J-A15047-14

1 

2014 PA Super 198 

AMERISOURCEBERGEN CORPORATION, IN THE SUPERIOR COURT OF 

INTEGRATED NEPHROLOGY NETWORK PENNSYLVANIA 

D/B/A/ DIALYSIS PURCHASING 

ALLIANCE, INC., F/K/A INTERNATIONAL 

NEPHROLOGY NETWORK, 

AMERISOURCEBERGEN SPECIALTY 

GROUP AND ASD HEALTHCARE, 

 Appellants 

v.

ACE AMERICAN INSURANCE COMPANY, 

 Appellee Nos. 2545 EDA 2013 

Appeal from the Order Entered July 16, 2013 

In the Court of Common Pleas of Philadelphia County

Civil Division at No(s): March Term, 2011, No. 002679

BEFORE: PANELLA, J., LAZARUS, J., AND JENKINS, J. 

OPINION BY: JENKINS, J. FILED SEPTEMBER 15, 2014 

 AmerisourceBergen Corporation, AmerisourceBergen Specialty Group, 

Integrated Nephrology Network, and ASD Healthcare (collectively 

"Amerisource”) incurred attorney fees and related costs defending a False 

Claims Act1

 lawsuit brought in Massachusetts federal court. Amerisource 

demanded that its insurer, ACE American Insurance Company (“ACE”), pay 

the attorney fees and costs, but ACE refused to pay on the basis of several 

exclusions in Amerisource’s 2009-10 policy. Amerisource brought an 

 

1

 31 U.S.C. § 3729 et seq. 
J-A15047-14

2 

insurance coverage action against ACE alleging breach of contract and bad 

faith. On July 16, 2013, the trial court granted ACE’s motion for summary 

judgment. 

 Amerisource filed a timely appeal to this Court. The trial court did not 

direct Amerisource to file a statement of matters complained of on appeal, 

opting instead to file a Pa.R.A.P. 1925(a) opinion incorporating by reference 

its order and opinion granting summary judgment. 

We agree with the trial court that ACE properly denied coverage under 

exclusion L in Amerisource’s 2009-10 policy, the “prior or pending litigation” 

exclusion. Accordingly, we affirm. 

A brief history of Amerisource’s policies with ACE and the False Claims 

Act lawsuit in Massachusetts provides the factual backdrop for our decision. 

Amerisource is a group of businesses that provides a vast range of services 

to healthcare providers and pharmaceutical companies, including 

distribution, logistics, clinical education, and marketing2

. Between May 2006 

and May 2010, Amerisource purchased the following professional liability 

insurance policies from ACE: 

2006-07 – Amerisource’s primary insurance carrier 

was St. Paul Travelers. Amerisource purchased an 

excess policy from Ace which provided $10 million 

in coverage over and above Amerisource’s selfinsurance and St. Paul’s primary coverage of $21 

million. Amerisource calls this a “tower” of coverage 

 

2

 R.R. 4499-4505. 
J-A15047-14

3 

in which Ace’s excess coverage was at the top of the 

tower3

. 

2007-08 – Ace provided primary coverage, the spot 

St. Paul’s held in 2006-07. This was a “replacement” 

policy for Ace’s 2006-07 policy, because ACE’s 2006-

07 excess coverage was replaced with primary 

coverage in 2007-08. The terms of the 37-page 

2007-08 primary policy were vastly different than 

the 4-page 2006-07 excess policy4. 

2008-09 – Ace provided primary coverage. The 

2008-09 policy is a “renewal” policy, since it renewed 

the primary coverage ACE provided in 2007-085. 

2009-10 – Ace provided primary coverage. This 

was a “renewal” policy, because it renewed the 

primary coverage ACE provided in 2008-09 and 

2007-086. 

The policy year for each policy began on May 1st. 

The False Claims Act (“FCA”) is a civil fraud statute that creates a right 

of action to recover damages and penalties, on behalf of the federal 

government, for false claims or statements to the government relating to 

government payments. Citizens have the right under the qui tam provision 

of the FCA, 31 U.S.C. § 3730(b), to bring “relator complaints” on behalf of 

the United States. The complaint must be filed in camera under seal and 

cannot be served on the defendant until the court so orders. Id. The 

federal government has the duty to examine the sealed complaint to 

 

3

 R.R. 3139-46 (2006-07 excess policy). 

4

 R.R. 3207-45 (2007-08 primary coverage policy). 

5

 R.R. 3248-3300 (2008-09 primary coverage policy). 

