Court Orders Insurer to Reimburse Hospital for Antitrust Case Settlement

In William Beaumont Hospital v. Federal Insurance Co., Sixth Circuit Court of Appeals ordered Federal Insurance Co. to reimburse WilliamBeaumontHospital 80 percent of an $11.3 million settlement with nurses who alleged wage suppression in an antitrust class action.  The court found that failing to hand over wages is different from illicitly acquiring wages.  As a result, the hospital’s settlement does not trigger an exception in an insurance policy that would shield Federal from covering disgorged profits.

On a separate question, Federal argued that Michigan public policy barring entities from benefiting from their own wrongdoing should prevent it from having to cover the settlement.  The Sixth Circuit disagreed, finding that the policy has been interpreted to apply only to claims involving intentional property damage or infliction of bodily harm, and there is no bar against buying a policy that would cover intentional civil rights violations.

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