A Brooklyn-based adult healthcare provider, Northern Manor Adult Day Care Health Program, has won a legal battle requiring its insurance company to cover litigation costs associated with a False Claims Act (FCA) lawsuit. The case centered around allegations that Northern Manor billed Medicaid while failing to comply with an anti-discrimination statute. Although the federal district court dismissed the suit and an appeals court affirmed the decision in 2022, Northern Manor subsequently sued RSUI Indemnity, a subsidiary of Berkshire Hathaway Inc., in 2020 for declining to cover the defense costs under their liability policy.
The court sided with Northern Manor, determining that the insurer improperly denied coverage for the litigation costs. This ruling underscores the importance of clear policy terms and the obligations of insurers to defend policyholders in FCA-related claims, even when the underlying case is dismissed. For further details, the full article elaborating on the judgment can be found here.