6

 R.R. 51-107 (2009-10 primary coverage policy); see also Amerisource’s 

Reply to New Matter, ¶ 58 (Amerisource’s admission that the 2009-10 policy 

is the “second renewal of a policy first issued effective May 1, 2007”).
J-A15047-14

4 

determine if the United States will prosecute the FCA claims itself, dismiss 

the claims, or release them for prosecution by the relator. Only when the 

United States takes up a qui tam action itself or releases it to the relator for 

prosecution does the court unseal the complaint and permit service on all 

defendants. 

On June 5, 2006, Kassie Westmoreland filed a qui tam action in the 

District Court of Massachusetts against Amerisource and another company, 

Amgen, under the FCA7

. The complaint was kept under seal for three years. 

Westmoreland alleged that Amgen and Amerisource conspired with medical 

providers to submit false Medicare claims relating to Aranesp, an anemia 

drug8. 

Amerisource claimed that it learned of the qui tam case in March 2008, 

when Amgen informed Amerisource that Amgen was under federal 

investigation9. In February 2009, the Department of Justice (“DOJ”) 

informed Amerisource that it was reviewing a relator’s allegations about 

Amgen and Amerisource. On February 11, 2009, the Massachusetts federal 

court permitted the government to place a redacted copy of the unserved 

 

7

 R.R. 701-796 (original qui tam complaint). The complaint was later 

amended several times. 

8

 The action concluded with a settlement in which Amgen agreed to pay 

$762 million in fines to the government, and INN, one of 

AmerisourceBergen’s subsidiaries, agreed to pay $15 million to the 

government. 

9 R. 41a (allegation in Amerisource’s complaint in present action). R. 4724-

25a (Debra Swartz deposition). 
J-A15047-14

5 

qui tam complaint on the electronic docket10. On June 18, 2009, the DOJ 

issued a confidential subpoena to Amerisource concerning the qui tam

matter11. 

On July 8, 2009, Amerisource sent ACE formal notice of a potential 

claim and a copy of the redacted complaint12. In January 2010, Amerisource 

received service of original process in the Massachusetts lawsuit13. On April 

5, 2010, ACE denied coverage to Amerisource under the 2009-10 primary 

coverage policy and refused to defend Amerisource in the qui tam matter or 

pay claims expenses14. 

In March 2011, Amerisource filed the present insurance coverage 

action against ACE, which argued in its defense that exclusions L, K and Y in 

the 2009-10 policy barred coverage for the qui tam action. Subsequently, 

the trial court entered summary judgment in favor of ACE on the ground 

that both exclusions L (“prior or pending litigation”) and Y (“false, deceptive 

or unfair business practices”) precluded coverage. 

In an appeal from an order granting summary judgment, 

our scope of review. . .is plenary, and our standard 

of review is clear: the trial court's order will be 

reversed only where it is established that the court 

committed an error of law or abused its discretion. 

 

10 R.R. 3326-3435a (e-mail from Nathan Andrisani to Jonathan Sturz). 

11 R.R. 3577-90a (June 18, 2009 subpoena Issued by the United States 

Attorney's Office to Amerisource). 

12 R.R. 3592-95a (July 8, 2009 Notice of Circumstance Letter from Walter J. 

Hope, Jr to William Wise). 

13 R.R. 4827-4930a (relator action docket). 

14 R.R. 4318-23a (denial of coverage letter).
J-A15047-14

6 

Summary judgment is appropriate only when the 

record clearly shows that there is no genuine issue of 

material fact and that the moving party is entitled to 

judgment as a matter of law. The reviewing court 

must view the record in the light most favorable to 

the nonmoving party and resolve all doubts as to the 

existence of a genuine issue of material fact against 

the moving party. Only when the facts are so clear 

that reasonable minds could not differ can a trial 

court properly enter summary judgment. 

Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa.Super.2013) (citation 

omitted). 

Generally, the proper construction of an insurance policy is a matter of 

law which the court may address at the summary judgment stage. 

Nationwide Mut. Ins. Co. v. Nixon, 682 A.2d 1310, 1313 

(Pa.Super.1996). The court may resolve via summary judgment whether a 

claim is within a policy's coverage or barred by an exclusion, provided that 

the policy's terms are clear and unambiguous so as to preclude any issue of 

material fact. Butterfield v. Giuntoli, 670 A.2d 646, 651 (Pa.Super.1995). 

Amerisource’s 2009-10 policy provides that the terms and conditions 

of the policy 

shall be interpreted and construed in an evenhanded 

fashion as between the parties. If the language of 

this Policy is deemed to be ambiguous or otherwise 

unclear, the issue shall be resolved in the manner 

most consistent with the relevant terms and 

conditions, without regard to authorship of the 

language, without any presumption or arbitrary 

interpretation or construction in favor of either the 

Insureds or the Insurer and without reference to the 
J-A15047-14

7 

reasonable expectations of either the Insureds or the 

Insurer15

. 

