1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TEXAS

SHERMAN DIVISION

HealthTrackRx Indiana, Inc.,

Plaintiff,

v.

RSUI Indemnity Company,

Defendant.

 Civil Action No.: _______________

 JURY TRIAL DEMANDED

COMPLAINT

Plaintiff HealthTrackRx Indiana, Inc. alleges, through counsel, and for its 

complaint against defendant RSUI Indemnity Company, as follows:

The Nature of the Action

1. This is an insurance coverage and bad faith action arising out of insurer RSUI 

Indemnity Company’s (“RSUI”) failure and refusal to provide the full defense coverage 

owed to its insured HealthTrackRx Indiana, Inc. (“HealthTrackRx”) for two pending 

“Regulatory Claims,” as that term is defined in the policy at issue in this lawsuit.

2. Those Regulatory Claims fall within the regulatory coverage provided by the 

relevant policy issued by RSUI, and trigger RSUI’s associated duty to defend 

HealthTrackRx under the policy.

3. That much does not appear in dispute - since in response to HealthTrackRx’s 

tender, RSUI agreed to defend and to the selection of counsel.

4. The dispute here concerns the fact that, under the terms of the policy, and its 

special regulatory coverage endorsement, RSUI’s duty to defend these Regulatory Claims 

is not subject to a retention and is outside of policy limits.

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 1 of 10 PageID #: 1
2

5. However, RSUI incorrectly insists that HealthTrackRx must first pay a 

$250,000 retention to receive its defense coverage, and that RSUI will then only pay the 

next $250,000 in defense costs.

6. Under these improper limitations being imposed by RSUI, HealthTrackRx 

receives only a small fraction of the defense coverage owed under the policy for the 

Regulatory Claims. Furthermore, HealthTrackRx improperly has had to wait until the 

exhaustion of an inapplicable $250,000 retention rather than receiving the immediate and 

“first-dollar” regulatory claim defense to which it is entitled.

7. HealthTrackRx alerted RSUI to these errors and to the importance of RSUI 

correcting itself and providing a full defense. But RSUI refuses to do so.

8. Accordingly, HealthTrackRx has been forced to bring this action to establish 

and enforce RSUI’s proper duty to defend the Regulatory Claims. HealthTrackRx 

already has incurred significant defense costs which all should have been paid by RSUI 

(instead of its insured). HealthTrackRx also brings a bad faith claim to recover its 

attorneys fees resulting from RSUI’s unreasonable conduct requiring this litigation.

The Parties

9. Plaintiff HealthTrackRx Indiana, Inc. is an Indiana corporation with its 

principal place of business in Denton, Texas.

10. On information and belief, defendant RSUI Indemnity Company is a New 

Hampshire corporation with its principal place of business in Georgia.

11. On information and belief, at all pertinent times RSUI was doing business 

within Denton County, Texas and was issuing insurance policies covering activities 

within Denton, Texas.

Jurisdiction and Venue

12. This Court has an independent basis of jurisdiction based upon the complete 

diversity of the parties, and because the amount in controversy set forth in this complaint 

exceeds $75,000, exclusive of costs. See 28 U.S.C. § 1332.

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 2 of 10 PageID #: 2
3

13. Venue is proper in this District under 28 U.S.C. § 1391 because jurisdiction is 

based only upon diversity of citizenship and a substantial part of the events or omissions 

giving rise to the claim occurred in this District.

General Allegations

14. HealthTrackRx brings this complaint to resolve a defense coverage dispute 

with its insurer, RSUI, pertaining to two Regulatory Claims.

15. Specifically, HealthTrackRx brings this complaint to: (1) determine 

HealthTrackRx’s and RSUI’s respective rights and duties with respect to defense 

coverage for the Regulatory Claims under the relevant RSUI policy’s special Regulatory 

Coverage endorsement; (2) recover damages for RSUI’s breach of its duty to defense and 

other contractual defense coverage obligations to HealthTrackRx; and (3) recover 

damages associated with RSUI’s unreasonable treatment of its duty to defend with 

respect to attempting to impose a inapplicable $250,000 retention and an inapplicable 

$250,000 defense costs limit.

