American Cas. Co. of Reading, Pa. v. Phico Ins. Co.

• Decision Date: 24 January 1992
• Citation: 602 A.2d 904,145 Pa.Cmwlth. 184
• Parties: AMERICAN CASUALTY COMPANY OF READING, PA., Petitioner, v. PHICO INSURANCE COMPANY and Commonwealth of Pennsylvania, Medical Professional Liability Catastrophe Loss Fund et al., Respondents.
• Court: Pennsylvania Commonwealth Court

Page 904

602 A.2d 904

145 Pa.Cmwlth. 184

AMERICAN CASUALTY COMPANY OF READING, PA., Petitioner, v. PHICO INSURANCE COMPANY and Commonwealth of Pennsylvania,

Medical Professional Liability Catastrophe Loss

Fund et al., Respondents.

Commonwealth Court of Pennsylvania.

Argued Sept. 10, 1991.

Decided Jan. 24, 1992.

[145 Pa.Cmwlth. 186] K. Charles Gudenas, for petitioner.

David E. Sandel, Jr., for respondent, Phico Ins. Co. and Sharon DiRienzo.

Peter J. Hoffman, for respondents, Com. of Pa. and Medical Professional Liability Catastrophe Loss Fund et al.

Before PALLADINO and McGINLEY, JJ., and SILVESTRI, Senior Judge.

McGINLEY, Judge.

Presently before this Court, in our original jurisdiction, is the motion of Phico Insurance Company (Phico) for summary judgment and the cross-motion of American Casualty Company of Reading, Pa. (American Casualty) for summary judgment and also the application of the Pennsylvania Medical Professional Liability Catastrophe Loss Fund (Cat Fund) for summary relief and the cross-application of American Casualty for summary relief.

American Casualty issued to Sharon DiRienzo (DiRienzo), a delivery room nurse, a "Professional Nurse's Liability Policy" (American Casualty's policy) for the period from February 6, 1987, through February 6, 1988. American Casualty's policy provides professional and personal liability coverage for the nursing profession. ¹ In its policy American Casualty agrees to "pay all amounts up to the limits of liability [$1,000,000] which you [DiRienzo] become legally obligated to pay as a result of injury or damage." American Casualty's policy, Appendix to Memorandum of Law of American Casualty (Appendix), Exhibit C at 5. American Casualty's policy also provides that "[t]he injury or damage must be caused by ... a medical incident as a result of the supplying of or failure to supply professional services by you...." American Casualty's policy, Appendix, Exhibit C at 5. DiRienzo paid an annual premium of $58.00 in consideration for the insurance coverage.

Phico issued two policies of insurance to Bryn Mawr Hospital (Hospital), one a "Health Care Providers Comprehensive Liability Policy" (primary policy), and the other a "Health Care Providers Umbrella Policy" (excess policy), for the period from November 20, 1987, through January 20, 1988. The policies were extended by endorsement to February 1, 1988. Phico's primary policy provides a wide range of liability insurance coverage. Coverage C, "Institutional Professional Liability", includes up to $200,000 of coverage to the Hospital and its employes for "any act or omissions in the furnishing of professional health care services." Phico's primary policy, Appendix, Exhibit D at 11. Phico's excess policy provides up to $10,000,000 of coverage to the Hospital and its employes for "any act or omission during the policy period in the furnishing of professional health care services including the furnishing of ... medication ... in connection with such services...." Phico's excess policy, Section VII-Definitions, Appendix, Exhibit E at 8. Phico's excess policy involves coverage "in excess of the greater of ... any other underlying insurance payable with respect to or collectible by the insured...." Phico's excess policy, Appendix, Exhibit E at 9.

By statute the Cat Fund provides the following coverage:

There is hereby created a contingency fund for the purpose of paying all awards, judgments and settlements for loss or damages against a health care Section 701(d) of the Health Care Services Malpractice Act (Act). ² "The limit of liability of the fund shall be $1,000,000 for each occurrence for each health care provider and $3,000,000 per annual aggregate for each health care provider." Section 701(d) of the Act, 40 P.S. § 1301.701(d).

provider entitled to participate in the fund as a consequence of any claim for professional liability brought against such health care provider as a defendant ... to the extent such health care providers' share exceeds his basic coverage insurance....

