As businesses approach year-end insurance renewals and potential renegotiations, a recent federal court decision highlights an important opportunity to strengthen insurance protection against False Claims Act (“FCA”) settlements. FCA lawsuits can expose businesses to substantial defense costs, government investigations, and costly settlements. Although liability policies commonly exclude fraudulent or intentionally wrongful conduct, as a recent federal court case has now confirmed, those exclusions do not necessarily bar coverage for every FCA claim.
In Guidehouse Inc. v. Cont'l Cas. Co., the U.S. District Court for the Eastern District of Virginia held that a government contractor was entitled to insurance coverage for a FCA whistleblower lawsuit and related government investigation expenses under its policy's terms. No. 1:25-CV-1601 (RDA/IDD), 2026 WL 2925113, at *19 (E.D. Va. Sept. 29, 2026). The Court's decision shows how carefully negotiated definitions and exclusions can affect a corporate policyholder’s ability to recover these costs.