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Member, Beacon International Group, Ltd.
NEW ORLEANSA computer-generated loss run submitted to an insurer is sufficient notice of a claim under an excess liability policy sold by Lexington Insurance Co., a federal appeals court has ruled.
The case of East Texas Medical Center Regional Healthcare System vs. Lexington Insurance Co. involved a claims-made medical malpractice policy from June 2002 to June 2003 with $5 million in limits above a $2 million retention, court records show.
During that time, a medical malpractice claim was filed and a dispute arose between East Texas Medical Center and Lexington about whether the policyholder properly notified Lexington of the claim and a subsequent lawsuit.
The medical center had provided Lexington information only through three computer-generated spreadsheets known as a loss runs that contained data on many claimants. Lexington denied coverage and the medical center sued.
A jury hearing the case awarded $1.7 million in damages to the medical center, but a trial court judge agreed with Lexington that there was insufficient evidence to support the jury findings.
However, the 5th U.S. Circuit Court of Appeals vacated that finding on Friday and remanded the case for additional proceedings.
Lexington had argued that loss runs lack relevant data and are, by their nature, insufficient to satisfy its policy requirements that written notice be made of a claim. But the New Orleans-based appeals court disagreed.
It found, among other issues, that Lexington’s acceptance of loss runs as notice of claims in other cases supported the jury’s finding. It also ruled that Lexington’s policy did not contain language limiting written notice to a particular format.