Empire Cas. Co. v. St. Paul Fire and Marine Ins. Co.
| Decision Date | 28 November 1988 |
| Docket Number | 85SC380,Nos. 85SC362,s. 85SC362 |
| Citation | 764 P.2d 1191 |
| Parties | EMPIRE CASUALTY COMPANY, a Corporation, Petitioner, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a corporation, Chicago Insurance Company, a corporation, and Continental Casualty Company, Respondents. CHICAGO INSURANCE COMPANY, a corporation, Petitioner, v. CONTINENTAL CASUALTY COMPANY, Respondent. |
| Court | Colorado Supreme Court |
William DeMoulin, Donald E. Cordova, Larry N. Harris, Cordova, DeMoulin, Harris & Mellon, P.C., Denver, for Empire Cas. Co.
Arthur H. Downey, Kenneth G. Gulley, Downey & Gulley, P.C., Denver, for Chicago Ins. Co.
Thomas L. Roberts, John L. Wheeler, Pryor, Carney and Johnson, P.C., Englewood, for Continental Cas. Co.
This case involves a dispute among three insurance companies regarding the share each must pay of a $575,000 medical malpractice judgment entered against a physician insured by the three companies. The trial court found multiple acts of negligence by the physician and held that each insurance policy in effect at the time the physician committed any negligent act was responsible for the entire amount of the verdict up to the amount of the policy limit. The court found that the Empire Casualty Company (Empire) had two policies in effect when the negligent acts were committed; that each policy had a limit of $100,000; and that, since both the physician and his professional corporation were insured under each policy, two separate limits of $100,000 applied. Accordingly, the trial court entered judgment against Empire for $200,000 on each policy, or a total of $400,000. The trial court apportioned the balance of the medical malpractice judgment equally between the two excess carriers, Continental Casualty Company (Continental) and Chicago Insurance Company (Chicago). Thus, judgment was entered against Continental for $87,500 and against Chicago for $87,500.
On appeal, the court of appeals affirmed the $400,000 award against Empire, vacated the entire award against Continental, and ordered the trial court to enter judgment against Chicago for $175,000. Continental Casualty Co. v. Empire Casualty Co., 713 P.2d 384 (Colo.Ct.App.1985). We granted certiorari to consider the following questions: (1) whether a legally cognizable cause of action exists in Colorado for the tort of "wrongful life;" (2) whether the doctrine of continuing negligence should be applied to the facts of this case; (3) whether, as a matter of law, the Continental Casualty Company waived the threshold limit on its umbrella insurance policy; and (4) whether the court of appeals erroneously failed to conclude that a portion of the malpractice judgment exceeded Continental's threshold limit of coverage even if Continental did not waive that limit.
We now affirm in part and reverse in part the judgment of the court of appeals.
The $575,000 medical malpractice judgment at issue in this case is the result of a suit brought by Randy and Shelly Peek, on behalf of their minor son, Gary Peter Peek (Pete) against Gerald M. Lockwood, M.D. (Lockwood), a physician specializing in obstetrics and gynecology. 1 Pete was severely injured by a hemolytic disease called erythroblastosis fetalis (EBF) which caused him to become mentally retarded and physically handicapped. Although there are other causes of EBF, the most common cause, and the one present in this case, occurs when a woman, whose blood is RH-negative and who has become sensitized to the D antigen which is present in RH-positive blood, bears a child who is RH-positive. An RH-negative woman may be sensitized by a transfusion of RH-positive blood or by RH-positive fetal blood entering her circulatory system during pregnancy or delivery. A sensitized RH-negative woman's blood contains antibodies which, during pregnancy, cross the placenta into the RH-positive fetus and attack the fetal blood causing anemia. About fifteen percent of fetuses with EBF die before birth, usually after twenty-eight weeks of gestation. R. Phibbs, Hemolytic Disease of the Newborn (Erythroblastosis Fetalis), Pediatrics 1029-30 (A. Rudolph & J. Hoffman eds., 18th ed. 1987). Sensitization of an RH-negative woman, however, ordinarily can be prevented if she is treated with the drug RhoGAM after each birth of an RH-positive child. RhoGAM became commercially available in 1968 and was hailed as a miracle drug because it effectively eliminated the risk of EBF in the children of an RH-negative mother and RH-positive father.
