Four insurers are locked in a $25.5 million dispute after Delaware’s highest court refused to hear their appeal in a case involving Cigna. The disagreement centers on whether a demand from the U.S. Justice Department counts as a claim covered by Cigna’s insurance policies.
The issue began with a 2016 investigation into Cigna’s submissions to Medicare and Medicaid. The Justice Department sent a civil investigative demand, seeking documents and information as part of this probe into possible False Claims Act violations. Cigna asked its insurers to cover the costs of responding to these requests, which totaled $25.5 million.
Cigna’s insurance policies require insurers to cover defense expenses for any claim made during the policy period. Here, a claim means any written notice that someone holds Cigna responsible for a wrongful act—which includes errors in handling insurance claims. However, the policies also exclude coverage for costs tied to government investigations, except for a $2 million deductible allowance if a covered claim arises from the investigation.
The primary insurer first agreed with the other insurers—XL Specialty Insurance, Homeland Insurance of New York, Travelers Casualty & Surety, and Admiral Insurance—that the Justice Department’s demand was just a government investigation and not a claim. Later, the primary insurer reversed course and said it would cover the costs.
The excess insurers stood their ground, leading Cigna to sue in Delaware Superior Court. The court split the case into two parts: first, to decide if the investigative demand qualifies as a claim and, second, to sort out when the claim was made and other coverage details related to Cigna’s eventual settlement with the government.
In December 2025, the judge sided with Cigna, ruling that the Justice Department’s demand did count as a claim under the policy. However, the judge did not say all $25.5 million should be covered. Instead, the insurers must review the costs and decide which parts they can reasonably contest.
The insurers sought permission to appeal this decision before the case was fully resolved. Both the Superior Court and the state Supreme Court denied their request. The courts found the contract language to be clear and said there was no urgent reason to allow an early appeal, noting it would cause unnecessary delays and complications.
Now, the case returns to Superior Court to figure out exactly how much of those legal bills the insurers should cover. If the parties don’t settle, the case will move on to the next phase, dealing with further insurance issues tied to Cigna’s settlement.
This case highlights how tricky insurance coverage can be when government investigations are involved. Even though policies often exclude investigation costs, the way “claim” is defined can lead to unexpected coverage decisions. With more government scrutiny on healthcare companies, fights like this one are likely to become more common.