Meaningful Linkage Between Notice & Class Action Requires Coverage
Post 4992
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The Supreme Court of Delaware, En Banc, dealt with an insurance coverage dispute where Alexion Pharmaceuticals, Inc. appealed a decision from the Superior Court of Delaware.
In Re Alexion Pharmaceuticals, Inc. Insurance Appeals, Nos. 154, 2024, 157, 2024, Supreme Court of Delaware, en banc (February 4, 2025).
ISSUE
The issue before the Supreme Court was whether a Securities and Exchange Commission (SEC) investigation disclosed to Alexion’s insurers is related to a later securities class action brought against the company. The Superior Court found that the two were unrelated. The Supreme Court reversed this decision, finding that the securities class action arose out of the circumstances disclosed by Alexion to its first tower insurers.
FACTS
Alexion Pharmaceuticals, Inc. develops therapies for people living with rare disorders. Alexion was insured under two claims-made director and officer (“D&O”) liability insurance programs covering different periods. The first program provided $85 million of coverage for claims made between June 27, 2014 and June 27, 2015 (“Tower 1”). The second program provided $105 million of coverage for claims made between June 27, 2015 and June 27, 2017 (“Tower 2”). The two towers consist largely of the same insurers located in the same coverage layers. Both towers are structured as ABC directors and officers policies covering securities claims against the company. Each tower is composed of a primary policy and follow-form excess policies.
NOTICE REQUIRED BY POLICIES
The Insureds first became aware of facts or circumstances which may reasonably give rise to a future Claim covered under this Policy, and if the Insureds give written notice to the Insurer during the Policy Period a description of the anticipated Wrongful Act allegations.
Soliris is an “orphan drug” developed by Alexion that treats rare genetic diseases. In 2017, Soliris had about 11,000 customers worldwide. Soliris had a retail price of $500,000 to $700,000 for each patient. The SEC Investigation Order raised possible violations of the federal securities laws.
On June 18, 2015, Alexion sent its Tower 1 insurers a notice (“2015 Notice”) disclosing Alexion’s receipt of the SEC Subpoena. Alexion also stated that the SEC Subpoena “seeks information related to Alexion’s recalls of specific lots of Soliris and related securities disclosures.”
On July 2, 2020, Alexion settled with the SEC for about $21.5 million (“SEC Settlement”). On September 12, 2023, Alexion settled the Securities Class Action for $125 million (“Securities Class Action Settlement”) more than the available limits.
ANALYSIS
The Supreme Court agreed that “meaningful linkage” is the appropriate standard of comparison. Alexion’s 2015 Notice was not a claim. Chubb accepted Alexion’s 2015 Notice “as a notice of circumstance that may give rise to a claim.”
The Supreme Court concluded that the Securities Class Action was meaningfully linked to the wrongful acts disclosed in the 2015 Notice. Both involve the same alleged wrongdoing and the Securities Class Action alleged the same wrongdoing investigated by the SEC and disclosed by Alexion in the 2015 Notice.
Both SEC investigations involved the same Wrongful Act – Alexion’s grantmaking activities. A meaningful linkage exists between the Securities Class Action and the SEC investigation as disclosed by Alexion in its 2015 Notice. Under the policies of both towers, the Securities Class Action claim is deemed to have been first made at the time the 2015 Notice was received by Chubb – during the Tower 1 coverage period. Therefore, coverage is under Tower 1. Applying the Prior Notice Exclusion provision of Tower 2, no coverage is available under Tower 2. The judgment of the Superior Court was reversed.
ZALMA OPINION
Claims made policies require reports of potential claims. Alexion told its insurers about a potential claim under its Tower 1 and was entitled to coverage for the suit that followed. The prior notice exclusion eliminated coverage for tower 2. Parties, and judges, must read the policy wording before making a decision on coverage and since there was a “meaningful linkage” between the notice and the actual claim, coverage was available under Tower 1 and not Tower 2 as established by the Supreme Court.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Detail Charging Defendant for Fraud is Sufficient
Post 5242
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FACTUAL BACKGROUND
The indictment alleged that insurers reimburse only for medically necessary services. Navarro performed unnecessary respiratory pathogen panel (RPP) tests on nasal swabs collected from asymptomatic individuals for COVID-19 screening.
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Post 5241
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In Illinois Department of Insurance, Insurance Compliance Department v.USA Water And Fire Restoration, Inc., And Nicholas Pacella, Individually And As Officer, Nos. 23WC021808, 18INC00228, No. 25IWCC0467, the Illinois Department of Insurance (Petitioner) initiated an investigation after the Injured Workers’ Benefit Fund (IWBF) was added to a pending workers’ compensation claim. The claim alleged a work-related injury during employment with the Respondents who failed to maintain workers’ compensation Insurance.
Company Overview:
USA Water & Fire Restoration, Inc. was incorporated on January 17, 2014, and dissolved on June 14, 2019, for failure to file annual reports and pay franchise taxes. It then operated under assumed names including USA Board Up & Glass Co. and USA Plumbing and Sewer. The business ...
Zalma’s Insurance Fraud Letter
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ZIFL Volume 29, Issue 24
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/
Zalma’s Insurance Fraud Letter
Merry Christmas & Happy Hannukah
Read the following Articles from the December 15, 2025 issue:
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The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
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Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
