Mayer Brown secures favorable jury verdict for AIG in insurance fraud dispute

After a hard-fought seven-day trial, a Mayer Brown team, working with Quinn Emanuel as co-counsel, secured a major victory in Conduent State Healthcare, LLC, et al. v. AIG Specialty Insurance Company, et al. on behalf of two member companies of AIG, AIG Specialty Insurance and Lexington Insurance Company. The lawsuit, filed in the Superior Court of Delaware, focused on whether professional liability insurance policies covered a $236 million settlement between the insured, Conduent Healthcare, and the State of Texas.

This week a jury unanimously found that Conduent engaged in insurance fraud and bad faith in connection with the settlement—defenses to Conduent’s lawsuit. The jury also found that Conduent breached its duties under the policy to cooperate and to seek written consent in connection with the settlement.

In the settled case, Texas had sued Conduent under the Texas Medicaid Fraud Prevention Act for $2 billion in civil penalties and treble damages for having allegedly misrepresented to Texas the thoroughness of it review of prior authorization applications for Medicaid orthodontic services. The Medicaid settlement was the largest Medicaid fraud settlement ever obtained by the Texas Attorney General’s Office.

AIG Specialty and Lexington took the case to trial after discovering that Conduent had misrepresented and hidden facts about the actions it took in settling with Texas.

The Houston-based Mayer Brown Litigation & Dispute Resolution team included partner Robert Harrell and associates Andrew Elkhoury, James Danford and Susan Alkadri.