In denying an insurer’s motion for reconsideration, the U.S. District Court for the Western District of Pennsylvania affirmed its earlier ruling requiring the insurer to defend restitutionary claims where such claims are offset by a benefit provided, or services rendered, by the policyholder using the funds at issue.  In Peerless Insurance Co. v. Pennsylvania Cyber Charter School, No. 12-cv-1700 (W.D. Pa. Aug. 29, 2014), the insurer, Peerless Insurance Company (“Peerless”), sought a declaratory judgment that it had no duty to defend or indemnify its policyholder, Pennsylvania Cyber Charter School (“PA Cyber”), against an underlying lawsuit brought by several county school districts alleging that they were entitled to the return of certain funds pursuant to a recent ruling by the Pennsylvania Supreme Court in another case.  On cross motions for summary judgment, the court granted PA Cyber’s motion seeking to enforce the insurer’s duty to defend and denied the insurer’s motion seeking to avoid a defense and indemnity.  The insurer later filed a motion for reconsideration as to its duty to defend.  In denying that motion as well, the court first held that the return of funds sought in the underlying claims constituted a “loss” to PA Cyber in satisfaction of the policy’s insuring agreement because PA Cyber had used the funds, as intended, to educate children in the school districts.  The court noted that other jurisdictions have not uniformly excluded restitutionary claims from the definition of “loss” where the restitutionary funds are offset by a benefit provided, or services rendered, by the policyholder.  Moreover, during the time period alleged in the underlying complaint, PA Cyber was legally entitled to collect and use the funds as it did because the Pennsylvania Supreme Court had not yet issued its ruling in Slippery Rock Area School District v. Pennsylvania Cyber Charter School, 31 A.3d 657 (Pa. 2011), which changed the law regarding the collection and use of such funds.  As a result, the court held that PA Cyber did not receive a profit or advantage to which it was not entitled at the relevant time and rejected the insurer’s remaining defenses based on the Illegal Profit or Advantage Exclusion and Pennsylvania public policy.