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Admiral, not clinic’s captive, is primary for med mal cover

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Admiral, not clinic’s captive, is primary for med mal cover

Admiral Insurance Co. was the primary insurer for a physician’s medical malpractice coverage, and a clinic’s captive is neither obligated to contribute to a $420,000 settlement nor pay $183,000 in attorneys fees and costs, said a federal appeals court Wednesday, in affirming lower court rulings.

Dr. Anthony Schwartz, who worked at the Bullhead City Clinic in Bullhead, Arizona, operated by Franklin, Tennessee-based Community Health Systems Inc., was sued for medical negligence in 2010, according to court papers in Admiral Insurance Co. v. Community Insurance Group SPC Ltd. Also sued in the litigation was Community Health’s captive, Community Insurance Group.

Mount Laurel Township, New Jersey-based Admiral, which had issued Dr. Schwartz a primary professional liability policy, settled the underlying litigation against Dr. Schwartz for $425,000 in 2012, while Community Insurance settled the underlying litigation against the clinic in a separate, confidential settlement agreement.

Admiral then filed suit against Community Insurance in U.S. District Court in Phoenix, seeking an equitable contribution for the payments it made on Dr. Schwartz’s behalf on the basis that Community Insurance was a primary insurer. Community Insurance argued it was not.

The district court ruled against Admiral in November 2016. The Community Insurance policy’s “‘other insurance’ clause makes clear  that the policy is excess when there is other insurance for a claim,” said the district court ruling.

“The Admiral Policy therefore remains primary, and primary insurance must be exhausted before excess insurance is obligated to pay.”

In a separate ruling in February 2017, the district court also held that Admiral, which had received a $250,000 premium from the clinic for Dr. Schwartz’s coverage, must pay $183,000 in attorneys fees plus $30,000 in expenses.

A unanimous three-judge appeals court panel of the 9th U.S. Circuit Court of Appeals in San Francisco affirmed the lower court’s decisions. “The district court correctly held that Admiral’s policy is primary,” said the ruling in upholding the lower court’s rulings on the coverage as well as the attorneys’ fees.

 

 

 

 

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