Background Facts

16. HealthTrackRx is a leading infectious disease lab test company. 

HealthTrackRx delivers next-morning test results to healthcare providers nationwide, 

specializing in TR-PCR (Real-Time Reverse Transcription Polymerase Chain Reaction), 

one of the foremost methods of detecting bacteria or viruses on the molecular level. For 

more than 20 years, HealthTrackRx has enabled accurate clinical decisions through its 

molecular testing platform, advancement in pathogen detection and identification, and 

leadership in antimicrobial stewardship.

17. Like most companies operating in the healthcare sector, and with significant 

billings through government healthcare programs, HealthTrackRx receives significant 

regulatory oversight.

18. On or about January 27, 2023, HealthTrackRx received a Regulatory Claim 

seeking the production of sixteen (including subparts) broad categories of company 

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 3 of 10 PageID #: 3
4

documents and twenty-five written interrogatories (the “January Regulatory Claim”). On 

or about July 5, 2023, HealthTrackRx received a second Regulatory Claim seeking the 

production of a separate ten (including subparts) categories of company documents and 

eleven interrogatories (the “July Regulatory Claim”).

19. Addressing and responding to such requests in the healthcare sector requires 

the retention of experienced counsel, and can be extremely time consuming and 

expensive, depending on the scope of the inquiry. 

20. Both the January Regulatory Claim and July Regulatory Claim remain 

pending. 

The RSUI Policy

21. As part of its comprehensive risk management strategy, and as a good actor 

operating in a highly-regulated industry, HealthTrackRx’s parent company, PL Parent, 

LLC, procured and maintained significant industry-specialized insurance coverage for 

itself and for its subsidiaries. 

22. As part of that program, PL Parent, LCC purchased RSUI Private Company 

Management Liability Policy Number PP700217, which provided broad primary liability 

coverage for HealthTrackRx1for the period of a least July 19, 2022 to July 19, 2023 (the 

“Policy”). The Policy and all its terms are incorporated by reference into this complaint.2

23. At all relevant times, the required premiums were paid for the Policy and the 

Policy was in full force and effect.

24. One of the most important features of the Policy is that it contains a broad 

duty to defend as to the Policy’s various coverage parts. The Policy’s general terms and 

 

1 The Policy defines “Insured Organization” to include PL Parent, LLC and “any Subsidiary

existing prior to or at the inception date of this policy” (emphasis in original, for this and all 

policy quotations), which therefore includes HealthTrackRx.

2 A copy is not attached due to its volume and because it contains some commercially sensitive 

information. HealthTrackRx and RSUI both have complete copies of the Policy, and a copy can 

be provided upon request.

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 4 of 10 PageID #: 4
5

conditions, applicable throughout the Policy, provide, inter alia, that “It shall be the right 

and duty of the Insurer to defend any Claim against any Insured for which coverage

applies under this policy . . .”

25. Relevant here, the Policy also contains a special Texas - Regulatory 

Coverage endorsement that makes two significant modifications to the Policy with regard 

to a Regulatory Claim, such as those here at issue. 

26. First, the endorsement makes clear that coverage is being provided under the 

Policy for “Regulatory Claims,” which it defines to include an array of regulatory 

demands, investigations, and other types of processes and proceedings. As agreed by 

RSUI, the January Regulatory Claim and July Regulatory Claim are such “Regulatory 

Claims.” Under the endorsement, indemnity coverage for Regulatory Claims is limited 

to $250,000 excess of a $250,000 retention.

27. Second, and most important for the coverage dispute at hand, the 

endorsement moves defense costs for Regulatory Claims to outside of the retention and to 

outside of policy limits.

28. Under the Policy, only the defined term “Loss” is subject to a retention and 

erodes policy limits. The default under the Policy is to include “Defense Expenses” 

within the definition of “Loss.” Therefore, for most coverage under the Policy, defense 

coverage is excess of the retention and erodes policy limits. But, importantly, the Policy 

also makes clear that may not always be the case because “Loss shall have the meaning 

set forth in each applicable Coverage Section or any applicable endorsements attached to 

this policy.”

