Companies operating in heavily regulated industries are becoming increasingly familiar with Department of Justice (DOJ) Civil Investigative Demands (CID). Traditionally viewed as a pre‑suit investigative tool, a CID may require collecting, reviewing, and producing documents; preparing for and attending witness interviews; or meeting and negotiating with DOJ. These steps can impose significant legal and operational costs on an entity long before any complaint is filed.
A recent Delaware Superior Court decision, The Cigna Group v. XL Specialty Insurance Co., strengthens policyholders’ arguments that the costs associated with responding to a government demand may be reimbursable by insurers. In Cigna, the court held that a DOJ CID issued in connection with a False Claims Act (FCA) investigation constituted a covered “Claim” under a managed care errors and omissions (E&O) policy. This ruling triggered the insurer’s obligation to reimburse defense expenses while responding to the CID. The Cigna decision has important implications for any company facing an FCA CID and seeking insurance coverage for response costs.
Claim vs. Government Investigation
In this matter, Cigna sought reimbursement for millions of dollars incurred responding to a DOJ CID focused on “one‑way chart reviews” allegedly conducted by Medicare Advantage Organizations to find ways to increase reimbursements, but not to seek avenues to decrease payments. The insurers denied coverage, arguing that a CID is...
Companies operating in heavily regulated industries are becoming increasingly familiar with Department of Justice (DOJ) Civil Investigative Demands (CID). Traditionally viewed as a pre‑suit invest...