I have enjoyed the new show Longmire on A&E. One episode the other night involved a crooked social service worker who was taking kickbacks for removing kids from Native American families and placing them with Caucasian adoptive parents. I then read an article in Engineering News Record about a construction company engaged to build a county’s privately developed and operated juvenile justice facilities that was bribing judges to incarcerate more juvenile offenders. Fortunately, the writers for Longmire had the sense to leave out any issues about coverage under a commercial general liability policy.
Apparently, Mericle Construction figured that if it could fill the juvenile centers, it would be asked to build more of them. The scheme flourished and a couple thousand juvenile offenders were taken from their homes and put in detention. The juvenile defendants and their families sued Mericle and Mericle demanded that its insurer provide coverage under its commercial general liability insurance policy.
The federal trial court ruled in the insurer’s favor. Unswayed, Mericle’s attorneys appealed to a United States Court of Appeals arguing that Mericle had not bribed the judges, but paid them referral fees in return for sentencing youths to detention. Although I cannot think of a provision that would have provided coverage, Mericle’s attorneys argued that this conduct was covered by its CGL policy. The Court of Appeals was not impressed with the argument and upheld that trial court’s ruling.
This case does raise an interesting point on coverage, though. If a case can go all the way to the Court of Appeals to determine whether an insurance policy provides coverage on a goofy claim like this, you know a more legitimate claim can take as long, if not longer.
Coverage claims can be difficult and frustrating, but courts may support your position if your claims have merit.