A federal appeals court has ordered an insurer to pay the claim for $1.2 million in "employee dishonesty" damages submitted by a suburban Philadelphia research firm whose employees fabricated some clinical trial records.

Ruling in the case of Scirex Corp. vs. Federal Insurance Co., the 3rd US Court of Appeals said the actions of nurses who falsified data in drug trials were covered by the dishonesty insurance and ordered Federal to pay the costs of re-running the fudged trials.

Representatives of the insurance company declined to comment. The company had argued, in part, that the nurses honestly believed they were complying with trial protocols, so their actions were not really dishonest.

Lying is lying, Chief Judge Edward R. Becker, concluded, regardless of intent.

"After you go through all the analysis, you come back to what your gut sense tells you in the first place," Joseph Roda, attorney for...

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