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The insurer on the hook for arbitration costs for professional liability



The unit of Hartford Financial Services Group Inc. has an obligation to defend a biopharmaceutical company in arbitration under its coverage of professional services, a federal court ruling Tuesday.

Morrisville, North Carolina-based Inventive Clinical, LLC, formerly known as PharmaNet LLC, had coverage of professional services from the Hartford Navigators Specialty Insurance Co., according to the decision of the Third U.S. Circuit Court of Appeals in Philadelphia and Navigators Specialty Insurance Co. v. Inventive Health Clinical Inc.

CEL-SCI Corp., a professional contract research organization in Vienna, Virginia, which had been hired by PharmaNet to assist with the management and administration of a clinical trial, initiated arbitration proceedings with allegations of breach of contract and fraud and sought under the judgment.

Navigators initially agreed to defend PharmaNet in his arbitration, but later withdrew coverage, claiming that the allegations were based on delays covered by its exclusion policy. The exclusion was for a "performance delay" that occurred due to "delayed delivery or failure to complete" the product or work, according to the decision.

Navigators then filed a complaint with the U.S. District Court in Trenton, New Jersey, requesting a declaration that it had no obligation to defend or harm PharmaNet. The district court ruled that the Navigators were obliged to defend the policyholder and the decision was upheld by a unanimous three-judge appeals panel.

"At least some of CEL-SCI's claims for damages were based on performance, failures, existing separately and separately from delays, so that the exclusion of the policy did not exempt navigators from the obligation to defend (ie there were accusations from CEL-SCI that were covered and not excluded by the policy), "said the decision.

" delays and failures alleged by CEL-SCI are not all relentlessly intertwined, there are in fact cases where CEL-SCI alleged failures from PharmaNet seem to exist separately and apart from accusations on delays and failure to comply, "they ruled, 1

9659002]" In view of the ambiguities in the complaint – namely whether CEL-SCI claimed damages solely due to delays, for delays caused by erroneous acts or for both erroneous acts sand delays – it was correct of the District Court nt to the New Jersey Act to read the complaint liberally in favor of PharmaNet, ”states the decision and confirms the decision of the lower court.

Lawyers in the case did not respond to a request for comment.


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