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CERNER CORPORATION v. COLUMBIA CASUALTY COMPANY et al complaint

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

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IN THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF MISSOURI
Cerner Corporation
Plaintiff,
vs.
Columbia Casualty Co.;
AIG Specialty Insurance Company
(formerly known as Chartis Specialty
Insurance Company);
ACE American Insurance Company;
Liberty Mutual Insurance Company; and
AXIS Insurance Company
Defendants.
CIVIL ACTION NO. _________
COMPLAINT
Cerner Corporation (“Cerner” or “Plaintiff”), by and through its attorneys
Rouse Hendricks German May PC, and Anderson Kill, P.C., as and for its complaint,
respectfully alleges as follows:
THE PARTIES
Plaintiff
1. Plaintiff, Cerner Corporation, is a corporation incorporated under the laws
of the state of Delaware with its principal place of business at 2800 Rockcreek Parkway,
North Kansas City, MO 64117.
Primary Layer Defendant
2. Upon information and belief, Defendant Columbia Casualty Company
(“Columbia Casualty” or “CNA”) is a corporation incorporated under the laws of the state
of Illinois with its principal place of business at 333 S. Wabash Ave, Chicago, IL 60604.
Case 4:15-cv-01008-DGK Document 1 Filed 12/23/15 Page 1 of 9
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Excess Layer Defendants
3. Upon information and belief, Defendant AIG Specialty Insurance Company
(“AIG”) is a corporation incorporated under the laws of the state of Illinois with its
principal place of business at 175 Water Street, New York, NY 10038.
4. Upon information and belief, Defendant ACE American Insurance
Company (“ACE”) is a corporation incorporated under the laws of the state of
Pennsylvania with its principal place of business at 436 Walnut Street, Philadelphia, PA
19106.
5. Upon information and belief, Defendant Liberty Mutual Insurance
Company (“Liberty”) is a corporation incorporated under the laws of the state of
Massachusetts with its principal place of business at 175 Berkeley Street, Boston, MA
02117.
6. Upon information and belief, Defendant AXIS Insurance Company
(“AXIS”) is a corporation incorporated under the laws of the state of Illinois with its
principal place of business at 11680 Great Oaks Way, Alpharetta, GA 30022.
JURISDICTION AND VENUE
7. Subject matter jurisdiction in this action arises under 28 U.S.C. §1332, in
that there is complete diversity, and the amount in controversy exceeds $75,000.00,
exclusive of interest and costs.
8. This is an action for declaratory judgment (in part) brought pursuant to the
Declaratory J udgment Act, 28 U.S.C. § 2201 et seq., and for other relief.
Case 4:15-cv-01008-DGK Document 1 Filed 12/23/15 Page 2 of 9
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9. This Court has jurisdiction over all Defendants because each defendant is
licensed in Missouri or authorized to do business on a surplus line basis in Missouri and
has, within the relevant time periods, transacted business in Missouri. In addition, each
Defendant has consented to suit in this Court.
10. Venue in this action is proper under 28 U.S.C. § 1391 because the
Policies of insurance upon which Cerner predicates its claims were sold to Cerner in
this District, and each Defendant has consented to venue in this District.
FACTS
The Policies
11. Columbia Casualty, an insurance company, sold to Cerner, as
policyholder, an enterprise professional solutions liability insurance policy, known as
Policy No. 425204233-01, which covered the period from September 1, 2011 to
September 1, 2012 (the “Primary Policy” or “CNA Policy”). A true, correct, and
complete copy of the CNA Policy is attached hereto as Exhibit A.
12. AIG, an insurance company, sold to Cerner, as policyholder, an excess
liability insurance policy, known as Policy No. 08-588-97-22, which covered the period
from September 1, 2011 to September 1, 2012 (the “AIG Policy”).The AIG policy sits
directly above the limits of the CNA Policy and follows form to the terms of the CNA
Policy. A true, correct, and complete copy of the AIG Policy is attached hereto as
Exhibit B.
