SW Legal studies in Business

Insurer Must Cover Malpractice Damages under Claims Made Policy
Description

Appeals court held that a physician and his employer properly notified insurer of a claim made against them for malpractice. Since the insured properly reported the claim to the insurer, under the claims made policy, the insurer must cover the settlement agreed to by the physician.

Topic Insurance
Key Words

Medical Malpractice; Claims Made; Coverage; Notice

C A S E   S U M M A R Y
Facts

Agnes Landry went to a hospital with chest pain. Dr. Gaddis, an employee of Metro Emergency Physicians (MEP), treated her. He failed to diagnose the fact that she was having a heart attack. The lack of proper treatment contributed to suffering permanent heart damage. She sued Gaddis and MEP who informed their malpractice insurer, Intermed. The insurance company for Gaddis and MEP denied coverage as it decided the facts did not relate to the coverage provided. Gaddis and MEP settled the suit by Landry for the maximum insurance coverage, $2 million. Landry then brought suit against the insurer to satisfy the $2 million settlement. The trial court held for Landry, ordering the Intermed to pay the claim. Intermed appealed.

Decision

Affirmed. The misdiagnosis by Gaddis was reported to Intermed properly when the matter came to light. Reporting the problem was required by the policy and the notice provided by Gattis and MEP was sufficient. The policy clearly applied to “claims made” against Gaddis and other MEP employees. Gaddis and MEP explained the matter fully to Intermed when the claim arose, as required by the policy, so they fulfilled their obligations. A “claims made” professional liability policy places special reliance on notice, which must be given to the insurer during the policy period of possible claims. If the insured does not give notice within the contractually required policy period, there is no coverage. Here, Intermed was given proper notice and the policy applied.

Citation

Landry v. Intermed Insurance, ---S.W.3d--- (2009 WL 1657992, Ct. App., Mo., 2009)

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