Expert Commentary

No Cover for Person Not Named as an Insured

Some people refuse to accept the fact that an insurance policy is controlled by the language of the policy if clear and unambiguous. When a policy explains, in clear and unambiguous language, who is insured, no brilliant argument, no Aristotelian logic can change the meaning of the contract of insurance.


Claims Practices
February 2015

In Hicks v. Kentuckiana Med. Reciprocal Risk Retention Group, 2015 Ky. App. Unpub. LEXIS 118 (Ky. Ct. App. Feb. 13, 2015), the Kentucky Court of Appeal was asked to rule that a person not named on a policy of insurance as an "insured" was intended to be an insured.

Facts

Alan Dean Hicks and Tracy Norris Hicks, individually and as administrators of the Estate of Sarah Elizabeth Hicks, appealed from the summary judgment entered in favor of Kentuckiana Medical Reciprocal Risk Retention Group (KMRRRG). The issue on appeal involved insurance coverage—specifically, whether KMRRRG was obligated to provide coverage under a professional liability insurance policy purchased by Pediatric Cardiology Associates, P.S.C. ("the P.S.C. policy"), for the allegedly negligent acts or omissions of one of its physicians, Dr. Christopher L. Johnsrude. The trial court concluded that KMRRRG was not obligated to provide coverage for defense or indemnity.

As an infant, Sarah Elizabeth Hicks was diagnosed with congenital heart conditions that caused her to suffer with an abnormal heart rhythm. On April 14, 2008, Dr. Johnsrude of Pediatric Cardiology Associates performed an electrophysiology study and a cardiac ablation procedure on Sarah. These relatively minor procedures were intended to restore her heart to a proper rhythm. However, following the treatment, Sarah suffered a stroke and died at the age of 10 years.

On April 10, 2009, the Hickses filed a wrongful death action against Dr. Johnsrude, Pediatric Cardiology Associates, Norton Hospitals, Inc., and Norton Healthcare, Inc. The claims against the Norton defendants were eventually dismissed by summary judgment, and no appeal was taken.

The Hickses agreed to settle the negligence action that they had brought against Dr. Johnsrude and the vicarious liability claims that they had asserted against Pediatric Cardiology Associates. Under the terms of the settlement agreement, the parties agreed that coverage for the alleged negligent acts or omissions of Dr. Johnsrude was provided by KMRRRG under a professional liability policy issued to Dr. Johnsrude individually. KMRRRG paid out the limits under Dr. Johnsrude's policy as part of the settlement of the wrongful death action.

However, KMRRRG and the Hickses did not agree that the "P.S.C. policy" provided coverage for the group's vicarious liability for any negligent acts or omissions of Dr. Johnsrude. The parties agreed to submit that coverage dispute to the trial court for resolution.

The trial court observed that the P.S.C. policy was clear and unambiguous on its face. The policy expressly limited coverage to Pediatric Cardiology Associates and to those physicians and allied health professionals named on a schedule prepared by the group. Only nurses and office staff employed by Pediatric Cardiology Associates were included on the schedule, and there is no dispute that Dr. Johnsrude was not included among those named in the list submitted by the P.S.C. The court observed that no physician was identified in the policy and that no premium was paid for coverage for any liability arising from the negligent acts or omissions of any physician.

Analysis

The Hickses contended that the circuit court erred by rendering summary judgment in favor of KMRRRG. They argued that the policy issued to Pediatric Cardiology Associates covered claims made against the group for its vicarious liability for the negligent acts or omissions of any physician acting on its behalf. KMRRRG contended that the limited purpose of the P.S.C. policy was to provide coverage to the P.S.C. for liability resulting from the acts or omissions of the allied health professionals and staff employed by the group.

On its declarations page, the P.S.C. policy provided that the named insured was Pediatric Cardiology Associates, P.S.C., and the insureds were listed as "those physicians and allied health professionals who are named on the Schedule of Insureds on file with the company, submitted by the Named Insured."

Each additional insured was to be listed on the "Schedule of Insureds" submitted by the named insured. An allied health professional named on the schedule was covered, but only with respect to professional services rendered as an employee of the named insured or an insured. Further, "a person or organization which, at the time of a medical incident giving rise to a claim under this policy, was an Insured under this policy or prior policies, issued by the Company, which this policy renews." (Emphasis added.)

"Insured" was defined in Part II as follows: "any person, corporation, or organization qualifying as an Insured under the Persons Insured provisions of Section I Part C of this policy while rendering services on behalf of their respective University of Louisville Practice Plan."

Decision

After completing its analysis, the appellate court concluded that the terms of the policy were clear and unambiguous. Part I, Paragraph C, provided coverage for the P.S.C. "but only with respect to Professional Services rendered by an Insured or by any person other than a physician or dentist under the direction of such Insured, for whose acts or omissions the Named Insured is legally responsible."

While Dr. Johnsrude may have been rendering services on behalf of the University of Louisville Practice Plan, he did not qualify as an "Insured" under the provisions of Part I, Paragraph C, of the policy, as he was not a physician named on the "Schedule of Insureds," an allied health professional, or an insured under a prior policy. Under the very terms of the policy, the definition of "Insured" could not be read to expand the coverage provided to Pediatric Cardiology Associates so as to include coverage for the P.S.C.'s vicarious liability for the acts or omissions of Dr. Johnsrude. The construction proposed by the Hickses was not supported by the clear and unambiguous language of the policy of insurance.


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