AIG, Chubb Handed Setback in Delaware on Medicaid Fraud Coverage

In a blow to units of American International Group Inc. and Chubb Ltd., Delaware’s high court affirmed a state court’s decision to nullify a jury verdict and grant a new trial in an insurance dispute with a health-care program administrator.

The state court also correctly concluded that a fraud exclusion didn’t preclude insurance coverage for Conduent State Healthcare LLC’s $236 million settlement with the state of Texas over alleged Medicaid fraud, the Delaware Supreme Court said in a Monday opinion.

The high court also affirmed the Delaware Superior Court’s ruling that Conduent was excused from its contractual obligation to ...