Judge awards Lifespan nearly $30M from insurer in breakup with Massachusetts hospital


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PROVIDENCE, Rhode Island — A federal judge on Monday ordered two insurance companies to pay health system Lifespan nearly $30 million to reimburse it for a judgment following a lawsuit over its breakup with a Boston hospital.

U.S. District Judge John McConnell found that National Union Fire Insurance Co. of Pittsburgh and RLI Insurance Co. must pay out policies to Providence-based Lifespan, as well as costs, interest and attorneys' fees. Lifespan, a nonprofit, owns the state's largest hospital, Rhode Island Hospital, as well as several others.

The decision stems from a 1997 affiliation agreement between Lifespan and New England Medical Center, now Tufts Medical Center. The sides decided to end the affiliation five years later, in 2002. Ultimately, both sides sued each other over various aspects of the affiliation and breakup. Massachusetts Attorney General Martha Coakley also intervened, suing Lifespan on behalf of New England Medical Center because of its status as a public charity.

Following a 2011 trial, New England Medical Center and Coakley's office were awarded $29.6 million, while Lifespan was awarded $20.4 million. Lifespan satisfied the judgment by paying the difference to New England Medical Center, around $9.2 million.

In the lawsuit against its two insurance companies, Lifespan was seeking to be reimbursed for the entire $29.6 million judgment.

Lifespan had a $15 million policy with National Union and a $10 million policy with RLI when the lawsuit was filed, McConnell wrote. The insurance companies had both argued that the loss was excluded from coverage under the policies.

McConnell found that the insurers did not meet their burden in showing that the exclusions should apply.

A spokeswoman for Lifespan, Gail Carvelli, said late Monday afternoon it would be premature to comment on the decision because she had not yet seen the language from the judge's ruling.

Lawyers for the insurance companies did not immediately return messages seeking comment.

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