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No Insurance for FCA Violators

The 10th Circuit was faced with a clear cut question recently–whether general liability policies trigger a duty to defend FCA claims.  In Zurich American Ins. Co. v. O’Hara Regional Center for Rehabilitation, 529 F.3d 916, 918 (10th Cir. 2008), the Court unequivocally held “that the applicable insurance policies do not cover these types of claims.”

While the government purusued an FCA claim in federal court, three insurance companies filed declaratory judgment suits concerning the above question.  The district court granted summary judgment that the professional services portion of the insurance contracts do not cover FCA claims.  O’hara claimed that it negligently failed to provide professionally adequate nursing or medical services or, alternately, tht the billing practices were professional services.  The Court distinguished the inadequate staffing issue from the misleading of the government in billing documents that it was providing adequate staffing.  As to the alternate claim, the Court found “[a]lthough processing Medicare and Medicaid claims may be difficult and time consuming, the activity does not characterize a ‘professional service.’”