Is a Sealed Lawsuit a “Claim”? Insurance Coverage Issues for Qui Tam Actions
The National Law Review
A critical coverage issue under “claims made” liability insurance policies—which typically cover only claims made against a policyholder and noticed to an insurance carrier during the applicable policy period (or shortly thereafter)—is determining when a matter becomes a “claim” and when that claim was first “made.” While these may sound like straightforward determinations, they can be contentious in certain contexts. One such context is qui tam actions. Policyholders who face possible qui tam liability should be aware that the unique procedural rules applied to qui tam actions are leading to a growing number of coverage disputes between qui tam defendants and their insurers.
In a qui tam action, an individual (known as a “relator”) brings suit under § 3730(b) of the False Claims Act on behalf of the government concerning a government contract. The relator’s complaint must be filed under seal and remain sealed until the government determines whether to intervene in the action. While determining whether to intervene, the government typically seeks additional information regarding the relator’s allegations, often communicating with and issuing subpoenas to the defendant (who has not yet seen the sealed complaint). The complaint is unsealed only after the government determines whether to intervene, which can take years.
Click the PDF to read the entire article.