Insurer urges judges to reject Harvard’s claim to legal costs in Supreme Court case
First Circuit presses Harvard on missed notification deadline for insurance coverage in case challenging school's admissions policy.
Federal appellate judges pressed Harvard College Wednesday on its argument that its insurance company must pay some legal costs the school incurred defending its admissions policy in a case pending at the U.S. Supreme Court, noting that Harvard missed a deadline to notify the insurer about its coverage claim.
During oral arguments, Judge Bruce Selya said applicable precedent from Massachusetts’ top court holds that notice provisions in claims-made policies must be strictly complied with and that insurers need not show harm stemming from the late notice.
“We’re bound to apply that rule and indeed, this court four times already has said that that is Massachusetts law,” said Selya, of the U.S. Court of Appeals for the First Circuit.
U.S. District Judge Allison Burroughs of the District of Massachusetts granted summary judgment to Zurich American Insurance Co. last year because Harvard didn’t formally notify the company about the admissions lawsuit until May 2017, after a notification deadline in the “claims-made-and-reported” policy had passed. The missed deadline could cost Harvard up to $15 million.
Harvard has argued that widespread media coverage of the lawsuit gave Zurich notice. The policy stated that claims must be reported to the insurer within 90 days of the end of the policy period, and Harvard’s attorney argued that it doesn’t specify whether the reporting must be done in writing.
But First Circuit Judge William Kayatta Jr. said that’s merely an example of an insurer not being harmed by the late notice.
“[W]hen you say ‘Well, the insurer knew [about the lawsuit] because it read something in a newspaper or somebody mentioned it in a meeting,’ that seems to me to be a way of saying they weren’t harmed by the lack of written notice—there was no prejudice. But Massachusetts law tells us lack of prejudice is not a reason for avoiding compliance with an insurance policy,” Kayatta said.
Anderson Kill shareholder Marshall Gilinsky, representing Harvard, said the insurance dispute at hand is set apart from others the court has considered.
“Massachusetts law only says that in the context where the insurance company did not know about the claim, and this is a different situation,” Gilinsky said. “[I]t has never been extended to a fact situation like the one we have here.”
Kayatta pushed back against that argument as well.
“That’s a bit of a reach when we’re looking at state law, and you’ve chosen to bring it into federal court where our job isn’t to create new state law,” Kayatta said.
The underlying lawsuit, brought by the group Students for Fair Admissions, alleges that Harvard’s race-conscious admissions policy discriminates against Asian American applicants.
The Supreme Court heard the case last year after the First Circuit upheld the policy. The high court’s conservative majority may overrule a 2003 decision that upheld the use of race as a factor in a holistic review of student applicants.
Ropers Majeski partner Andrew Margulis, representing Zurich, said precedent requires strict compliance with notice requirements in insurance policies, which Harvard failed to do, and that “there is no wiggle room.”
And he argued that accepting Harvard’s legal arguments would “turn claims-made policies on their head,” since many companies have such policies and are involved in newsworthy lawsuits.
“This would hold that we’re not going to enforce these clear notice provisions. We are going to change Massachusetts law and say they don’t have to be strictly complied with and go to a case-by-case analysis and say, ‘OK, somebody at the insurance company watched CNN that night and there was a story about a lawsuit’ or ‘It was on page 22 of the Wall Street Journal. … I now don’t have to give notice,’” Margulis said.
“[N]otice provisions and claims-made policies must be strictly complied with. Period. There is no exception,” he added.
Judge Jeffrey Howard also sat on the three-judge First Circuit panel.
The case is President and Fellows of Harvard College v. Zurich American Insurance, No. 22-1938.