In Selective Way Insurance Company v. RHJ Medical Center, Inc., the court found there was no coverage under the unambiguous terms of the insurance policy. Thus, the insurer could not be in breach of its insurance agreement when there was no duty to indemnify or defend, and could not act in bad faith by refusing to indemnify or defend the insured because there was no coverage for the insured under the policy terms.
This case is related to a pending wrongful death action in which damages are sought against RHJ Medical Center, Inc. and one of its physician employees, both insured under the same policies. The wrongful death action alleges that the clinic patient who murdered the decedent did so due to the insured’s malpractice in treating him. The insured’s CGL carrier obtained judgment in its favor because its policy did not cover any claims in the wrongful death action and because the policy excluded such coverage.
Subsequently, the insured sought benefits for the wrongful death action against a second carrier, under its medical professional liability insurance policy with Evanston Ins. Co. (“Insurer II”). Upon that claim’s denial, the insured joined Insurer II, asserting breach of contract for refusal to defend or indemnify and bad faith for breach of duty of good faith and fair dealing and violating the Pennsylvania Unfair Insurance Practices Act. Insurer II’s answer included a counterclaim seeking a declaratory judgment that it has no duty to defend, indemnify, or provide coverage for the wrongful death action and no obligation to reimburse legal fees or expenses incurred in that action. Insurer II moved for summary judgment on its counterclaim and for dismissal of the insured’s complaint.
The court found the policy language to be unambiguous, reading the contract as a whole and construing it according to its plain meaning, as required under Pennsylvania insurance contract law. The court determined that the policy covered only claims for any injury to or death of a patient, not claims arising from injury to or death of a patient. Although the wrongful death action alleges an injury to the patient (from the insured’s malpractice), it does not assert any claims on behalf of (for) the patient for such injury. The wrongful death action, therefore, does not fall under the covered claims so the insured is not covered in the wrongful death action.
The physician employee is not covered, additionally, because a clause in the policy specifically excludes claims against any insured physician arising out of rendering or failing to render professional services.
In the absence of coverage, Insurer II has no duty to defend or indemnify either insured and its motion was granted.
Without a duty to defend, the insured’s bad faith claim can not stand.
Date of Decision: December 8, 2008