In our view, this clause exists in harmony with the well-known principle that 

when the court interprets an insurance contract, words that are clear and 

unambiguous must be given their plain and ordinary meaning. State Farm 

Fire and Cas. Co. v. MacDonald, 850 A.2d 707, 710 (Pa.Super.2004) 

(citation omitted). 

Amerisource’s policies are “claims made” policies, a type of policy 

which covers all claims made during the policy period and timely reported by 

the insured. Since Amerisource made its claim for coverage in early 2010, 

the language of the 2009-10 policy governs this case. The 2009-10 policy 

defines “claim”, in relevant part, as a “civil proceeding against [Amerisource] 

seeking monetary damages...commenced by the service of a complaint or 

similar pleading” or a “written demand against [Amerisource] for monetary 

damages16.” As one court has said, claims made policies 

are intended by insurers to avoid the hazard of an 

indefinite future: Once the policy period has expired,

the book can be closed on everything except thenpending claims. On the other hand, an insurer incurs 

a risk with this kind of policy: liability for a claim that 

has been brewing and was ripe to erupt before the 

policy period, but is asserted only after the policy 

period begins. For this reason, claims made policies 

generally include a number of endorsements and 

exclusions intended to limit this front end risk by 

cutting off liability for claims ready, but not yet 

made, at the start of the policy period. 

 

15 R. R. 74. 

16 R.R. 57 (definition of “claim” in 2009-10 policy). 
J-A15047-14

8 

Ameriwood Indus. Int'l Corp. v. Am. Cas. Co., 840 F.Supp. 1143, 1148–

49 (W.D.Mich.1993) (internal quotations and citations omitted). 

Exclusion L in the 2009-10 policy, entitled “Prior or Pending Litigation”, 

is one such exclusion “intended to limit [ACE’s] front end risk for claims 

ready, but not yet made, at the start of the policy period.” Id. Exclusion L 

excludes any claim 

alleging, based on, arising out of, or attributable to 

any prior or pending litigation, claims, demands, 

arbitration, administrative or regulatory proceeding

or investigation filed or commenced on or before 

the earlier of the effective date of this policy or 

the effective date of any policy issued by [ACE] 

of which this policy is a continuous renewal or 

a replacement, or alleging or derived from the 

same or substantially the same fact, circumstance or 

situation underlying or alleged therein. 

[Emphasis added]. Applied to this case, exclusion L precludes coverage of 

any claim based on prior litigation filed or commenced on or before the 

earlier of: 

(1) the effective date of Amerisource’s 2009-10 policy, or 

(2) the effective date of any policy issued by ACE of which the 2009-

10 policy is a continuous renewal or a replacement. 

Based on our review of the record, we conclude that the effective date 

of Amerisource’s 2009-10 primary coverage policy was May 1, 2009. This 

policy was a continuous renewal of the primary coverage policy issued by 

ACE to Amerisource effective May 1, 2007. Therefore, exclusion L precludes 
J-A15047-14

9 

coverage for litigation filed or commenced on or before May 1, 2007. Since 

Westmoreland filed her qui tam action on June 5, 2006, almost one year 

before May 1, 2007, ACE properly invoked exclusion L to deny coverage for 

defense costs that Amerisource incurred in defending against 

Westmoreland’s action. 

Amerisource submits two arguments for the proposition that exclusion 

L does not apply. We address each in turn. 

First, Amerisource contends that Westmoreland’s lawsuit falls outside 

of exclusion L because Westmoreland merely filed her complaint under seal 

in June 2006 but did not serve it on Amerisource until midway through the 

2009-10 policy period (January 2010). We disagree. 

Amerisource’s argument requires us to interpret the meaning of “filed” 

and “commenced” within the context of Exclusion L. Amerisource’s policy 

does not define these terms -- but as explained above, we must construe 

clear and unambiguous words in accordance with their plain and ordinary 

meaning. State Farm, supra, 850 A.2d at 710. Viewed in this light, we 

think it is clear that litigation is “filed” or “commenced” against an entity 

when it names that entity as a defendant, is filed with a court, and is 

docketed and given a case number. Nothing in the ordinary meaning of 

these terms requires service of original process or unsealing of the complaint 

in order for an action to be “filed” or “commenced”. No litigator in today’s 
J-A15047-14

10

world would interpret an action he has filed with the prothonotary to be 

“unfiled” or “uncommenced” until he serves the complaint on the defendant. 

