Liability Insurance

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7^th Circuit Court of Appeals

Case Name: Astellas US Holding, Inc. v. Federal Insurance Company

Case No.: 21-3075

Officials: Rovner, Hamilton, and Scudder, Circuit Judges.

Focus: Liability Insurance

Plaintiffs Astellas US Holding, Inc. and Astellas Pharma US, Inc. (treated here as one entity, Astellas) paid the federal government $100 million to settle potential claims for violations of the federal Antikickback Statute and the federal False Claims Act. The potential claims stemmed from Astellas’ contributions to so-called “patient assistance plans” to cover the costs of treatment with an expensive new cancer drug. Astellas had a $10 million directors-and-officers liability insurance policy with defendant Federal Insurance Company. The many questions raised in this appeal boil down to whether Illinois public policy forbids the liability insurer from covering part of its insured’s payment to settle the federal government’s potential claims. The district court granted summary judgment for the insured, concluding that Illinois public policy does not forbid coverage of the settlement. The court held that Federal owes Astellas the policy limit of $10 million. Astellas US Holding, Inc. v. Starr Indem. & Liab. Co., 566 F. Supp. 3d 879 (N.D. Ill. 2021).

Under Illinois law, a party may not obtain liability insurance for genuine restitution it owes the victim of its intentional wrongdoing, but a party may obtain insurance for compensatory damages it may owe. The Seventh Circuit ruled that Federal bears the burden of showing that the portion of the settlement payment for which Astellas seeks coverage is uninsurable restitution. Federal has not carried that burden with evidence that would allow a reasonable jury to decide in its favor.

Affirmed.

Decided 05/03/23

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