Notice provision not ambiguous
Wright State Physicians (WSP) is a medical practice group through which physicians employed by the Boonshoft School of Medicine at Wright State University provide medical services at local hospitals while teaching and supervising medical students, interns, and resident physicians. Daniel Lacey was a neurologist with WSP and provided medical services at the Children’s Medical Center of Dayton (CMC), (now called Dayton Children’s Hospital).
The Doctors Company (TDC) is an interinsurance exchange that provides medical malpractice insurance. TDC had separately issued policies to CMC and WSP. Lacey was covered under WSP’s policy, which was a claims-made policy in effect from April 15, 2009, until April 15, 2010.
On December 28, 2009, an attorney representing a minor child and his parents sent a letter of assertion to Lacey at CMC claiming that Lacey negligently treated the child at CMC in 2003. The attorney also sent a separate letter of assertion to CMC similarly claiming that the care its employees provided was negligent. In January 2010, CMC forwarded a copy of the Lacey letter to WSP. The president and chief executive officer of WSP at the time acknowledged that it needed to notify TDC of the Lacey letter and that it needed to submit an incident or claims form.
In February 2010, CMC filed a claims form with TDC and forwarded it with the letter from the child’s attorney as well as other information about its treatment of the minor child. CMC told the TDC litigation specialist assigned to the claim that the child’s attorney had said that Lacey was the primary actor and that Lacey was also insured by TDC. After talking with CMC, the litigation specialist wrote in his notes that Lacey was employed by WSP and that he was “a TDC insured.” The specialist also referred to Lacey as “the anticipated codefendant.”
In September 2011, the child and his parents filed a medical malpractice suit against CMC, WSP, and Lacey. Both CMC and WSP (for itself and Lacey) tendered their defenses of the suit to TDC under their respective policies. TDC accepted CMC’s tender but refused to provide a defense for WSP and Lacey because neither had ever notified it of the claim as required by the policy. The malpractice suit was settled in December 2014.
In October 2014, after TDC again refused their tender, WSP and Lacey filed suit against TDC, claiming breach of contract and bad faith and asking for a declaratory judgment. WSP and Lacey alleged that TDC was obligated under the policy to provide coverage and that by failing to do so TDC breached the policy and acted in bad faith. TDC maintained that it was not obligated to provide coverage and did not act in bad faith because WSP and Lacey failed to satisfy the policy’s notice requirements. The parties filed cross-motions for summary judgment, and the court sustained TDC’s motion and overruled WSP’s and Lacey’s motion. WSP and Lacey appealed.
On appeal, WSP challenged the trial court’s grant of summary judgment on both the breach of contract and bad faith claims.
The appellate court noted that WSP’s policy was a claims-made policy whose language stated that “the coverage of this policy is limited generally to liability for only those claims that are first reported in writing to the Company while the policy is in force.” The policy also stated that a claim was covered “only if and when” the claim arises from an incident that took place “prior to the termination date of this Policy” and “we receive a Claim Report from you during this Policy Period.” The policy twice stated that each protected party must satisfy the notice requirements.
The court noted that the policy imposed a duty on the protected party to notify TDC about the potential claim “in writing” and to forward to TDC any document it received relating to the claim. In addition, the party had a duty to provide “written details” about the claim. The policy required that notice be made by the protected party itself or by someone “on behalf of” the party, like an agent or representative. The court stated that neither WSP nor Lacey satisfied any of these requirements. The court overruled this assignment of error as well as the one that asserted that TDC acted in bad faith in denying WSP’s claim.
Wright State Physicians, Inc., vs. The Doctors Company-Court of Appeals of Ohio, Second District-December 23, 2016- No. 27084.