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California Court Tentatively Rules for CombiMatrix in Litigation Alleging Insurance Fraud

NEW YORK (GenomeWeb) – CombiMatrix today said that a California court has tentatively ruled in the company's favor in a lawsuit that alleged CombiMatrix committed insurance fraud.

The Superior Court of the State of California, County of Orange has issued a tentative ruling and proposed statement in favor of the Irvine, Calif.-based firm and "against all claims" of the plaintiff, Michael Strathmann, a former employee of CombiMatrix who sued the firm in 2011, the company said.

In his lawsuit, Strathmann accused CombiMatrix, its former CEO Amit Kumar, and CombiMatrix's former partner Acacia Research of submitting false and fraudulent insurance claims to National Union Fire Insurance Company. In 2010 CombiMatrix received $25 million from the insurer to settle a lawsuit that claimed National Union Fire Insurance had refused to defend and indemnify CombiMatrix under its director and officer's insurance policy.

After the Superior Court dismissed Strathmann's complaint in May 2011, he appealed the decision, and the California Court of Appeals reversed the Superior Court's dismissal in late 2012. CombiMatrix said in a Form 10-Q filed in November that a trial in Superior Court began this past June.   

CombiMatrix said today that the court found that it "had no fraudulent intent" when it pursued insurance benefits with National Union Fire Insurance. Each party has 15 days to file any objections to the court's ruling. The court then has 60 days to consider the objections and to issue a filing ruling.

"Though we understand that there may be future legal hurdles to overcome, based on the court's tentative decision, we are optimistic this matter will be resolved in favor of CombiMatrix in a timely fashion," CombiMatrix President and CEO Mark McDonough said in a statement. "We continue to focus on executing our business plan and driving toward commercial success in 2015 and beyond."