Smith, Katzenstein & Jenkins Wins Key Insurance Coverage Jury Trial

On February 22, 2022, a Delaware Superior Court jury found that Conduent State Healthcare, LLC, engaged in insurance fraud and bad faith in its $236 million settlement of claims by the State of Texas under the Texas Medicaid Fraud Prevention Act.  Conduent sued its insurers in Delaware for coverage of the settlement.  The insurers raised several affirmative defenses to coverage, including fraud and bad faith.  The jury also found that Conduent breached its duties under the policy to cooperate and to seek written consent in connection with the settlement.

During the seven-day trial, Bob Katzenstein and co-counsel Neal Glazer and Izak Weintraub  of London Fischer represented ACE American Insurance Company, a Chubb company.  AIG, the primary insurer, was represented by Quinn Emanuel, Mayer Brown and DLA Piper.

In the settled case, Texas had sued Conduent under the Texas Medicaid Fraud Prevention Act for $2 billion in civil penalties and treble damages for having allegedly misrepresented to Texas the thoroughness of it review of prior authorization applications for Medicaid orthodontic services. The Medicaid settlement was the largest Medicaid fraud settlement ever obtained by the Texas Attorney General’s Office.