In a recent development, a federal judge has dismissed part of a lawsuit filed by Harvard University against a broker for allegedly mishandling the school’s claim for insurance coverage. The claim was intended to help cover legal expenses incurred in a high-profile case that ultimately led to the U.S. Supreme Court ruling against the consideration of race in college admissions.
U.S. District Judge Allison Burroughs in Boston ruled that Harvard had waited too long to sue a unit of Marsh & McLennan for breach of contract. The lawsuit alleged that the broker failed to timely notify one of Harvard’s excess insurance carriers about the affirmative action case brought against the university by Students for Fair Admissions (SFFA).
The insurance carrier in question, a unit of Zurich Insurance Group, successfully argued in a federal appeals court that it was not obligated to cover expenses related to the lawsuit filed by SFFA in 2014. This lawsuit, along with a similar case against the University of North Carolina, ultimately resulted in a landmark Supreme Court decision in June 2023 that effectively ended affirmative action policies in college admissions.
Both lawsuits were initiated by SFFA, a nonprofit organization founded by affirmative action opponent Edward Blum. The organization alleged that Harvard’s admissions policies discriminated against Asian American applicants, leading to a protracted legal battle that incurred significant legal costs for the university.
Harvard claimed that the expenses incurred in defending against the lawsuit and a related government investigation exceeded the coverage limit provided by its primary insurer, an AIG Inc unit. The university sought up to $15 million in coverage from its excess insurance policy with Zurich, but the carrier denied coverage citing Harvard’s failure to provide timely notice of the claim.
Following its unsuccessful attempt to secure coverage from Zurich, Harvard filed a lawsuit against Marsh USA, its insurance broker, alleging breach of contract and malpractice. The university claimed that the broker had failed to report the SFFA case to Zurich in a timely manner as required under their agreement.
However, Judge Burroughs ruled that Harvard had missed the deadline to bring its breach of contract claims under New York law, which she determined governed the case. As a result, the claims against Marsh for breach of contract were dismissed, while the claims for broker malpractice remain pending.
The case highlights the complex legal issues that can arise in insurance coverage disputes, particularly in high-stakes cases involving significant financial implications for institutions like Harvard University. The outcome of this lawsuit underscores the importance of timely and accurate communication between insured parties, brokers, and insurance carriers to ensure that coverage is available when needed.
In conclusion, the dismissal of part of Harvard’s lawsuit against its insurance broker serves as a cautionary tale for organizations navigating insurance claims in complex legal matters. It underscores the importance of proactive risk management and diligent oversight of insurance coverage to avoid potential pitfalls in the event of litigation.