Aetna Life and Cas. Co. v. McCabe
Decision Date | 31 January 1983 |
Docket Number | Civ. A. No. 78-598. |
Citation | 556 F. Supp. 1342 |
Parties | AETNA LIFE AND CASUALTY COMPANY (CASUALTY & SURETY DIVISION), Plaintiff, v. Donald Lee McCABE and Gale Greenberg, Defendants. |
Court | U.S. District Court — Eastern District of Pennsylvania |
Francis E. Shields, Pepper, Hamilton & Scheetz, Philadelphia, Pa., for plaintiff.
James E. Beasley, Beasley, Hewson, Casey, Colleran & Stopford, Philadelphia, Pa., for Gale Greenberg.
Louis Samuel Fine, Fine, Staud & Grossman, Philadelphia, Pa., for Donald McCabe.
This is an action for declaratory judgment by the plaintiff insurance company, Aetna Life and Casualty Company ("Aetna") against Dr. Donald Lee McCabe ("McCabe"), its insured under a medical malpractice policy, and Gale Greenberg ("Greenberg"), a former patient of McCabe's who obtained a judgment in her favor against McCabe in a medical malpractice action. Aetna seeks a declaration of non-coverage under Dr. McCabe's Professional Liability Policy. Before us for decision are motions for summary judgment filed on behalf of defendants McCabe and Greenberg. Defendants argue that Aetna is collaterally estopped by the jury's verdict upon special interrogatories in Greenberg's medical malpractice action against McCabe, Greenberg v. McCabe, C.A. No. 76-342, in which Aetna defended McCabe, and that Aetna cannot relitigate facts determinative of coverage that were decided therein. The defendants also contend that Aetna has waived its right to raise certain of the defenses it now seeks to invoke and that its reservation of rights while defending Dr. McCabe was ineffective. Aetna contends the doctrines of waiver and estoppel are inapplicable and the reservation of rights was valid. Defendants claim Aetna as insurer must pay the total amount of the jury award, including that for punitive damages, but plaintiff asserts it cannot legally insure against punitive damages and that its coverage in any event was limited to $250,000 for any one claim. For the reasons which follow, defendants' motion for summary judgment will be granted in part and denied in part.
The parties have stipulated to many of the important facts. (Stipulation of Facts, Dkt. No. 62).
Aetna issued a "Professional Liability Policy," No. 57 DZ 28720, to McCabe for the period commencing January 2, 1974 through January 2, 1975. (Stipulation # 5). An identical policy was in effect between Aetna and McCabe for each prior year since 1968. (Stipulation # 6). From 1968 to 1974 inclusive, McCabe was a practicing Doctor of Osteopathic Medicine in Harrisburg, Pennsylvania. (Stipulation # 7).
The Coverage Agreements of McCabe's policy with Aetna provided:
The policy contained only one exclusion, which provided:
This insurance does not apply to liability of the insured as a proprietor, superintendent or executive officer of any hospital, sanitarium, clinic with bed and board facilities, laboratory or business enterprise.
The "limits of liability" section of McCabe's policy provided:
The limit of liability stated in the declarations as applicable to "each claim" is the limit of the company's liability for all damages because of each claim or suit covered hereby. The limit of liability stated in the declarations as "aggregate" is, subject to the above provisions respecting "each claim", the total limit of the company's liability under this coverage for all damages. Such limits of liability shall apply separately to each insured.
On January 15, 1976, Greenberg filed a complaint against McCabe in the United States District Court for the Eastern District of Pennsylvania, C.A. No. 76-342, which alleged that McCabe's negligent care and treatment had caused her injury. McCabe notified Aetna of the complaint on March 23, 1976 and Aetna retained the law firm of Kaliner and Joseph to represent McCabe on March 31, 1976. (Stipulation # 8, # 9).
On March 31, 1976, C.F. Higgins, Jr., Supervisor, Philadelphia Claim Department of Aetna, also sent a letter to McCabe regarding coverage under the policy. (Exhibit G-9 to Fact Stipulation). This letter stated in relevant part:
On April 23, 1976, Edward Joseph of Kaliner & Joseph entered an appearance on behalf of McCabe and continued to represent McCabe through the entire proceedings. (Stipulation # 13). Aetna conducted the investigation of the Greenberg v. McCabe case.
Greenberg v. McCabe was originally scheduled for trial before the Honorable Joseph S. Lord, III, on or about March 14, 1977. (Stipulation # 28). Aetna first claimed a "reservation of rights" to disclaim coverage by letter to McCabe dated March 11, 1977. (Stipulation # 26; Exhibit G-30 to Stipulation of Facts). This letter stated:
Dear Dr. McCabe:
Left frontal skull fracture Cerebral concussion Headaches Blurred vision Intravaginal trauma Parametritis Multiple contusions; Abrasions and bites; Scarring; Shock; Mental anxiety; Embarrassment; Injury to her nerves and nervous system; Pain and mental suffering; Lost earnings and earning capacity; and Special damages.
Aetna wrote a supplemental letter to McCabe regarding coverage on March 16, 1977. (Stipulation # 27, Exhibit G-31 to Stipulation of Facts). That letter stated:
Greenberg v. McCabe was tried before the Honorable Joseph S. Lord, III and a jury from September 6, 1977 to September 16, 1977. (Stipulation # 29). Joseph was sole counsel representing Dr. McCabe (Stipulation # 30); Chief Judge Lord did not permit the personal attorney retained and paid for by Dr. McCabe to participate in the trial. (No. 76-342, N-T 1-17, dkt. # 67).
Greenberg testified at that trial that she had come as a patient to McCabe in 1968, for treatment of asthma and anxiety, on the recommendation of a friend. During therapy sessions McCabe administered certain drugs that were either illicit or "contraindicated." She testified that she and McCabe began to have sexual relations after she had been his patient for approximately six months and that their affair continued through February, 1974; Greenberg lived with McCabe beginning in the fall of 1972. There was also testimony that McCabe continued to prescribe drugs for Greenberg until an altercation on February 11, 1974.
Expert testimony was presented with regard to McCabe's drug therapy and the phenomenon of...
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