because i think that the procedural aspect really informs a lot of this discussion we tendered the subpoenas from the d o j to allied world and they  accepted defense coverage applying a potential for coverage standard and then it one point early on the stop defending the real issue initially was not potential for coverage or anything else it was that they applied one hundred for coverage here and that they should be advancing the fence cost pursuant to the policy we think the potential for coverage standard clearly applies i'll get to that in a moment and that's where i think that things with all due respect went off the rails in the district court because the court instead of applying the potential for coverage standard and requiring the real time advancement of defense cost is a key component of this policy it's its own provision providing that  instead applied a different standard and basically required the parties to conduct extensive discovery about what was being investigated except and that went on for a couple of years so what should have happened was that we were receiving we should have been receiving the fence costs in real time which frankly given the pace of the defense expenditures would have exhausted their policy fairly quickly there's only a few million dollars in that policy and they probably would have exhausted excess coverage on top of that and then at some point down the road the government completes its investigation and for the first time in they basically three years into the investigation for the first time the government states what its allegations are prior to that time we knew they were investigating a number of things and we knew and allied world knew and agreed that they were investigating the gum was investigating some completely new issues that had never come up for any prior key tammany prior competitor action one key of those ones being the custom profiles issue which was unclear from the briefing basically is that millennium would provide doctors with a special requisition form where you could check one box and a whole host of tests would be conducted and the government's point was that doesn't satisfy the requirements that a physician specifically identify which tests should be conducted so automatically a certain number of tests sometimes a large number has to be conducted that was a completely new issue so in twenty fifteen three years into this investigation the government  intervenes and files their complaint and that complaint the first time when it was unsealed provides what the government's actual allegations were so what should have happened that time they would have already exhausted they've long been exhausted we would have had our defense coverage under the policy which we were entitled to and which we didn't get and they breached and there's damages for that regardless of whether they get any money back for at that point what they should have done is then if the case was still going i guess they could have amended the complaint to add a recoupment claim or some other claim that they get the money back they didn't none of that happened of course or if there was a if the case was over at that point they could have filed a new action and tried to get some of that money back in this action it so happens they didn't even file a recoupment claim i think they're from a defense even state recouping claim so everything kind of ended up and is still involved at least in some way with the three specified excluded actions do you disagree with the judge's conclusion i disagree your honor and here's here's why the government for the first time the included we will concede they included in their complaint along with a series of very specific allegations for example regarding custom profiles pages and pages of allegations of why this is wrong they also included some allegations as i think any good plaintiff attorney for the government would do saying that conduct may also be tied to kickbacks and the specific kickback issue for example they mentioned was the provision of these free point of care testing so they do mention that however i would argue that well first of all i would argue that even at that point for this still probably the potential for coverage under the appropriate standard because those are only some of the allegations that potentially tie it if you look at them most of the allegation of going custom profiles has nothing to do with any kickback allegation and the case that the government may have taken the trial may have been solely focused for example on saying that it was  improper for a millennium to set up their requisition form this way and that would be a completely new issue so i think judge beacham went to the coverage says and i'm not on a previous page in any way involving that's awfully broad so you're on i will concede this i think that from the date of the complaint of the government complaint going forward i think they have a pretty good argument i think we still have arguments that at that point the potential for coverage their duty to advance extinguished from that point forward the problem is that their policy had long been exhausted and their burden really in order to get back the defense costs that they should have been paying for three and a half years that they never paid their burden there would be to show not what the got government ultimately alleged in their complaint because that only shows what the claims were from that date going forward what they needed to do because this policy provides coverage for subpoenas which don't contain any allegations is that they would need to go back and be able to prove that some components of the investigation tied back to prior litigations and i'm not sure frankly first of all once again we never could make claims of procedure they may be an issue there secondly i'm not sure they can do that because certainly what the government ultimately alleged i don't think that can be dispositive and what i