At least in the foreseeable future, a recent decision handed down by the Delaware Superior Court will potentially impact many D&O insurers, especially those hoping to divvy defense fees for certain policyholders.
In the case of HLTH Corporation and Emdeon Practice Services, Inc. v. Federal Insurance Company et. al. (July 31, 2008), the Court ruled that a D&O insurance company must pay defense costs on behalf of its policyholder to the full policy limits against a criminal indictment alleging wrongful acts over an extended period of time, even when involving a subsidiary acquired after a number of the alleged acts occurred.
In granting summary judgment to HLTH Corporation, Superior Court Judge Richard R. Cooch rejected defendant Federal Insurance Company's argument that defense costs must be allocated proportionately among multiple insurance companies according to the quantity of alleged wrongful acts committed during discreet policy periods. When rendering his decision, Judge Cooch noted that the insurance policy failed to stipulate any such allocation.
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