J-A15047-14
2014 PA Super 198
AMERISOURCEBERGEN CORPORATION, IN THE SUPERIOR COURT OF
INTEGRATED NEPHROLOGY NETWORK PENNSYLVANIA
D/B/A/ DIALYSIS PURCHASING
ALLIANCE, INC., F/K/A INTERNATIONAL
NEPHROLOGY NETWORK,
AMERISOURCEBERGEN SPECIALTY
GROUP AND ASD HEALTHCARE,
Appellants
v.
ACE AMERICAN INSURANCE COMPANY,
Appellee Nos. 2545 EDA 2013
Appeal from the Order Entered July 16, 2013
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): March Term, 2011, No. 002679
BEFORE: PANELLA, J., LAZARUS, J., AND JENKINS, J.
OPINION BY: JENKINS, J. FILED SEPTEMBER 15, 2014
AmerisourceBergen Corporation, AmerisourceBergen Specialty Group,
Integrated Nephrology Network, and ASD Healthcare (collectively
"
Claims Act1 lawsuit brought in Massachusetts federal court. Amerisource
the attorney fees and costs, but ACE refused to pay on the basis of several
-10 policy. Amerisource brought an
1
31 U.S.C. § 3729 et seq.
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insurance coverage action against ACE alleging breach of contract and bad
judgment.
Amerisource filed a timely appeal to this Court. The trial court did not
direct Amerisource to file a statement of matters complained of on appeal,
opting instead to file a Pa.R.A.P. 1925(a) opinion incorporating by reference
its order and opinion granting summary judgment.
We agree with the trial court that ACE properly denied coverage under
-
exclusion. Accordingly, we affirm.
cies with ACE and the False Claims
Act lawsuit in Massachusetts provides the factual backdrop for our decision.
Amerisource is a group of businesses that provides a vast range of services
to healthcare providers and pharmaceutical companies, including
distribution, logistics, clinical education, and marketing 2. Between May 2006
and May 2010, Amerisource purchased the following professional liability
insurance policies from ACE:
2006-07 Amerisource
was St. Paul Travelers. Amerisource purchased an
excess policy from Ace which provided $10 million
in coverage over and above Amerisource -
million. Amerisource
2
R.R. 4499-4505.
2
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at the top of the
3
tower .
2007-08 Ace provided primary coverage, the spot
-
- -
07 excess coverage was replaced with primary
coverage in 2007-08. The terms of the 37-page
2007-08 primary policy were vastly different than
the 4-page 2006-07 excess policy4.
2008-09 Ace provided primary coverage. The
2008-
the primary coverage ACE provided in 2007-085.
2009-10 Ace provided primary coverage. This
primary coverage ACE provided in 2008-09 and
2007-086.
The policy year for each policy began on May 1st.
of action to recover damages and penalties, on behalf of the federal
government, for false claims or statements to the government relating to
government payments. Citizens have the right under the qui tam provision
the United States. The complaint must be filed in camera under seal and
cannot be served on the defendant until the court so orders. Id. The
federal government has the duty to examine the sealed complaint to
3
R.R. 3139-46 (2006-07 excess policy).
4
R.R. 3207-45 (2007-08 primary coverage policy).
5
R.R. 3248-3300 (2008-09 primary coverage policy).
6
R.R. 51-107 (2009-10 primary coverage policy); see also
-10 policy
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determine if the United States will prosecute the FCA claims itself, dismiss
the claims, or release them for prosecution by the relator. Only when the
United States takes up a qui tam action itself or releases it to the relator for
prosecution does the court unseal the complaint and permit service on all
defendants.
On June 5, 2006, Kassie Westmoreland filed a qui tam action in the
District Court of Massachusetts against Amerisource and another company,
Amgen, under the FCA7. The complaint was kept under seal for three years.
Westmoreland alleged that Amgen and Amerisource conspired with medical
providers to submit false Medicare claims relating to Aranesp, an anemia
drug8.