Shelly Peek, Pete's mother, is an RH-negative woman and Randy Peek, Shelly's husband and the father of their children, is RH-positive homozygous. The RH-positive group includes RH-positive homozygous and RH-positive heterozygous. All of the children of an RH-negative mother and an RH-positive homozygous father will be RH-positive. If the father is RH-positive heterozygous, one-half of his children will be RH-positive. Id. at 1029.
The Peeks' first child, Billy, was born on December 22, 1972. Shelly Peek was treated by Lockwood from the early stages of her pregnancy through the delivery. In July or August 1972 Lockwood typed her blood and either mistyped or misrecorded it as RH-positive when, in fact, her blood was RH-negative. This first pregnancy was uneventful and Billy was born a normal, healthy RH-positive baby. Lockwood did not retype Shelly Peek's blood at any time during her first pregnancy and he did not administer RhoGAM to her after Billy was born.
Lockwood also treated Shelly Peek during her second pregnancy in 1974. He did not retype her blood during the second pregnancy and the Peeks' second son, Justin, was stillborn on October 16, 1974. Prior to receiving the autopsy report on Justin, Lockwood affirmatively advised Shelly Peek that she and her husband could have more children. The autopsy was inconclusive as to the cause of death and Lockwood did not order a blood test of the stillborn baby's umbilical cord or otherwise further investigate the cause of death.
When Shelly Peek became pregnant for a third time, she sought the care of a different physician who typed her blood and discovered that she was RH-negative. Subsequent tests determined that Shelly Peek's fetus had developed a severe case of EBF and attempts were made to treat the disease by giving intrauterine transfusions. Finally, however, the treating physicians decided to deliver the baby prematurely to avoid its certain death if the pregnancy continued. On April 25, 1976, Pete was delivered at about thirty to thirty-one weeks of gestation. He suffered severe mental and physical injuries because of EBF.
The advisory jury to the trial court found that Shelly Peek became sensitized immediately after the birth of her first son on December 22, 1972. The jury also found that Lockwood committed four separate acts of negligence during the twenty-seven month period (July 1972 to October 1974) when he treated Shelly Peek for her first two pregnancies. It also found that each act of negligence was a proximate cause of the injuries sustained by Pete. The negligent acts were: (1) mistyping or misrecording of the blood typing of Shelly Peek in July or August of 1972; (2) failing to retype Shelly Peek's blood for RH factor during her second pregnancy and before she was confined for delivery; (3) failing to investigate adequately the cause of the death of Justin Peek including, but not limited to, cord blood tests or retyping the blood of Shelly Peek; and (4) affirmatively advising Shelly Peek to have additional children, without determining or knowing further information regarding the cause of Justin Peek's death. The trial court generally adopted the findings of the advisory jury, with some modifications.
Empire provided Lockwood with his primary malpractice insurance; two of its policies were in effect during the times when Lockwood's negligent acts occurred. Each policy provided coverage of $100,000 per claim and $300,000 aggregate ($100/$300). The first Empire policy was in place in 1972 when Lockwood incorrectly typed or erroneously recorded Shelly Peek's RH blood factor. An Empire policy also was in effect in 1974 when the other three acts of negligence found by the jury occurred. Continental provided excess insurance coverage to Lockwood for a three-year term beginning on April 21, 1970. That policy required that underlying limits of $500/$500 be maintained and provided $1,000,000 of coverage in excess of the underlying limits. Only the first negligent act occurred during the term of this policy. The third insurer, Chicago, had an excess policy in effect for Lockwood from April 21, 1974, to April 21, 1977. Under that policy, Lockwood was required to maintain underlying limits of $100/$300 and Chicago provided him $1,000,000 coverage in excess of the underlying limits. The stillbirth of Justin occurred during the time when Chicago's policy was in effect and the last two negligent acts found by the jury occurred during the term of this policy. 2
The trial court rejected the arguments of Empire and Chicago that the mistyping or misrecording of Shelly Peek's blood type was the only proximate cause of the injury sustained by Pete and that an apportionment of the damage award based upon any of Lockwood's subsequent acts of negligence could only be accomplished by recognizing a claim for wrongful life. 3 The trial court also ruled that the doctrine of continuing negligence was inapplicable to this case, and implicitly held that Continental had waived the threshold limit of its umbrella insurance policy.
The court of appeals agreed with Empire and Chicago that allocating the damage award based upon Lockwood's subsequent acts of negligence was tantamount to allowing recovery for wrongful life. The court, however, recognized this claim for relief. 713 P.2d at 391-94. The court further ruled that, as a matter of law, Continental could not waive the threshold limit on its umbrella...
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