NAVIGATORS SPECIALTY INSURANCE COMPANY v. AVERTEST, LLC; COLUMBIA CASUALTY COMPANY

Background Avertest, a laboratory testing company, was insured by Columbia Casualty through May 1, 2022, and then by Navigators Specialty Insurance Company beginning that same day. During Columbia’s coverage period, plaintiffs sued Avertest in the Gonzalez action, alleging false positive drug tests caused by improper testing methods that did not comply with CAP standards. After Avertest switched insurers, new plaintiffs filed the Foulger action alleging false positive drug tests and repeating the same core allegations about quality controls, internal standards, calibration curves, and Avertest’s prioritization of speed over compliance. Navigators accepted the Foulger tender under a reservation of rights, then sued for declaratory relief after concluding Columbia had the duty to defend because Foulger was related to Gonzalez. The court’s reasoning Applying Virginia contract principles, the court focused on Columbia’s policy language defining related claims as claims arising from acts, errors, or omissions that are logically or causally connected by any common fact, circumstance, situation, transaction, event, advice, or decision. The panel relied on its recent related-claims precedent and described the policy language as expansive. It concluded that Gonzalez and Foulger alleged the same testing-methodology errors: deficient quality controls, improper internal standards, and flawed calibration curves, all tied to the same alleged scheme of prioritizing speed over CAP-compliant testing. The court said differences such as different plaintiffs, different tests, and additional allegations did not matter because the policy asked only whether the acts, errors, or omissions were logically or causally connected by any common fact. Because the lawsuits were related, the policy’s provision stating that all related claims, whenever made, are treated as a single claim first made during the policy period of the earliest claim meant Foulger was treated as first made during Columbia’s 2020 to 2021 policy period. The court rejected Columbia’s argument that the claims-made structure barred coverage for Foulger because that reading would remove the phrase "whenever made" from the related-claims provision. They are, instead, the very same errors in testing methodology. J.A. 69; slip op. at 14 What it means going forward For insurers and policyholders, the decision underscores that broad related-claims language can shift defense and indemnity obligations back to an earlier claims-made policy when later suits rest on the same underlying alleged scheme or methodology. On remand, Columbia rather than Navigators must be treated as the insurer responsible for the Foulger defense under the court’s reading of the policies.