An Ohio insurance company and a special education school in Washington are locked in a fight over whether the carrier is obligated to cover the bills the school has racked up amid a grand jury investigation.
Claiming breach of contract, the Sunrise Academy, which provided special education for boys and young male adults, sued Cincinnati-based The Great American Insurance Co. in D.C. Superior Court in September.
The carrier’s attorneys recently moved the suit to U.S. District Court for the District of Columbia. A trial judge has not ruled whether the case will remain in federal court.
Sunrise Academy, represented by John Quinn of Washington’s Sale & Quinn, contends in the suit that the contract between Sunrise and Great American covers criminal defense costs.
Federal prosecutors in Washington issued a subpoena to Sunrise in March 2010. Lawyers for Sunrise said in the suit that the school timely notified Great American of the criminal investigation into Sunrise Academy. Sunrise has not been charged with a crime.
The academy’s founder, a man named Charles Emor, pleaded guilty in Washington federal district court to a one-count information charging him in a wire fraud scheme. Prosecutors and defense lawyers in the case are arguing now over forfeiture, loss amount and restitution.
Emor was accused of diverting government-issued funds from Sunrise’s bank accounts between January 2006 and November 2010. Prosecutors, including assistant U.S. attorney Lionel Andre, argue Emor bilked the government out of more than $2.3 million.
Lawyers for Sunrise tried unsuccessfully over the summer to convince U.S. District Judge Paul Friedman to order the return of more than $2 million prosecutors seized in the Sunrise and Emor investigation. Friedman said in a ruling (.pdf) in June that the demand for the seized funds was premature.
Sunrise Academy, according to the suit the company filed against its insurance carrier, has spent more than $200,000 on legal defense costs. Great American, the suit said, is obligated to pay or reimburse the mounting legal fees.
A lawyer for Great American, Gabriela Richeimer, a Troutman Sanders partner in Washington, declined to comment about the suit. Richeimer practices in insurance and professional liability.