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An American International Group Inc. unit was not obligated to defend or indemnify a prison management company in the death of an inmate, says a federal appeals court in partially overturning a lower court ruling.
Lafayette, Louisiana-based LCS Corrections Services Inc. was sued by the heirs of Mario Garcia, a prisoner in the Brooks County detention center in Falfurrias, Texas, which was operated by LCS, who allegedly died because of the firm's failure to provide him with additional doses of benzodiazepine, a drug he had been prescribed, according to Wednesday's ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in LCS Corrections Services Inc. v. Lexington Insurance Co.
A U.S. District Court jury in Corpus Christi, Texas, had awarded $2.25 million to the plaintiffs in the case on a medical malpractice claim in Mr. Garcia's death. The litigation now at issue was Lexington's duty to defend and indemnify LCS for a claim alleging Mr. Garcia's constitutional rights had been violated.
The focus of the ruling in the complex constitutional litigation are two policies issued by Lexington, a unit of New York-based AIG: a commercial general liability policy and a commercial umbrella liability policy. The District Court ruled for the plaintiffs on the CGL policy and for Lexington on the umbrella policy.
A three-judge panel of the 5th Circuit unanimously ruled, however, that neither policy applied. In the case of the CGL policy, the appellate court held that its medical services exclusion applied. “Providing and administering medicine to an inmate in prison is a medical service, which LCS failed to render, for whatever reasons,” said the ruling.
The appeals court also held that the umbrella policy did not provide coverage under its professional liability exclusion. Plaintiffs had alleged that a separate administrative policy, not the denial of professional services, caused Mr. Garcia's death, said the ruling.
However, “any administrative policy plainly amounted to a refusal to render a professional service to Garcia,” said the board, in also denying coverage under this policy.
A jury in Oakland, California, has ruled that three American International Group Inc. units must pay a more than $55 million award, including $46 million in punitive damages, to a valve and piping manufacturer in a products liability coverage dispute.