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Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
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July 26, 2023
A Threat of Litigation is not a Claim

There Must be a Claim for Coverage Under a Claims Made Policy

Barry Zalma
Jul 25, 2023

Read the full article at https://lnkd.in/giHFRGaj and see the full video at https://lnkd.in/gRHu9mJz and at https://lnkd.in/gjFJfyrm and at https://zalma.com/blog plus more than 4550 posts.

Homeland Insurance Company of New York (Homeland) issued Plaintiff a claims made liability insurance policy covering errors and omissions, effective January 16, 2019 to January 16, 2020. Plaintiff eQHealth AdviseWell, Inc., f/k/a eQHealth Solutions, Inc., a Louisiana corporation that provides health care management services to Medicaid agencies, commercial healthcare payers, third-party administrators, and self-insured employer groups.

In Eqhealth Advisewell, Inc. v. Homeland Ins. Co. Of N.Y., Civil Action No. 22-00050-BAJ-EWD, United States District Court, M.D. Louisiana (July 15, 2023) the USDC resolved the dispute over coverage.

BACKGROUND

Homeland issued a Managed Care Organizations Errors and Omissions Liability Policy (“the Policy”) to Plaintiff. The Policy covered “Damages and Claim Expenses in excess of the Retention that [Plaintiff is] legally obligated to pay as a result of a Claim …” A “Claim,” as defined by the Policy, “means any written demand from any person or entity seeking money or services or civil, injunctive, or administrative relief from [Plaintiff].”

Plaintiff Authorizes Treatment For B.N., A Florida Resident, In Oklahoma

One of Plaintiff’s contracts was to provide Medicaid management services to the State of Florida. Under this contract, Plaintiff’s primary operational contact was Florida’s Agency for Health Care Administration (“AHCA”), which is the state agency responsible for administering Florida’s Medicaid program. As part of its contract, Plaintiff reviewed requests for patients-Medicaid recipients-to receive medical services outside of Florida.

One such request for out-of-state services was a Medicaid claim by B.N. a Florida resident. B.N. was admitted on an emergency basis into non-party Brookhaven Hospital (“Brookhaven”), a licensed psychiatric hospital located in Tulsa, Oklahoma. At the end of B.N.’s initial 180-day period neared, Brookhaven submitted a continued stay authorization request to Plaintiff, requesting an additional 180 days of inpatient services for B.N. Plaintiff denied Brookhaven’s request based on Plaintiff’s determination that B.N. no longer met the medical necessity criteria for the level of neurological rehabilitation provided at Brookhaven.

Plaintiff’s Communications To Defendant Regarding B.N.’S Treatment At Brookhaven

Plaintiff’s April 30 Notice of Circumstances email also contained a written timeline of events for B.N.’s treatment at Brookhaven. On June 10, 2019, a lawyer with the Jones Law Firm, representing Brookhaven, sent a letter to Florida’s Governor, multiple Florida AHCA officials, and a Medicare/Medicaid official. Brookhaven’s June 10 letter discussed Brookhaven’s disagreements with how Florida AHCA handled B.N.’s case.

The lawyer stated that “[n]o lawsuit has been filed, at least as yet.” (emphasis added) The lawyer recommended to Plaintiff that it review its E&O insurance policy “to determine whether th[e] letter triggers a reporting requirement.” He concluded that “[t]his letter reasonably constitutes threatened litigation. Depending on the language of the policy, it may need to be reported.”
Plaintiff and Florida AHCA’s Settlement with Brookhaven

Six months later, on December 12, 2019, Plaintiff “formally tender[ed]” the matter for coverage. To do so, Plaintiff wrote a letter to Defendant, discussing the history of the B.N. matter and informing Defendant that Plaintiff had participated in settlement negotiations with Florida AHCA and Brookhaven and, ultimately, settled the matter in September 2019.

At the point of a settlement eQHealth had virtually no choice but to settle on the terms agreed by AHCA and Brookhaven. Had eQHealth refused, then the likely alternative would have been a suit by Brookhaven in federal court against AHCA and eQHealth, with eQHealth not only having to indemnify AHCA for any judgments but for all defense fees and costs. In order to mitigate the total exposure to all parties involved, eQHealth agreed. The settlement agreement was signed by the last parties on September 20, 2019, and pursuant to it, eQHealth paid Brookhaven $262,500.

Defendant denied coverage on February 3, 2020, stating that: “[n]o Claim against eQHealth was reported to Homeland, eQHealth did not ask for consent to settle any Claim, and Homeland did not provide prior written consent for the settlement, or for any expense, payment, liability, or obligation eQHealth may have had in relation to this matter. Therefore, no coverage is available for the settlement payment eQHealth made to Brookhaven.”

DISCUSSION

Homeland expressly conditioned coverage of all claims under the Policy on the filing of notice of a “Claim” against Plaintiff. When considering what constitutes a “claim” to trigger coverage under a “claims-made” insurance policy, the court relied on the Fifth Circuit that instructs trial courts to differentiate the “mere threat of a claim” from an “actual claim.”

The USDC concluded that despite the numerous communications between the parties and relevant third parties, no communication rose to the definitional level of a “Claim” such that coverage under the Policy was triggered.

Because the Court found that none of the relevant communications prior to the September 2019 settlement between Brookhaven, Florida AHCA, and Plaintiff constituted “Claims” as defined by the Policy, coverage under the Policy was never triggered since none of the communications sought “money or services or civil, injunctive, or administrative relief.”

ZALMA OPINION

Homeland included in its policy wording a definition of the word “claim.” For the insured to obtain defense or indemnity it must establish that a claims, as defined, happened. Without question threats were made. A settlement was reached and the insured paid money to fund the settlement. Yet, no one made a “claim” as defined, the insurer was not advised of the settlement nor was it advised of the insured’s intent to pay until after it paid although the decision to pay was a “business” decision since no one made a demand in writing that they pay for a cause of loss insured against, there could not be coverage for a claim or loss triggered under the policy’s clear and unambiguous definition of the word “claim.”

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

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00:10:20
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See the full video at and at https://rumble.com/v6zefq8-untrue-application-for-insurance-voids-policy.html and at https://zalma.com/blog plus more than 5150 posts.

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Plaintiff misrepresented that she would not use the SUV for food delivery, but records show she was compensated for delivering food.

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Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

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Post 5185
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See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

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See the full video at and at

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© 2025 Barry Zalma, Esq., CFE

When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.

On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...

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