SavaSeniorCare, LLC v. Starr Indem. & Liab. Co., Civil Action 1:18-cv-01991-SDG
Decision Date | 27 September 2021 |
Docket Number | Civil Action 1:18-cv-01991-SDG |
Parties | SAVASENIORCARE, LLC, Plaintiff/ Counterclaim Defendant, v. STARR INDEMNITY AND LIABILITY COMPANY and ASPEN AMERICAN INSURANCE COMPANY, Defendants/Counterclaim Plaintiffs. |
Court | U.S. District Court — Northern District of Georgia |
This matter is before the Court on the following:
Having reviewed the record, and with the benefit of argument, the Court rules as follows:[1]
In January 2013, Starr issued Policy No. SISIFNL20060613 to Sava (the Starr Policy).[2] Pursuant to a Mid-Term Run-Off Endorsement, the policy provided coverage for any Claim made during the Discovery Period (October 11, 2013 through October 11, 2019) for any Wrongful Act allegedly committed prior to October 11, 2013.[3] The policy has an aggregate limit of liability of $15 million.[4]
1. Definitions and Exclusions
The Starr Policy contained a provision entitled the Directors & Officers Liability Coverage Section.[5] It defined a Claim to mean (among other things) any:
The Starr Policy also defined a Wrongful Act to mean "with respect to the Company, any actual or alleged breach of duty, neglect, error, misstatement, misleading statement, omission or act by the Company/'[7]
i. Government Funding Sublimit
Endorsement 50 amended the Directors & Officers Liability Coverage Section as follows:
This section is the Government Funding Sublimit. ii. Conditions
Endorsement 8 amended the General Terms & Conditions Liability Coverage Section of the Starr Policy.[9] It contained three conditions relevant here. First, it stated that [10] This is the association condition.
Second, Endorsement 8 provided that:
This is the consent condition.
Finally, Endorsement 8 read that:
Each and every Insured shall give the Insurer full cooperation and such information as it may reasonably require relating to the defense and settlement of any Claim and the prosecution of any counterclaim, cross-claim or third-party claim, including without limitation the assertion of an Insured's indemnification or contribution rights.[12]
This is the cooperation condition. According to a "no action" clause, "[n]o action may be taken against [Starr] unless, as a condition precedent thereto, there shall have been full compliance with all material terms of this policy."[13]
Sava purchased an additional $10 million in excess insurance from Aspen, Policy Number MCA9J6V13 (the Aspen Policy), effective for the period from January 31, 2013 to January 31, 2014.[14] This policy generally follows form to the Starr Policy, meaning it provides "insurance excess of the Underlying Limits in accordance with the same terms, conditions, definitions, exclusions and limitations of the [Starr Policy] as they existed on the inception date of this Policy."[15] According to its express terms, the Aspen Policy only provided excess insurance and would not:
[D]rop down for any reason including, but not limited to: (1) non-payment to any extent of the Underlying Limits; (2) the existence of a sub-limit of liability in any Underlying Policies (unless specifically endorsed hereon); or (3) any Underlying Policies containing terms and conditions different from the Followed Policy.[16]
Between August 26, 2011 and November 20, 2013, three sealed qui tarn lawsuits alleging violations of the False Claims Act (the FCA) were filed against Sava by former employees (the FCA Actions).[17] On June 26, 2012, the United States issued a subpoena to Sava.[18] After a series of communications, representatives of Sava met with the Department of Justice (the DOJ) on September 25, 2014.[19] During this meeting, the DOJ gave a presentation to Sava demonstrating the government's claimed total loss due to Sava's alleged FCA violations.[20] On December 9, Sava gave its own presentation to the DOJ.[21] During the following months, Sava and the DOJ engaged in discussions about mediating and settling the FCA Actions.[22]
On July 21, 2015, the United States filed a notice to intervene in the FCA Actions.[23] Sava notified the Insurers about the cases on October 20, 2015.[24] The following day, the FCA Actions were consolidated and the DOJ filed a consolidated complaint against Sava in the Middle District of Tennessee.[25]
On January 19, 2016, Starr sent Sava its initial coverage letter, agreeing to provide defense costs to Sava up to $1 million, but denying any other coverage based on the Government Funding Sublimit.[26] In March 2016 and June 2017, Starr sent letters affirming its coverage position.[27] Sava ultimately initiated this action for coverage on May 7, 2018.[28]
Each party has moved for summary judgment. Although the facts overlap and legal issues are intertwined, the Court addresses each motion separately.
Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The Court must "view the evidence and all reasonable inferences drawn from it in the light most favorable to the nonmoving party." Tesoriero v. Carnival Corp., 965 F.3d 1170, 1177 (11th Cir. 2020) (quoting Hornsby-Culpepper v. Ware, 906 F.3d 1302, 1311 (11th Cir. 2018)). If the non-movant relies on evidence that is "'merely colorable' or 'not significantly probative,' then summary judgment is appropriate." Deal v. Tugalo Gas Co., Inc., 991 F.3d 1313, 1325 (11th Cir. 2021) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (cleaned up)). However, "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions." Strickland v. Norfolk S. Ry. Co., 692 F.3d 1151, 1154 (11th Cir. 2012) (quoting Anderson, 477 U.S. at 255). Put another way, to defeat summary judgment, the nonmovant "need only present evidence from which a jury might return a verdict in [its] favor." Samples ex rel. Samples v. City of Atlanta, 846 F.2d 1328, 1330 (11th Cir. 1988) (quoting Anderson, 477 U.S. at 257) (cleaned up).
On February 22, 2021, Sava filed its motion for partial summary judgment.[29]
Sava...
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