We also find significant that the 2009-10 policy defines a “claim” as a 

“civil proceeding against [Amerisource] seeking monetary 

damages...commenced by the service of a complaint or similar pleading.” 

The explicit service requirement in this definition demonstrates that the 

parties knew how to include a service requirement when they so desired. 

Thus, the absence of a service requirement from exclusion L demonstrates 

that the parties did not intend for “filing” or “commencement” of litigation in 

exclusion L to depend upon service of process. 

Our interpretation of “filed” and “commenced” is consistent with a 

decision from this Court and from another federal court. See Norristown 

Auto. Co., Inc. v. Hand, 562 A.2d 902 (Pa.Super.1989); HR Acquisition I 

Corp. v. Twin City Fire Ins. Co., 547 F.3d 1309 (11th Cir. 2008). In 

Hand, Hand filed a civil complaint against Norristown Automobile Company 

(“Norristown”) at 1:01 p.m., and Norristown filed a civil complaint against 

Hand in a different court on the same day at 4:13 p.m. Hand filed 

preliminary objections seeking dismissal of Norristown’s complaint on the 

ground that Hand’s action was a prior pending action. Norristown argued 

that both actions should be deemed filed at the same time because they 

were filed on the same day. We held, however, that “Hand's action must be 

considered prior in time to that of Norristown.” Id., 562 A.2d at 904. 
J-A15047-14

11

Hand thus limits the determination of priority to the time that the first 

action is filed; the time of service is irrelevant to whether the first action 

constitutes a “prior” action. Hand thus implicitly refutes Amerisource’s 

contention that the qui tam action filed under seal in June 2006 was not 

“prior litigation” under exclusion L of the 2009-10 policy. 

In HR Acquisition I Corp., an insured requested the insurer to 

provide coverage for litigation expenses incurred in a shareholder’s 

derivative lawsuit commenced during the policy period. The gravamen of 

the action was that the insured participated in a fraudulent scheme with 

other defendants to submit false claims to the federal government's 

Medicare program. The insurer denied coverage under the “prior litigation” 

exclusion17 in the insured’s policy based on a qui tam action alleging the 

same misconduct that had been filed under seal several years before the 

policy period and that was never served on the insured – circumstances that 

are virtually identical to the present case. Another defendant settled the 

claims by paying the United States government $7.9 million plus interest, 

and the case was dismissed with prejudice. Despite the lack of service, the 

Eleventh Circuit held that the insurer properly denied coverage under the 

 

17 The exclusion stated that the insurer “shall not be liable to make any 

payment for Loss in connection with any Claim. . .based upon, arising from, 

or in any way related to any demand, suit, or other proceeding against any 

Insured which was pending on or existed prior to the applicable Prior 

Litigation Date specified by endorsement to this Policy, or the same or 

substantially the same facts, circumstances or allegations which are the 

subject of or the basis for such demand, suit, or other proceeding.” Id., 547 

F.3d at 1312. 
J-A15047-14

12

“prior litigation” exclusion, stating: “The ‘prior litigation’ exclusion only 

requires that a related lawsuit ‘against’ [the insured] be ‘pending’ or that it 

‘exist.’ The exclusion does not require that [the insured] be ‘served’ or 

made ‘party’ to an action.” Id., 547 F.3d at 1317. Given the similarity 

between HR Acquisition I Corp. and this case, we find HR Acquisition I 

Corp. persuasive authority for our construction of the “prior litigation” 

exclusion in Amerisource’s 2009-10 policy. 

Second, Amerisource contends that exclusion L does not apply 

because the series of insurance policies issued by ACE to Amerisource 

extends back to May 1, 2006, thus predating Westmoreland’s June 2006 

lawsuit. Amerisource’s argument, phrased in terms of exclusion L, is that 

Westmoreland filed or commenced her lawsuit on or after “the earlier of the 

effective date of the [2009-10] policy or of any policy issued by [ACE] of 

which [the 2009-10] policy is a continuous renewal or a replacement.” We

disagree with Amerisource. 

Westmoreland obviously filed her June 2006 lawsuit before the 

effective date of the 2009-10 policy (May 1, 2009). Therefore, 

Amerisource’s argument boils down to whether Westmoreland filed her 

lawsuit on or after “the effective date of. . .any policy issued by [ACE] of 

which [the 2009-10] policy is a continuous renewal or a replacement.”

The 2009-10 policy does not define “renewal” or “replacement”. 

