Doctors' Co. v. Insurance Corp. of America

• Decision Date: 06 December 1993
• Docket Number: 92-270,Nos. 92-68,s. 92-68
• Citation: 864 P.2d 1018
• Parties: The DOCTORS' COMPANY, a California corporation, Appellant (Plaintiff), v. The INSURANCE CORPORATION OF AMERICA, a Texas corporation; and Stanley W. Peters, MD, Appellees (Defendants). (Two Cases).
• Court: Wyoming Supreme Court

Page 1018

864 P.2d 1018

The DOCTORS' COMPANY, a California corporation, Appellant (Plaintiff), v. The INSURANCE CORPORATION OF AMERICA, a Texas corporation; and Stanley W. Peters, MD, Appellees (Defendants). (Two Cases).

Nos. 92-68, 92-270.

Supreme Court of Wyoming.

Dec. 6, 1993.

Arthur H. Downey and Laurel E. Adams, Denver, CO, for Doctors' Co.

Judith A. Studer of Schwartz, Bon, McCrary & Walker, Casper, for Insurance Corp. of America.

Robert M. Shively of Murane & Bostwick, Casper, for Stanley W. Peters, M.D.

Before MACY, C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, JJ.

TAYLOR, Justice.

In these consolidated appeals, we are required to determine which "claims made" professional liability insurer provides coverage when a potential claim is reported to the former insurer but the actual claim is made during the coverage period of the present insurer. The present insurer of a Wyoming physician challenges the district court's grant of summary judgment in favor of the former insurer. The district court determined that no claim, as defined by the former insurer's policy, had been made during that company's applicable coverage period.

We affirm.

I. ISSUES

In Appeal No. 92-68, The Doctors' Company, appellant and the present insurer, identifies the following issues:

1. Whether the trial court erred in holding, as a matter of law, that no "claim" had been made against Stanley W. Peters, M.D., prior to the expiration of his insurance policy with the Insurance Corporation of America.

2. Whether the record shows, as a matter of law, that notice of the Wardell claim was given to the Insurance Corporation of America during its coverage period.

3. Whether the trial court erred in finding that there were no material issues of fact existing between the parties to this action.

Appellee, Stanley W. Peters, M.D., presents a single issue for this appeal:

Whether the failure of the appellant to contest its policy's coverage for Dr. Peters in the underlying personal injury action either here or in the court below acts as a waiver or an estoppel of its previously made reservation of rights as to that coverage.

The Insurance Corporation of America, appellee and the former insurer, questions:

Whether the court erred in holding, as a matter of law, that there was no coverage for Dr. Peters for the Wardell incident under the policy issued by the Insurance Corporation of America.

More specifically, this issue has two subparts. They are:

A. Whether the trial court erred in holding as a matter of law that a "claim", as that term is defined in the policy, was not made during the policy period.

B. Whether The Doctors['] Company can rely upon a self-serving, conclusory affidavit prepared by its counsel to raise a disputed issue of fact in order to defeat summary judgment.

In Appeal No. 92-270, appellant, The Doctors' Company, questions whether the district court abused its discretion in denying relief from judgment under W.R.C.P. 60(b).

Appellee, Stanley W. Peters, M.D., takes no position on the issue presented in this appeal.

Appellee, The Insurance Corporation of America, responds with the following issues:

1. Did the lower court's finding that the appellant failed to bring itself within Rule 60(b) constitute an abuse of discretion?

2. Did the lower court err, as a matter of law, in finding that "Plaintiff's Responses To Defendant West Park Hospital And Board of Trustees' First Interrogatories" would not [a]ffect the court's prior decision granting summary judgment to [The Insurance Corporation of America]?

II. FACTS

On May 13, 1987, Neal Wardell (Wardell) fell on the school playground in Burlington, Wyoming during recess. The seven-year-old child struck the back of his neck on a rock. Injured and complaining of pain and weakness in his arms and legs, Wardell was immobilized and brought, by ambulance, to West Park Hospital in Cody, Wyoming.

At the hospital, Stanley W. Peters, M.D. (Dr. Peters), an emergency room physician, examined Wardell along with an orthopedic surgeon. The diagnostic process included a range of motion test. At some point, Wardell was permitted to walk and use the bathroom. However, Wardell's neurological functions continued to diminish and the doctors ordered him transferred, by helicopter, to St. Vincent Hospital in Billings, Montana. The next day, as his condition deteriorated, the treating physician in Billings transferred Wardell to Children's Hospital in Denver, Colorado. Wardell left that hospital a quadriplegic with permanent injury to the seventh cervical vertebra.

