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July 10, 2024
No Coverage for Anti-Kickback Settlement

D & O Policy Professional Services Exclusion - Post 4830

Read the full article at https://lnkd.in/g-Srqy6m, see the full video at https://lnkd.in/gvhVhEnY and at https://lnkd.in/gGMGepXT, and at https://zalma.com/blog plus more than 4800 posts.

The California Court of Appeals was asked to resolve a dispute over the applicability of professional services coverage exclusions in directors and officers liability insurance policies. The policies were issued to Practice Fusion, Inc., a company that develops and licenses electronic health record software for use by healthcare providers.

In Practice Fusion, Inc. v. Freedom Specialty Insurance Company et al., A167130, A167886, California Court of Appeals, First District, Second Division (June 21, 2024) it responded.

FACTUAL BACKGROUND

An electronic health record is an electronic version of a patient’s medical history as maintained by a healthcare provider.

Following investigations by the United States Department of Justice, Practice Fusion entered into a civil settlement with the United States that resolved two distinct sets of claims that alleged that Practice Fusion violated the federal Anti-Kickback Statute. Further, although the alerts appeared to healthcare providers as unbiased medical information, in some instances they were designed to encourage healthcare providers to prescribe a specific product or class of products to the benefit of the sponsoring pharmaceutical company.

Practice Fusion sought insurance coverage for the civil settlement under its directors and officers liability insurance policies. The insurers denied coverage on the ground that the policies’ professional services exclusions applied to the losses. Practice Fusion then sued the insurers for breach of contract.

The trial court granted the insurers’ motion for summary adjudication because the claims arose from Practice Fusion providing professional services to the pharmaceutical companies and its claim was barred by the professional services exclusion in the policies.

The Settlement Between the United States Department of Justice and Practice Fusion

In January 2020, Practice Fusion agreed to pay $118,642,000 plus interest to the United States and participating states to resolve claims arising from investigations relating to Practice Fusion’s electronic health record software.

Practice Fusion’s Insurance Coverage

Several insurers relevant to the CDS claims insured Practice Fusion under primary or excess directors and officers (D&O) liability insurance policies. The policies in an “insurance tower” provided a total of $50 million in coverage. All policies contained an exclusion that applies to all “Insureds” and bars coverage for “Loss in connection with any Claim made against any Insured . . . alleging, arising out of, based upon or attributable to an Insured’s performance of or failure to perform professional services for others, or any act(s), error(s) or omission(s) relating thereto; ….”

DISCUSSION

At issue in this case are exclusions that apply to losses connected to claims arising from “professional services for others.” The loss claimed by Practice Fusion as a result of its settlement with the United States as to the CDS alerts falls within the provisions in Practice Fusion’s D&O policies exclude coverage for claims arising out of, based upon or attributable to an Insured’s performance of professional services for others, or any act(s), error(s) or omission(s) relating thereto.

Practice Fusion conceded it agreed to modify its software to include the CDS alerts, which were targeted for particular patients with particular conditions based on selected guidelines. The contracts between Practice Fusion and the pharmaceutical companies are premised upon Practice Fusion providing the companies with professional services. The Court of Appeals concluded that the CDS claims, which Practice Fusion settled, are claims that meet the terms of the exclusion.

Accordingly, the loss connected to the settlement of the DOJ’s claims regarding the CDS alerts was barred by the professional services exclusion. The contracts included as a major objective for Practice Fusion to provide the companies with services by deploying CDS alerts in its software and by “arranging for or recommending” that healthcare providers prescribe their products.

ZALMA OPINION

Health insurance fraud is rampant. If you read Zalma’s Insurance Fraud Letter you will see dozens of convictions for fraud on government funded health care programs and multiple civil settlements like that reached with Practice Fusion. It would be ridiculous to allow a person or entity to insure for its fraudulent conduct and payment to avoid criminal prosecution. To do so would avoid the purpose of the kickback statutes and the crime that Practice Fusion avoided by agreeing to pay the Government and eliminate the fact that D&O insurance was designed to protect against fortuitous losses not intentional criminal conduct.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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00:08:52
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September 05, 2025
Interpleader Helps Everyone Potential Claimant to Insurance Proceeds

Interpleader Protects All Claimants Against Life Policy and the Insurer

Who’s on First to Get Life Insurance Proceeds

Post 5184

See the full video at https://lnkd.in/gyxQfnUz and at https://lnkd.in/gAd3wqWP, and at https://zalma.com/blog plus more than 5150 posts.

