In First Horizon Nat’l Corp., et al. v. Houston Casualty Co., et al., the Sixth Circuit Court of Appeals delivered a clear win for insurers, affirming that they properly denied coverage to First Horizon National Corporation and First Tennessee Bank N.A. (“First Horizon”) under a claims-made Blended Executive Risk Insurance Program.
First Horizon sought to recover $75 million it paid to settle accusations by the Department of Justice that it violated the False Claims Act by improperly certifying compliance with underwriting requirements for Fair Housing Act mortgages. The policies required timely notice of claims made during the policy period as well as sufficiently detailed Notice of Circumstances that could lead to a claim. After extensive discovery, the insurers moved for summary judgment, arguing that First Horizon failed to timely report a claim made during the policy period and that its Notice of Circumstances was inadequate. First Horizon argued that the claim against it was first made after the policy period expired, but that it had provided a timely and sufficient Notice of Circumstances so that the claim was deemed to have been made during the policy period. In affirming summary judgment for the insurers, the Sixth Circuit concluded that the “Claim” (i.e., a written demand for monetary relief) had actually been made during the policy period when the DOJ made a $610 million settlement offer that First Horizon failed to report. The court further held that the Notice of Circumstances was both insufficiently detailed and untimely. Mike Smith and Bryan Petrilla of STEWART SMITH represented defendant Everest National Insurance Company in both the United States District Court for the Western District of Tennessee and before the Sixth Circuit.