Harvard fails to recover $15M legal fees in race-based admission case.
Harvard University’s Insurance Provider Refuses to Cover $15 Million in Legal Fees
In a disappointing ruling, the First Circuit Court of Appeals has determined that Harvard University’s secondary insurance provider is not obligated to cover $15 million in legal fees incurred during the school’s defense of its use of racial preference in admissions.
Back in 2014, Harvard purchased an excess insurance policy with Zurich American Insurance to cover legal fees exceeding million. However, the policy had a limit of $15 million and only covered claims made between November 1, 2014, and November 1, 2015.
According to the policy’s terms and conditions, Harvard was required to formally notify Zurich about its legal claims within 90 days after surpassing the $25 million cap in order for the secondary policy to take effect. Unfortunately, Harvard failed to provide written notice to Zurich until May 2017, well past the 90-day window that closed in January 2016.
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Harvard took legal action against Zurich in 2021 after the insurance company refused to cover the legal fees associated with the Students for Fair Admissions (SFFA) case. Harvard argued that Zurich should have been aware of the pending lawsuit due to extensive media coverage.
However, in a unanimous decision on August 8, a three-judge panel at the First Circuit upheld a lower court ruling in favor of Zurich. The panel stated that Harvard’s failure to provide timely notice as required by the policy’s terms and conditions forfeited its right to coverage.
“Consequently, Zurich had every right to deny coverage based on lack of timely notice,” wrote Circuit Judge Bruce Selya, a Harvard Law alum, on behalf of the panel of judges.
The panel also rejected Harvard’s argument for an “actual notice” exception, accusing the school of “gaslighting.” Judge Selya emphasized the importance of deadlines in a claims-based policy like this, stating that enforcing the notice requirement promotes fairness in rate setting.
The appeals court explained that a claims-made policy aims to minimize the time between a claim being made and the payment. If an insurer is unaware of a claim until years later, the purpose of insuring claims rather than occurrences is undermined.
The court’s opinion emphasized that in Massachusetts, notice provisions of claims-made policies are essential and intended to facilitate investigations into claims and promote fairness in rate setting.
9-Year Legal Battle
The dispute over Harvard’s admissions policy began in 2014 when the SFFA, representing a coalition of students who claimed discrimination based on their Asian ancestry, filed a lawsuit. In 2020, the Court of Appeals for the 1st Circuit upheld a lower court decision that Harvard’s consideration of race in its admissions process is not discriminatory. This prompted the SFFA to take the legal battle to the U.S. Supreme Court.
In a significant ruling this June, the Supreme Court declared it unconstitutional for colleges and universities to use race as a factor in admissions decisions. Chief Justice John Roberts, writing for the conservative-leaning majority, criticized institutions that prioritize an individual’s skin color over their achievements and character.
Justice Sonia Sotomayor dissented, expressing concerns about the future of racial equality in the United States and criticizing her conservative colleagues for promoting a “superficial rule of colorblindness.”
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