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United States Court of Appeals for the Sixth Circuit
September 17, 2021, Filed
File Name: 21a0434n.06
Case No. 20-6014
SILER, Circuit Judge. Responding to lawsuits and investigations is expensive (even when they are without merit). That reality played out when Plaintiff Springstone, Inc. incurred substantial legal fees responding to a government subpoena based on a sealed qui tam lawsuit. Springstone thought, however, it was in luck. After all, it had purchased insurance from Defendant Hiscox Insurance Company, Inc. to cover it from certain legal claims. But its coverage does not extend so far. Springstone's policy does not cover qui tam actions filed before the coverage period, nor does it cover subpoena responses. Accordingly, the district court's judgment is AFFIRMED.
Springstone (headquartered [*2] in Louisville) provides behavioral health services across several facilities. In January 2017, it purchased insurance from Hiscox. That insurance plan included Directors & Officers (D&O) Liability Coverage. Only two parts of that coverage are relevant here:
• Coverage B: Company Reimbursement Coverage
• This D&O Coverage Part shall pay the Loss of a Company arising from a Claim first made against an Individual insured during the Policy Period or the Discovery Period (if applicable) for any actual or alleged Wrongful Act of such Individual Insured, but only when and to the extent that such Company has indemnified such Individual Insured for such Loss.
• Coverage C: Company Coverage
• This D&O Coverage Part shall pay the Loss of a Company arising from a Claim first made against a Company during the Policy Period or the Discovery Period (if applicable) for any actual or alleged Wrongful Act of a Company.
In July 2016, a qui tam lawsuit was filed—under seal—against Springstone. It alleged that "Springstone had violated the False Claims Act by obtaining reimbursement from Medicare and Medicaid for medically unnecessary services that it provided to patients." A year after the lawsuit was filed, [*3] the Office of the Inspector General for the Department of Health and Human Services sent Springstone a subpoena related to its investigation of the qui tam complaint. That subpoena requested documents related to Springstone's patient treatment and management practices.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2021 U.S. App. LEXIS 28184 *; 2021 FED App. 0434N (6th Cir.); __ Fed. Appx. __; 2021 WL 4240779
SPRINGSTONE, INC., Plaintiff-Appellant, v. HISCOX INSURANCE COMPANY, INC., Defendant-Appellant.
Notice: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION. SIXTH CIRCUIT RULE 28 LIMITS CITATION TO SPECIFIC SITUATIONS. PLEASE SEE RULE 28 BEFORE CITING IN A PROCEEDING IN A COURT IN THE SIXTH CIRCUIT. IF CITED, A COPY MUST BE SERVED ON OTHER PARTIES AND THE COURT. THIS NOTICE IS TO BE PROMINENTLY DISPLAYED IF THIS DECISION IS REPRODUCED.
Prior History: [*1] ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF KENTUCKY.
Springstone, Inc. v. Hiscox Ins. Co., 2020 U.S. Dist. LEXIS 139654, 2020 WL 4506097 (W.D. Ky., Aug. 5, 2020)
Coverage, qui tam, subpoena, Insured, lawsuit, policy period, non-monetary
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