The U.S. Court of Appeals for the Fifth Circuit recently rejected a shipbuilder’s claim against its insurance company seeking defense and indemnification from a False Claims Act suit. See XL Spec. Ins. Co. v. Bollinger Shipyards, Inc., No. 14-31283, 2015 WL 5052504, 2015 U.S. App. LEXIS 15160 (5th Cir. Aug. 27, 2015). Over a decade ago, shipbuilder Bollinger Shipyards, Inc. retrofitted patrol boats under contract with the United States Coast Guard as part of the Coast Guard’s “Deepwater” modernization program. In short, Bollinger made the boats longer—extending 110-foot patrol boats to become 123-foot patrol boats.
Throughout, the Coast Guard expressed concerned the boats’ hulls could not support the additional length. Bollinger repeatedly assured the Coast Guard that they could. The Coast Guard claims that wasn’t true and that Bollinger concealed two strength analyses showing the hulls were not strong enough to support the conversion. After the hull buckled on one of the refitted boats, the Coast Guard removed all of the retrofitted boats from service, and eventually the United States brought an FCA suit against Bollinger. The suit remains unresolved.
Bollinger tendered a claim to its general maritime liability insurer days before the government filed suit. Litigation...