investigate what point does millennium know what the government's origin at the point of the complaint that's not i don't know at what point do they learn that at what point in time do they get their hands on the information as to what the government is complaining about it was i believe shortly after the government intervened filed their complaint intervention which was march two thousand and fifteen and when is that in relation to the time that millennium enters into the two hundred  fifty six million dollars settlement so we entered the settlement in i believe october or november of that year of two thousand and fifteen and at what point do you turn over that information to the insurance company as soon as the government allowed us to my understanding is the series of events there was that with the government forbidding you from turning that over when you find out the information correct that that's that's that's my understanding so the subpoenas were in march that's my understanding what your understanding based on from the history of the case what i was told by defense counsel was that so the system would astound me that the government before bid you from communicating with the insurance company the contents of the complaint my understanding with the complaint was first when the government first sent to the complain in three years into their investigation so in march two thousand and fifteen that that was under seal at that point and then at some point there after in the course of settlement discussions with millennium the government agreed to partially and seal that complaint to millennium but told millennium this is my understanding that we were not to provide that to anyone and then including your insurer that's my understanding you did millennium ever make any specific request to allow you to show the complaint to the insurer i don't want to misspeak on that fact but my understanding what i'm after here is obviously mo the insurance company is saying you guys have been keeping information from a pretty regular basis including your representation in the separate ameritech so litigation and so on because according to the insurance company you knew a lot about what was being investigated but you didn't turn it over to the insurance company because what you knew  insurance company says you didn't know would show there was no coverage and that your honor is that is completely untrue that allegation we were providing stuff and trying to get the government to allow us to provide stuff in real time to the insurer but there were no allegations being made we knew the government was investigating a whole series of things and then once the court in the underlying action said that the potential for coverage incorrectly said that the potential for coverage did not apply and said go do this governor on what's being investigated everything was provided that could possibly have been provided the defense counsel were opposed and information about every conversation they had with the government was provided nothing was withheld we have no we no basis for wanting to withhold anything our point was that we don't know what exactly they're going to allege but we know they're investigating at least some very new issues that was the point and it wasn't until the government actually made an allegation and judged the shunt agreed with us here it was until the government actually made an allegation that they could apply these exclusions just a few months prior to that the court said hey look based on everything all the interviews of witnesses before grand juries we see that there's a bunch of new issues we see there maybe some old issues certainly the government was asking about peak ups and stuff like that but we don't know what the government's actually after we don't know what they're going to let and that didn't crystallize until the complaint and the problem is the complaint is now not dispositive evidence but what the government is investigating before then and there was no eb other evidence of what they were asking that we haven't provided they put all of that evidence that they got the witness interviews the defense counsel interviews every subpoena every day they put all that evidence before judge bush on in the first in the second summary judgment motion the time we won they put all that evidence before the district court in the district court said no i still can't tell what their actual allegations are going to be because there is coverage for subpoenas there is the potential for what she said but there is coverage here you've  satisfied your burden of even under the not under the potential for coverage standard of showing that it's basically within the scope of coverage the mistake then happened i believe that when besides the first mistake of not applying the potential for coverage standard and getting us costs in real time which is the cash flow is a major issue the other mistake was then the complaint comes out and the settlement comes out and it appears perhaps if the misimpression that something is was being the down issue by issue it just kind of one kind of a glob just a blob said none of this is covered i guess what you're asking us to do is to have the district court actually break them out issue by issue to see what we covered what would be what we would ask two components one is to instate the correct standard potential for cover and that was the potential through the date of the complaint and then to the extent they have a recouping claim once again i think there's a pleading issue  there then and then with respect recoupment to say certainly can't be all one claim to the extent that they can prove that certain defense costs per team to certain issues that were litigated previously then  the district judge did break down i think the district court did two things one is applied single claim standard because in part of the ruling the court said well it mentions kind of the settlement mentions cunningham so must