Methodist Healthcare v. American Int’l Specialty Line Ins. Co.

MALPRACTICE – CORPORATE NEGLIGENCE, INSURANCE COVERAGE

Methodist Healthcare v. American Int’l Specialty Line Ins.
Co.,
No. 03-2106 D/V (W.D.Tenn. Mar. 30, 2004)

A mother sued a hospital for negligent credentialing on behalf
of her child who suffered injuries during birth. An insurance company for the
hospital denied coverage, claiming that the policy excluded claims for bodily
injury. The hospital filed a declaratory judgment action against the insurance
company, and the insurance company moved for summary judgment. The trial court
found that, while the policy excluded claims for bodily injury, the policy was
amended to cover negligent credentialing claims.

The insurance company then argued that the negligent credentialing
claim was interrelated with an earlier malpractice claim by the mother and her
child, which was defended by another insurance company for the hospital, and
because of that, the insurance company was the "successor insurer"
and therefore not responsible under the policy to defend and indemnify the hospital
on the negligent credentialing claim. The court held that this was a new complaint,
and that both insurance companies were concurrent insurers and therefore responsible.

Finally, the insurance company argued that the "other
insurer" clause defeated complete coverage because the hospital’s other
insurance company was the primary provider. The court held that the clause was
inconsistent with the rest of the policy, and that this was an issue for later
in the litigation process. The Western District Court of Tennessee denied the
summary judgment.