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Vol. 6, Iss. 1
January 11, 2017

What Is A Claim? Lots Of Cases On This. Here’s One Worth Reading.

There is a great quote from a 1963 Supreme Court of Pennsylvania case that asks the question – what is an accident?

The court’s answer in Brenneman v. St. Paul F. & M. Ins. Co.:

“Everyone knows what an accident is until the word comes up in court. Then it becomes a mysterious phenomenon, and, in order to resolve the enigma, witnesses are summoned, experts testify, lawyers argue, treatises are consulted and even when a conclave of twelve world-knowledgeable individuals agree as to whether a certain set of facts made out an accident, the question may not yet be settled and it must be reheard in an appellate court.”

You could say the same about the question what is a claim? Everyone knows what a “claim” is until the word comes up in court. Then all bets are off. And it comes up in court a lot. In coverage cases, it often arises in the context of whether a “claim” has been made for purposes of triggering a “claims made” policy. These decisions are often fact and policy-language driven. For this reason, I do not usually address them in CO. They are usually too unique to be able to impart any sort of general lesson or guidance for future cases.

Reuter v. Lancet Indem. Risk Retention Group, No. 16-80581 (S.D. Fla. Dec. 15, 2016) is fact and policy-language driven. But, nonetheless, I included it here because it demonstrates the importance for insurers of having a very clear definition of “claim.” Not to mention that, even with its definition of “claim,” the insurer still had no easy road. The insurer won – but it took a court willing to drill-down into the policy to do so.

At issue in Reuter was coverage, for a physician, under a claims made medical professional liability policy. Specifically, was a “claim” first made against the Insured during the May 1, 2013 to May 1, 2014 policy period?

Of significance, the policy defined “claim” as follows:

(1) a written notice received by an Insured, and forwarded to us, from a person or entity, or on behalf of such person or entity by another party legally empowered to act on their behalf, alleging that such person or entity has been damaged by an Insured and demanding monetary damages or notifying the Insured of an intention to hold an Insured responsible for an Occurrence; or

(2) the filing of a civil lawsuit or arbitration proceeding seeking monetary damages.

Notifying us of an Occurrence that may result in a Claim as required under “Section 6- Notice Provisions” does not constitute a Claim first made hereunder unless it incorporates Items 1 or 2 above.

Here’s what happened during the May 1, 2013 to May 1, 2014 policy period:

First, “[i]n a letter dated August 20, 2013, and addressed to Plaintiff [the insured physician], the Florida Department of Health notified Plaintiff that it was investigating a complaint (the ‘Report’) the DOH had received regarding Plaintiff’s possible violations of the Medical Practices Act in connection with medical treatment Plaintiff rendered to patient V. G. The DOH Letter stated in relevant part, ‘We are currently investigating the enclosed document received by the Department of Health. This investigation was initiated after it was determined that you may have violated the Medical Practices Act.’ The DOH Letter outlined procedures governing the investigation.”

Then, “[i]n a letter dated December 9, 2013, and addressed to Plaintiff [the insured physician], the attorney representing patient V.G. requested that Plaintiff provide, pursuant to section 627.4137 of the Florida Statutes, a statement setting forth certain specified ‘information with regard to each policy of insurance.’”

There is no doubt that certain things were sent to, and about, the physician, during the May 1, 2013 to May 1, 2014 policy period, that smelled like a claim. A claim was definitely in the air. Surely there was a good chance that one was coming down the pike. But, were these things enough to satisfy the policy’s specific definition of “claim?”

Lancet, the insurer that issued the claims made medical professional liability policy, maintained that these various notices were not a “claim,” as defined under its policy. Rather, if a “claim” were made, it was not until after the May 1, 2014 expiration of its policy.

The insured-physician filed suit against Lancet, alleging that the insurance letter and/or the Report filed by the patient, with the DOH, constituted a “claim,” within the meaning of the Lancet Policy.

The court concluded otherwise, holding that, of the three possibilities, none was a defined “claim” made during the Lancet policy period:

First, the Florida Department of Health notified the physician that it was investigating a report that the DOH had received regarding his possible violations of the Medical Practices Act in connection with medical treatment rendered to patient V. G. However, while the DOH Letter was received by the physician-insured, as required by the definition of "claim,” the DOH Letter was not received “from a person. . . or on behalf of such person by another party legally empowered to act on their behalf,” i.e. the patient V. G.

Second, while the underlying report, filed with the DOH, was received from the patient – solving the problem above -- the report was received by the DOH and not the physician. Not to mention, as the court noted, “even if the Report had been received by [the physician], the Report did not ‘demand[] monetary damages’ or ‘notify[] the Insured of an intention to hold an Insured responsible for an Occurrence.’ Rather, the Report was filed to initiate a disciplinary investigation.”

Third, the court concluded that the letter requesting insurance information from the physician, pursuant to Florida statute, was not a “claim” within the policy’s definition: “[N]othing in the Insurance Letter alleges that the former patient ‘has been damaged by’ Plaintiff, demands monetary damages, or purports to notify the insured of an intention to hold the insured responsible.”

The court’s decision here is correct – no matter how you slice it, the definition of “claim” was not satisfied. And the insurer, to its credit, was willing to go to mat on it. But I can imagine some courts, looking at the totality of the situation here, and the information that had been provided to the physician – especially the request for insurance letter, since, why else would it be sent -- and concluding that if it walks like a claim, quacks like a claim and looks like a claim, well, you know…


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