Harvard cannot recoup $15 million from insurer for race case costs, court rules

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BOSTON (Reuters) – Harvard University on Wednesday lost a bid for an insurer to cover up to $15 million of the costs of defending itself in a lawsuit that led to the U.S. Supreme Court barring it and other colleges from considering race as an admissions factor.

The Boston-based 1st U.S. Circuit Court of Appeals upheld a lower-court judge’s November ruling concluding that the Ivy League school waited too long to ask a unit of Zurich Insurance Group (OTC:ZFSVF) to cover expenses arising from the lawsuit.

That lawsuit, along with a related case against the University of North Carolina, resulted in a landmark Supreme Court ruling in June that effectively ended affirmative action policies long used to raise the number of Black, Hispanic and other underrepresented minority students on American campuses.

Both cases were filed by Students for Fair Admissions, a group founded by affirmative action opponent Edward Blum, which alleged that Harvard’s race-conscious admissions policies discriminated against Asian American applicants.

In the lawsuit against Zurich filed in 2021, Harvard said the costs of defending against that lawsuit and a related government investigation had already exceeded the $25 million limit in a policy issued by its primary insurer, an AIG Inc (NYSE:AIG) unit, which had a $2.5 million deductible.

Harvard, which was represented by the law firm Wilmer Cutler Pickering Hale and Dorr in the affirmative action case, sought to force its secondary insurer, Zurich, to cover the excess costs up to a limit of $15 million.

But the insurer refused, saying the policy required Harvard to give notice of a claim no later than Jan. 30, 2016, yet the university waited until May 23, 2017 to do so.

U.S. Circuit Judge Bruce Selya, writing for Wednesday’s three-judge panel, agreed, saying that under Massachusetts law, “the failure to give notice according to the policy’s terms and conditions forfeits any right to coverage.”

Cambridge, Massachusetts-based Harvard did not immediately respond to a request for comment. Zurich declined to comment.