Clinical Perfusionists, Inc. v. St. Paul Fire and Marine Ins. Co.

• Decision Date: 01 September 1994
• Docket Number: No. 15,15
• Citation: 336 Md. 685,650 A.2d 285
• Parties: CLINICAL PERFUSIONISTS, INC. v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY. Misc.,
• Court: Maryland Court of Appeals

Page 685

336 Md. 685

650 A.2d 285

CLINICAL PERFUSIONISTS, INC. v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY.

Misc. No. 15, Sept. Term, 1994.

Court of Appeals of Maryland.

Dec. 9, 1994.

Thomas McCarthy, Jr. (McCarthy & Dernoga, on brief), Annapolis, for appellant.

Kathryn D. Kirmayer (Richard McMillan, Jr., Andrew H. Marks, Crowell & Moring, all on brief), Washington, DC, for appellee.

Catherine A. Potthast and Jessica S. Schaffer, Smith, Somerville & Case, Baltimore, for amicus curiae Saint Joseph Hospital, Inc.

Argued before MURPHY, C.J., ELDRIDGE, RODOWSKY, CHASANOW, BELL and RAKER, JJ, and JOHN F. McAULIFFE, Judge of the Court of Appeals (retired), Specially Assigned.

RODOWSKY, Judge.

This is an insurance case. It presents trigger of coverage issues under a form of claims made, medical profession, liability policy that is the subject of a declaratory judgment action in the United States District Court for the District of Maryland. The federal court (Frank A. Kaufman, J.) has certified to us four progressively more complex questions. ¹ Basically, two health care providers, insured under different policies issued by the same insurer, participated in a surgical operation. Shortly thereafter the patient died, prompting one insured to give notice of a potential claim to the insurer. The other insured did not notify the insurer until suit was filed, after its policy had expired. We conclude, based on the particular facts set forth below, that coverage was not triggered under the policy of the non-notifying insured.

The plaintiff in the federal action is Clinical Perfusionists, Inc. (CPI). Through its technicians CPI provides perfusion services for open heart surgery at various hospitals, including St. Joseph Hospital, Inc. (the Hospital). "Perfusion" is the process whereby a patient's blood is oxygenated and recirculated through the use of a heart-lung "pump" machine, thereby bypassing the patient's heart and lungs during the surgical procedure. CPI was insured under professional liability policy No. 508JD3817 (the Policy), issued by St. Paul Fire and Marine Insurance Company (St. Paul), the defendant in the federal action. The Policy period was September 1, 1986 through September 1, 1987, with a retroactive date of September 1, 1985. CPI did not renew the Policy.

The Policy, in relevant part, provides:

"Important note: This is a claims-made coverage. Please read it carefully, especially the When A Claim is Covered section.

....

"When A Claim Is Covered

"We'll cover claims that result from the professional service you performed or should have performed after the retroactive date that applies. We must also be notified of the claim while this agreement is in effect.

"When We'll Consider A Claim Made

"We'll consider a claim is made on the date you first report an incident or injury to us or our agent. You must include the following information:

Date, time and place of the incident What happened and what professional service you performed;

Type of claim you anticipate;

Name and address of injured party; and

Name and address of any witness.

....

"WHAT TO DO IF YOU HAVE A LOSS

....

"Someone Is Injured Or Something Happens Which Can Result In A Liability Claim

"If an accident or incident occurs that may involve this policy, you or any other protected person involved must:

....

"2. Tell us or our agent what happened as soon as possible. Do this even though no claim has been made but you or another protected person is aware of having done something that may later result in a claim. This notice should include:

The time and place of the event;

The protected person involved;

The specific nature of the incident including the type of claim that may result; and

The names and addresses of any witnesses and injured people." ²

On December 16, 1986, Paul Trionfo underwent coronary artery bypass surgery at the Hospital. Physicians participating in the procedure were the surgeon, assistant surgeon, and the anesthesiologist, Dr. George V. George. The perfusionist was employed by CPI. Mr. Trionfo never regained consciousness following the surgery, and he died on December 29, 1986 of anoxic encephalopathy. Sometime thereafter Dr. George had a telephone conversation with his insurance broker to whom Dr. George subsequently wrote a letter dated February 13, 1987. That letter was forwarded to St. Paul, which insured Dr. George against professional liability under Policy 508JA6877.

Dr. George's letter advised that the patient had been cooled to 29.5? >>>>> C, the bypass performed, and the patient rewarmed to 36.8? >>>> C. The aorta cross clamp was then released and Mr. Trionfo's heart spontaneously started to beat.

