Homeland Ins. Co. of N.Y. v. Corvel Corp.
197 A.3d 1042
| Del. | 2018Background
- CorVel, a Delaware PPO operator, was insured by Homeland under a $10M claims-made E&O policy (2005–2006, with renewals). Louisiana medical providers sued CorVel for improper discounts under a Louisiana PPO statute; millions in exposures arose.
- CorVel sought arbitration and notified Homeland of the LCMH arbitration in March 2007; Homeland denied coverage in June 2007 citing prior-acts and late-reporting exclusions.
- In January 2011 Homeland filed a Delaware declaratory-judgment action asserting CorVel had not timely reported the PPO claims per the policy.
- CorVel settled the related Louisiana class action and the LCMH arbitration for $9M on June 23, 2011 (retaining limited rights to recover fees). CorVel later assigned policy rights to the class, rendering some coverage litigation active against Homeland in Louisiana.
- CorVel sued Homeland in Delaware Superior Court on May 8, 2015, adding (June 9, 2015) a claim under La. R.S. 22:1973 (the Louisiana bad-faith statute), alleging Homeland knowingly misrepresented coverage by claiming late reporting; Superior Court granted summary judgment for CorVel and awarded $9M damages plus $4.5M penalties and interest.
- On appeal the Delaware Supreme Court reversed, holding CorVel’s bad-faith claim was time-barred under Delaware’s three-year statute of limitations because the cause accrued no later than CorVel’s June 23, 2011 settlement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did CorVel’s Louisiana bad-faith claim accrue for statute-of-limitations purposes? | Accrual occurred only after a judicial determination of coverage (Jan 21, 2016); before that CorVel lacked a viable claim for damages. | Accrual occurred when CorVel could plead all elements and suffered damages—no later than the settlement on June 23, 2011. | Held for Homeland: claim accrued by June 23, 2011; action filed May 8, 2015 was untimely. |
| Whether Homeland’s declaratory-judgment allegation that claims were untimely could support a bad-faith finding | CorVel: Homeland’s allegation was a knowing misrepresentation under La. R.S. 22:1973 and caused CorVel to settle. | Homeland: a coverage position in litigation cannot constitute bad faith; causal link lacking. | Not reached: court reversed on statute-of-limitations grounds and did not decide these merits on appeal. |
| Whether Delaware statute requiring insurers to notify claimants of limitations (18 Del. C. § 3914) precludes Homeland from asserting the limitations defense | CorVel: Homeland failed to provide the notice and thus should be estopped from asserting limitations. | Homeland: § 3914 applies only to contractual damages under the policy, not statutory bad-faith damages. | Held for Homeland: § 3914 inapplicable because bad-faith damages are distinct from contractual policy damages. |
| Choice-of-law and applicability of Louisiana bad-faith statute | CorVel assumed Louisiana law governs bad-faith claim. | Homeland disputed choice-of-law but did not prevail on timeliness. | Court proceeded assuming Louisiana statute for timeliness analysis; choice-of-law dispute noted but not dispositive. |
Key Cases Cited
- GMG Capital Invs., LLC v. Athenian Venture P’rs I, L.P., 36 A.3d 776 (Del. 2012) (standard of review for summary judgment)
- Durio v. Horace Mann Ins. Co., 74 So. 3d 1159 (La. 2011) (clarifies that bad-faith statutory penalties are distinct from contractual policy damages)
- Sultana Corp. v. Jewelers Mut. Ins. Co., 860 So. 2d 1112 (La. 2003) (penalties under La. R.S. 22:1973 may be awarded without proof of actual damages)
- Clausen v. Fidelity & Deposit Co. of Maryland, 660 So. 2d 83 (La. Ct. App.) (discusses requirements for underlying valid claim to support bad-faith statute allegations)
- Williams v. SIF Consultants of Louisiana, Inc., 209 So. 3d 903 (La. Ct. App. 2016) (coverage determination against insurer in Louisiana litigation that resolved the underlying exposure)