Illinois Appellate Court Holds Interrelated Wrongful Acts Provision And Prior And Pending Litigation Exclusion Bar Coverage

The Appellate Court of Illinois has held that an underlying lawsuit was interrelated with another lawsuit brought against the insured by a different claimant, and thus precluded from coverage pursuant to the policy's interrelated wrongful acts exclusion. Arch Ins. Co. v. PCH Mgmt. Alpha, LLC, 2024 WL 5039931 (Ill. App Ct. Dec. 9, 2024).

In 2018, a third-party medical holdings company and its managing member filed a counterclaim and third-party complaint against the insured in Illinois state court for perpetuating a fraudulent billing scheme. The pleadings alleged that the insured engaged in a "familiar pattern and practice" and "modus operandi," in which it would contract with regional hospitals in financial distress and obtain unrestrained control of the company. The counterclaim and third-party complaint further contended that a number of other similar lawsuits were pending against the insured, each of which allegedly stated that the insured was vested with