FMG attorney, Jonathan L. Schwartz, prevailed on summary judgment in favor of National Fire & Marine Insurance Company in the U.S. District Court for the Northern District of Illinois before a federal judge. As background,…
FMG attorney, Jonathan L. Schwartz, prevailed on summary judgment in favor of National Fire & Marine Insurance Company in the U.S. District Court for the Northern District of Illinois before a federal judge.
As background, approximately two months after the claimant died in February 2018, the insured received a request for medical records from counsel for the claimant’s family. The request did not demand money or threaten suit. The insured forwarded the request to the carrier, without more information. After multiple requests for information by the carrier to determine whether the matter was a “potential claim” to which the insured did not respond, the carrier closed its file.
Approximately ten months later, the insured declared bankruptcy. Nine months after that, the claimant’s Estate filed suit against the insured. The insured had its bankruptcy counsel enter an appearance in the wrongful death lawsuit, file an answer, and then facilitate a stay of the suit. But then, the Estate appeared in the bankruptcy court to seek a lift of the stay of the wrongful death to the extent of insurance proceeds. That was allowed. The wrongful death was reactivated, and nobody appeared for the insured. A default judgment of ~$3.3M was entered. At no point did anyone notify the carrier of the wrongful death lawsuit, the lift of the bankruptcy stay, or the order of default. The carrier’s first notice of the default judgment was a citation to discover assets. The carrier promptly filed a declaratory judgment action seeking a declaration of noncoverage.
The district court agreed with the arguments advanced by FMG, on behalf of its client, that the medical records request was not a “potential claim” under the Policy, which was a claims-made-and-reported policy, and further, that no “claim” or “potential claim” was reported to the carrier during the policy period. As such, the Insuring Agreement was not satisfied. Nonetheless, the district court also agreed with the argument advanced by FMG, on behalf of its client, that the insured breached the Policy’s notice and cooperation conditions.
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