Therefore, we must construe these words in accordance with their plain and 
J-A15047-14

13

ordinary meaning18

. State Farm, supra, 850 A.2d at 710. The ordinary 

meaning of “replace” is “to be used instead of19.” The ordinary meaning of 

“renew” is “to do again20.” Thus, we construe “replacement policy” to mean 

“a policy used instead of another policy” and “continuous renewal policy” to 

mean “a policy that is used again for consecutive policy periods”. 

The 2009-10 primary coverage policy is a “continuous renewal” of the 

2007-08 and 2008-09 primary coverage policies. The policy numbers of the 

2007-08, 2008-09 and 2009-10 policies -- EON 621683498 001, EON 

621683498 002, and EON 621683498 003 – share the same prefix and 

middle components (EON 621683498) and have consecutive numerical 

suffixes (001, 002 and 003). See Wendy’s Intern., Inc. v. Illinois Union 

Ins. Co., 2007 WL 710242, *2 (S.D. Ohio 2007) (observing that policies 

numbered EON G21639175 002 and 003 were successive renewals of policy 

number EON G21639175 001).21 This, however, does not overcome 

 

18 Although our legislature has defined “renewal” for purposes of automobile 

insurance policies, see 40 P.S. § 991.2001, and “replacement” for purposes 

of life insurance policies, see 40 P.S. § 625-1, these definitions are not 

controlling in this dispute over the interpretation of an agreement between 

two private parties. See Profit Wize Marketing v. Wiest, 812 A.2d 1270, 

1276 n. 4 (Pa.Super.2002) (“While the General Assembly is free to define 

‘prevailing party’ in any fashion it chooses, its definition [of this term] does 

not control in a contract dispute. This Court is constrained to interpret the 

language of this private contract in accordance with the plain and ordinary 

meaning of the Agreement's terms”).

19 See Merriam Webster Online Dictionary. 

20 Id.

21 Indeed, ACE concedes that the 2009-10 policy is a continuous renewal of 

the 2007-08 and 2008-09 policies. 
J-A15047-14

14

exclusion L, because the 2007-08 policy became effective on May 1, 2007, 

almost one year after Westmoreland filed suit. 

In an attempt to surmount this obstacle, Amerisource argues: 

(1) the 2007-08 primary coverage policy is a “replacement” of the 

2006-07 excess policy that ACE issued on May 1, 2006; thus, 

(2) Westmoreland’s June 2006 lawsuit was filed one month after a 

policy issued by ACE of which the 2009-10 policy “is a continuous 

renewal or a replacement.”

In effect, Amerisource claims the right under exclusion L to graft the 

“replacement” of the 2006 policy onto subsequent “continuous renewals.” 

This construction is not consonant with exclusion L’s language, as ACE 

cogently explains: 

Exclusion L’s actual wording does not permit 

conjoining a supposed ‘replacement’ with a 

subsequent ‘renewal line.’ Exclusion L is worded in 

the disjunctive, referencing: ‘the effective date of 

any policy issued by the Insurer of which this Policy

is a continuous renewal or a replacement. . .’ 

Exclusion L does not say the prior/pending date is 

determined by ‘. . .the effective date of any policy 

issued by the Insurer of which this Policy is the last 

of any combination of renewals and replacements...’ 

Thus, it is irrelevant whether the 2007 policy 

replaced another policy. The actual wording of 

Exclusion L focuses on whether this Policy, i.e., the 

2009 policy, is a ‘replacement’ of another policy. 

[Amerisource] does not contend the 2009 Policy 

could be ‘a replacement’ of any 2006 policy. 

ACE Brief, p. 22 (emphasis in part in original and in part added). Under 

Amerisource’s interpretation, the 2009-10 policy is both (1) a “continuous 
J-A15047-14

15

renewal” of the 2007-08 and 2008-09 policies and (2) a replacement of the 

2006-07 policy issued three policy terms before with two primary policies 

issued in between. This construction does not withstand scrutiny due to the 

disjunctive wording of exclusion L: “a continuous renewal or a replacement”. 

In short, the 2009-10 policy did not “replace” the 2006-07 policy. The 

only policy that “replaced” the 2006-07 policy was the 2007-08 policy. 

ACE’s construction of exclusion L thus carries the day.

For these reasons, we agree with the trial court’s determination that 

exclusion L of Amerisource’s 2009-10 policy precludes Amerisource from 

obtaining coverage from ACE for attorney fees and related costs incurred in 

defending against Westmoreland’s qui tam lawsuit. Since we find that 

exclusion L applies, we need not review whether exclusion Y applies or 

address the other grounds for affirming the judgment raised in ACE’s brief.

 Order affirmed. 

Judgment Entered. 

Joseph D. Seletyn, Esq. 

Prothonotary 

Date: 9/15/2014