Harvard Suit Blaming Marsh for Its $15M Insurance Denial Filed Too Late, Judge Rules

After losing two bids to recover $15 million from its insurer for costs related to its failed legal defense of its admissions policy, Harvard University has now failed in a bid to hold its insurance broker Marsh responsible.

A federal judge in Massachusetts has ruled that Harvard was itself untimely with its suit alleging that its broker Marsh breached its contact by failing to timely notify its excess insurer of the litigation brought by the Students for Fair Admissions (SFFA). The court found that New York’s six-year statute of limitations plus a 228-day COVID-related tolling extension ran out on September 15, 2022, which was 13 months before Harvard sued Marsh for breach of contract on October 25, 2023.

US District Judge Allison D. Burroughs also found that a tolling agreement between Harvard and Marsh signed in 2023 did not apply because it also came after the September 15, 2022 deadline and because it did not revive any SFFA claims otherwise barred by any timing defenses.

The lawsuit by SFFA against Harvard culminated with a landmark ruling by the U.S. Supreme Court in June 2023 that found Harvard’s affirmative action admissions policy was unconstitutional.

The SFFA lawsuit was filed Nov. 17, 2014. Harvard’s primary carrier — AIG’s National Union Fire Insurance — was immediately notified of the claim event but Zurich was not notified until May 2017, well after the 90-day notification window.

AIG paid what it owed as primary insurer but Harvard’s excess insurer Zurich American denied coverage for the high-profile litigation because it had not been timely notified of the case. When the university went to court to force Zurich to pay up, Harvard lost in federal district court in November 2022 and then again on appeal last August. The courts found Zurich rightfully denied coverage because it did not receive timely notice of the litigation.

Harvard then sought to hold Marsh responsible, arguing that the broker failed in its duty to notify Zurich. Harvard argued that as its broker, Marsh undertook the contractual obligation to “prepare loss notices to insurers and notify insurers of claims.” Further, Harvard said Marsh owed a duty to perform its duties in a “professional manner that accorded with the applicable standard of care.”

According to the timeline provided by Harvard, on Nov. 18, 2014, Harvard sent an email to Marsh regarding the SFFA action requesting that Marsh report the matter to AIG. Harvard says it did not discover Marsh’s failure to place Zurich on notice until May 2017. Marsh then formally reported it to Zurich and Harvard’s other excess errors and omissions insurers. Zurich acknowledged receipt on May 25, 2017.

Harvard argued that the receipt of Harvard’s instruction to provide notice to one insurer triggered Marsh’s contractual and professional duties to notify all of the insurers Marsh used to place Harvard’s coverage. Harvard maintained that the inaction of Marsh was in contrast to that of another of its brokers, Risk Strategies Co., which placed the entire tower of primary and excess general liability carriers for its policies with Harvard on notice of the SFFA action, “despite the absence of an initial explicit request from Harvard that it do so.”

According to the university, Marsh had taken the position it was instructed by Harvard not to notify excess insurers. Harvard denies that it ever instructed Marsh not to notify excess insurers.

Topics Lawsuits Legislation