The Insurance and Reinsurance Report

Court of Appeals Affirms Decision For Insurer Holding Doctor’s Wife Was A Medical Assistant Under The Statute And Therefore Was Providing Professional Services Precluding Coverage Under The Professional Services Exclusion

The Estate of Steven Tinervin v. Nationwide Mutual Ins. Co.

(Florida Court of Appeals, Fourth District, November 25, 2009)

Plaintiff appealed an adverse declaratory judgment in favor of the insurer, wherein the trial court found that the professional services exclusion of a business owner’s policy excluded coverage for services performed by the doctor’s wife in filing, and making the doctor aware of lab reports, knowledge of which, would have changed his treatment strategies.

 

Specifically, the plaintiff brought a wrongful death action against the doctor, his only employee (his wife), and the doctor’s professional association. The plaintiff alleged medical malpractice against the doctor and general negligence against the employee.  The doctor and his employee requested coverage under the insurer’s business owner’s policy.  The insurer refused to defend or indemnify the doctor and his employee based on the exclusion for injuries arising from professional services.  The insurer claimed that misfiling the lab results fell within the professional serves exclusion because it was an “intricate part” of the medical services the doctor rendered.  The plaintiff claimed however, that the employee’s negligence was not excluded because her services were clerical, as she had no professional responsibility to read or interpret the lab reports.

 

The court of appeals disagreed with plaintiff that the policy language was susceptible to more than one interpretation.  Rather, the court held that the policy language of the exclusion was unambiguous, as the professional services exclusion excluded coverage for injury due to rendering any professional services, which were defined to include, “but not limited to, medical surgical dental, x-ray or nursing services.  The court further stated that employees are not insured for injuries arising out of his or her providing of failing to provide professional health care services.  Secondly, the court found that the employee's acts were causally connected to the professional services rendered by the doctor.  The court further noted that the policy clearly excluded medical services and the employees duties were an intricate part of the medical services provided.  Plaintiff on the other hand argued that because the employee’s acts of opening the mail and attaching a lab report required no professional skill her acts are not excluded from coverage.  The court, however, agreed with the trial court’s finding that the employee was a medical assistant under 458.3485 Florida Statute (2007), thus she fell within the policies professional services exclusion.  As such the trial court’s decision was affirmed. 

 

A copy of the decision is available here

 

Paul Steck and Sharon Angelino

 

http://www.goldbergsegalla.com/attorneys/Steck.html

http://www.goldbergsegalla.com/attorneys/Angelino.html

 

The case is published with consent by Lexis. 

 

SECOND CIRCUIT HOLDS THAT WORLD TRADE CENTER COVERAGE DISPUTE IS RIPE

SR International Business Insurance v. Port Authority el al

(2^nd Circuit, July 28, 2009)

 

In the ongoing coverage litigation relating to the World Trade Center tragedy, SR International Business Insurance Co., Ltd. v. Allianz Insurance Company,   the Second Circuit, applying New York law, held that a dispute between the insurer and the insured regarding priority of recovery for World Trade Center losses was ripe for adjudication.  The insured claimed that the matter was un-ripe because, among other things, it was possible that neither party would succeed in proving damages in the tort litigation.  Rejecting that claim, the Second Circuit held that the matter was one of pure contract interpretation, and did not require further factual development before being decided. 

The Second Circuit went onto reject the insured’s secondary argument:  that the insured was entitled to priority in recovery against the tortfeasor based upon the “application of recoveries” clause in the excess policy at issue. The excess policy incorporated the subrogation clause in the primary policy, which provided that the insurer was entitled to priority of recovery against third parties. The insured argued that an “application of recoveries” clause in the excess policy, instead of allowing the insurer to offset amounts owed to the insured, required the insurer to turn over the proceeds of any subrogation actions to the insured and rendered its claim primary to the insurer’s.  Calling the insured’s interpretation “tortured,” it held that the “application of recoveries” clause was separate and had no impact on the priority of subrogation. Based on the plain language of the subrogation clause, the insurer’s claim was primary.

 

For a copy of the decision, click here

 

By Sarah J. Delaney and Joanna M. Roberto

 

http://www.goldbergsegalla.com/attorneys/Delaney.html

http://www.goldbergsegalla.com/attorneys/Roberto.html

Failure to Comply with Claims-Made-and-Reported Requirement Vitiates Coverage Under Professional Liability Policies

Gargano v. Liberty Int’l Underwriters, Inc.

(1^st Cir. (Mass.) July 14, 2009)

An attorney sued the policyholder, also an attorney, after the policyholder failed to pay an attorney’s lien for work the plaintiff attorney completed on a case ultimately transferred and settled by the policyholder. The plaintiff attorney filed suit in March 2005 and entered judgment against the policyholder in July 2007. After judgment was entered, the policyholder reported the claim to his three professional liability insurers, which had issued three consecutive “claims-made-and-reported” policies from September 1, 2004 through September 1, 2007. The First Circuit held that the insurers were not obligated to defend or indemnify the policyholder for the underlying action because he failed to report the claim during the policy period in which it was made. The First Circuit also rejected the policyholder’s assertion that the insurers must demonstrate prejudice to escape liability.

For a copy of the decision click here

By Carrie P. Appler

http://www.goldbergsegalla.com/attorneys/Appler.html

Second Circuit Remands Lloyd's Dispute on Policy Terms

Crucible Materials Corp v. Certain Underwiters at Lloyd's

(2d Circ. May 14, 2009 (New York))

The plaintiff insured alleged that defendant insurer breached an excess insurance contract insuring against property damage claims arising from the insured's manufacturing operations at 18 sites across the United States. Concluding that the insured failed to present evidence of the terms of the contract, the United States District Court  New York granted summary judgment to the insurer. The district court based its decision awarding summary judgment in favor of the insurer on its observation that the insured had failed to produce a copy of the excess liability policy and on its holding that that, accordingly, the insured had failed to meet the burden of proving the terms of the policy. On appeal, the court held that the insured was not afforded a full and fair opportunity to demonstrate that there were genuine issues of material fact with respect to the terms of the policy. The insurer had not argued in its motion for summary judgment that it was entitled to prevail on the basis that there was no genuine issue as to the terms of the policy and had acknowledged the existence of a factual dispute with respect to the terms of the policy. Because the insured was not afforded adequate notice that the district court had under advisement the question of an asserted failure to prove the terms of the policy, the district court erred in granting summary judgment to the insurer on that basis.

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By Daniel W. Gerber and Richard J. Cohen

http://www.goldbergsegalla.com/attorneys/Gerber.html

http://www.goldbergsegalla.com/attorneys/Cohen.html

 

Renewal Premium Check Cashed After Expiry of First Policy Did Not Reinstate Prior Policy, But Formed New One

Hartland v. Progressive County Mutual Insurance CompanyUT

( Ct. App. Texas, April 23, 2009)

The policyholder sent a renewal premium check after the policy expired.  The insurer accepted the check, and issued a revised renewal declarations page listing the date the check was received as the inception date of the renewed polcy. The policyholder argued that the acceptance of the check formed a contract under the terms of the original renewal policy, and coverage was uninterrupted.  Rejecting that argument, the court held that when the prior policy expired, no policy was in existence, and the premium was for a completely new policy.

 

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By Bryan D. Richmond and Toni L. Frain

 

http://www.goldbergsegalla.com/attorneys/Richmond.html

http://www.goldbergsegalla.com/attorneys/Frain.html