The United States Court of Appeals for the Sixth Circuit, applying Ohio law, has held that a warranty exclusion barred coverage for a claim arising from circumstances that were not disclosed in an insured's application for coverage. SHH Holdings, LLC v. Allied World Specialty Ins. Co., 65 F.4th 830 (6th Cir. Apr. 21, 2023).
In 2016, a False Claims Act qui tam action was filed under seal against an insured nursing home owner alleging that the insured provided unreasonable and unnecessary services to patients to claim extra Medicare reimbursement. The qui tam complaint also included a count alleging retaliation by the nursing home owner against employees who reported the fraudulent billing practices. The U.S. Department of Justice (DOJ) issued a Civil Investigative Demand in January 2017 requesting documents and notifying the insured that it was the subject of a pending False Claims Act investigation for fraudulent claims submission.
In 2019, the insured purchased a claims-made insurance policy. In applying for coverage, the insured represented that no insured "kn[e]w of any act, error or omission which could give rise to a claim, suit or action under any coverage part of the proposed policy." The insured also declined a question asking the applicant to "provide full details of all inquiries, investigations, administrative charges, claims, and lawsuits filed within the last three years against [the applicant], any Subsidiary, any Executive or other entity proposed for any...
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