Pac. Emp’rs Ins. Co. v. Travelers Cas. and Sur. Co. – Sept. 2015 (Summary)

PROFESSIONAL LIABILITY INSURANCE

Pac. Emp’rs Ins. Co. v. Travelers Cas. and Sur. Co., No. 3:11-cv-924 (SRU) (D. Conn. Sept. 25, 2015)

This is a declaratory judgment action involving a hospital’s insurance carriers and the scope of their policies based on claims filed against the hospital by victims of a physician who was alleged to have sexually abused children who were his patients.

The hospital carried two insurance policies, a general liability policy (“GL”) and a hospital professional liability policy (“HPL”), which were supplemented by a blanket catastrophe policy. The insurers disagreed about the scope of their policies regarding the abuse and the coverage of the settlement payments related to the abuse.

The blanket catastrophe insurer basically argued that both the HPL and GL must be exhausted before its policy was triggered, rather than just the HPL. The hospital objected to that position, essentially arguing that it would be left with uncovered costs if the HPL was exhausted because the GL was inapplicable to the claims. The court held in favor of the hospital that if the HPL coverage limits are reached for a claim that would otherwise have been covered, the excess catastrophe policy begins paying.