Media Coverage
Source: Law360 Insurance Authority
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Taina Rosa, Olivia Meyer
03.02.26
Kaiser Foundation Health Plan has filed a $95 million lawsuit against a unit of American International Group, Inc. (AIG) and other insurers, alleging they improperly capped coverage at $1 million in connection with a whistleblower case that resulted in a $556 million settlement. Kaiser contends the insurers misapplied a policy provision concerning the return of government funds. According to the complaint, the underlying matter involved multiplied damages pursued by the U.S. Department of Justice—not simply repayment—and therefore should be covered up to the full limits of the policy.
In an interview with Law360, Insurance Recovery & Advisory practice co-leader Robert Wallan said disputes over sublimits like the one Kaiser alleges are not uncommon. He noted that insurers often argue that highly specific policy language should be interpreted broadly.
According to Wallan, the issue “runs square into many decades of insurance law.”
Kaiser maintains that its AIG directors and officers (D&O) policy, along with excess coverage, provided up to $95 million in coverage for the whistleblower action. Although AIG acknowledged coverage, it limited payment to a $1 million sublimit. The lawsuit underscores broader tensions that frequently arise in high-stakes insurance coverage disputes.
Wallan added that, across the country—and particularly in California, where the case was filed— courts generally interpret exclusions and other coverage limitations narrowly and in favor of policyholders.
“It seems to me the complaint really squarely tees that issue up, which is that the insurance tower has taken a broad reading of the exclusion, and [the insurers are] asserting that exclusion to apply beyond its terms,” he said.
Click here to read the full article (additional subscription required).