BOSTON (April 2, 2014) – Robert C. Shindell and Kristen M. Whittle recently persuaded a Massachusetts Superior Court judge to allocate insurance coverage on a pro rata basis for a medical malpractice judgment totaling $2.4 million with interest.
The judge’s ruling reduced the exposure faced by the firm’s client by $875,185.
In the underlying professional liability case, the jury found that the insured doctor was a substantial contributing factor for two and half years in causing the injuries suffered by a woman, her husband and two sons relating to a failure to diagnose cancer. The woman would eventually die of colon cancer.
The firm’s client insured the doctor for a portion of that time period, while a prior insurer had issued a policy covering the doctor for part of the same time period.
The prior carrier was eventually declared insolvent. The Massachusetts Insurers Insolvency Fund, the entity responsible for paying covered claims of liquidated insurers, claimed it was not obliged to pay any portion of the medical malpractice judgment entered in May 2013.
However, the Superior Court judge agreed with Shindell and Whittle that their client was only responsible for a pro rata share of the judgment based on the time period that it had insured the physician.
The judge applied a rule of insurance coverage that, in the event a court or jury cannot allocate a loss between two or more consecutive carriers from the facts in evidence, the loss is allocated among the policies based on the respective amounts of time they applied to the insured while the loss was taking place (also known as the “time-on-the-risk” method of allocation).
In so doing, the judge rejected the argument that a carrier is jointly and severally liable up to its policy limits if it insures any portion of a time period in which an individual suffers harm. (Under this approach, a carrier that is ruled liable has the option of subsequently seeking contributions from other carriers.)
The judge also rejected the Massachusetts Insurers Insolvency Fund’s position that all other insurance policies, including a policy for a later policy period, had to be exhausted before any portion of the loss could be allocated to the Fund.
The judge determined that the language of the policies issued by the firm’s client limited coverage to the policy periods. She also emphasized the difficulty of making a fact-based allocation of indemnity in light of the jury’s finding that the professional negligence spanned more than two years.
“The jury in the medical malpractice action,” the judge wrote, “determined that the negligence that caused the injury and death . . . occurred over a range of time. [I]t is not possible to make a fact-based allocation among different policies since the professional services (or failure to provide services) which gave rise to the claim of negligence spanned a number of years.”
The judge’s ruling extends the pro rata rule of coverage to medical malpractice cases. This rule of coverage was first adopted in 2009 by the Massachusetts Supreme Judicial Court in a case involving environmental contamination over several years.
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Barton Gilman is one of New England’s leading civil litigation law firms with offices in Boston and Providence. Its experienced trial attorneys appear regularly in the federal and state courts of Massachusetts, Rhode Island and Connecticut. The Providence Business News named the firm five consecutive years as one of Rhode Island’s Best Places to Work (2008–2012).