Tenth Circuit Denies General Liability Insurance Coverage for False Billing Claims
In Zurich American Ins. Co. et al. v. O’Hara Regional Center for Rehabilitation, et al., 2008 U.S. App. LEXIS 12913 (10th Cir., June 18, 2008), the Tenth Circuit addressed the question of whether general liability insurance policies trigger a duty to defend false billing claims. The insured, O’Hara Regional Center for Rehabilitation (“O’Hara”) is a long-term care facility in Denver that was licensed by the State of Colorado to provide specialized nursing home care, and provided such care pursuant to agreements with the United States and the State of Colorado under the Medicare and Medicaid programs. After concluding that O’Hara submitted inflated invoices for patient services, the government sued O’Hara under the False Claims Act and state common law, alleging O’Hara “knowingly presented or caused to be presented claims for payment to the Medicare and Medicaid programs, for care, goods or services not rendered, that were inadequate or worthless, or that were rendered in violation of applicable statutes, regulations and guidelines with a nexus to payment.” The government further alleged that O’Hara “‘systematically and routinely understaffed [the facility]’ in violation of the provider agreements.” LEXIS p. 5. O’Hara tendered defense of the suit to its three liability carriers. Two accepted the defense under a reservation of rights, while the third simply denied coverage.
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