Amerisource claimed that it learned of the qui tam case in March 2008,
when Amgen informed Amerisource that Amgen was under federal
investigation9
informed Amerisource
Amgen and Amerisource. On February 11, 2009, the Massachusetts federal
court permitted the government to place a redacted copy of the unserved
7
R.R. 701-796 (original qui tam complaint). The complaint was later
amended several times.
8
The action concluded with a settlement in which Amgen agreed to pay
$762 million in fines to the government, and INN, one of
bsidiaries, agreed to pay $15 million to the
government.
9
R. 4724-
25a (Debra Swartz deposition).
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qui tam complaint on the electronic docket10. On June 18, 2009, the DOJ
issued a confidential subpoena to Amerisource concerning the qui tam
matter11.
On July 8, 2009, Amerisource sent ACE formal notice of a potential
claim and a copy of the redacted complaint12. In January 2010, Amerisource
received service of original process in the Massachusetts lawsuit 13. On April
5, 2010, ACE denied coverage to Amerisource under the 2009-10 primary
coverage policy and refused to defend Amerisource in the qui tam matter or
pay claims expenses14.
In March 2011, Amerisource filed the present insurance coverage
action against ACE, which argued in its defense that exclusions L, K and Y in
the 2009-10 policy barred coverage for the qui tam action. Subsequently,
the trial court entered summary judgment in favor of ACE on the ground
tive
In an appeal from an order granting summary judgment,
our scope of review. . .is plenary, and our standard
of review is clear: the trial court's order will be
reversed only where it is established that the court
committed an error of law or abused its discretion.
10
R.R. 3326-3435a (e-mail from Nathan Andrisani to Jonathan Sturz).
11
R.R. 3577-90a (June 18, 2009 subpoena Issued by the United States
Attorney's Office to Amerisource).
12
R.R. 3592-95a (July 8, 2009 Notice of Circumstance Letter from Walter J.
Hope, Jr to William Wise).
13
R.R. 4827-4930a (relator action docket).
14
R.R. 4318-23a (denial of coverage letter).
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Summary judgment is appropriate only when the
record clearly shows that there is no genuine issue of
material fact and that the moving party is entitled to
judgment as a matter of law. The reviewing court
must view the record in the light most favorable to
the nonmoving party and resolve all doubts as to the
existence of a genuine issue of material fact against
the moving party. Only when the facts are so clear
that reasonable minds could not differ can a trial
court properly enter summary judgment.
Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa.Super.2013) (citation
omitted).
Generally, the proper construction of an insurance policy is a matter of
law which the court may address at the summary judgment stage.
Nationwide Mut. Ins. Co. v. Nixon, 682 A.2d 1310, 1313
(Pa.Super.1996). The court may resolve via summary judgment whether a
claim is within a policy's coverage or barred by an exclusion, provided that
the policy's terms are clear and unambiguous so as to preclude any issue of
material fact. Butterfield v. Giuntoli, 670 A.2d 646, 651 (Pa.Super.1995).
-10 policy provides that the terms and conditions
of the policy
shall be interpreted and construed in an evenhanded
fashion as between the parties. If the language of
this Policy is deemed to be ambiguous or otherwise
unclear, the issue shall be resolved in the manner
most consistent with the relevant terms and
conditions, without regard to authorship of the
language, without any presumption or arbitrary
interpretation or construction in favor of either the
Insureds or the Insurer and without reference to the
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reasonable expectations of either the Insureds or the
Insurer15.
In our view, this clause exists in harmony with the well-known principle that
when the court interprets an insurance contract, words that are clear and
unambiguous must be given their plain and ordinary meaning. State Farm
Fire and Cas. Co. v. MacDonald, 850 A.2d 707, 710 (Pa.Super.2004)
(citation omitted).
