Harvard University has one insurance policy to protect it against the costs of lawsuits and a second policy to protect it if its costs exceed those of the first policy.
In its own lawsuit against one of its insurers, Harvard is seeking to get reimbursed for the "excess" costs of defending itself against an admissions lawsuit that the Supreme Court is currently deciding to whether to consider. Harvard said it has gone past the $25 million limit of its first policy, but that its second, "excess insurance" insurer, Zurich American Insurance Company, is refusing to pay for the rest.
At issue is Harvard's defense against a group called Students for Fair Admissions, which first sued Harvard in 2014 claiming its admissions policies discriminate against Asian-Americans even though it was founded by three White people.
A federal judge in Boston dismissed the case, the group appealed and the US Court of Appeals for the First Circuit also rejected the case, saying that Harvard's admission policies, in which an applicant's race can be considered as one of many criteria, was not a discriminatory quota. However, the appeals court found that the group did have "standing" to bring the suit, which led to its current appeal to the Supreme Court. The group says it has since expanded its membership to include actual Asian-Americans
Also, the Department of Justice has not dropped an investigation, begun in 2017 under the Trump administration, into Harvard's admissions policies, which has led to further legal costs, the university says.
In its lawsuit against Zurich, filed this week in US District Court in Boston, Harvard said it has gone through the $25-million lawsuit-coverage policy it had with AIG - which included a $2.5-million deductible and so turned to the $15-million "Excess Select Insurance Policy" it had purchased from Zurich to cover it should its AIG policy be exhausted, which the school says it was.
Harvard says Zurich denied its claim on the grounds that Harvard didn't notify Zurich when it should have about the excess costs and so it doesn't owe the school anything. In its complaint, Harvard basically says: Seriously?
Without even getting into the whole issue of whether the nation's oldest institution of higher learning could possibly forget to notify an insurer about something like this, Harvard adds it would be hard for Zurich to not be aware of what was going on:
The SFFA Action was the topic of contemporaneous reports and written pieces in numerous national news media, including CNN and Fox News, as well as publications such as The New York Times, The Wall Street Journal, The Boston Globe, Bloomberg, USA Today, The Associated Press and The Washington Post. ...
Upon information and belief, Zurich had knowledge of the SFFA Action by late 2014 or early 2015, and no later than January 30, 2016.
In fact, if we're talking about formal invitations, Harvard continues:
Harvard provided Zurich formal notice of the SFFA Action in or around May 2017.
The complaint says AIG certainly knew about the suit and reimbursed Harvard for its costs related to the suit and federal investigation up to $25 million, less that $2.5 million deductible and that Harvard's policy with Zurich was essentially identical to AIG's.
As such, Harvard seeks damages from Zurich for breach of contract and a declaration that Zurich must reimburse Harvard for all reasonable defense costs incurred and which will be incurred in excess of the AIG Policy and retention/deductible.
The university continues:
Harvard has incurred legal fees and expenses, costs paid to electronic discovery vendors, expert witness fees and court costs in excess of the policy limits under the AIG Policy and retention/deductible.
Harvard adds it has also had to dig up thousands of documents to provide to the Justice Department for its probe.
Harvard did not specify how much it is seeking from Zurich, save that it is more than $75,000 - the minimum amount required to bring a lawsuit of this nature in federal court. It is also seeking attorney's fees, court costs, interest and "other and further relief as the Court may deem just and proper."