In Atlantic Health System Inc. v. National Union Fire Ins. Co. of Pittsburgh, 2012 WL 640033 (3d. Cir. (N.J.) February 29, 2012), Atlantic Health System, Inc., AHS Hospital Corp., and Atlantic Ambulance Corp. (collectively, aEURoeAHSaEUR?) brought an action against National Union Fire Insurance Company of Pittsburgh and American International Group (collectively, aEURoeNational UnionaEUR?), challenging the denial of coverage under an insurance policy.
The underlying case involved an antitrust complaint filed by Med Alert Ambulance, Inc. (aEURoeMed AlertaEUR?) against AHS on April 5, 2004. AHS contended that it was entitled to defense and indemnification in connection with the Med Alert action under its National Union claims-made insurance policy that was in effect from May 1, 2003 to May 1, 2004. AHS ultimately settled the Med Alert action for $800,000, and allegedly incurred more than $1.3 million in attorneys' fees and costs in defending against the Med Alert action.
On July 23, 2004, AHS sent a aEURoeFirst Notice of LossaEUR? letter to National Union, requesting coverage under Policy No. 316aEUR"29aEUR"70, which was effective from May 1, 2004 to May 1, 2005 (the aEURoe2004aEUR"2005 PolicyaEUR?). The request for coverage under the 2004aEUR"2005 Policy was denied because AHS had notice of the underlying Med Alert claim prior to the inception of the 2004aEUR"2005 Policy coverage.
On August 17, 2004, AHS sent a second letter to National Union marked aEURoeFirst Report of a new lossaEUR? and requested coverage under Policy No. 382aEUR"77aEUR"89, which was in effect from May 1, 2003 to May 1, 2004 (the aEURoe2003aEUR"2004 PolicyaEUR?). That request was denied because notice of the Med Alert claim had not been provided to National Union during the policy period, or within the policy's 30aEUR"day notice period. Because the Med Alert action was filed on April 5, 2004, AHS was required under the terms of the 2003aEUR"2004 Policy to provide written notice of the Med Alert claim to National Union no later than May 5, 2004.
Within the 2003aEUR"2004 policy period, however, AHS had submitted to National Union two renewal applications, one handwritten and the other typed, that revealed AHS's involvement in the Med Alert suit. Specifically, AHS answered in the affirmative the questions on the renewal applications related to the company being involved in litigation charging it with a violation of antitrust laws.
AHS further clarified these answers by noting that aEURoeAHS and Atlantic Ambulance have been named, . . ., in a civil action filed by Med Alert Ambulance Co. alleging unfair trade practices and anti-trust violations . . . .aEUR? The renewal applications were sent to Christine McSweeny, a National Union underwriter who worked at 80 Pine Street, New York, NY.
Article VII of the 2003aEUR"2004 Policy, which is titled aEURoeNOTICE/CLAIM REPORTING PROVISIONS,aEUR? provided that notice should be given in writing to National Union at aEURoe175 Water Street, New York, NY.aEUR? Though the renewal applications were not sent to the Water Street address, AHS argued that statements made in the renewal applications gave National Union actual notice of the Med Alert claim, and National Union therefore should not have denied coverage under the 2003aEUR"2004 Policy.
The Third Circuit affirmed the District Court's grant of summary judgment finding that plaintiffs' renewal application to National Union's underwriters was not a formal notice of claim and that plaintiffs' did not comply with the claims-made policy's notice requirements, which must be applied strictly. The court held that plaintiffs were properly denied coverage.
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