Medical Professional Mutual Insurance v. Newton-Wellesley Hospital

11 Mass. L. Rptr. 114
CourtMassachusetts Superior Court
DecidedDecember 14, 1999
DocketNo. 984705C
StatusPublished

This text of 11 Mass. L. Rptr. 114 (Medical Professional Mutual Insurance v. Newton-Wellesley Hospital) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Medical Professional Mutual Insurance v. Newton-Wellesley Hospital, 11 Mass. L. Rptr. 114 (Mass. Ct. App. 1999).

Opinion

Gershengorn, J.

Plaintiff, Medical Professional Mutual Insurance Company, is moving for summary judgment on its complaint for a declaration that it has no obligation to fund an appeal on behalf of its insured, Madeleine Loan, R.N. Madeleine Loan was insured under a Medical Professional Mutual Insurance policy issued to her employer, Newton Wellesley Hospital. Plaintiff contends that having exhausted its Policy limits, it has no further duty to defend Madeleine Loan. In its cross motion for summary judgment, defendants, Newton Wellesley Hospital and Madeleine Loan, allege that the policy language at issue supports an ongoing duty to defend. Specifically, defendants allege that the tendering of the policy limit does not terminate plaintiffs duty to defend, and therefore that plaintiff must fund the appeal that its counsel has filed on behalf of Madeleine Loan. For the reasons set forth below, plaintiffs motion is DENIED. This Court takes no action on defendants’ motion.

[115]*115BACKGROUND

Newton Wellesley Hospital (the “Hospital”) purchased from plaintiff Medical Professional Mutual Insurance Company (“ProMutual”)1 a claims-made professional liability insurance policy, number MK1655, effective from January 13, 1994 through January 13, 1995 (the “Policy”).

The Policy provides liability coverage for:

damages because of any claim or claims made against the insured during the policy period arising out of the rendering of or failure to render . . . professional services . . .

The policy also provides that:

The company shall have the right and duty to defend any suit against an insured seeking such damages . . . , but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company’s liability has been exhausted by the payment of judgments or settlements.

Endorsement #2 to the Policy amends the Policy by adding as “Persons Insured” under the Policy “any authorized volunteer worker or employee of the named insured (except interns, externs, residents, dental, osteopathic or medical doctors).” The Policy therefore provides coverage to the Hospital’s employed nurses. The Policy has a $2,000,000 liability limit per claim.

In April 1994, Devin Lucas and Stacy Lucas (“the Lucases”), individually and as next friend of Krista Lucas (“Krista”) and Jared Lucas (“Jared”), filed a complaint against Dr. Louisa Stigol, M.D. (the “doctor”), Madeleine Love, R.N.2 (“Nurse Loan”), Jane Doe A, Jane Does 1-10, and the Hospital (collectively the “Lucas action”) alleging, among other things, that Nurse Loan failed to exercise reasonable skill in her care and treatment of Krista, who was born at the Hospital.

Pursuant to the Policy, ProMutual retained counsel to defend Nurse Loan and the Hospital in the Lucas action. Before trial, the Hospital was dismissed from the Lucas action by stipulation of the parties. The Lucases’ claims against Nurse Loan were tried to a jury. On or about February 11, 1998, the jury rendered a verdict against Nurse Loan in an amount in excess of the $2,000,000 per claim Policy limit and on or about February 25, 1998, judgment entered against Nurse Loan. Defense counsel moved for a new trial and for judgment notwithstanding the verdict, as well as to reduce the verdict. ProMutual funded all of Nurse Loan’s defense fees and costs throughout the trial and the motions for post-judgment relief.

ProMutual contends that based on the evidence at trial and its review of the post trial motions, it believed that it would be unlikely that Nurse Loan would obtain any post-judgment relief or prevail on appeal. While the post-trial motions were pending, ProMutual attempted to obtain a release of Nurse Loan from the Lucases in exchange for ProMutual’s payment of its $2 million policy limits to the Lucases. Nurse Loan states that the release which ProMutual attempted to obtain post verdict was the same release that she had demanded ProMutual obtain prior to judgment in response to the Lucases’ counsel demand for settlement within ProMutual’s Policy limit.

After the Lucases refused to release Nurse Loan in exchange for ProMutual’s payment of its policy limits, ProMutual confirmed with Nurse Loan’s personal counsel, Michael Mahoney (“Nurse Loan’s counsel”), that Nurse Loan had no objection to ProMutual’s payment of its policy limits, even in the absence of a release. Defendants contend that at this time ProM-utual did not disclose its intention not to fund an appeal. On April 1, 1998, the court approved a motion to distribute the policy proceeds which was assented to by both ProMutual and Nurse Loan.3 Accordingly, on April 2, 1998, ProMutual paid to the Lucases, in partial satisfaction of the judgment against Nurse Loan, its $2 million Policy limit, as well as all post-judgment interest that had accrued on the judgment.

On or about April 29, 1998, the court (White, J.) denied Nurse Loan’s motions for postjudgment relief. Specifically, as to the motions for a new trial and judgment notwithstanding the verdict, the court found that there was sufficient evidence to support the verdict and that the verdict was not against the weight of the evidence. As to the motion to reduce the verdict, the court stated that there was no reason to revisit or revise her trial rulings on damage issues.

By letter dated May 28, 1998, ProMutual notified Nurse Loan’s attorney that ProMutual had authorized defense counsel to file a notice of appeal at ProMutual’s expense. ProMutual sent copies of that letter to counsel for the Hospital and counsel for Lexington Insurance Company (“Lexington”), which had issued an excess insurance policy to the Hospital covering the period from January 13, 1994 to January 13, 1995. In the letter, ProMutual informed Nurse Loan that it had only authorized defense counsel to file a notice of appeal because it was necessary to preserve Nurse Loan’s right to pursue an appeal should she elect to do so. ProMutual further informed Nurse Loan that because it had exhausted its Policy limits in partial satisfaction of the judgment in the Lucas action, it believed that it had no obligation to fund an appeal.

On June 5, 1998, ProMutual’s counsel sent a letter to Nurse Loan’s counsel and sent copies of said letter to counsel for Lexington and the Hospital. This letter reiterated ProMutual’s belief that it had no obligation to fund an appeal because it had exhausted its policy limits in partial satisfaction of the judgment in the Lucas action. This letter also noted that ProMutual had authorized defense counsel to order the trial transcript and had advanced the cost of the transcript, because such actions were necessary to preserve [116]*116Nurse Loan’s right to an appeal. ProMutual again expressly reserved the right to discontinue funding any further fees or costs associated with an appeal, and to seek judicial determination concerning whether or not it was obligated to fund an appeal.

On or about February 17,1998, Lexington had filed a declaratory judgment against Newell Health Care Systems, Inc., the Hospital, and Nurse Loan (collectively the “Lexington action”). The Lexington action, filed just days after the verdict in the Lucas action, seeks a determination concerning the applicability of the Lexington excess policy issued to the Hospital to the judgment in the Lucas action.

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Bluebook (online)
11 Mass. L. Rptr. 114, Counsel Stack Legal Research, https://law.counselstack.com/opinion/medical-professional-mutual-insurance-v-newton-wellesley-hospital-masssuperct-1999.