Go to X @bzalma; Go to Barry Zalma videos at Rumble.com at https://lnkd.in/gRthzSnT; Go to Barry Zalma on YouTube- https://lnkd.in/g2hGv88; Go to the Insurance Claims Library – https://lnkd.in/gwEYk.
Interpleader Protects All Claimants Against Life Policy and the Insurer

In Metropolitan Life Insurance Company v. Selena Sanchez, et al, No. 2:24-cv-03278-TLN-CSK, United States District Court, E.D. California (September 3, 2025) the USDC applied interpleader law.
Case Overview

This case involves an interpleader action brought by the Metropolitan Life Insurance Company (Plaintiff-in-Interpleader) against Selena Sanchez and other defendants (Defendants-in-Interpleader).

Key Points

Plaintiff-in-Interpleader’s Application:

The Plaintiff-in-Interpleader...

00:06:34
September 05, 2025
Demands for Reasons for Termination not a “Claim”

A Claim by Any Other Name is not a Claim
Post 5182

It is Imperative that Insured Report Potential Claim to Insurers

Read the full article at https://lnkd.in/gfbwAsxw, See the full video at https://lnkd.in/gea_hgB3 and at https://lnkd.in/ghZ7gjxy, and at https://zalma.com/blog plus more than 5150 posts.

In Jeffrey B. Scott v. Certain Underwriters At Lloyd’s, London, Subscribing To Policy No. B0901li1837279, RLI Insurance Company, Certain Underwriters At Lloyds, London And The Insurance Company, Subscribing To Policy No. B0180fn2102430, No. 24-12441, United States Court of Appeals, Eleventh Circuit (August 25, 2025) the court explained the need for a claim to obtain coverage.

Case Background:

This appeal arises from a coverage dispute under a Directors & Officers (D&O) insurance policy. Jeffrey B. Scott, the plaintiff-appellant, was terminated from his role as CEO, President, and Secretary of Gemini Financial Holdings, LLC in October 2019. Following his termination, Scott threatened legal action against Gemini, and ...

00:08:22
September 04, 2025
Demands for Reasons for Termination not a “Claim”

A Claim by Any Other Name is not a Claim
Post 5182

It is Imperative that Insured Report Potential Claim to Insurers

Read the full article at https://lnkd.in/gfbwAsxw, See the full video at https://lnkd.in/gea_hgB3 and at https://lnkd.in/ghZ7gjxy, and at https://zalma.com/blog plus more than 5150 posts.

In Jeffrey B. Scott v. Certain Underwriters At Lloyd’s, London, Subscribing To Policy No. B0901li1837279, RLI Insurance Company, Certain Underwriters At Lloyds, London And The Insurance Company, Subscribing To Policy No. B0180fn2102430, No. 24-12441, United States Court of Appeals, Eleventh Circuit (August 25, 2025) the court explained the need for a claim to obtain coverage.

Case Background:

This appeal arises from a coverage dispute under a Directors & Officers (D&O) insurance policy. Jeffrey B. Scott, the plaintiff-appellant, was terminated from his role as CEO, President, and Secretary of Gemini Financial Holdings, LLC in October 2019. Following his termination, Scott threatened legal action against Gemini, and ...

00:08:22
September 03, 2025

Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit

© 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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September 03, 2025
Barry Zalma, Esq., CFE Insurance Claims Expert Witness

The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 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 and became a consultant and expert witness for lawyers representing insurers and lawyers ...

post photo preview
September 03, 2025
Evidence Required to Prove Breach of Contract

APPRAISAL AWARD SETS AMOUNT OF DAMAGES RECOVERED FROM INSURER

Post 5180

See the full video at https://rumble.com/v6yd2z0-evidence-required-to-prove-breach-of-contract.html and at https://youtu.be/2ywEjs3hZsw, and at https://zalma.com/blog plus more than 5150 posts.

It’s a Waste of Time to Sue Your Insurer if You Don’t Have Evidence

Evidence Required to Prove Breach of Contract

Read the full article at https://www.linkedin.com/pulse/evidence-required-prove-breach-contract-barry-zalma-esq-cfe-rfelc, see the full video at https://rumble.com/v6yd2z0-evidence-required-to-prove-breach-of-contract.html and at https://youtu.be/2ywEjs3hZsw, and at https://zalma.com/blog plus more than 5150 posts.

It’s a Waste of Time to Sue Your Insurer if You Don’t Have Evidence

In Debbie Beaty and Jonathan Hayes v. Homeowners Of America Insurance Company, No. 01-23-00844-CV, Court of Appeals of Texas, First District (August 26, 2025) Debbie Beaty and Jonathan Hayes filed a claim under their homeowner’s insurance policy with Homeowners of ...

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