941 F. Supp. 2d 1029
D. Minnesota2013Background
- UnitedHealth sued ten insurers to determine which must indemnify or cover defense costs for dozens of claims (Dec 1998–Dec 2000).
- Only four excess insurers remain: Executive Risk, First Specialty, Starr, National Union; Lexington’s policy exhausted and settlements with five excess insurers occurred.
- Motions for summary judgment addressing allocation of the AMA/Malchow settlement, ultimate net loss definitions, and whether Antitrust Endorsement is incorporated.
- Court held United bears allocation burden; Items 1–9 are exclusions (not conditions); First Specialty’s policy may not incorporate Executive Risk’s UNL definition.
- National Union’s strict timing issue was resolved in favor of National Union; AMA claim denied under its policy; cross-motions on Antitrust Endorsement incorporation denied.
- Court emphasized Miller-Shugart framework limited to Miller-Shugart contexts; AMA/Malchow settlement allocation remains a fact-intensive issue with following precedents (SCSC Corp., etc.).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Burden of allocation for AMA/Malchow settlement | United bears allocation burden; insurers should prove exclusions | Insurers should bear allocation between covered and excluded claims | United bears allocation burden |
| Ultimate Net Loss definition incorporation | First Specialty incorporates Executive Risk UNL; ambiguity favors United | UNL items 1–9 are exclusions; burden on insurers | UNL items 1–9 are exclusions; First Specialty may not fully incorporate UNL |
| Notice and reporting timing to National Union (AMA claim) | Notice given to National Union through Lexington sufficient | Strict compliance with claims-made notice timing required | National Union motion granted; no obligation to indemnify for AMA claim |
| Incorporation of Antitrust Endorsement into excess policies | Endorsement broadly covers AMA/Malchow; trumps conflicts | Endorsement follows form but does not override other provisions | Denies incorporation of Antitrust Endorsement as controlling over excess policies |
Key Cases Cited
- Bor-Son Bldg. Corp., 323 N.W.2d 58 (Minn. 1982) (allocation permissible even when contemporaneous allocation not possible)
- SCSC Corp. v. Allied Mut. Ins. Co., 515 N.W.2d 588 (Minn. Ct. App. 1994) (insurer bears burden to prove damages allocable to insurance period/claims)
- Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982) (allocation concepts in Miller-Shugart framework)
- Allstate Ins. Co. v. Continisio, 17 F.3d 62 (3d Cir. 1994) (allocation issues and burdens in insurance allocations)
- Ebenezer Soc. v. Dryvit Sys., Inc., 453 N.W.2d 545 (Minn. Ct. App. 1990) (allocation across covered vs. uninsured damages under Miller-Shugart lineage)