Insurance – Two carriers disagree over duty-to-defend responsibility

Where a second lawsuit filed against an insured was related to an earlier filed lawsuit, in that they alleged the same scheme, resulting in the same errors and causing the same general harm, the carrier defending the first lawsuit was responsible for defending the second lawsuit.

Background

Columbia Casualty Company and Navigators Specialty Insurance Company disagree as to which company, if either, is responsible for providing coverage for a claim against one of their insureds, Avertest LLC. Navigators provided coverage at the time of the claim but later filed suit, alleging that Columbia was legally obligated to provide coverage. Navigators argued that Columbia was responsible for coverage because the disputed claim was “related” to an earlier claim made during Columbia’s coverage period.

The district court concluded that the relevant terms of Columbia’s policy did not require it to provide coverage for the disputed claim and instead held that Navigators was required to provide coverage.

Analysis

The question is whether the Gonzalez and Foulger lawsuits are “related claims” as that term is defined in Columbia’s policy. Looking to the Columbia policy’s definition of “related claims,” the relevant question here is whether the “acts, errors, or omissions” giving rise to the Gonzalez and Foulger claims are “logically or causally connected by any common fact, circumstance, situation, transaction, event, advice or decision.” If the answer is yes, then the two claims are related, Columbia was responsible for defending Avertest in the Foulger litigation, and it must reimburse Navigators.

Just recently, this court considered similar policy language. It determined that “two things are logically related when they are reasonably or rationally connected to or associated with one another.” This court also previously considered a similar definition of “related claims” as in the Columbia policy — “wrongful acts which are logically or causally connected by reason of any common fact . . . ” — and concluded that it was “expansive.”

There, this court held that claims in one lawsuit involving an alleged breach of a real estate contract by not paying a fee and claims in a separate lawsuit alleging that the insured had taken steps to prevent the entity from collecting on the judgment were related. In the court’s view, those claims “share[d] a common nexus of fact” because, but for the breach of contract, neither lawsuit would have taken place.

Applying those precedents to the facts here, this court holds that the Gonzalez and Foulger lawsuits were related claims pursuant to Columbia’s policy. Both lawsuits alleged that Avertest reported false positive drug tests due to fundamental problems with its testing methodology: Its “quality control practices . . . did not meet guidelines established by the College of American Pathologists,” it failed to “follow the proper process as to internal standards” and there were “serious problems with the calibration curves [Avertest] uses for its tests,” including manipulation of data. In other words, both lawsuits alleged that the same scheme (Avertest’s prioritization of speed over compliance with CAP standards) resulted in the same errors (false positive drug tests) and caused the same general harm (negative impacts on pending child custody cases).

It is immaterial that there were also differences in the two lawsuits — different plaintiffs, different individual tests, different allegations as to errant collection practices, etc. — because the policy does not ask whether two claims are more similar than different. Instead, the Columbia policy specifies that two claims are related if the acts, errors, or omissions giving rise to the claims are “logically or causally connected by any common fact, circumstance, situation, transaction, event, advice or decision.”

And here, the errors giving rise to both Gonzalez and Foulger are more than just logically connected by any one fact. They are, instead, the very same errors in testing

methodology. Therefore the two claims are related. And, because the first claim, Gonzalez, was made during Columbia’s 2020-21 policy period, Foulger is treated as part of that single claim, made during that same policy period.

Columbia tries to avoid this outcome by arguing that the claims-made nature of its policy precludes coverage because the Foulger claim was not made and reported to it during the policy period. But this argument seeks to rewrite the policy by removing

“whenever made” from the related claims provision. If Columbia wanted to limit related

claims to those individually made during the policy period, it could have done so. But it did not.

Vacated and remanded.

Navigators Specialty Insurance Company v. Avertest, LLC, Case No. 25-1977, June 9, 2026. 4th Cir. (per curiam), from EDVA at Alexandria (Brinkema). Jonathan Freiman for Appellant. Margaret Fonshell Ward and Harold E. Johnson for Appellees. VLW 026-2-210. 15 pp.

Full-Text Opinion
VLW 026-2-210