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.