evolve kind of him but then the court does go down and break it down but not issue by issue what the court really does is say well everything relates to medically unnecessary testing and that was at issue in or everything relates to a business plan and we cite to some cases on that issue eureka from this court for example where you can't that's not the appropriate standard that's too broad a brush you can't just say well there was some previous complaint that allege that we had a bad are the way we do business was improper and then use that to say everything's in compas by that because then the coverage would be a loser e you get no coverage from any new claim so it's a you have to look at what america talks a just coming in what they were actually alleging and they had very specific issues which were completely different for example their main issues kickbacks which are completely different from this custom profile issue which even by allied world discovery responses they admitted was not one of the  old prior years so i think you need to break it down with a feeling or so year to me then depends upon your conclusion that the district court is just wrong when the district court says well in support of its argument millennium points to millennium a point created custom profiles the district judge says well they're related so they didn't break it down a major saying they just made a must do district judge made a mistake after she'd broken down yes but at two levels one at the level that yes too broad a brush but other at the level that the district court base that the terminations on what was alleged in the complaint and same because it was alleged in a particular way in the complaint that shows that that's what was being investigated the entire time and it wasn't until the complaint that the government made any indication there's nothing in the record thousands of pages that they were trying custom profiles to kickbacks or anything else that it was in a completely new issue are several twenty ha submissions one of them that we submitted to the court was a decision from the district judge now an appeal in the first circuit relating to a dispute between the tam plaintiffs about who gets the fee which is of a substantial  and a point in which the government took no issue the conning ham court itself dealt with the evolving nature of the complaints and ultimately concluded that while cunningham's description of the fraud  included slightly different allegations because the government had changed its definition of what millennium could do in the medicare will say the court went on and said however all the essential elements of the covered conduct were in cunningham's complaint now that's important and then it went through them by the way and it actually deals with some of what millennium has been arguing or somehow different what judge the shot below was first she took millennium at its word and it's important to know when we obviously don't get a chance to reply to or apply to anything the ninth circuit that many of the arguments made in the reply before there are no connection to the arguments that were made in the first  millennium here and certainly were never presented to the district court judge for example millennium has never argued that the subpoena is a claim with the exception of suggesting that in its reply brief here for the first time and in fact  occasion of millennium now that's important because these are defined terms in our policy a claim which is a bold it capital c word is a defined term and by endorsement which was a manuscript it addition to the policy a claim was defined to include an investigation civil or criminal formal investigation subpoena the investigation and we were in agreement with that for five years now it's not just important because they're the a pal and they never made this argument to the district court and therefore it was waived there but it's also important because they never played it in their in their complaint below and there was a reference to us being the plaintiff we weren't we were sued they never applied it they never amended they consistently agreed with us that the only definition of claim that matters in this case is the one that says it's an investigation condensed by a subpoena now that's also important to the defenses in this case because explanations all turn on claims and a claim is defined to include  not only allegations but actual wrongful acts now another argument that they made for the very first time in their reply to try to get around what the panel mentioned to them on  argument about the very breath of what we call the specific claims exclusion and that's the exclusion that says there's no coverage for any claim capital see the fine word in any way involving america cunningham ages now that's important because we knew about them and how did we know about them because when they applied for insurance and this is in the record their general counsel working with those large insurance broker made clear to our wide world we're not going to say that anything in any way involving these types of claims will be covered here now that's not know who cirie coverage issue because after all there can be other types of claims there are there can be securities class actions brought by shareholders there can be claims by doctors or patients that they should have gotten reimbursement for drug testing or that it just testing was done well it can be other acquaints those things do not relate back to america ox cunningham and ages fraudulent billing claims in fact to be clear because he knew these were very broad lawsuits these competitor lawsuits these other problems he the current lawsuits challenge millenniums testing methodology going practice and relationships with physicians in other words every aspect of its business and then he excluded them now before anybody feels sorry for millennium sure they had prior coverage which avars lloyds they also had subsequent coverage