A Berkshire Hathaway Inc. medical malpractice unit has prevailed in litigation with an American International Group Inc. unit over a 2002 med mal case.

The complex case’s origins go back to October 2002, when a physician performed a laparoscopic hysterectomy on Vicki Bramlett, who died from complications a few days later, according to Tuesday’s ruling by the 7th U.S. Circuit Court of Appeals in Chicago in The Medical Protective Co. of Fort Wayne, Indiana, v. American International Specialty Lines Insurance Co., now known as AIG Specialty Insurance.

Ms. Bramlett’s husband and children filed a wrongful death suit in Texas state court against the doctor who performed the surgery, his clinic and the hospital where the surgery took place. At the time, the doctor and his clinic held a $200,000 health care professional liability insurance policy with Berkshire Hathaway unit MedPro.

The hospital settled with the Bramletts for about $2.3 million, but MedPro refused to settle the case against the doctor and his clinic for $200,000. 

The case against the doctor went to trial in August 2005, and a jury returned a surprise $14 million verdict for the family, including $11 million in actual damages and $3 million in punitive damages.

In 2009, the Texas Supreme Court capped the doctor’s liability at $1.6 million, the statutory limit for physicians, but held the family could sue MedPro directly for the difference between the statutory cap and the jury verdict.

MedPro paid the family the $1.6 million, and the family then sued the insurer for the rest of the award. After the court denied MedPro’s motion for summary judgment, the parties settled for a confidential amount. MedPro then asked its insurer, American International Specialty Lines Insurance Co., to cover the settlement, but the AIG unit refused.

MedPro then sued AISLIC for breach of contract under its policy, which provided $5 million in coverage. AISLIC moved for summary judgment on the basis of a policy exclusion that bars coverage for any wrongful act that occurs before the policy began that the insured could have reasonably foreseen. The district court ruled in the AIG unit's favor but was overturned by the 7th Circuit in an earlier ruling.

A jury subsequently ruled in MedPro’s favor, and AISLIC appealed. A three-judge appeals court panel unanimously ruled in MedPro’s favor in Tuesday’s decision.

The panel held that the claim against MedPro for a wrongful act was sufficient to invoke coverage under the policy.

It also disagreed with AIG as to whether MedPro’s claim was made before the policy period began. After a close examination of the term “claim,” the panel concluded it was not.

MedPro attorney John R. Gerstein, of counsel with Clyde & Co. US LLP in Washington, said in a statement, “MedPro is pleased to have the trial court judgment in its favor affirmed by the United States Court of Appeals for the Seventh Circuit. The rulings by the trial court, and the opinion of the Seventh Circuit, are eloquent and speak for themselves.” 

AIG attorneys did not respond to a request for comment.