Montgomery Hosp. and Med. Ctr. v. Bureau of Med. Care Availability and Reduction of Error Fund — Jan. 2019 (PDF)

INSURANCE COVERAGE OF DEFENSE EXPENSES

Montgomery Hosp. and Med. Ctr. v. Bureau of Med. Care Availability and Reduction of Error Fund
No. 571 M.D. 2012 (Pa. Commw. Ct. Jan. 4, 2019)

The Commonwealth Court of Pennsylvania declined to grant summary relief to a hospital seeking primary coverage under the state’s MCARE fund for the costs of its defense of a medical malpractice case in which the hospital was alleged to be vicariously liable for the negligence of its radiologists (whom the patient claimed were ostensible agents of the hospital).

The MCARE fund provides primary coverage for defense of malpractice claims only where the claim is made more than four years after the alleged negligent act. Primary coverage is not available if the health care provider seeking coverage has treated the patient multiple times during the four years prior to the filing of the claim.

In this case, although the original surgery that led to the malpractice lawsuit occurred more than four years prior to the claim, the radiologists (who were independent contractors, but were alleged by the patient to be ostensible agents of the hospital) had treated the patient during the four years prior to the lawsuit. Since the hospital did not show that no genuine issue of material fact existed with respect to whether the radiologists were its ostensible agents and, in turn, with respect to whether it would be held vicariously liable for their actions, the court held that it could not grant summary relief to the hospital (and, in turn, could not overturn the MCARE fund’s determination that the hospital was not entitled to primary coverage of its defense costs since the radiologists had treated the patient within the four years prior to the filing of the claim).

In reaching its decision, the court rejected the hospital’s argument that concepts of ostensible agency, though relevant for determining liability, were irrelevant in determining whether primary coverage is available under the MCARE fund.