Dr. George further reported as follows:

"One of the anastomoses was unsatisfactory and so [a]ortic cross clamp was re-applied 10:44 A.M. at a body temperature of 36.8 degrees C. Surgical conditions were unsatisfactory and hence the [s]urgeon requested the [p]erfusionist to reduce blood flow to about two litres, which is less than half [the flow] that was optimal. His mean blood pressure decreased to about thirty mm, which could not be raised by pharmacological means. Surgeon was informed of this, but due to the difficulty in anastomosis, this condition had to be maintained for about fourteen minutes."

Dr. George concluded by stating that

"[w]e used standard anesthesia care and at no time was [the patient's] pressure or oxygenation below levels except when the perfusion flow was decreased by the [p]erfusionist to subnormal levels at the request of the [s]urgeon."

Dr. George did not mention CPI in his letter. Nor did he identify the individual who was performing the perfusion service.

St. Paul assigned an adjuster to investigate. The adjuster conducted a recorded question and answer interview of Dr. George, and that recording was transcribed. The perfusionist was not identified in that interview. The adjuster obtained the 371 page medical record on Mr. Trionfo from the Hospital. Within that record there is a chart on which are recorded various readings by the perfusionist at various times in the course of the surgery. That chart has a preprinted heading reading, "Clinical Perfusionists, Inc. Cardiopulmonary Bypass Record."

In addition to investigating the possible liability of Dr. George to the survivors of Mr. Trionfo, the adjuster, on an internal form called the "TEN-DAY REPORT," was asked to opine on "Subrogation, Indemnity, or Contribution." The adjuster inserted, "Hospital & Surgeon." In a memorandum of May 6, 1987 to the Baltimore branch office claims supervisor, the adjuster stated "that the primary exposure would rest with the surgeon," and advised that the surgeon was insured with Medical Mutual "and is believed to have a $3,000,000.00 limit." The adjuster further believed "that our insured [i.e., Dr. George] would be second in line followed by" the Hospital, which the adjuster believed was also insured by Medical Mutual. The Baltimore claims office reported to the regional and home offices of St. Paul that "[w]e insure only the anesthesiologist...." A report of late May to the home office from the regional claims supervisor for St. Paul recognized that "[i]f a claim is made, there would be a shotgun approach by the family...."

St. Paul also caused Mr. Trionfo's record from the Hospital to be reviewed by another anesthesiologist who concluded that the case was "handled flawlessly" by Dr. George. St. Paul determined that it would close its file if no claim were asserted against Dr. George by August 1987.

Mr. Trionfo's survivors filed a wrongful death action in December 1989. Included among the defendants are CPI, Dr. George, and the Hospital. In January 1990 CPI notified its insurance agent of the Trionfo lawsuit, and the agent reported that filing to St. Paul a few days later. Prior to the filing of the wrongful death action no claim had been made against CPI by Mr. Trionfo's survivors or his estate. St. Paul denied coverage, contending that no claim had been made during the Policy period. The federal declaratory judgment action followed.

Thus, although the bypass surgery giving rise to alleged tort liability on the part of CPI occurred during the Policy period, no claim was asserted by the Trionfo family against CPI during the Policy period, and CPI did not report a potential Trionfo claim to St. Paul during the Policy period. But for (1) the report by Dr. George to St. Paul of a potential claim under his policy and (2) St. Paul's resulting investigation, this case would be controlled by T.H.E. Ins. Co. v. P.T.P. Inc., 331 Md. 406, 628 A.2d 223 (1993). There we held that the notice-prejudice rule of Md.Code (1957, 1991 Repl.Vol.), Art. 48A, § 482 does not operate to enlarge the insuring agreement in a claims made policy so as to cover a claim arising out of an occurrence that took place within the policy period when the claim was neither made nor reported during the policy period. ³

The questions certified by the federal court are:

"1. Under the terms of the policy at issue in this case, in order for a claim or potential claim to be considered 'made,' or in order for coverage of that claim to be considered 'made,' or in order for coverage of that claim or potential claim to be provided, must the insured CPI report the claim or potential claim to St. Paul, or can a third party report that claim or potential claim?

"2. If a third-party report is permissible, in the context of the facts in this case, was the scope of the information provided by George in his notice of a potential claim sufficient to constitute a third-party report of CPI's claim as well?

"3. If, prior to the expiration of CPI's policy period, St. Paul discovered, through its own efforts or as a result of the notice given it by George, the existence of CPI's policy and the fact of CPI's participation in the Trionfo surgery, does that suffice to require St. Paul to insure CPI from claims or potential claims arising...