On March 17, 2022, the California Court of Appeals in Cardiovascular Consultants Heart Center. v. Norcal Mutual Insurance Company, 2022 Cal. App. Unpub. LEXIS 1642, *11 held that False Claims Act (FCA) allegations in a civil investigative demand (CID) were not covered under a professional liability policy.
The court held that the CID contains “no allegations of substandard medical care so as to constitute a Potential Claim under the Policy.” Furthermore, it noted the “FCA attaches liability, not to the underlying fraudulent activity (“excessive, medically unnecessary, and/or inadequately documented cardiovascular procedures”), but to the claim for payment.”
To understand the court’s reasoning, we must delve into the specific policy language at issue, as is typical when reviewing any policy for coverage. In the Cardiovascular Consultants Heart Center case, the subject policy covered claims resulting from a “medical incident,” which was defined as “any act or omission or series of related acts or omissions resulting directly from the rendering of or failure to render Professional Health Care Services.” (Emphasis added). Professional health care services” was defined, in relevant part, as “medical or health care services the Insured provides, including 1) direct medical, surgical, dental, or nursing treatment . . . [and] 2) making medical diagnosis and rendering medical opinions or medical service.” The CID concerned “allegations that [the insured] ha[d] submitted false...
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