In its decision filed on September 23, 2015, the Fifth Circuit Court of Appeal State of Louisiana (“Appellate Court”) held that a medical malpractice insurance company was not required to obtain the consent of a physician to settle a medical malpractice case under the clear and unambiguous terms of the medical malpractice insurance policy, because the physician was no longer an insured paying premiums on a current primary professional liability policy with the insurance company.
The Underlying Facts
The plaintiff physician was employed by the medical malpractice insured and was named as an additional insured under the medical malpractice policy. Her employment was terminated on June 21, 2008. On December 16, 2008, a medical malpractice complaint was filed that named the plaintiff physician and a hospital as defendants, alleging that on January 26, 2008, the plaintiff physician committed medical malpractice during her treatment of a patient, resulting in the patient’s loss of his leg and his subsequent death.
The medical malpractice insurance company hired an attorney to defend the plaintiff physician, who subsequently determined that the medical malpractice claim against the plaintiff physician was indefensible and recommended settlement (the Louisiana State Board of Medical Examiners had suspended the plaintiff physician’s medical license indefinitely, finding that she had failed to meet the appropriate standard of care in her treatment of the medical malpractice plaintiff and another patient).
Despite the plaintiff physician’s opposition to the settlement, the named insured under the policy settled the underlying medical malpractice case for $90,000 paid on behalf of the named insured and the plaintiff physician, and the medical malpractice insurance company reported the settlement to the National Practitioner Data Bank (“NPDB”), as required by federal law. The medical malpractice plaintiffs reserved their right to proceed against the Louisiana Patient’s Compensation Fund (“PCF”) for additional recovery (an additional recovery in the amount of $360,000 was received from the PCF, which was also reported to the NPDB).
The plaintiff physician filed a civil action against the medial malpractice insurance company, alleging that it had breached its contractual duty owed to her to obtain her consent before settling the underlying medical malpractice case.
The Appellate Court noted that the medical malpractice insurance company’s policy issued to its insured contained the general requirement that the consent of the insured was required before settling a medical malpractice claim covered under the policy (“The Company will not settle any claim or suit without having first obtained the written consent of the insured”). However, the policy also contained the specific provision that “… the Company shall not be obligated to: … b) obtain the insured’s consent to settle: … after the insured involved in the claim is no longer paying premiums on a current primary professional liability policy with the Company …”
The Appellate Court stated that an insurance policy is a conventional obligation that constitutes the law between the insured and the insurer, and the agreement governs the nature of their relationship. When the words of an insurance contract are clear and explicit and lead to no absurd consequences, the courts must enforce the contract as written and may make no further interpretation in search of the parties’ intent. The Appellate Court therefore held that summary judgment was properly granted in favor of the medical malpractice insurance company.
Source Lynch-Ballard v. LAMMICO Insurance Agency, Inc., et al., No. 14-CA-793.
If you or a loved one were harmed as a result of medical malpractice in Louisiana, you should promptly find a Louisiana medical malpractice lawyer who may investigate your medical malpractice claim for you and represent you in a medical malpractice case, if appropriate.
Turn to us when you don’t know where to turn.