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Plaintiff v. Reinsurer

May 2011

Sedgwick obtained summary judgment on behalf of a reinsurer in a coverage dispute arising out of a multimillion-dollar verdict against a West Virginia hospital and the resulting settlement of $11.5 million. The coverage case was heard in federal court in West Virginia.  The underlying lawsuit arose out of the revocation of a physician’s license, and included claims of defamation, invasion of privacy and tortious interference. Our client reinsured 100 percent of the excess liability policy issued by the hospital’s captive liability carrier. The reinsured excess policy provided various types of specified liability coverage including hospital professional liability and directors and officers (D&O) coverage, as well as more general coverage for losses that did not fall within the specified coverages. The court found that the reinsurer did not cover any of the $11.5 million settlement as the settlement was not covered by the reinsured policy. Specifically, the court held that the jury verdict and settlement were based solely upon D&O claims, that the underlying D&O coverage had not been exhausted and that D&O claims that resulted in the verdict and settlement did not trigger coverage under any other part of the reinsured policy.