so to some extent they missed this in their briefing if they're relating if they were referring to for example intimidation of witnesses which was something that the government complained about first answer is a sentence and inexplicably intertwined or in the language of our policy it's related to the other wrongful acts and therefore excluded and that's good enough it should be the end of the discussion but the second point is if it was separate if somehow you ignore that a claim is an investigation and you say that this is a separate claim somehow then post dates our policy and it goes into another policy period which i can say fortunately for allied world we don't work now to put things in further perspective this was a hide to ball for years we get sued in two thousand and twelve they immediately file for summary judgment when we're asking for discovery the day before the business day i should say before the summary judgment argument at that point front of judge hough they deliver some but not all documents and in those documents for the first time week at what had been a sealed documents so we can get it from a court record from there america oxidation and remember america is one of the three suits in the specific claim exclusion and by the way they had filed everything under seal all over the country which made it very hard for us to get anything to this prove actual coverage and in that in the allegations made by america talks in this lawsuit because a one quote because america south asians overlap so closely with the usa oh investigation should the government obtain any injunctive relief against millennium then america is for also be a beneficiary of such relief next as shown in the chart attached as exhibit three here too there is substantial overlap between the issues on which the usa o has requested information from millennium and the allegations made by america arts and its t l c third amended complaint about which america has propounded extensive discovery upon millennium there were a lot more and here is the real coincidence the chart that their lawyers and i'm forgetting whether it submitted in the context of briefing and then we used that at that argument iran or but what we said to her at the time was one they wanted saying there was no actual coverage they actually said this is a duty to defend policy and we said you're wrong you had right to invoke a duty to defend clause but you left it not to why she wanted to control your defense hire a very expensive counsel and tell us only what you wanted to tell us because if you instead turned it over to us we would appoint defense counsel who allied world considered competent but it wouldn't have been their counsel and allied world would have had certain control that it didn't happen they said you're right we misspoke and then when their reply preece for the first time they said but it doesn't matter it simply like a duty to defend standard and judge hof disagreed why because our policy says not only we have the key to advanced defense costs but it says subject to all other terms and conditions of our policy and what the briefing does not say on their side is that makes sense to give effect to all terms in the policy what it means is that if we think even before seeing whether there's actual coverage that there that there is a cover claim at that time we can pay defense costs before the actual suit is settled one were lost and then if it turns out either at the time of the settlement or one or win or lose it wasn't we can get and if you can get it back you get it back with interest we believe we would but we don't know that's a dispute i'm sure we would have with them but it ties into something else roger because there are two ways this can come off one is they contend it just means we have essentially they have an inviolate and voluble inviolate right to get our money and we can get it back later we say not so fast if we have coverage defenses it's not a duty to defend policy we don't we have the right for example to consent to defense costs in advance and you didn't ask us to concern we have the right to consent to other things it's not like a duty to defend policy in other words and we said if it turns out that the other situation which they're preaching doesn't contemplate is if it turns out initially we thought there was a duty to advance defense cost but something happens there's an amendment to the complaint or somebody testifies and says something for them that establishes that there really wasn't breach we can stop paying and we can say we never should've paid in the first place and that's not something they contemplate at all they say in order to give our reimbursement right meaning we had a duty to advance them not so your honour's instead if we thought there was a duty to paid defense costs and no coverage defenses to prevent that and that can happen it happens all the time but something later happens in the underlying litigation that shows that we were wrong we can stop paying the fence costs and we can say reimburse us and that matters because there are states california isn't one of them because  bumps in the g l context be uss but there are states like my state of pennsylvania where when you advance defense costs you don't have the right to get them back even if the facts of the law change and it establishes you never should have advanced in the first place unless you put it in the policy to accountant and based on my limited experience in this area before i got this job i was accustomed to policies where it would be paid as costs are incurred and i take it you're saying in this instance and that's always been my experience so come in is this case that's what i was familiar with but you're saying that in this area it's common that parties are not written that way i'm saying you can have been written either way and the fact that our says subject to all the terms and conditions of the policy means that we're allowed to apply the