Claims Not Related When Prior Demands Would Not Have Been Covered

The Court of Appeal of Louisiana, applying Louisiana law, has held that a class arbitration claim that was covered under an errors and omissions policy was not “related” under the policy’s related claim provision to two earlier contractual demands for indemnity and workers compensation first made prior to the policy period.  Williams v. SIF Consultants of Louisiana, Inc., 2016 WL 7475860 (La. Ct. App. Dec. 29, 2016).

The insurer was sued by a class of medical providers under Louisiana’s direct action statute.  The class alleged that the insured failed to comply with mandatory notice provisions of billing discounts under state statutory law.  The insured admitted that it had not complied.  The trial court granted the class plaintiffs’ motion for summary judgment against the insurer.

On appeal, the insurer argued that the statutory claim was “related” to a prior claim first made against the insured prior to the policy period under the policy’s related claims provision.  The related claims provision defined “related claims” as “all Claims for Wrongful Acts based on, arising out of, directly or indirectly resulting from, in consequence of, or in any way involving the same or related facts, circumstances, [or] situations . . . whether related logically, causally or in any other way.”  The insurer pointed to two prior demands—a demand for contractual indemnity and a workers’ compensation claim as the first “Related Claims.”  The Court of Appeal affirmed the trial court, holding that in order for the earlier claims to be “related” to the statutory claim for which coverage was sought, “those instances must . . . be ‘Claims’ that are covered under [the insurer’s] policy.”  The Court explained that, because the policy excluded workers’ compensation claims and tort claims, neither of the prior demands would have been covered and were therefore not related to either of the two prior claims.