On November 28, 1989, American Casualty filed a petition seeking a declaratory judgment "[i]nterpreting the priorities of the insurance policies issued by the parties" as a result of an underlying civil action filed in the Court of Common Pleas of Montgomery County at Docket No. 89-17897. ³ Petition for Declaratory Judgment, November 28, 1989, (Petition). American Casualty alleges at Count I that the American Casualty policy involves only excess insurance for DiRienzo; that Phico provides primary insurance "for liability arising out of any 'medical incident' and that term is defined to include the rendering or failure to render professional services"; that "[t]he Phico's Primary Policy states in its 'other insurance' clause that it provides primary insurance"; that Phico issued another policy to the Hospital providing "excess insurance to any professional employee of the named insured for liability arising out of any 'medical incident' "; that the "American Casualty policy and the Phico Excess Policy provide coverage for DiRienzo in excess of the amounts collectible under the Phico Primary Policy and the Cat Fund"; and that "American Casualty's and Phico's contributions should be apportioned according to the respective limits of liability stated in those policies." Petition, paragraphs 12, 15, 16, 17, 18 and 24.

At Count II American Casualty alleges that DiRienzo is a "health care provider" as defined in Section 103 of the Act, 40 P.S. 1301.103; that pursuant to Section 705(a) of the Act, 40 P.S. § 1301.705(a) "an insurer issuing a professional liability policy on an excess basis is not liable for payment of any claim against a health care provider before the limits of liability of the Cat Fund have been exhausted"; that "the Cat Fund must provide ... the benefits required by the Act up to $1,000,000.00"; and that "only in the event the coverage owed DiRienzo by Phico under its Primary Policy and by the Cat Fund were inadequate ... American Casualty and Phico, under its Excess Policy, would be required to indemnify her as excess co-insurers." Petition, paragraphs 31 and 32. American Casualty seeks declaratory relief on the theory that Phico's primary policy and the Cat Fund must provide coverage with respect to the claims asserted against DiRienzo and that American Casualty's policy provides excess coverage with any contribution apportioned to the limits of its policy.

On April 19, 1991, Phico and DiRienzo moved for summary judgment pursuant to Pa.R.C.P. No. 1035. Phico and DiRienzo contend that the pleadings and the uncontested facts establish that American Casualty's insurance policy does not provide excess coverage but provides primary or co-primary insurance. American Casualty filed a cross-motion for summary judgment alleging that its insurance coverage is in excess of Phico's insurance coverage and that "the responsibility for the sums covered under both the Phico Excess Policy (No. EP 2001) and the American Casualty Policy be prorated in accordance with the limits of those policies...." Answer of American Casualty Company to the Motion for Summary Judgment of Phico Insurance Company.

Also, the Cat Fund filed an application for summary relief seeking a declaration Consequently, we must determine the respective obligations of American Casualty, Phico and the Cat Fund to DiRienzo.

that American Casualty must provide DiRienzo primary coverage and that DiRienzo is not a health care provider as defined in the Act. American Casualty filed a cross-application for summary relief seeking a declaration that DiRienzo qualifies as a health care provider and that the Cat Fund must provide up to a $1,000,000 in coverage to DiRienzo.

SUMMARY JUDGMENT

Pa.R.C.P. No. 1035(a) provides "[a]fter the pleadings are closed, but within such time as not to delay trial, any party may move for summary judgment on the pleadings and any depositions, answers to interrogatories, admissions on file and supporting affidavits." In Geriot v. Council of the Borough of Darby, 491 Pa. 63, 417 A.2d 1144 (1980), appeal after remand, 73 Pa.Commonwealth Ct. 1, 457 A.2d 202 (1983) we reiterated the following standards for entry of a summary judgment:

1) the case must be clear and free from doubt; 2) the moving party must prove that there is no genuine issue of material fact to be tried and that it is entitled to judgment as a matter of law; and 3) the record must be viewed in the light most favorable to the nonmoving party and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.

Id. at 3, 457 A.2d at 203.

American Casualty's policy contains the following clause:

If you have other insurance which applies to the loss, the other insurance must pay first. It is the intent of this policy to apply to the amount of loss which is more than the limit of liability of the other insurance. We will not pay more than our limit of liability.

American Casualty's policy, Appendix, Exhibit C at 3. Phico's primary policy contains a "pro rata" other insurance clause. It states:

The insurance afforded by this policy is primary insurance, except when stated to apply in excess of or contingent upon the absence of other insurance. When this insurance is primary and the insured has other insurance which is stated to be applicable to the loss on an excess or contingent basis, the amount of the Company's liability under this policy shall not be reduced by the existence of such other insurance. When both this insurance and other insurance apply to the loss on the same basis, whether primary, excess or contingent, the Company shall not be liable under this policy for a greater proportion of the loss than that stated in the applicable contribution provision....

Phico's primary policy, Amendment of Other Insurance Condition, Appendix, Exhibit D. It is the position of American Casualty that the policy limit of $1,000,000 is excess...