other terms and conditions and to be clear your honor not a single case they cite either to say that we're subject to something like a duty to defend standard even though it's not a policy or one that accoutrements of a duty to defend policy or because they just say we're wrong and we can get it back later which is sort of interesting since they went through bankruptcy and they know it but in any event and to answer your question no director officer was ever harmed we have something to all other terms and conditions of the policy and one of those terms and conditions of the policy says that we have to consent to things and that we have the right to apply our other terms and conditions of the policy to show there's no coverage so this is to be clear your honor policies are written both ways and this policy was written specifically to have language to treat it to omit to have that language with many policies omitted and they don't have a single policy that says subject to are the terms and conditions quick other common are two that relates to something you just asked me or you asked me a minute ago and that is they say they were somehow was a case where the ninth circuit said in agreeing with the insurer there was no coverage it would not reach the the other issue whether or not in a prior to seclude order that had to advance defense costs should also be reached and said it's moot their argument here which is somehow that even if they lose on the actual coverage they should have gotten the use of the money for a few years and i only touched on one area i touched  the missions to the america cockpit that they didn't give us until we got them on those too late and there was also a tolling agreement that they had in two thousand and twelve and entered into with the department of justice and there were also other documents and to be clear in september two thousand and fifteen when we had this the summary judgment argument that i lost in front of judge bush on i said to judge this on the wall street journal has reported that they have  she turned to them and said you know what's going on and their counsel said to judge bush on there are no allegations yet there were allegations they've had the complaint since march they didn't say we're not allowed to tell you and they also didn't say and there's allegations are too late but then at the time the only point i wanted to make is on the eight million dollars they say we would have had the use of and they should get ten percent interest against us well first off we do think that we would be able to have gotten interest from them if they had had the use of our money so it would have been a wash second it's not eight million dollars because five million is an excess and sure they can go after them for interest if they think gone if you read the recent break in this is it goes to a full analysis to make absolutely clear that the court's instinct was correct potential for coverage standard applies here is a separate defense section it creates a separate duty to advance defense costs that they you have been required to return all the fans costs incurred we believe well if on the merits we believe that at most we have to return part of it right but if everything needs to be return then we didn't receive we only received one hundred thousand dollars in the fence costs i think the result would be we return that except for the fact that they breached by not having provide met their duty to advance obligation and so we would have accrued interest the actual damages would be accrued interest on the three million we would argue for the full eight million because of the impact on the excess we would also have a bad end are you and are you contending that if you do have to return or would have had to return advanced costs for defense the you're not required to pay any interest on that oh absolutely not your honor because the policy makes one hundred percent clear that upon our request they shall advance defense costs and that at a later date then we shall pay them back at you're now having to return absolutely not because because of the fact that our right to the money started at the beginning and went through the time that we have to return it their right to get the money back only that's did at the point and which they in the policy one way or the other on interest no not on interest except it's in the language of the requirements of the do to advance if we pay back plus interest rates are right this fundamental right to the advancement of defense costs and the policy everyone sure  terms and visions here's the part they completely defeats their argument which is it says insure shall not be entitled to if the insurer shall not be entitled to payment of such defense costs under the terms and condition of this policy they will repay to the insurer so basically saying if or why would they see it twice if clearly if it's not subject to the terms and conditions of the policy we still get it but then they get it back later on it's just clear in the policy in my opinion or the minimum it's ambiguous quickly on the no hide the ball component just that i have a couple of seconds on that there's not a single suggestion in the record by the judges by the referees that we did anything wrong those in the hiding of anything and in fact they were the ones that caused the problem because they were their claims adjust admitted that the potential for corporate standard applied started providing the fans costs and we did the right thing by then and neatly moving for summary judgment that's the way these things work to say hey based on the allegations and the potential for standard we get coverage there's no question that at that time of the potential for standard of that have been applied we don't got uncovered you would have won were in hiding anything and then interestingly after two years of this government with all the things they said that we were hiding supposedly which we were not they have all this