Interpreting Illinois law, a New York trial court rejected an insurer’s broad interpretation of two key exclusions in a professional liability policy and instead limited the reach of those exclusions such that the insurer had a duty to defend. Certain Underwriters at Lloyd’s London v. Huron Consulting Group, Inc., No. 650339-2001 (N.Y. Sup. Ct. May 16, 2014). At issue was defense costs coverage for a False Claims Act (“FCA”) lawsuit filed against the policyholder and alleging excessive Medicaid and Medicare billing. The insurer moved for summary judgment on two main grounds. First, the insurer argued that the FCA lawsuit alleged intentional conduct and thus was not covered. The insurer pointed to the insuring agreement that required a negligent act, error or omission while also arguing that the language of the conduct exclusion did not support coverage. The conduct exclusion precluded coverage for actions alleging criminal, dishonest, fraudulent or malicious conduct, but required that the insurer pay defense costs until such time as there was a final adjudication as to intentional wrongdoing. The insurer asked the court to disregard the conduct exclusion’s requirement of defense costs coverage prior to a final adjudication, on the grounds that an exclusion could not create coverage for intentional wrongdoing. The court was not persuaded by this argument, reasoning that the conduct exclusion “evinces an unambiguous intent to afford a defense (at least temporarily) for claims of intentional conduct.” Thus, the insurer was required to pay defense costs incurred in defending allegations of both negligent and intentional conduct. The court also ruled that the FCA lawsuit could be construed to have alleged negligent conduct. Second, the insurer argued that an exclusion for actions brought by or against government entities in their regulatory or official capacities applied. The court also was not persuaded by this argument, reasoning that the federal government had declined to participate in the FCA lawsuit. The FCA lawsuit had been pursued by private parties without government intervention, and the exclusion could not be read to apply simply because the FCA lawsuit would further the federal government’s regulatory and official objectives. Moreover, the court reasoned that even if the FCA lawsuit could be considered brought on behalf of the federal government, the exclusion still would not apply because the FCA lawsuit also was brought on behalf of a private plaintiff.