NSW-based St George Aged Care has filed a suit in the Federal Court to recoup substantial advice fees under a Dual Australia policy after health authorities demanded it appoint an adviser to address compliance failures during a covid outbreak, or risk withdrawal of government subsidies.

St George alleges Dual declined to indemnify $821,776 in adviser fees to date and that this was in breach of its obligations under a Dual Australia Management Liability policy which was in force for 12 months from July 31 last year. Its lawsuit is against “Dual Australia on behalf of certain underwriters at Lloyd’s”.

The suit says it concerns "the proper construction of several clauses of the relevant policy” and that the matter had been through Dual’s internal dispute resolution process, with the claim remaining declined.

A year ago, eight St George residents contracted covid and three died. The Aged Care Quality and Safety Commission sent notification to St George on August 12, requiring it to appoint an eligible adviser for six months at its own expense. In March, a second notice required St George to appoint an eligible adviser until September 30 to assist it to comply with care and services, governance and business operation.

The lawsuit, filed last week, says St George has paid for advice from three firms. Health Generation is still advising it under the last authority directive, and it previously paid for advice from O’Connell Advisory and Maria Toman.

Court documents obtained by insuranceNEWS.com.au say Dual declined the claim under clause 3.22 of the policy because the Commission had required their appointment "to assist with compliance".

St George says the circumstances of its claim satisfy the clause "when proper regard is had to the requirements of the notice and the scope of the work undertaken by the advisers."

Dual also declined its claims under policy clause 3.21 (a), which agreed to pay an insured’s “investigation costs arising from the attendance by an insured for examination at, or the production of documents to, any investigation in connection with a breach or alleged breach of any Commonwealth, state or territory occupational or workplace health and safety legislation”.

Dual said the Aged Care Quality and Safety Commission Act 2018 is not "occupational or workplace health and safety legislation," according to the court filings. St George says the term is not defined in the policy.

Dual also said the policy’s defence cost cover clause did not respond.