The United States Court of Appeals for the Seventh Circuit, applying Illinois law, has held that a $100 million settlement between the United States government and a pharmaceutical company for claims arising under the False Claims Act for underlying violations of the Anti-Kickback Statute do not constitute uninsurable "restitution" under Illinois law. Astellas US Holding, Inc. v. Federal Ins. Co., 66 F.4th 1055 (7th Cir. May 3, 2023).
The insured, a pharmaceutical company, introduced a new cancer drug to the market. In an effort to offset the cost of the drug not being covered by Medicare, the company contributed to "patient assistance plans" to cover portions of costs of the new treatment. In 2017, the U.S. Department of Justice began investigating the contributions for possible violations of the False Claims Act and the Anti-Kickback Statute, alleging that the government suffered Medicare losses attributable to the company's contributions to funds for the company's own product. Before a complaint was filed, the government and company settled for $100 million, half of which was labeled as "restitution."
The company was insured under a D&O policy with a $10 million limit of liability, under which the definition of "Loss" carved out "matters which may be deemed uninsurable under applicable law." The D&O insurer denied coverage on the basis that the settlement represented an overlap between the company's gains and the government's losses, and thus was wholly...
The Nigerian National Petroleum Company Limited has denied claims that it is selling scrap materials from its refineries, warning the public to disregard such information and remain alert to fraud...