HNRK Coverage Corner

On December 8, 2025, Judge Rennie of the Superior Court of Delaware issued a decision in The Cigna Group v. XL Specialty Ins. Co., C.A. No. N23C-03-009, holding that a civil investigative demand (CID), issued by the U.S. Department of Justice in connection with a False Claims Act investigation, constituted a “Claim” under the insured’s E&O policy, triggering coverage for defense costs.

Responding to a government investigation can be a costly proposition.  And the issue of insurance coverage for the resulting attorneys’ fees and other defense expenses is a perennial issue.  Cigna, a Medicare Advantage Organization, received a CID from the DOJ, which was investigating potential FCA violations arising from so-called “one-way chart reviews,” in which insurers review patient records to find and add, but not delete, diagnosis codes to boost, or inflate, risk-adjusted payments.  Cigna submitted a claim to its managed care errors and omissions towers.  The primary insurer ultimately acknowledged coverage, but the excess insurers declined, contending that the CID was not a “Claim” as defined by the policy.

As always, the analysis begins with the policy language.  The policy at issue here defined “Claim” as:

any written notice received by [Cigna] that person or entity intends to hold [Cigna] responsible for a Wrongful Act[.]  . . . In clarification and not in limitation of the foregoing, such notice may be in the form of an arbitration, mediation, judicial injunctive or regulatory proceeding. 

The excess insurers argued that the CID was not a “Claim” because “it does not convey an intent to hold Cigna responsible for a wrongful act.”  Instead, it was a “Governmental Investigation,” which the policy expressly defined to include a “civil investigative demand (‘CID’) from any state or federal governmental or regulatory agency, body or authority.”  The policy provided no coverage for the cost of responding to a Governmental Investigation. But in the event an investigation subsequently gives rise to a covered Claim, such expenses would count toward Cigna’s per-Claim self-insured retention.

Granting partial summary judgment to Cigna, Judge Rennie held that the CID was “a Claim, not a Governmental Investigation.”  That the policy’s definition of  Governmental Investigation expressly included a “civil investigative demand” was “not conclusive” and did not “mandate a finding that the 2016 CID is not a Claim.”  Instead, the Court cited an earlier Delaware precedent, Conduent State Healthcare, LLC v. AIG Specialty Ins. Co., 2019 WL 2612829 (Del. Super. June 24, 2019), for the proposition that “a government CID seeking information to investigate specific alleged wrongdoing by [the] recipient, demonstrates an intent to hold the receiver responsible for that conduct.”

Judge Rennie held that, under the standard set forth in Conduent, the CID issued to Cigna “requested information as part of a government investigation concerning actions by the recipient, Cigna, and suggested that conduct violated a specific statute.”  Thus, the CID “sought to hold Cigna responsible for one-way chart review, and as such, is a Claim under the Policy.”  The Court found that this interpretation “does not render the Policy’s provisions concerning Governmental Investigations superfluous,” as those provisions could still be triggered by a CID issued to third parties that are not the subject of the government’s investigation.

The Court ordered further proceedings to determine the amount of the “reasonable legal fees and costs” Cigna was entitled to recover.  In a decision issued earlier this week, the Delaware Supreme Court denied the insurers’ motion for an interlocutory appeal.  We’ll be following this case with interest as it proceeds.

In other related news, the California Court of Appeal will be hearing argument next month in a case previously covered on this blog concerning insurance coverage for the cost of responding to a CID the Federal Trade Commission issued to Zoom.  The trial court held that the CID did not trigger coverage under Zoom’s E&O policy, which defined “Claim” to include a demand for “nonmonetary relief.”  We were critical of that holding and will be closely watching the appeal.