Amerisource
which covers all claims made during the policy period and timely reported by
the insured. Since Amerisource made its claim for coverage in early 2010,
the language of the 2009-10 policy governs this case. The 2009-10 policy
Amerisource]
seeking monetary damages...commenced by the service of a complaint or
Amerisource] for monetary
damages16 As one court has said, claims made policies
are intended by insurers to avoid the hazard of an
indefinite future: Once the policy period has expired,
the book can be closed on everything except then-
pending claims. On the other hand, an insurer incurs
a risk with this kind of policy: liability for a claim that
has been brewing and was ripe to erupt before the
policy period, but is asserted only after the policy
period begins. For this reason, claims made policies
generally include a number of endorsements and
exclusions intended to limit this front end risk by
cutting off liability for claims ready, but not yet
made, at the start of the policy period.
15
R. R. 74.
16
-10 policy).
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Ameriwood Indus. Int'l Corp. v. Am. Cas. Co., 840 F.Supp. 1143, 1148
49 (W.D.Mich.1993) (internal quotations and citations omitted).
Exclusion L in the 2009-10 policy,
Id. Exclusion L
excludes any claim
alleging, based on, arising out of, or attributable to
any prior or pending litigation, claims, demands,
arbitration, administrative or regulatory proceeding
or investigation filed or commenced on or before
the earlier of the effective date of this policy or
the effective date of any policy issued by [ACE]
of which this policy is a continuous renewal or
a replacement, or alleging or derived from the
same or substantially the same fact, circumstance or
situation underlying or alleged therein.
[Emphasis added]. Applied to this case, exclusion L precludes coverage of
any claim based on prior litigation filed or commenced on or before the
earlier of:
(1) the effective date of Amerisource -10 policy, or
(2) the effective date of any policy issued by ACE of which the 2009-
10 policy is a continuous renewal or a replacement.
Based on our review of the record, we conclude that the effective date
-10 primary coverage policy was May 1, 2009. This
policy was a continuous renewal of the primary coverage policy issued by
ACE to Amerisource effective May 1, 2007. Therefore, exclusion L precludes
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coverage for litigation filed or commenced on or before May 1, 2007. Since
Westmoreland filed her qui tam action on June 5, 2006, almost one year
before May 1, 2007, ACE properly invoked exclusion L to deny coverage for
defense costs that Amerisource incurred in defending against
.
Amerisource submits two arguments for the proposition that exclusion
L does not apply. We address each in turn.
First
of exclusion L because Westmoreland merely filed her complaint under seal
in June 2006 but did not serve it on Amerisource until midway through the
2009-10 policy period (January 2010). We disagree.
policy
does not define these terms -- but as explained above, we must construe
clear and unambiguous words in accordance with their plain and ordinary
meaning. State Farm, supra, 850 A.2d at 710. Viewed in this light, we
think it is clear that litigation
when it names that entity as a defendant, is filed with a court, and is
docketed and given a case number. Nothing in the ordinary meaning of
these terms requires service of original process or unsealing of the complaint
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world would interpret an action he has filed with the prothonotary to be
We also find significant that the 2009-
Amerisource] seeking monetary
The explicit service requirement in this definition demonstrates that the
parties knew how to include a service requirement when they so desired.
Thus, the absence of a service requirement from exclusion L demonstrates
exclusion L to depend upon service of process.
decision from this Court and from another federal court. See Norristown
Auto. Co., Inc. v. Hand, 562 A.2d 902 (Pa.Super.1989); HR Acquisition I
Corp. v. Twin City Fire Ins. Co., 547 F.3d 1309 (11th Cir. 2008). In
Hand, Hand filed a civil complaint against Norristown Automobile Company
Hand in a different court on the same day at 4:13 p.m. Hand filed
that both actions should be deemed filed at the same time because they
were filed on the same day. We h
Id., 562 A.2d at 904.
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Hand thus limits the determination of priority to the time that the first
action is filed; the time of service is irrelevant to whether the first action
Hand
contention that the qui tam action filed under seal in June 2006 was not
-10 policy.
