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AmerisourceBergen Corp. v. ACE American Ins. Co.

Superior Court of Pennsylvania

September 15, 2014

AMERISOURCEBERGEN CORPORATION, INTEGRATED NEPHROLOGY NETWORK D/B/A/ DIALYSIS PURCHASING ALLIANCE, INC., F/K/A INTERNATIONAL NEPHROLOGY NETWORK, AMERISOURCEBERGEN SPECIALTY GROUP AND ASD HEALTHCARE, Appellants
v.
ACE AMERICAN INSURANCE COMPANY, Appellee

Argued May 21, 2014.

Appeal from the Order of the Court of Common Pleas, Philadelphia County, Civil Division, No(s): MarchTerm, 2011, No. 002679. Before SNITE, J.

Ronald P. Schiller, Philadelphia, for appellants.

Stephen A. Cozen, Philadelphia, for appellee.

BEFORE: PANELLA, J., LAZARUS, J., AND JENKINS, J. OPINION BY: JENKINS, J.

OPINION

Page 284

JENKINS, J.

AmerisourceBergen Corporation, AmerisourceBergen Specialty Group, Integrated Nephrology Network, and ASD Healthcare (collectively " Amerisource" ) incurred attorney fees and related costs defending a False Claims Act[1] lawsuit brought in Massachusetts federal court. Amerisource demanded that its insurer, ACE American Insurance Company (" ACE" ), pay the attorney fees and costs, but ACE refused to pay on the basis of several exclusions in Amerisource's 2009-10 policy. Amerisource brought an insurance coverage action

Page 285

against ACE alleging breach of contract and bad faith. On July 16, 2013, the trial court granted ACE's motion for summary judgment.

Amerisource filed a timely appeal to this Court. The trial court did not direct Amerisource to file a statement of matters complained of on appeal, opting instead to file a Pa.R.A.P. 1925(a) opinion incorporating by reference its order and opinion granting summary judgment.

We agree with the trial court that ACE properly denied coverage under exclusion L in Amerisource's 2009-10 policy, the " prior or pending litigation" exclusion. Accordingly, we affirm.

A brief history of Amerisource's policies with ACE and the False Claims Act lawsuit in Massachusetts provides the factual backdrop for our decision. Amerisource is a group of businesses that provides a vast range of services to healthcare providers and pharmaceutical companies, including distribution, logistics, clinical education, and marketing[2]. Between May 2006 and May 2010, Amerisource purchased the following professional liability insurance policies from ACE:

2006-07 -- Amerisource's primary insurance carrier was St. Paul Travelers. Amerisource purchased an excess policy from Ace which provided $10 million in coverage over and above Amerisource's self-insurance and St. Paul's primary coverage of $21 million. Amerisource calls this a " tower" of coverage in which Ace's excess coverage was at the top of the tower[3].
2007-08 -- Ace provided primary coverage, the spot St. Paul's held in 2006-07. This was a " replacement" policy for Ace's 2006-07 policy, because ACE's 2006-07 excess coverage was replaced with primary coverage in 2007-08. The terms of the 37-page 2007-08 primary policy were vastly different than the 4-page 2006-07 excess policy[4].
2008-09 -- Ace provided primary coverage. The 2008-09 policy is a " renewal" policy, since it renewed the primary coverage ACE provided in 2007-08[5].
2009-10 -- Ace provided primary coverage. This was a " renewal" policy, because it renewed the primary coverage ACE provided in 2008-09 and 2007-08[6].

The policy year for each policy began on May 1st.

The False Claims Act (" FCA" ) is a civil fraud statute that creates a right of action to recover damages and penalties, on behalf of the federal government, for false claims or statements to the government relating to government payments. Citizens have the right under the qui tam provision of the FCA, 31 U.S.C. § 3730(b), to bring " relator complaints" on behalf of the United States. The complaint must be filed in camera under seal and cannot be served on the defendant until the court so orders. Id. The federal government has the duty to examine the sealed complaint to determine if the United States will prosecute the FCA claims ...


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