relief is excluded" from the policy, the verdict said to confirm the lower court's decision.

Lawyers in the case had no comments or did not respond to a request

Earlier this month, a federal appeals court upheld a subpoena in favor of entities from Allied World Assurance Company Holdings Ltd., Intact Insurance Group USA LLC and Travelers Cos. Inc. in disputes filed by a prescription chief over their refusal to make amends according to their faults and omissions and board members and executive insurance.

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