In HR Acquisition I Corp., an insured requested the insurer to
derivative lawsuit commenced during the policy period. The gravamen of
the action was that the insured participated in a fraudulent scheme with
other defendants to submit false claims to the federal government's
exclusion17 qui tam action alleging the
same misconduct that had been filed under seal several years before the
policy period and that was never served on the insured circumstances that
are virtually identical to the present case. Another defendant settled the
claims by paying the United States government $7.9 million plus interest,
and the case was dismissed with prejudice. Despite the lack of service, the
Eleventh Circuit held that the insurer properly denied coverage under the
17
payment for Loss in connection with any Claim. . .based upon, arising from,
or in any way related to any demand, suit, or other proceeding against any
Insured which was pending on or existed prior to the applicable Prior
Litigation Date specified by endorsement to this Policy, or the same or
substantially the same facts, circumstances or allegations which are the
Id., 547
F.3d at 1312.
11
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Id., 547 F.3d at 1317. Given the similarity
between HR Acquisition I Corp. and this case, we find HR Acquisition I
Corp.
-10 policy.
Second, Amerisource contends that exclusion L does not apply
because the series of insurance policies issued by ACE to Amerisource
ext
the earlier of the
effective date of the [2009-10] policy or of any policy issued by [ACE] of
which [the 2009-
disagree with Amerisource.
Westmoreland obviously filed her June 2006 lawsuit before the
effective date of the 2009-10 policy (May 1, 2009). Therefore,
which [the 2009-10] policy is a continuous renewal or a replacement
The 2009-10 policy does not define
Therefore, we must construe these words in accordance with their plain and
12
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ordinary meaning18. State Farm, supra, 850 A.2d at 710. The ordinary
19
20
The 2009-10 primary coverage policy is a
2007-08 and 2008-09 primary coverage policies. The policy numbers of the
2007-08, 2008-09 and 2009-10 policies -- EON 621683498 001, EON
621683498 002, and EON 621683498 003 share the same prefix and
middle components (EON 621683498) and have consecutive numerical
suffixes (001, 002 and 003).
Ins. Co., 2007 WL 710242, *2 (S.D. Ohio 2007) (observing that policies
numbered EON G21639175 002 and 003 were successive renewals of policy
number EON G21639175 001).21 This, however, does not overcome
18
insurance policies, see
of life insurance policies, see 40 P.S. § 625-1, these definitions are not
controlling in this dispute over the interpretation of an agreement between
two private parties. See Profit Wize Marketing v. Wiest, 812 A.2d 1270,
not control in a contract dispute. This Court is constrained to interpret the
language of this private contract in accordance with the plain and ordinary
19
See Merriam Webster Online Dictionary.
20
Id.
21
Indeed, ACE concedes that the 2009-10 policy is a continuous renewal of
the 2007-08 and 2008-09 policies.
13
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exclusion L, because the 2007-08 policy became effective on May 1, 2007,
almost one year after Westmoreland filed suit.
In an attempt to surmount this obstacle, Amerisource argues:
(1) the 2007-
2006-07 excess policy that ACE issued on May 1, 2006; thus,
policy issued by ACE of which the 2009-
renewal or a replacement
In effect, Amerisource claims the right under exclusion L to graft the
cogently explains:
Exclusion L is worded in
any policy issued by the Insurer of which this Policy
is a continuous renewal or a
Exclusion L does not say the prior/pending date is
tive date of any policy
issued by the Insurer of which this Policy is the last
of any combination of renewals and replacements
Thus, it is irrelevant whether the 2007 policy
replaced another policy. The actual wording of
Exclusion L focuses on whether this Policy, i.e., the
2009
[Amerisource] does not contend the 2009 Policy
ACE Brief, p. 22 (emphasis in part in original and in part added). Under
Amerisourc -
14
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-08 and 2008-09 policies and (2) a replacement of the
2006-07 policy issued three policy terms before with two primary policies
issued in between. This construction does not withstand scrutiny due to the
or a
In short, the 2009- -07 policy. The
-07 policy was the 2007-08 policy.
-10 policy precludes Amerisource from
obtaining coverage from ACE for attorney fees and related costs incurred in
qui tam lawsuit. Since we find that
exclusion L applies, we need not review whether exclusion Y applies or
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/15/2014
15