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Atlantic Health System, Inc v. National Union Fire Insurance Company of Pittsburgh

April 11, 2011

ATLANTIC HEALTH SYSTEM, INC., AHS HOSPITAL CORP., AND ATLANTIC AMBULANCE CORP.,
PLAINTIFFS,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, A MEMBER COMPANY OF AMERICAN INTERNATIONAL GROUP AND AMERICAN INTERNATIONAL GROUP, INDIVIDUALLY, DEFENDANTS.



The opinion of the court was delivered by: Hon. Garrett E. Brown, Jr.

NOT FOR PUBLICATION

MEMORANDUM OPINION

BROWN, Chief Judge:

This matter*fn1 comes before the Court on the cross motions for summary judgment (Doc. Nos. 65, 72) filed by Plaintiffs Atlantic Health Systems, Inc., AHS Hospital Corp., and Atlantic Ambulance Corp. (collectively "AHS") and Defendants National Union Fire Insurance Company of Pittsburgh, PA ("National Union") and American International Group (AIG). This Court has considered the parties' submissions and decided the matter without oral argument pursuant to Federal Rule of Civil Procedure 78. For the following reasons, this Court will deny AHS's motion and grant Defendants' motion.

I. BACKGROUND

This dispute concerns whether AHS is entitled to coverage under a claims-made insurance policy (Policy No. 382-77-89, hereinafter the "2003--2004 Policy") issued by National Union that was in effect from May 1, 2003 to May 1, 2004. The relevant facts are not disputed.

In or about February 2004, AHS's general counsel received a letter from an attorney enclosing a draft complaint by Med Alert Ambulance, Inc. (hereinafter "Med Alert"), alleging that AHS had committed antitrust violations. Med Alert filed suit in this District on April 5, 2004. Med Alert Ambulance, Inc. v. Atlantic Health System, Civ. No. 04-1615 (hereinafter "Med Alert action"). Following the filing of the Med Alert action, AHS sought indemnification under its National Union claims-made insurance policy. On or about July 23, 2004, AHS sent a letter bearing the description "First Notice of Loss" to AIG Technical Services requesting coverage under a subsequent claims-made insurance policy (Policy No. 316-29-70, effective from May 1, 2004 to May 1, 2005, hereinafter the "2004--2005 Policy"), but the claim was denied for falling outside the coverage period for that policy. (See Defs.' 56.1 Statement ¶¶ 1--3, 5--6; Kelly Certif. Exs. B, D, F; Pls.' 56.1 Resp. ¶¶ 1--3, 5--6.) On or about August 17, 2004, AHS sent a second letter to AIG indicating that it was a "First Report of a new loss" and requesting coverage for the Med Alert action under the 2003--2004 Policy. (See Defs.' 56.1 Statement ¶ 7; Kelly Certif. Ex. H; Pls.' 56.1 Resp. ¶ 7.) That claim was denied by letter dated March 15, 2005, because the notice of claim was not reported during the 2003--2004 Policy period, or within the policy's 30-day notice period. (See Defs.' 56.1 Statement ¶ 8; Kelly Certif. Ex. I; Pls.' 56.1 Resp. ¶ 8.) The denial letter stated that the Med Alert action was filed on April 5, 2004, and pursuant to the terms of the 2003--2004 Policy, AHS was required to provide written notice of the matter by May 5, 2004. (Kelly Certif. Ex. I.)

During the 2003--2004 Policy period, AHS submitted documents to National Union in connection with the renewal of AHS's insurance policy including one or more renewal applications. (See Defs.' 56.1 Statement ¶ 10; Kelly Certif. Ex. K; Pls.' 56.1 Resp. ¶ 10.) The renewal application includes the following questions and disclosures:

27. Has the Applicant or any of its Subsidiaries or any director, officer, trustee or employee of any of the foregoing:

(a) Been involved in any antitrust, copyright or patent litigation? X Yes _ No.

(b) Been charged in any civil or criminal action or administrative proceeding with a violation of any federal or state antitrust or fair trade law? X Yes _ No.

(c) Been charged in any civil or criminal action or administrative proceeding with a violation of any federal or state securities law or regulation? _ Yes X No.

(d) Been involved in any representative actions, class actions, or derivative suits? X Yes _ No.

If the answer to any of the above, 27(a) - 27(d) is "yes", please attach full details. [attached response] AHS has periodically been a plaintiff member of a class in action on refunds against vendors.

AHS and Atlantic Ambulance have been named, together with Newton Memorial Hospital, in a civil action filed by Med Alert Ambulance Co. alleging unfair trade practices and anti-trust violations with respect to the transport of cardiac patients from Newton to Morristown Memorial.

It is agreed that with respect to Questions 25 through 27 above, if such claim, knowledge, information or involvement exists, any such claim or any claim or any claim or action arising therefrom is excluded from the proposed coverage. (Defs.' 56.1 Statement ¶ 11; Kelly Certif. Ex. K; Pls.' 56.1 Resp. ¶ 11.) The renewal applications were sent to Christine McSweeny, an underwriter that worked at 80 Pine Street, New York, NY. (See Defs.' 56.1 Statement ¶¶ 10, 12; Kelly Certif. Ex. K; Pls.' 56.1 Resp. ¶¶ 10, 12; Manganiello Aff. ¶¶ 4--5.) AHS takes the position that the renewal application gave National Union actual notice of ...


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