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ARTICLE · 25 OCTOBER 2026

False Claims Act Insurance Coverage: Court Rejects Exclusion For $7.6 Million Settlement

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In Guidehouse Inc. v. Continental Casualty Co., No. 1:25-cv-1601 (RDA/IDD), slip op. (E.D. Va. Sept. 29, 2026), a Virginia federal court held that an insurer was obligated to cover a $7.6 million False Claims Act settlement, subject to a $5 million retention.

United StatesInsurance
Matthew Grady
Matthew Grady
Andrew Reidy
Andrew Reidy
Joseph Saka
Joseph Saka
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An insurer cannot escape coverage for a False Claims Act settlement simply because the underlying allegations involve fraud.

In Guidehouse Inc. v. Continental Casualty Co., No. 1:25-cv-1601 (RDA/IDD), slip op. (E.D. Va. Sept. 29, 2026), a Virginia federal court held that an insurer was obligated to cover a $7.6 million False Claims Act settlement, subject to a $5 million retention.

Guidehouse helped administer New York's COVID-era rental-assistance program, whose online portal was shut down just 12 hours after launch when applicants' personal information was exposed. A whistleblower alleged that Guidehouse misrepresented the system's cybersecurity compliance, leading to a DOJ investigation and a $7.6 million settlement without any admission of wrongdoing.

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