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Note: Sentry Insurance A Mutual Co. (Insurer) entered into two contracts, a Workers Compensation Policy (Policy) and a Casualty Insurance Agreement (Agreement), with B & H Health Care Services (Insured). Under the Agreement, Insured was to pay to Issuer all deductions due within 30 days of receiving an invoice from Insurer unless Insured disputed, in good faith, the amount owed and submitted a written explanation for the disagreement within 30 days. Pursuant to the Agreement, Insured provided a standby letter of credit for USD 140,000.00 to Insured to secure its obligations. When Insured failed to reimburse Insurer, Insurer drew on the letter of credit and applied its proceeds to Insured's total obligations, which Insurer claimed amounted to USD 262,286.00. Between December 2011 and February 2014, Insurer sent Insured several invoices to which Insured failed to make payment or to dispute the amount owed in writing.

In light of the outstanding debt owed, Insurer sued Insured for breach of contract and sought summary judgment on its claim. In response, Insured made two counterclaims: that Insurer breached the contract by failing to properly process and administer each Worker's Insurance Compensation Claim and that Insurer failed to account for the amount held as collateral when seeking payment under the agreement. The United States District Court for the Western District of Wisconsin, Conley, J., granted the motions in part and denied in part.

The Judge denied Insured's breach of contract counterclaim noting that in the event of a conflict or ambiguity the Agreement governed all payments based on workers compensation, including payments made under the Policy and furthermore, the 30 day requirement was clear. In regard to Insurer's motion for summary judgment on the counterclaim that Insurer failed to account for the amount held as collateral, the Judge denied the motion, agreeing with Insured's claim that it was not possible to reconcile the amount sought by Insurer and the amount represented on the invoice.

[JBB]

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This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.