The First Health Settlement Class v. Chartis Speciality Insurance Co.

Defendant-Appellant First Health Settlement Class appealed a superior court order that granted partial summary judgment in favor of plaintiff-appellee Chartis Specialty Insurance Company. This was one of a number of class action cases filed against First Health and others in the State of Louisiana. In those actions, medical service providers alleged that First Health violated notice provisions contained in a Louisiana statute known as the Preferred Provider Organizations Act. First Health ultimately entered into a settlement in which it resolved all of the Louisiana litigation. Chartis was First Health's errors and omissions insurance insurer. The policy had a number of exclusions, one of which was an exclusion for "penalties." The issue this case presented for the Delaware Supreme Court's review was whether the amount that First Health paid to settle the Louisiana litigation was a "penalty," and, therefore, not a covered loss under the insurance policy. The superior court concluded that the amount paid was a "penalty." The Delaware court disagreed, concluding that it was not a "penalty," and that the policy's exclusion for "penalties" did not apply. View "The First Health Settlement Class v. Chartis Speciality Insurance Co." on Justia Law