The Lower Merion School District argued Friday that the district's insurer should pay what could be a million-dollar tab to resolve a lawsuit over its now-disabled laptop tracking program.

In a counterclaim filed in federal court, attorneys for the district also accused Graphics Arts Mutual Insurance of New York of breaching the terms of the multimillion-dollar policy it issued last year.

"To date, Graphic Arts has not fully paid for all the defense costs and fees incurred," the lawsuit said.

The dispute cropped up when Harriton High School sophomore Blake Robbins alleged in a lawsuit that the district violated his civil rights by secretly activating his laptop webcam in the fall at his Penn Valley house.

As the district launched an investigation and prepared to defend the lawsuit, it asked its insurer to cover the bills and any settlement or award.

But Graphic Arts balked, contending that its policy covered only personal injury or bodily harm, not the kind of damage that Robbins and his family alleged.

The company filed its own lawsuit against the district, asking a federal judge to rule that the contract released it from any liability related to the Robbins matter. In the interim, Graphic Arts said it would cover only 80 percent of Lower Merion's costs and reserved the right to recoup that money if the judge ruled in its favor.

The reply that school district attorneys filed Friday was in many ways a boilerplate legal response, denying the insurance company's claims and calling its refusal to pay "inconsistent with the terms of the policy."

Bruce Morrison, an attorney for Graphic Arts, did not respond to a call and e-mail seeking comment.

How high the school district's bills will go is unclear. In the six weeks after Robbins and his parents filed their suit in February, the Ballard Spahr law firm and L3, a computer forensics company, submitted more than $550,000 in invoices for their services to Lower Merion.

District spokesman Doug Young said this week that those bills had been paid, but that the district was waiting for new bills from the firms for their work since then. It was not clear whether the district or insurer had paid those bills.

School board president David Ebby said last month that he expected at least $200,000 more in invoices before the case was over. That was the same week that attorneys for the Robbinses and the school district met behind closed doors to discuss a possible settlement.

No settlement was reached.

Mark Haltzman, attorney for the Robbinses, said Friday he was continuing his investigation. He said he had no comment on the insurance dispute.

On May 3, the lawyers and computer experts released a report that said Lower Merion's tracking system secretly captured more than 58,000 photos and screen images from students' laptops during the last two school years. Most were from computers that had been reported missing or stolen, although some were photos of students snapped after the machines had been found and returned to them.

The report faulted district officials and administrators for poor policies and management of the system. But investigators said they found no proof that anyone used the software to intentionally spy on students or that the photos included students in "salacious" or compromising situations.

In recent weeks, district officials have notified about 40 students who were photographed to arrange for them to privately view the images.

Contact staff writer John P. Martin at 610-313-8120 or jmartin@phillynews.com.