Delaware Court Orders Insurer to Pay $13.5M
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Delaware Court Orders Insurer to Pay $13.5M

An insured under an E&O policy was the defendant in a Louisiana class action arbitration for improperly discounting medical services payments without providing proper notice to its providers. The insurer sued its insured in Delaware alleging its E&O “claims-made” policy didn’t provide coverage, because, among other reasons, the claim was allegedly made before the policy period. The insured settled the underlying and related claims for $9M plus an assignment to the class members of its insurance claim. Applying Louisiana law, the Delaware state court found the insurer liable for bad faith for seeking a no coverage determination and ordered it to pay $13.5 million in damages and penalties. Under the bad faith statute an insurer who knowingly misrepresents facts or policy provisions to its policyholder violates the statute.

Homeland Insurance Company of New York v CorVel