29. The Texas - Regulatory Coverage endorsement provides an amended 

definition of “Loss” that is “[s]olely with respect to coverage afforded by this 

endorsement.” For the Regulatory Coverage the “Loss” that is subject to a retention, and 

which erodes policy limits, no longer includes Defense Expenses.

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 5 of 10 PageID #: 5
6

30. Therefore, in the case of a Regulatory Claim triggering the Policy’s 

Regulatory Coverage, RSUI has a duty to defend with no retention and that does not 

erode policy limits. This is a common and more valuable type of defense coverage. By 

this same token, in the event of any need for indemnity coverage, RSUI’s liability would 

be limited to $250,000 excess of a $250,000 retention.

The Coverage Claim and RSUI’s Refusal to Acknowledge and Provide Coverage

31. The January Regulatory Claim and July Regulatory Claim (collectively, the 

“Regulatory Claims”) each were timely tendered to RSUI for a defense under the Policy.

32. RSUI responded by acknowledging that each of the Regulatory Claims 

triggers the additional coverage provided by the Texas-Regulatory Coverage 

endorsement, subject to an alleged reservation of rights.

33. RSUI agreed to the selection of defense counsel for each of the Regulatory 

Claims.

34. But RSUI also took the incorrect position that its defense coverage 

obligations for the Regulatory Claims were subject to a $250,000 retention and then 

limited to $250,000 of defense costs once the alleged retention is exhausted.

35. On September 20, 2023, counsel for HealthTrackRx informed RSUI of the 

error in the insurer’s position and of RSUI’s obligation to provide “first-dollar” defense 

coverage outside of policy limits.

36. On September 26, 2023, RSUI responded, reiterating its incorrect 

interpretation of the policy defense obligations and informing HealthTrackRx, “We stand 

by our previously stated coverage position.”

37. Accordingly, although significant defense costs have been incurred for the 

Regulatory Claims, RSUI has not paid any of those defense costs, and instead has 

improperly required HealthTrackRx to pay the first $250,000 of defense costs.

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 6 of 10 PageID #: 6
7

FIRST CAUSE OF ACTION

(Declaratory Relief)

38. HealthTrackRx incorporates the allegations of all of the preceding 

paragraphs of this complaint, as though fully set forth herein.

39. There presently exists an actual and continuing controversy between 

HealthTrackRx and RSUI regarding RSUI’s defense coverage obligations under the 

Policy resulting from the Regulatory Claims.

40. HealthTrackRx contends, among other things, that the Policy obligates RSUI 

to provide a defense not subject to the retention and without eroding the policy limits, for 

both the January Regulatory Claim and the July Regulatory Claim (and the associated 

proceedings).

41. RSUI disputes that contention, instead taking the position that its defense 

coverage obligations are limited to $250,000 in Defense Expenses and subject first to a 

$250,000 retention.

42. HealthTrackRx desires a judicial determination and declaration as to these 

disputes concerning RSUI’s duty to defend and payment of defense costs under the 

Policy.

43. A judicial declaration is necessary and appropriate under these circumstances 

in order that the parties may ascertain their respective rights and obligations under the 

Policy, and also because the Regulatory Claims and need for defense coverage are 

ongoing.

SECOND CAUSE OF ACTION

(Breach of Contract)

44. HealthTrackRx incorporates the allegations of all of the preceding 

paragraphs of this complaint, as though fully set forth herein.

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 7 of 10 PageID #: 7
8

45. All relevant conditions and requirements under the Policy for RSUI to have a 

duty to defend the January Regulatory Claim and the July Regulatory Claim, and the 

associated proceedings, have been satisfied.

46. Pursuant to the terms of the Policy, RSUI has had an obligation to pay for 

that defense, including the defense costs already billed by its approved defense counsel, 

not subject to a retention and not subject to a policy limit.

