The US Court of Appeals for the Fourth Circuit recently endorsed an expansive view of “related” claims in claims-made liability policies, holding under Virginia law that a later-filed lawsuit overlapped sufficiently with an earlier action to constitute a single, related claim. In shifting the full coverage obligation to an earlier insurer, the decision underscores how broad related-claims provisions can materially affect the allocation of risk across claims, insurers, and policy periods.

Competing Insurers and a Familiar Coverage Dispute

A laboratory testing company, Avertest, was sued in a putative class action (the Gonzalez lawsuit) challenging Avertest’s drug testing practices. The class plaintiffs alleged that the company:

• had systemic deficiencies in its testing methods;
• prioritized speed over compliance with governing standards; and
• used defective or failing quality controls, manipulated testing data, relied on improper or nonexistent internal standards, and employed flawed calibration methods, including unacceptable historical data.

These alleged practices, the complaint claimed, produced false positive results that had serious consequences, particularly in child custody and visitation determinations. The company submitted the suit to its healthcare liability insurer at the time, Columbia. The insurer agreed to defend the Gonzalez action, which ultimately ended in a settlement.

After the Columbia policy period ended, Avertest switched to a new insurer, Navigators. During the Navigators’ policy period, a new group of plaintiffs filed a second lawsuit, Foulger, which:

• similarly alleged that Avertest’s testing practices produced false positives and caused similar custody-related harms;
• repeated substantial portions of the Gonzalez allegations nearly word for word, including detailed assertions concerning failures in quality control procedures, internal standards, and calibration practices;
• alleged that Avertest’s business model prioritized speed over accuracy, leading to unreliable testing results;
• involved different plaintiffs, different testing events, and different facility locations than those at issue in Gonzalez;
• was filed at a later time and asserted a broader scope of alleged misconduct; and
• included additional allegations of negligent collection practices not specifically asserted in Gonzalez.

Avertest notified both insurers of the Foulger lawsuit. Columbia denied coverage on the ground that the new claim was first made outside its policy period. Navigators accepted the defense subject to a reservation of rights but later sought to shift responsibility back to Columbia based on the two claims being related.

The dispute turned on whether Gonzalez and Foulger qualified as “related claims” under Columbia’s policy, which provided that claims “logically or causally connected by any common fact” would be deemed a single claim first made at the time of the earliest such claim. Navigators then sued Avertest and Columbia, seeking declaratory relief, saying that it had no duty to defend or indemnify Avertest in Foulger and that Columbia had to reimburse Navigators for the defense costs paid toward defense of that uncovered claim.

The District Court Concludes That the Claims Are Not “Related”

The district court held that Gonzalez and Foulger were not sufficiently alike to constitute related claims under the policies. In the court’s view, any overlap between the complaints was offset by several significant differences, including that the suits involved different plaintiffs, Foulger was not brought as a class action, and the claims rested on different consumer-fraud statutes. The court also noted that Foulger alleged defects in Avertest’s collection procedures at its testing sites, which were absent from the Gonzalez class action allegations.

The alleged misconduct also did not align neatly in time, the district court noted, because Gonzalez’s samples were collected earlier, whereas the alleged false positives in Foulger occurred later and overlapped only with the period relevant to the second named plaintiff in Gonzalez. Taken together, those differences led the court to conclude that the two lawsuits were not related claims.

The Fourth Circuit Reverses—the Claims Are “Related”

The district court ruling was not the final word. On appeal, the Fourth Circuit framed the central question simply as whether Gonzalez and Foulger were “related claims” under Columbia’s policy. The court said they were and reversed.

The Fourth Circuit’s analysis began with the policy’s broad definition of related claims, which required only a logical or causal connection grounded in “any common fact.” Stressing the breadth of that language, the court refused to add limitations not found in the text of the policy.

