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Insurer Sued for Blood Plasma Claims

CHICAGO (CN) - Baxter International sued its German insurer for more than $12 million: legal defense and settlement costs of cases brought by hemophiliacs who were infected with HIV or hepatitis C after from tainted blood plasma.

Baxter International sued Axa Versicherung AG in Federal Court.

"As these previously unknown viruses spread through the blood supply in the 1970s and 1980s, individuals with hemophilia became infected through their use of factor concentrates to treat hemophilia," according to the complaint.

An estimated 6,000 to 10,000 hemophiliacs in the United States contracted HIV from factor concentrate, The New York Times reported on June 11, 1996.

In May 1997, Baxter participated in a settlement that paid $600 million to infected hemophiliacs.

Last week, Baxter filed a complaint to confirm coverage under its insurance policy with AXA Versicherung "for millions of dollars in losses incurred by Baxter in defending and resolving certain product liability litigation."

Baxter seeks coverage of its defense expenses in the multidistrict litigation that was transferred to the Northern District of Illinois in 2004. Baxter calls it the Second Generation Litigation.

"A nearly complete settlement of those claims has and will ultimately cost Baxter millions more," the complaint states.

"AXA was obligated by its policy to acknowledge promptly its obligation to defend and potentially indemnify Baxter from covered loss incurred in the Second Generation Litigation. Having refused to participate in Baxter's defense of the Second Generation Litigation, and having otherwise refused to acknowledge any obligation to provide coverage to Baxter, AXA has breached its contractual obligations to Baxter," according to the complaint.

Baxter demands $12 million to cover its defense costs, and additional "millions of dollars in settlements paid or to be paid to HCV claimants in the Second Generation Litigation."

Baxter is represented by David Mathues with Kirkland & Ellis.

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