13. ACE, an insurance company, sold to Cerner, as policyholder, an excess
liability insurance policy, known as Policy No. XEO G23664628 002, which covered the
period from September 1, 2011 to September 1, 2012 (the “ACE Policy”).The ACE
Case 4:15-cv-01008-DGK Document 1 Filed 12/23/15 Page 3 of 9
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policy sits directly above the limits of the AIG Policy and follows form to the terms of the
CNA Policy. A true, correct, and complete copy of the ACE Policy is attached hereto as
Exhibit C.
14. Liberty, an insurance company, sold to Cerner, as policyholder, an excess
liability insurance policy, known as Policy No. EO4NAABMD6002, which covered the
period from September 1, 2011 to September 1, 2012 (the “Liberty Policy”).The Liberty
policy sits directly above the limits of the ACE Policy and follows form to the terms of the
CNA Policy. A true, correct, and complete copy of the Liberty Policy is attached hereto
as Exhibit D.
15. AXIS, an insurance company, sold to Cerner, as policyholder, an excess
liability insurance policy, known as Policy No. MNN754795/01/2011, which covered the
period from September 1, 2011 to September 1, 2012 (the “AXIS Policy”).The AXIS
policy sits directly above the limits of the Liberty Policy and follows form to the terms of
the CNA Policy. A true, correct, and complete copy of the AXIS Policy is attached
hereto as Exhibit E.
The Underlying Claim
16. On or about April 19, 2012, counsel for Trinity Health in Minot, North
Dakota (“Trinity”) made a demand to Cerner seeking damages in connection with the
sales, installation and implementation of Cerner’s ProFit/Revenue Cycle product.
17. Trinity Health initiated an arbitration against Cerner relating to the April 19,
2012 demand on or about February 28, 2013.
18. The April 19, 2012 demand fits within the definition of a “Claim” under the
Policies, as a “written demand for monetary damages or non-monetary relief.”
Case 4:15-cv-01008-DGK Document 1 Filed 12/23/15 Page 4 of 9
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19. Together, the allegations in the April 19, 2012 demand and in the
arbitration (the “Trinity Claim”) trigger coverage under, at a minimum, the “Technology
and Telecommunication Liability” coverage, the “Professional Service Liability”
coverage, and the “Media Liability” coverage of the Policies.
20. Following an Interim Award in the arbitration, Trinity and Cerner resolved
their claims against one another and settled those claims on December 20, 2013.
21. Before the settlement, Cerner informed each Defendant of the Interim
Award and the potential settlement. All of them denied coverage and none expressed
any objection to the potential settlement.
22. The Interim Award specifically provided that the “the Hearing shall remain
open” in anticipation of a “Final Award.”
23. As part of that resolution, Cerner paid to Trinity an amount greater than
the combined limits of the Defendants’ Policies. In addition, Trinity paid to Cerner a
smaller sum also in resolution of the claims in the arbitration.
24. The amount that Cerner paid to Trinity, even when offset by the amount
that Trinity paid to Cerner, is also greater than the combined limits of the Defendants’
Policies.
25. On or about December 27, 2013, the parties advised the arbitration panel
that “the parties reached agreement and exchanged payments in full satisfaction of their
respective claims in the arbitration, including claims for attorneys’ fees, costs and
disbursements. Accordingly, the parties need nothing further from the Panel.”
Case 4:15-cv-01008-DGK Document 1 Filed 12/23/15 Page 5 of 9
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26. On or about J anuary 16, 2014, the firm of Lindquist & Vennum confirmed
that “the parties have reached settlement and the Panel’s services are no longer
needed.”
27. Pursuant to an agreement entered into on September 21, 2015, Trinity
licensed the Cerner Health Information Management solution, formerly known as
ProFile®, which was part of the revenue cycle suite of solutions addressed in the
arbitration.
The Coverage Dispute
28. Cerner has requested that each Defendant pay its portion of the
settlement payment.
29. Every Defendant has refused Cerner’s demand and has denied coverage
for the Trinity Claim.
30. CNA paid more than $3.8 million in claim expenses in connection with the
Trinity Arbitration.
