Astellas US Holding, Inc. v. Federal Insurance Co.

Dist. Ct. did not err in granting plaintiff-insured’s motion for summary judgment in plaintiff’s action, alleging that defendant-insurance company breached its insurance contract by failing to pay $10 million in proceeds from its directors-and-officers liability insurance policy, under circumstances where: (1) federal government began investigation into plaintiff’s contributions to “patient assistance plan,” where federal government asserted that said contributions violated federal Anti-Kickback Statute and federal False Claims Act; (2) federal government claimed that plaintiff funded said plan to help patients pay for plaintiff’s own drugs for which plaintiff would ultimately obtain payment from Medicare; and (3) plaintiff eventually settled with federal government for $100 million, $50 million of which was labeled “restitution to the United States,“ without federal government ever filing formal charges against plaintiff. While defendant denied coverage due to its belief that plaintiff’s settlement of instant “claim” was not insurable, because Illinois public policy prohibits insurance coverage for settlement payments that are restitutionary in nature, Dist. Ct. could properly find that defendant failed to establish that settlement payment was restitutionary in nature. Moreover, Ct. of Appeals held that: (1) even if $50 million portion of settlement payment was restitutionary in nature, i.e. payment designed to restore victim what had been taken from it or to force perpetrator to disgorge fraudulently obtained profits, remaining $50 million could still be categorized as compensatory and thus insurable; and (2) defendant would still have to show that $10 million plaintiff seeks in lawsuit applied to uninsurable portion of settlement payment.