47. In breach of those obligations, RSUI has not paid any defense costs to date, 

nor has RSUI reimbursed any defense costs that HealthTrackRx has had to pay to defense 

counsel.

48. Likewise, in both present and anticipatory breach of its Policy obligations, 

RSUI indicated that it will only pay $250,000 in defense costs, and that it will do so only 

after HealthTrackRx exhausts an inapplicable $250,000 retention.

49. As a direct and proximate result of RSUI’s breaches, HealthTrackRx has 

sustained substantial losses, including the attorney’s fees and other costs that 

HealthTrackRx already incurred and will continue to incur for the defense of the 

Regulatory Claims and associated proceedings.

THIRD CAUSE OF ACTION

(Breach of the Covenant of Good Faith and Fair Dealing)

50. HealthTrackRx incorporates the allegations of all of the preceding 

paragraphs of this complaint, as though fully set forth herein.

51. RSUI has taken an unreasonably narrow interpretation of its duty to defend 

associated with the Policy’s Regulatory Coverage, which is contradicted by the Policy 

language and basic rules of insurance contract interpretation.

52. HealthTrackRx has pointed out these errors to RSUI, but RSUI refuses to 

alter its position, instead standing by its erroneous position without reasonable 

explanation.

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 8 of 10 PageID #: 8
9

53. These actions and inactions show that RSUI is improperly placing its own 

self-interest in limiting or reducing its coverage payment obligations ahead of the 

interests and needs of its policyholder who has the right to an immediate and full defense.

54. Likewise, on information and belief, RSUI did not conduct a proper 

investigation of its defense coverage obligations under the Policy, as RSUI’s position is 

contrary to the Policy language and applicable insurance law principles.

55. RSUI either knows better or should know better, and its unreasonable 

conduct is a breach of the covenant of good faith and fair dealing and constitutes bad 

faith.

56. As a proximate result of RSUI’s misconduct, HealthTrackRx has been 

damaged as alleged, including by having to incur the time and resources to file and 

prosecute this litigation to establish and enforce its coverage rights. The full amount of 

such damages will be proven at trial.

PRAYER FOR RELIEF

Wherefore, plaintiff HealthTrackRx prays for judgment as follows:

On the First Cause of Action:

1. For the Court to order and declare that, under the Policy, RSUI is 

obligated to provide defense coverage, not subject to a retention and not subject to a 

policy limit, for HealthTrackRx’s incurred and future defense costs for the January 

Regulatory Claim and July Regulatory Claim and the associated proceedings.

On the Second Cause of Action:

2. For compensatory damages in an amount to be proven at trial;

On the Third Cause of Action:

3. For compensatory damages in an amount to be proven at trial, including 

its attorney’s fees and other expenses incurred in prosecuting the First and Second Causes 

of Action in this lawsuit.

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 9 of 10 PageID #: 9
10

On All Causes of Action:

4. For its costs of suit;

5. For pre-judgment and post-judgment interest at the maximum legal rate on 

all sums awarded; and

6. For such other and further relief as the Court may deem just and proper.

JURY DEMAND

HealthTrackRx hereby demands a trial by jury on all issues so triable.

Dated: December 1 2023 HALPERN MAY YBARRA GELBERG LLP

__/s/ Marc D. Halpern ___ 

Marc D. Halpern (California #216426)

Douglas J. Brown (California #248673)

600 W Broadway, Suite 1060

San Diego, CA 92101

Phone: (619) 618-7000

Fax: (619) 618-7001

marc.halpern@halpernmay.com

douglas.brown@halpernmay.com

(pro hac vice applications forthcoming)

Chad Arnette

Texas Bar No. 24014751

KELLY HART & HALLMAN LLP 

201 Main Street, Suite 2500

Fort Worth, Texas 76102

(817) 878-3561 (Phone)

(817-989-9761 (Fax)

chad.arnette@kellyhart.com

Attorneys for Plaintiff

HealthTrackRx Indiana, Inc.

Case 4:23-cv-01063-ALM Document 1 Filed 12/01/23 Page 10 of 10 PageID #: 10