31. CNA has demanded reimbursement for that amount from Cerner.
32. As grounds for its reimbursement demand, CNA relied upon Exclusion E
of the Policy, a “Deliberate Acts” exclusion that applies only “after final adjudication in
any proceeding establishes that such act, or such commingling, misappropriation or
misuse was committed.” The Exclusion further provides that the Insured will reimburse
the Carrier for Claim Expenses only “If such act, or such commingling, misappropriation
or misuse is so determined to have been committed” (emphasis added).
Case 4:15-cv-01008-DGK Document 1 Filed 12/23/15 Page 6 of 9
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33. Because Cerner and Trinity settled the Trinity Claim via settlement, before
a Final Award, and before the time for reconsideration or judicial review of the award
had expired or even started to run, there was no “final adjudication” and CNA is not
entitled to reimbursement.
34. Cerner is entitled to all benefits provided by the Policies.
35. Cerner is entitled to have the Policies interpreted in a reasonable manner
that maximizes its insurance coverage.
36. Accordingly, Cerner seeks to have this Court construe the meaning of,
and enforce the provisions of, the Policies.
37. Cerner has complied with all applicable conditions under the Policies, and
Defendants have not been prejudiced by the nature of any such compliance by Cerner.
38. All parties have agreed to waive any requirements in the subject policies
that may have required arbitration and/or mediation in advance of or in place of
litigation.
COUNT I
DECLARATORY JUDGMENT AGAINST CNA
39. Plaintiff hereby repeats and realleges each of the allegations contained in
the preceding paragraphs as if fully set forth herein.
40. As a result of the Trinity Claim, Cerner has incurred Claim Expenses that
were properly paid by CNA.
41. CNA has demanded reimbursement of those Claim Expenses.
Case 4:15-cv-01008-DGK Document 1 Filed 12/23/15 Page 7 of 9
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42. CNA is not entitled to reimbursement of the Claim Expenses under the
terms of the CNA Policy, which require a “final adjudication” not present in this matter.
43. By reason of the foregoing, an actual and justiciable controversy exists
between Plaintiff and CNA regarding CNA’s demand for reimbursement of the Claim
Expenses in connection with the Trinity Claim.
COUNT II
BREACH OF CONTRACT AGAINST ALL DEFENDANTS
44. Plaintiff hereby repeats and realleges each of the allegations contained in
the preceding paragraphs as if fully set forth herein.
45. Each Insurance Policy constitutes a valid contract between a Defendant
and Cerner.
46. In breach of their obligations under the Insurance Policies that they sold to
Cerner, each Defendant has failed and refused to accept its obligations to provide
Plaintiff with the full costs of defense, investigation, and/or indemnification with respect
to the Trinity Claim, as required by the Policies.
WHEREFORE, Plaintiff seeks,
(1) under the Declaratory J udgment Act, 28 U.S.C. § 2201 et seq.,
a judicial declaration by this Court declaring that CNA is not
entitled to reimbursement of Claim Expenses for the Trinity
Claim. For the foregoing reasons, such a judicial declaration is
necessary and appropriate at this time; and
(2) damages for breach of contract against each Defendant in
amounts yet to be ascertained for all costs of investigation,
Case 4:15-cv-01008-DGK Document 1 Filed 12/23/15 Page 8 of 9
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defense, damages and payments, and all other sums incurred
to date by Plaintiff or which may be incurred, together with the
costs and disbursements of this action, including, but not limited
to, reasonable attorneys’ fees, costs and pre-judgment and
post-judgment interest.
DEMAND FOR JURY TRIAL
Plaintiff Cerner hereby demands a jury trial for all claims which are so
eligible.
Dated: December 23, 2015
By: /s/ William D. Beil
William D. Beil MO Bar #33922
ROUSE HENDRICKS GERMAN MAY
PC
1201 Walnut Street
20
th
Floor
Kansas City, MO 64106
billb@rhgm.com
Telephone: 816-471-7700
Mark Garbowski
ANDERSON KILL, P.C.
1251 Avenue of the Americas
New York, NY 10020
mgarbowski@andersonkill.com
Telephone: 212-278-1000
Attorneys for: Plaintiff
Cerner Corporation
Case 4:15-cv-01008-DGK Document 1 Filed 12/23/15 Page 9 of 9

Published under a Creative Commons License By attribution, non-commercial
date: 
Wed, 2015-12-23
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