Kaiser Foundation Health Plan's call for coverage of any multiplied damages included in a $581 million False Claims Act settlement with the U.S. Department of Justice grabbed the attention of policyholder attorneys, who see a smart strategy to simplify litigation and possibly save a buck.

In a motion for partial summary judgment filed May 21, Kaiser told a California federal court that coverage for the underlying settlement may be barred by a "return of funds" exclusion in a directors and officers policy issued by National Union Fire Insurance Co. of Pittsburgh, Pa. However, Kaiser argued that the exclusion does not apply to the portion of the settlement it paid to resolve claims seeking multiplied damages under the False Claims Act.
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Raymond A. Mascia Jr., a shareholder at Anderson Kill PC, told Law360 that even if National Union put forth an argument that it needed discovery on opposition, the question presented in Kaiser's motion is one of explicit policy interpretation.

Mascia said that while he doesn't predict that the court will rule against Kaiser on the motion, if the court were to come back and say discovery is needed, it wouldn't raise alarms because it's not a decision on the merits of the case.

"This motion is very, very narrowly tailored and it is really just about policy interpretation," he said. "If a policy is susceptible to two different interpretations in California, particularly an exclusion, the policyholder wins."
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