Judge Rules v Harvard in Troubled Insurance File Case

WASHINGTON – A federal judge in Boston ruled on Wednesday that Harvard University’s failure to tell an insurance company it had sued over its race-conscious admissions program meant it could not use a $15 million insurance policy to cover its legal expenses.

Two days after Harvard University faced skeptical questions in the Supreme Court about its admission practices, Judge Alison D. Burroughs of the Federal District Court in Boston ruled that “an insurance policy must be applied as unambiguously as it is written.”

She said it was indisputable that Harvard had failed to file a formal claim in a timely manner to one of its insurers, Zurich American Insurance. She wrote that it did not matter that Zurich might have known about the affirmative action claim informally.

Days after Students for Fair Admission sued Harvard University in 2014, arguing that its practice of taking race into account in undergraduate admissions decisions was illegal and harmed Asian American applicants, the university formally notified its primary insurance company to request payment of defense costs. This policy had a $25 million limit, after Harvard University paid out $2.5 million.

But Harvard didn’t alert Zurich Insurance, which was supposed to cover the next $15 million, until well after the document’s deadline.

Zurich refused to pay, and Harvard sued. Meanwhile, the university revealed that the fees and legal expenses in the admissions lawsuit and related Department of Justice investigation have exceeded $27 million.

The two Harvard insurance policies covered claims made against it during the one-year period ending in November 2015, as long as they were reported to insurers by January 2016. The Zurich policy said the notification to the main insurer was insufficient.

Harvard did not provide formal notice to Zurich until May 2017, more than a year after the deadline.

In court papers, Zurich’s lawyers said the case was straightforward. They wrote: “Harvard has admitted its failure to comply with the notice provision is fatal for its cover-up demand.”

In response, Harvard lawyers said Zurich “certainly knew” about the affirmative action lawsuit “in the year since it was filed, particularly given the significant and continuing interest the lawsuit has enjoyed in national and local news” and Zurich’s underwriting activities.

They added: “The notice requirement is not an escape hatch for insurance companies to avoid liability to policyholders due to technical non-compliance.”

Zurich lawyers said this argument was “creative but deceptive” and “strange”.

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