A health care system has filed a lawsuit in federal court alleging that its insurance companies have failed to provide coverages they are obligated to pay. In response, one insurance company filed a countersuit, alleging that the health care system engaged in fraudulent practices. Federal Insurance Company (also known as Chubb) is one of the largest insurance providers in the country, including many in New York.
Novant Health claims that Chubb failed to pay for a settlement that the company made with its employees over its retirement plan. It alleges that none of its insurance providers have met their obligations to cover the $32 million settlement that resulted from a suit filed on behalf of current and former employees in 2014. To date, Chubb has apparently paid an estimated $4 million toward the costs of the settlement.
Chubb claims that the health system fraudulently benefited from third-party companies that were contracted to service the retirement plans for employees. Chubb claims that Novant received payments in excess of the amounts needed to service the plans and that the executives were unjustly rewarded at the cost of the employees and the insurance companies. Novant denies the allegations, says that it terminated business deals with the third-party provider and claims its insurers are in breach of contract.
The insurance company asserts that it is not responsible for paying for the settlement because the losses Novant is claiming do not qualify for coverage under the its policy. Chubb and the other insurance companies named in the initial suit are requesting that the lawsuit be dismissed. Insurance companies provide a valuable service in protecting companies and individuals against losses; of course, these companies are likewise entitled to defend against fraudulent and invalid claims. New York insurance companies have access to seasoned defense counsel to represent their interests when a denied claim results in litigation.
Source: charlotteobserver.com, "Novant Health sues insurers over settlement money for retirees", Deon Roberts, July 5, 2017