On May 12, 1989, Wardell and his parents (collectively Wardell) simultaneously filed tort claims under the Wyoming Governmental Claims Act against the Big Horn County School District No. 1 and West Park Hospital and filed a negligence action against the orthopedic surgeon and West Park Hospital. The negligence action alleged a breach in the standard of care by failing to keep Wardell immobilized. As discovery proceeded, it was determined that Dr. Peters was an independent contractor and not a hospital employee at the time he treated Wardell. Consequently, on November 13, 1989, Wardell and his parents filed a separate action against Dr. Peters alleging negligence. Following a settlement of the claims against the Big Horn County School District No. 1 and West Park Hospital, the underlying negligence actions continued, on remand, following this court's decision in Wardell v. McMillan, 844 P.2d 1052 (Wyo.1992).

When Dr. Peters treated Wardell, Insurance Corporation of America (ICA) insured Dr. Peters for professional liability on a "claims made" basis. ICA also insured Dr. Peters on a "claims made" basis at the time the May 12, 1989 Wardell complaint was filed against the orthopedic surgeon and West Park Hospital. On September 13, 1989, Dr. Peters completed an application for renewal of his ICA policy in which he stated: "I was involved 2 years ago in [a] case in which this hospital [West Park Hospital] and [a] consulting physician [were] sued recently. I am not sued but am named in the interrogatory. Note: thus far I have not been named in suit." (Emphasis in original.)

On October 16, 1989, Dr. Peters completed an application for professional liability insurance on a "claims made" basis with The Doctor's Company (TDC). In describing potential claims, Dr. Peters identified Wardell as a former patient and indicated: "I was involved in this case 2+ years ago; I was not named in suit (consultant, hospital and nurses were)[;] I felt it prudent to report it to ICA [and] did so. I was not sued." (Emphasis in original.) Dr. Peters identified the status of the claim as an open claim, but "[n]ot against me."

Coverage under Dr. Peters' professional liability insurance with ICA expired on November 1, 1989. On the same date, TDC issued a professional liability policy on a "claims made" basis insuring Dr. Peters. The TDC policy included retroactive coverage to November 1, 1986.

Service of process for the November 13, 1989 Wardell complaint against Dr. Peters occurred on December 1, 1989. Dr. Peters promptly notified his local insurance agent, ICA and TDC. Dr. Peters' handwritten letter to ICA reported:

This letter is to inform you that I was finally named in a law suit of alleged malpractice. The incident occurred 5/13/87--the patient's name was Neal W. Wardell. I notified Norm Cooper of Lander Valley Ins. verbally a long time ago and notified you on my application renewal form a couple months ago--at that time I was not sued--now I am. I'm waiting to hear from you.

Sincerely,

[Signature]

P.S. My papers were served 1 Dec. 89.

[Initials]

TDC notified Dr. Peters that under the terms of that company's professional liability policy, no coverage would be provided. On behalf of Dr. Peters, TDC tendered the defense of the November 13, 1989 Wardell complaint to ICA. ICA refused determining that no coverage existed under its former policy with Dr. Peters because the claim, defined by ICA as a "demand for money, services or property made upon you," was not actually made during the coverage period.

TDC filed the declaratory judgment action that is the subject of Appeal No. 92-68 to determine the respective liabilities, if any, of ICA and TDC to Dr. Peters. ICA denied liability maintaining that because Dr. Peters had failed to purchase an Extended Reporting Endorsement on his ICA policy, "claims made" coverage had expired before the actual claim was made. ICA counterclaimed that sole liability for Dr. Peters' coverage belonged to TDC. Dr. Peters asserted that either ICA or TDC, under their respective policies, were required to tender a defense to the underlying negligence action and be liable for the payment of any judgment from that action.

The district court ruled, on cross motions for summary judgment, in favor of ICA. The district court found, despite Dr. Peters report to ICA of a potential claim following the filing of the May 12, 1989 Wardell complaint against the hospital and the orthopedic surgeon, no actual claim was made against Dr. Peters until the November 13, 1989 Wardell complaint was filed and service of process was accomplished on December 1, 1989. The district court determined that the language of the ICA policy was unambiguous and ICA had no coverage obligation because that policy expired before a "demand for money, services or property" was made upon Dr. Peters. Since the actual claim was made after the effective date of the professional liability policy issued by TDC, the district court determined that coverage existed for Dr. Peters under the TDC policy. TDC appeals the district court's order.

After Appeal No. 92-68 was filed, TDC sought a limited remand to permit the district court to consider a motion for relief from judgment under W.R.C.P. 60(b). This court denied the motion, but established a procedure permitting district courts to consider W.R.C.P. 60(b) motions during the pendency of an appeal. The Doctors'...