Harvard lawsuit blames Marsh for $15M insurance denial filed too late, judge rules

After losing two bids to recover $15 million from its insurer for costs related to a failed legal defense of its admissions policy, Harvard University has now failed in its bid to hold its insurance broker Marsh liable.

A federal judge in Massachusetts ruled that Harvard was timely in its lawsuit, alleging that its broker, Marsh, breached its contact by failing to timely waive the excess insurer in the lawsuit brought by Students for Fair Admissions (SFFA ). The court found that New York’s six-year statute of limitations, plus a 228-day extension on the COVID-related fee, expired on September 15, 2022, 13 months before Harvard sued Marsh for breach of contract on October 25, 2023.

U.S. District Judge Allison D. Burroughs also found that a fee agreement between Harvard and Marsh signed in 2023 did not apply because it also came after the September 15, 2022 deadline and because it did not revive no SFFA claim otherwise barred by any defense in time.

SFFA’s lawsuit against Harvard culminated in a landmark US Supreme Court ruling in June 2023 that found Harvard’s affirmative action admissions policy unconstitutional.

The SFFA lawsuit was filed on November 17, 2014. Harvard’s primary carrier – AIG’s National Union Fire Insurance – was immediately notified of the claim event, but Zurich was not notified until May 2017, well after the notification window of 90 days.

AIG paid what it owed as the primary insurer, but Harvard’s excess insurer, Zurich American, denied coverage for the high-profile litigation because it had not been notified of the case in a timely manner. When the university went to court to force Zurich to pay, Harvard lost in federal district court in November 2022 and then again on appeal last August. Courts have found that Zurich properly denied coverage because it did not receive timely notice of the litigation.

Harvard then tried to hold Marsh liable, arguing that the broker had failed in its duty to notify Zurich. Harvard argued that, as its broker, Marsh assumed a contractual obligation to “prepare notices of loss for insurers and notify insurers of claims.” In addition, Harvard said Marsh has a duty to perform his duties in a “professional manner that meets the applicable standard of care.”

According to the timeline provided by Harvard, on November 18, 2014, Harvard sent an email to Marsh regarding the SFFA action, requesting that Marsh report the matter to AIG. Harvard says it did not discover Marsh’s failure to notify Zurich until May 2017. Marsh formally reported it to Zurich and Harvard’s other excess errors and omissions insurers. Zurich confirmed receipt on 25 May 2017.

Harvard argued that receipt of Harvard’s instruction to notify an insurer triggered Marsh’s contractual and professional obligations to notify all insurers Marsh used to place Harvard coverage. Harvard argued that Marsh’s inaction was in contrast to that of another of its brokers, Risk Strategies Co., which placed the entire tower of primary and excess general liability carriers for its policies with Harvard upon notification of the SFFA action, “despite the fact that the absence of an explicit initial request from Harvard to do so.”

According to the university, Marsh took the position that he was instructed by Harvard not to over-notify insurers. Harvard denies that it ever ordered Marsh not to notify excess insurers.

TOPICS
Law of processes