Citing another recent Fourth Circuit insurance coverage decision, which happened to also involve Navigators, the court explained that “logically related” claims need only be “reasonably or rationally connected or associated with one another.” Prior Fourth Circuit case law considering a similar definition of “related claims” also supported an “expansive” view of the policy’s “logically or causally connected” standard.

Applying that standard, the Fourth Circuit held that the two suits were “plainly” related. Both stemmed from the same alleged scheme: Avertest’s systemic practice of prioritizing speed over proper testing protocols, which produced inaccurate and unreliable results. And the overlap was not abstract, because the complaints repeated several allegations verbatim. That common factual core, the court concluded, established both a logical and causal connection between the claims.

The Fourth Circuit rejected the district court’s focus on differences between the suits, like different plaintiffs, separate testing events, and new allegations in Foulger not found in the original lawsuit. The court went so far as to say that those differences were “immaterial” where the policy did “not ask whether two claims are more similar than different.” Instead, the policy asked only whether claims are “logically or causally connected by any common fact, circumstance, situation, transaction, event, advice or decision.” Because both suits arose from the same alleged practices and operational failures, they were related claims under the policy.

Having determined that Gonzalez and Foulger were related, the court concluded that they were a single claim first made at the time of the earliest such claim. This meant that the Foulger lawsuit was deemed part of the Gonzalez action and, therefore, was first made within Columbia’s policy period before the Navigators policy incepted.

Columbia argued that, because its policy is claims-made, coverage was unavailable unless the later suit was itself made and reported during the policy period, notwithstanding the related-claims provision. The court disagreed, explaining that the related-claims provision controlled and that Columbia’s narrow view of relatedness ignored its policy’s acknowledgment that claims may be related, “whenever made,” as long as they met the logically or causally connected” standard. Because the second claim fell within Columbia’s policy, Navigators’ exclusion for claims previously reported to or covered under another insurance program applied. As a result, Columbia bore the full duty to defend both claims.

Takeaways for Policyholders Facing “Related” Claim Disputes

The Fourth Circuit’s decision shows the outsized impact related-claims provisions can have in disputes under claims-made liability policies. When those provisions are enforced broadly as written, they can treat multiple lawsuits as a single claim, limit access to additional policy limits, and shift claims not only between policies but also outside all potentially applicable policies.

The case also illustrates the practical risk of changing insurers, including insurers in excess layers, from one year to the next, as those changes can invite finger-pointing and misaligned incentives. In some cases, mismatched towers can lead to different sets of insurers taking contrary related-claim positions, both resulting in denials, which leaves the policyholder with continuous policies but not coverage.

The Avertest claim, like most related-claim disputes, turned on specific allegations, policy language, and governing law. For that reason, results may vary based on other facts or law if, for example, other jurisdictions do not have developed precedent taking a broader view of the policy’s “any fact” related-claims language.

While related-claim decisions remain fact-specific and unpredictable, one uncommon issue from Avertest was Columbia’s argument that it should not be asked to cover both sets of claims due to “the claims-made nature” of its policy, which the insurer said precluded coverage because the second claim was not made and reported during the policy period.

Even though the Fourth Circuit rejected that argument, the court focused on the related-claim provision’s application to claims, “whenever made.” Given that conflicting language, the court noted that, “[i]f Columbia wanted to limit related claims to those individually made during the policy period, it could have done so.”

That “whenever made” qualification is not found in every policy, which could lead to other insurers making similar arguments to escape expanded liability for related claims made and reported outside the policy period. Policyholders should be on the lookout for modified related-claim provisions that attempt to reduce the risk that later claims will be shifted into earlier policy years. Those nuances could lead to gaps in coverage based on material variances in related-claim language between policies.

The Avertest ruling underscores the risk that later-filed actions, particularly those alleging variations of the same underlying conduct, may be pulled into earlier policy periods. Ultimately, the case is a reminder that in claims-made coverage disputes, whether claims are “related” can be the dispositive issue between coverage and no coverage, and the answer will often turn on the policy’s precise language and the particular facts alleged.